UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.             )

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Carolina Power & Light Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Carolina Power & Light Company

410 S. Wilmington Street

Raleigh, NC 27601-1849

April 6, 2006

Dear Shareholder:

I am pleased to invite you to attend the 2006 Annual Meeting of the Shareholders of Carolina Power & Light Company. The meeting will be held at 10 a.m. on May 10, 2006, in the Fletcher Opera Theater at the Progress Energy Center for the Performing Arts, 2 E. South Street, Raleigh, North Carolina.

As described in the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement, the matters scheduled to be acted upon at the meeting for Carolina Power & Light Company are the election of directors and the ratification of the selection of the independent registered public accounting firm for Carolina Power & Light Company.

Regardless of the size of your holdings, it is important that your shares be represented at the meeting. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING ENVELOPE OR VOTE BY TELEPHONE IN ACCORDANCE WITH THE INSTRUCTIONS ON THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE. Voting by either of these methods will ensure that your vote is counted at the Annual Meeting if you do not attend in person.

I am delighted that you have chosen to invest in Carolina Power & Light Company and look forward to seeing you at the meeting. On behalf of the management and Directors of Carolina Power & Light Company thank you for your continued support and confidence in 2006.

Sincerely,

Robert B. McGehee

Chairman of the Board

VOTING YOUR PROXY IS IMPORTANT

Your vote is important. Please promptly SIGN, DATE and RETURN the enclosed proxy card or VOTE BY TELEPHONE in accordance with the instructions on the enclosed proxy card so that as many shares as possible will be represented at the Annual Meeting.

A self-addressed envelope, which requires no postage if mailed in the United States, is enclosed for your convenience.

CAROLINA POWER & LIGHT COMPANY

410 S. Wilmington Street
Raleigh, North Carolina 27601-1849

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON

MAY 10, 2006

The Annual Meeting of the Shareholders of Carolina Power & Light Company (the “Company”) will be held at 10 a.m. on May 10, 2006, in the Fletcher Opera Theater at the Progress Energy Center for the Performing Arts, 2 E. South Street, Raleigh, North Carolina. The meeting will be held in order to:

(1)Elect three (3) Class I directors of the Company to serve two-year terms; four (4) Class II directors of the Company to serve three-year terms; and one (1) Class III director of the Company to serve a one-year term.

(2)Ratify the selection of the independent registered public accounting firm for the Company.

(3)Transact any other business as may properly be brought before the meeting.

All shareholders of $5 Preferred Stock, Serial Preferred Stock and Common Stock of record at the close of business on March 3, 2006, are entitled to attend the meeting and to vote. The stock transfer books will remain open.

By order of the Board of Directors

JOHN R. MCARTHUR

Senior Vice President and Secretary

Raleigh, North Carolina

April 6, 2006

CAROLINA POWER & LIGHT COMPANY

410 S. Wilmington Street
Raleigh, North Carolina 27601-1849

PROXY STATEMENT

GENERAL

This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of Carolina Power & Light Company (Company) of proxies to be used at the Annual Meeting of Shareholders. That meeting will be held at 10 a.m. on May 10, 2006, in the Fletcher Opera Theater at the Progress Energy Center for the Performing Arts, 2 E. South Street, Raleigh, North Carolina. (For directions to the meeting location, please see the map included at the end of this Proxy Statement.) This Proxy Statement and form of proxy were first sent to shareholders on or about April 6, 2006.

An audio webcast of the Annual Meeting of Shareholders will be available online at www.progress-energy.com/webcast. The webcast will be available in Windows Media Player format and will be archived on the site.

Copies of the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, including financial statements and schedules, are available upon written request, without charge, to the persons whose proxies are solicited. Any exhibit to the Form 10-K is also available upon written request at a reasonable charge for copying and mailing. Written requests should be made to Mr. Thomas R. Sullivan, Treasurer, P.O. Box 1551, Raleigh, North Carolina 27602. The Company’s Form 10-K is also available through the Securities and Exchange Commission’s (the “SEC”) Web site at www.sec.gov or through the Company’s Web site at www.progress-energy.com. The contents of these Web sites are not, and shall not be deemed to be a part of this proxy statement or proxy solicitation materials.

The SEC delivery rules can be satisfied by delivering a single proxy statement and annual report to shareholders to an address shared by two or more of our shareholders. This delivery method is referred to as householding. A single copy of the annual report and of the proxy statement will be sent to multiple shareholders who share the same address unless the Company has received contrary instructions from one or more of the shareholders.

If you prefer to receive a separate copy of the proxy statement or the annual report, please write to Shareholder Relations, P.O. Box 1551, Raleigh, North Carolina 27602 or telephone the Company’s Shareholder Relations Section at 919-546-3014, and we will promptly send you separate copies. If you are currently receiving multiple copies of the proxy statement or the annual report at your address and would prefer that a single copy of each be delivered there, you may contact the Company at the address or telephone number provided in this paragraph.

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PROXIES

The accompanying proxy is solicited by the Board of Directors of the Company and the entire cost of solicitation will be borne by the Company. The Company expects to solicit proxies primarily by mail. Proxies may also be solicited by telephone, e-mail or other electronic media or personally by officers and employees of the Company and its subsidiaries, who will not be specially compensated for such services.

You may vote shares either in person or by duly authorized proxy. In addition, you may vote your shares by telephone by following the instructions provided on the enclosed proxy card. The telephone voting facilities for shareholders of record will close at 12:01 a.m. E.D.T. on the morning of the meeting. Any shareholder who has executed a proxy and attends the meeting may elect to vote in person rather than by proxy. You may revoke any proxy given by you in response to this solicitation at any time before the proxy is exercised by (i) delivering a written notice of revocation, (ii) timely filing with the Secretary of the Company a subsequently dated, properly executed proxy or (iii) attending the Annual Meeting and electing to vote in person. Your attendance at the Annual Meeting, by itself, will not constitute a revocation of a proxy. If you vote by telephone, you may also revoke your vote by any of the three methods noted above, or you may change your vote by voting again by telephone. If you decide to vote by completing and mailing the enclosed proxy card, you should retain a copy of certain identifying information found on the proxy card in the event that you decide later to change or revoke your proxy. You should address any written notices of proxy revocation to: Carolina Power & Light Company, P.O. Box 1551, Raleigh, North Carolina 27602, Attention: Secretary.

All shares represented by effective proxies received by the Company at or before the Annual Meeting, and not revoked before they are exercised, will be voted in the manner specified therein. Proxies that do not contain specifications will be voted “FOR” the election of all Directors as set forth in this Proxy Statement; and “FOR” the ratification of the selection of Deloitte & Touche LLP as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2006, as set forth in this Proxy Statement. Proxies will be voted at the discretion of the named proxies on any other business properly brought before the meeting.

Special Note for Shares Held in “Street Name”

If your shares are held by a brokerage firm, bank or other nominee (i.e., in “street name”), you will receive directions from your nominee that you must follow in order to have your shares voted. “Street name” shareholders who wish to vote in person at the meeting will need to obtain a special proxy form from the brokerage firm, bank or other nominee that holds their shares of record. You should contact your brokerage firm, bank or other bank nominee for details regarding how you may obtain this special proxy form.

If your shares are held in “street name” and you do not give instructions as to how you want your shares voted (a “non-vote”), the brokerage firm, bank or other nominee who holds Carolina Power & Light Company shares on your behalf may, in certain circumstances, vote the shares at its discretion. However, such brokerage firm, bank or other nominee is not required to vote the shares and therefore these would be counted as “broker non-votes.”

With respect to “routine” matters, such as the election of Directors, and the ratification of the selection of the independent registered public accounting firm, a brokerage firm, bank or other nominee has authority (but is not required) under the rules governing self-regulatory organizations (the “SRO rules”), including the New York Stock Exchange (“NYSE”), to vote its clients’ shares if the clients do not provide instructions. When a brokerage firm, bank or other nominee votes its clients’ shares on routine matters without receiving voting instructions, these shares are counted both for establishing a quorum to conduct business at the meeting and in determining the number of shares voted FOR, WITHHELD FROM or AGAINST such routine matters.

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With respect to “non-routine” matters, a brokerage firm, bank or other nominee is not permitted under the SRO rules to vote its clients’ shares if the clients do not provide instructions. The brokerage firm or other nominee will so note on the vote card, and this constitutes a “broker non-vote.” “Broker non-votes” will be counted for purposes of establishing a quorum to conduct business at the meeting but not for determining the number of shares voted FOR, AGAINST or ABSTAINING from such non-routine matters.

Accordingly, if you do not vote your proxy, your brokerage firm, bank or other nominee may either: (i) vote your shares on routine matters and cast a “broker non-vote” on non-routine matters, or (ii) leave your shares unvoted altogether.

At the 2006 Annual Meeting of Shareholders, no non-routine matters are expected to be presented for a vote. Therefore, we encourage you to provide instructions to your brokerage firm or other nominee by voting your proxy. This action ensures that your shares and voting preferences will be fully represented at the meeting.

VOTING SECURITIES

The Directors of the Company have fixed March 3, 2006, as the record date for shareholders entitled to vote at the Annual Meeting. Only holders of the Company’s $5 Preferred Stock, Serial Preferred Stock and Common Stock of record at the close of business on that date are entitled to notice of and to vote at the Annual Meeting. Each share is entitled to one vote. As of March 3, 2006, there were outstanding 236,997 shares of $5 Preferred Stock, 349,850 shares of Serial Preferred Stock and 159,608,055 shares of Common Stock. Progress Energy, Inc. (Progress Energy) owns all outstanding Shares of the Company’s Common Stock.

Consistent with state law and the Company’s By-Laws, the presence, in person or by proxy, of holders of at least a majority of the total number of shares entitled to vote is necessary to constitute a quorum for the transaction of business at the Annual Meeting. Once a share of stock is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and any adjournment thereof, unless a new record date is or must be set for the adjournment. Shares held of record by shareholders or their nominees who do not vote by proxy or attend the Annual Meeting in person will not be considered present or represented at the Annual Meeting and will not be counted in determining the presence of a quorum. Proxies that withhold authority or reflect abstentions or “broker non-votes” will be counted for purposes of determining whether a quorum is present.

Pursuant to the provisions of the North Carolina Business Corporation Act, Directors will be elected by a plurality of the votes cast by the holders of shares entitled to vote. Accordingly, assuming a quorum is present, the nominee(s) receiving the highest number of “FOR” votes within each of class of Directors for which nominees are proposed will be elected. Withheld votes or shares held in “street name” that are not voted in the election of Directors will not be included in determining the number of votes cast.

Approval of the proposal to ratify the selection of the Company’s independent registered public accounting firm and other matters to be presented at the Annual Meeting, if any, generally will require the affirmative vote of a majority of votes actually cast by holders of shares entitled to vote. With respect to matters requiring a majority vote, assuming a quorum is present, the number of “FOR” votes cast at the meeting for the proposal must exceed the number of “AGAINST” votes cast at the meeting in order for this proposal to be approved. Abstentions from voting and broker non-votes will not count as votes cast and will not have the effect of a “negative” vote with respect to any such matters.

We will announce preliminary voting results at the Annual Meeting. We will publish the final results in our quarterly report on Form 10-Q for the second quarter of fiscal year 2006. A copy of this quarterly report may be obtained without charge by any of the means outlined above for obtaining a copy of the Annual Report on Form 10-K.

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PROPOSAL 1—ELECTION OF DIRECTORS

Based on the report of the Corporate Governance Committee (see page 12), the Board of Directors nominates the following three nominees to serve as Directors in Class I with terms expiring in 2008 and until their respective successors are elected and qualified: W. D. Frederick, Jr., W. Steven Jones, and Theresa M. Stone. The Board of Directors also nominates the following four nominees to serve as Directors in Class II with terms expiring in 2009 and until their respective successors are elected and qualified: Edwin B. Borden, James E. Bostic, Jr., David L. Burner and Richard L. Daugherty. The Board of Directors also nominates the following nominee to serve as a Director in Class III with a term expiring in 2007 and until his successor is elected and qualified: Harris E. DeLoach, Jr.

The nomination of Directors in all three Classes is the result of the Board’s efforts to apportion the nominees among the Classes so that all Classes are as nearly equal in number as possible.

There are no family relationships among any of the nominees for Director or among any nominee and any Director or officer of the Company or its subsidiaries, and there is no arrangement or understanding between any nominee and any other person pursuant to which the nominee was selected.

The election of Directors will be determined by a plurality of the votes cast at the Annual Meeting at which a quorum is present. Shareholders do not have cumulative voting rights in connection with the election of Directors. This means that the nominee(s) receiving the highest number of “FOR” votes within each of Class I, II and III will be elected as Directors in their respective classes. Withheld votes and broker non-votes, if any, are not treated as votes cast and, therefore, will have no effect on the proposal to elect Directors.

Valid proxies received pursuant to this solicitation will be voted in the manner specified. Where specifications are not made, the shares represented by the accompanying proxy will be voted FOR the election of each of the eight nominees. Votes (other than votes withheld) will be cast pursuant to the accompanying proxy for the election of the nominees listed above unless, by reason of death or other unexpected occurrence, one or more of such nominees shall not be available for election, in which event it is intended that such votes will be cast for such substitute nominee or nominees as may be determined by the persons named in such proxy. The Board of Directors has no reason to believe that any of the nominees listed above will not be available for election as a Director.

The names of the eight nominees for election to the Board of Directors and of the Continuing Directors, along with their ages, principal occupations or employment for the past five years, and current directorships of public companies are set forth below. No information is included regarding Charles W. Coker (currently a Director in Class III) and William O. McCoy (currently a Director in Class I), who will reach the mandatory retirement age for non-employee Board members this year, and thus will retire from the Board at the Annual Meeting of Shareholders on May 10, 2006. No information is included regarding Peter S. Rummell (currently a director in Class III) who recently notified the Company that he will resign from the Board, effective May 1, 2006. No decision has been made regarding which nominees or Continuing Directors will replace Messrs. Coker, McCoy and Rummell on the various Board Committees on which they currently serve. The Company is a direct subsidiary of Progress Energy and a sibling of Florida Progress Corporation (FPC), both of which are noted in the descriptions below. Information concerning the number of shares of Progress Energy’s Common Stock beneficially owned, directly or indirectly, by all current Directors appears on page 8 of this Proxy Statement.

The Board of Directors recommends a vote FOR each nominee for Director.

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Nominees for Election—Class I

(Terms Expiring in 2008)

W. D. FREDERICK, JR., age 71, is a citrus grower and rancher. He is a retired partner in the law firm of Holland & Knight and a former mayor of Orlando, Florida. He has served as a Director of the Company since 2000 and also serves as a Director of Progress Energy, FPC, United Heritage Bank and Blue Cross/Blue Shield of Florida.

W. STEVEN JONES, age 54, is Dean and Professor of Management of UNC Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. He is a former CEO and Managing Director of Suncorp-Metway, Ltd. in Brisbane, Queensland, Australia, which provides banking, insurance and investing services. He has served as a Director of the Company since 2005 and also serves as a Director of Progress Energy, FPC and Bank of America.

THERESA M. STONE, age 61, is Executive Vice President and Chief Financial Officer of Jefferson-Pilot Financial, a company offering full lines of individual and group life insurance products as well as annuity and investment products. She also serves as President of Jefferson-Pilot Communications. She has served as a Director of the Company since 2005 and also serves as a Director of Progress Energy and FPC.

Nominees for Election—Class II

(Terms Expiring in 2009)

EDWIN B. BORDEN, age 72, is retired President of The Borden Manufacturing Company, a textile management services company. He has served as a Director of the Company since 1985 and also serves as a Director of Progress Energy, FPC, Ruddick Corporation and Winston Hotels, Inc.

JAMES E. BOSTIC, JR., age 58, is retired Executive Vice President of Georgia-Pacific Corporation, a manufacturer and distributor of tissue, paper, packaging, building products, pulp and related chemicals (since January 2001). He previously served as Senior Vice President of Georgia-Pacific Corporation (from January 1995 to December 2000). He has served as a Director of the Company since 2002 and also serves as a Director of Progress Energy and FPC.

DAVID L. BURNER, age 66, is retired Chairman and Chief Executive Officer of the Goodrich Corporation, a provider of aerospace components, systems and services. He has served as a Director of the Company since 1999 and also serves as a Director of Progress Energy, FPC, Milacron, Inc., Lance, Inc., Engelhard Corporation and Briggs & Stratton Corporation.

RICHARD L. DAUGHERTY, age 70, was formerly Executive Director of NCSU Research Corporation, a development corporation of the Centennial Campus of North Carolina State University. He previously served as Vice President of IBM PC Company and Senior State Executive of IBM Corp. He has served as a Director of the Company since 1992 and also serves as a Director of Progress Energy, FPC and Winston Hotels, Inc.

Nominees for Election—Class III

(Term Expiring in 2007)

HARRIS E. DELOACH, JR., age 61, is Chairman, President and Chief Executive Officer of Sonoco Products Company, a manufacturer of paperboard and paper and plastics packaging products. He previously served as President and CEO of Sonoco Products Company (from July 2000 to April 2005). If elected he will also serve as a Director of Progress Energy and FPC. He also serves as a director of the Goodrich Corporation.

Ms. Stone and Messrs. DeLoach and Jones are nominees standing for election to the Board for the first time. All three were recommended to the Corporate Governance Committee by other independent Directors.

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Directors Continuing in Office—Class I

(Terms Expiring in 2008)

JOHN H. MULLIN, III, age 64, is Chairman of Ridgeway Farm, LLC, a limited liability company engaged in farming and timber management. He is a former Managing Director of Dillon, Read & Co. (investment bankers). He has served as a Director of the Company since 1999 and also serves as a Director of Progress Energy, FPC and Sonoco Products Company, and as a Trustee of The Putnam Funds.

CARLOS A. SALADRIGAS, age 57, is Chairman of Premier American Bank in Miami, Florida. In 2002, he retired as Chief Executive Officer of ADP TotalSource (previously The Vincam Group, Inc.), a Miami-based human resources outsourcing company that provides services to small and mid-sized businesses. He has served as a Director of the Company since 2001 and also serves as a Director of Progress Energy, FPC and Advance Auto Parts, Inc.

Directors Continuing in Office—Class III

(Terms Expiring in 2007)

ROBERT B. MCGEHEE, age 63, is Chairman of the Company since 2004. Mr. McGehee joined the Company in 1997 as Senior Vice President and General Counsel. Since that time, he has held several senior management positions of increasing responsibility within the Company and Progress Energy. Mr. McGehee also serves as Chairman and Chief Executive Officer of Progress Energy. Mr. McGehee previously served as President and Chief Operating Officer of Progress Energy, having responsibility for the day-to-day operations of both Progress Energy’s regulated and nonregulated businesses. Prior to that, Mr. McGehee served as President and Chief Executive Officer of Progress Energy Service Company, LLC. He has served as a Director of the Company since 2004 and also serves as a Director of Progress Energy and FPC.

E. MARIE MCKEE, age 55, is Senior Vice President of Corning Incorporated, a developer of technologies for glass, ceramics, fiber optics and photonics. She also serves as President and Chief Executive Officer of Steuben Glass. She has served as a Director of the Company since 1999 and also serves as a Director of Progress Energy and FPC.

JEAN GILES WITTNER, age 71, is President and Secretary of Wittner & Co., Inc., a Florida holding company for companies that provide life insurance products, employee benefit insurance programs, and commercial office leasing and property management services. She has served as a Director of the Company since 2000 and also serves as a Director of Progress Energy, FPC and Raymond James Bank, FSB.

PROPOSAL 2—RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit and Corporate Performance Committee of the Company’s Board of Directors (the “Audit Committee”) has selected Deloitte & Touche LLP (“Deloitte & Touche”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2006, and has directed that management submit the selection of that independent registered public accounting firm for ratification by the shareholders at the 2006 Annual Meeting of the Shareholders. Deloitte & Touche has served as the independent registered public accounting firm for the Company and its predecessors since 1930. In selecting Deloitte & Touche, the Audit Committee considered carefully Deloitte & Touche’s previous performance for the Company, its independence with respect to the services to be performed and its general reputation for adherence to professional auditing standards. A representative of Deloitte & Touche will be present at the Annual Meeting of Shareholders, will have the opportunity to make a statement and will be available to respond to appropriate questions. Shareholder ratification of the selection of Deloitte & Touche as the Company’s independent registered public accounting firm is not required by the Company’s By-Laws or otherwise. However, the Company is submitting the selection of

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Deloitte & Touche to the shareholders for ratification as a matter of good corporate practice. If the shareholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain Deloitte & Touche. Even if the shareholders ratify the selection, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if it is determined that such a change would be in the best interest of the Company and its shareholders.

The Audit Committee and the Board of Directors recommend a vote FOR the ratification of the selection of Deloitte & Touche as the independent registered public accounting firm for the Company.

Valid proxies received pursuant to this solicitation will be voted in the manner specified. Where no specification is made, the shares represented by the accompanying proxy will be voted FOR the ratification of the selection of Deloitte & Touche as the independent registered public accounting firm for the Company. Votes (other than votes withheld) will be cast pursuant to the accompanying proxy for the ratification of the selection of Deloitte & Touche.

The proposal to ratify the selection of Deloitte & Touche to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2006 requires approval by a majority of  the votes actually cast by holders of Common Stock present in person or represented by proxy at the Annual Meeting of Shareholders and entitled to vote thereon. Abstentions from voting and broker non-votes will not count as shares voted and will not have the effect of a “negative” vote, as described in more detail under the heading “PROXIES” on page 2.

PRINCIPAL SHAREHOLDERS

The following table sets forth the only shareholders known to the Company to beneficially own more than 5% of the outstanding shares of the Common Stock of the Company as of December 31, 2005. The Company does not know of any shareholder that owned more than 5% of any class of its other voting securities as of December 31, 2005.

Title of Class	Name and Address of Beneficial Owner	Number of Shares Beneficially Owned		Percentage of Class
Common Stock	Progress Energy, Inc. 410 S. Wilmington Street Raleigh, NC 27601-1849		159,608,055		100	%

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MANAGEMENT OWNERSHIP OF COMMON STOCK

None of the Company’s Directors or officers owns any shares of the Company’s Common or Preferred Stock.

The following table describes the beneficial ownership of the Common Stock of Progress Energy and ownership of Common Stock units as of February 28, 2006, of (i) all current Directors and nominees for Director, (ii) each executive officer of the Company named in the Summary Compensation Table presented later in this proxy statement and (iii) all Directors and nominees for Director and executive officers as a group. A unit of Common Stock does not represent an equity interest in Progress Energy and possesses no voting rights, but is equal in economic value at all times to one share of Common Stock. As of February 28, 2006, none of the individuals or the group in the above categories owned one percent (1%) or more of Progress Energy’s voting securities. Unless otherwise noted, all shares of Progress Energy Common Stock set forth in the table are beneficially owned, directly or indirectly, with sole voting and investment power, by such shareholder.

Name	Number of Shares of Common Stock Beneficially Owned			Units Representing Shares of Common Stock1,2,3,4,5,6
Edwin B. Borden		12,615	7		47,086	8
James E. Bostic, Jr.		5,678	7		7,737	8
David L. Burner		7,000	7		15,007	8
Geoffrey S. Chatas (resigned as of November 14, 2005)		23,443	9		0
Charles W. Coker		13,498	7		53,499	8
Richard L. Daugherty		7,243	7		37,456	8
Donald K. Davis (separating as of May 12, 2006)		79,789	9		50,004	10
Frederick N. Day IV		134,464	9		38,670	11
Harris E. DeLoach, Jr.		5,000			0
W. D. Frederick, Jr.		7,000	7		15,703	8
C. S. Hinnant		143,857	9		46,879	12
William D. Johnson		221,650	9		52,231	13
W. Steven Jones		1,000			2,440	8
William O. McCoy		7,337	7		27,116	8
E. Marie McKee		7,500	7		19,760	8
John H. Mullin, III		10,000	7		18,651	8
Peter S. Rummell		4,400	7		7,276	8
Carlos A. Saladrigas		10,600	7		6,769	8
Peter M. Scott III		214,237	9		50,050	14
Theresa M. Stone		1,000			2,440	8
Jean Giles Wittner		9,000	7		14,573	8
Shares of Common Stock and Units beneficially owned by all Directors and executive officers of the Company as a group (26 persons)		1,183,990	15		620,432

1Includes units representing Common Stock of Progress Energy under the Directors’ Deferred Compensation Plan and the Progress Energy Non-Employee Director Stock Unit Plan (see “Directors’ Compensation” on page 14).

2Includes accumulated replacement units representing Common Stock of Progress Energy under the Management Deferred Compensation Plan.

3Includes performance units under the Progress Energy Long-Term Compensation Program.

4Includes performance shares awarded under the Performance Share Sub-Plan of the Progress Energy 1997 and 2002 Equity Incentive Plans (see “Long-Term Incentive Plan Awards In Last Fiscal Year” on page 21.

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5Includes replacement units to replace the value of Company contributions to the 401(k) Savings & Stock Ownership Plan that would have been made but for the deferral of salary under the Progress Energy Management Deferred Compensation Plan and contribution limitations under Section 415 of the Internal Revenue Code of 1986, as amended (see “Summary Compensation Table” on page 17 and footnote 5 thereunder).

6Includes performance units recorded to reflect awards deferred under the Progress Energy Management Incentive Compensation Plan.

7Includes shares of Progress Energy Common Stock such director has the right to acquire beneficial ownership of within 60 days through the exercise of certain stock options, and, where indicated, shares over which the director shares voting and investment powers with a family member and has not disclaimed beneficial ownership, as follows:

Director	Stock Options	Shared Powers/Beneficial Ownership Not Disclaimed
Edwin B. Borden	6,000
James E. Bostic, Jr.	4,000
David L. Burner	6,000
Charles W. Coker	6,000	7,298
Richard L. Daugherty	6,000
W. D. Frederick, Jr.	6,000
William O. McCoy	6,000	337
E. Marie McKee	6,000
John H. Mullin, III	6,000
Peter S. Rummell	2,000
Carlos A. Saladrigas*	6,000
Jean Giles Wittner	6,000	1,000

*On December 16, 2005, Mr. Saladrigas transferred 4,600 shares he owned to a short-term irrevocable trust created under Florida law. The trustee had sole investment control over the shares, thus Mr. Saladrigas was not the beneficial owner of the shares at that time. The 4,600 shares were distributed to Mr. Saladrigas on March 1, 2006, and he became, once again, the beneficial owner of 4,600 shares.

8Consists of units representing Common Stock of Progress Energy under the Directors’ Deferred Compensation Plan and units under the Progress Energy Non-Employee Director Stock Unit Plan as follows:

Director	Directors’ Deferred Compensation Plan	Non-Employee Director Stock Unit Plan
Edwin B. Borden	36,278	10,808
James E. Bostic, Jr.	4,539	3,198
David L. Burner	9,539	5,468
Charles W. Coker	41,185	12,314
Richard L. Daugherty	28,808	8,648
W. D. Frederick, Jr.	10,235	5,468
W. Steven Jones	1,223	1,217
William O. McCoy	19,709	7,407
E. Marie McKee	14,293	5,467
John H. Mullin, III	12,789	5,862
Peter S. Rummell	4,810	2,466
Carlos A. Saladrigas	2,781	3,988
Theresa M. Stone	1,223	1,217
Jean Giles Wittner	9,105	5,468

9

9Includes shares of Progress Energy Restricted Stock currently held and shares of Common Stock of Progress Energy such officer has the right to acquire beneficial ownership of within 60 days through the exercise of certain stock options as follows:

Officer	Restricted Stock	Stock Options
Geoffrey S. Chatas	0	19,333
Donald K. Davis	20,700	57,500
Frederick N. Day IV	25,800	102,333
C. S. Hinnant	23,734	93,100
William D. Johnson	60,068	130,333
Peter M. Scott III	64,201	123,167

10Consists of (i) 9,426 performance units recorded to reflect awards deferred under the Progress Energy Management Incentive Compensation Plan, (ii) 40,125 performance shares awarded under the Performance Share Sub-Plan of the 1997 and 2002 Equity Incentive Plans, and (iii) 453 replacement units under the Progress Energy Management Deferred Compensation Plan.

11Consists of (i) 1,149 performance units recorded to reflect awards deferred under the Progress Energy Management Incentive Compensation Plan, (ii) 36,835 performance shares awarded under the Performance Share Sub-Plan of the 1997 and 2002 Equity Incentive Plans, and (iii) 686 replacement units under the Progress Energy Management Deferred Compensation Plan.

12Consists of (i) 1,514 performance units under the Progress Energy Long-Term Compensation Program, (ii) 4,352 performance units recorded to reflect awards deferred under the Progress Energy Management Incentive Compensation Plan, (iii) 39,877 performance shares awarded under the Performance Share Sub-Plan of the 1997 and 2002 Equity Incentive Plans, and (iv) 1,136 replacement units under the Progress Energy Management Deferred Compensation Plan.

13Consists of (i) 1,358 performance units recorded to reflect awards deferred under the Progress Energy Management Incentive Compensation Program, (ii) 50,032 shares awarded under the Performance Share Sub-Plan of the 1997 and 2002 Equity Incentive Plans, and (iii) 841 replacement units under the Progress Energy Management Deferred Compensation Plan.

14Consists of 49,296 performance shares awarded under the Performance Share Sub-Plan of the 1997 and 2002 Equity Incentive Plans, and 754 replacement units under the Progress Energy Management Deferred Compensation Plan.

15Includes shares each group member (shares in the aggregate) has the right to acquire beneficial ownership of within 60 days through the exercise of certain stock options.

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During 2005, seven of the Company’s Directors/nominees for Director had indirect interests in routine commercial transactions for the sale of goods and services to which Progress Energy or one of its subsidiaries was a party; however, none of those interests were material and thus are not required to be disclosed.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s Directors and executive officers to file reports of their holdings and transactions in the Company’s securities with the SEC and the New York Stock Exchange. Based on Company records and other information, the Company believes that all Section 16(a) filing requirements applicable to its Directors and executive officers with respect to the Company’s 2005 fiscal year were met except that Ms. Stone inadvertently failed to file on a timely basis a Form 4 with respect to one transaction involving an open market acquisition of 500 shares of Progress Energy’s Common Stock on November 16, 2005. A Form 4 reporting the transaction was filed on November 21, 2005.

BOARD OF DIRECTORS

The Board of Directors is currently comprised of fifteen (15) members. The Board of Directors met five times in 2005. Average attendance of the Directors at the meetings of the Board and its Committees held during 2005 was 97%, and no Director attended less than 78% of all Board and his/her respective Committee meetings held in 2005.

The Board of Directors appoints from its members an Executive Committee, a Committee on Audit and Corporate Performance, a Committee on Finance, a Committee on Operations, Environmental, Health and Safety Issues, a Committee on Organization and Compensation, and a Corporate Governance Committee. The composition of the Boards of Directors of the Company, Progress Energy and FPC is identical, as is the composition of the Committees of those Boards. The charters of all Committees of the Board are posted on Progress Energy’s Internet Web site and can be accessed at www.progress-energy.com under the Investors section. The charters are available in print to any shareholder who requests them. Additionally, the charter of the Audit and Corporate Performance Committee is included as Exhibit A to this proxy statement. The membership and functions of the standing Board Committees, as of December 31, 2005, are discussed below.

EXECUTIVE COMMITTEE

The Executive Committee is presently composed of one Director who is an officer and five independent Directors: Messrs. Robert B. McGehee—Chairman, Edwin B. Borden, Charles W. Coker, Richard L. Daugherty, William O. McCoy and John H. Mullin, III. The authority and responsibilities of the Executive Committee are described in the Company’s By-Laws. Generally, the Executive Committee will review routine matters that arise between meetings of the full Board and require action by the Board. The Executive Committee held no meetings in 2005.

AUDIT AND CORPORATE PERFORMANCE COMMITTEE

The Audit and Corporate Performance Committee is presently composed of the following seven non-employee Directors: Messrs. Richard L. Daugherty—Chairman, James E. Bostic, Jr., David L. Burner, W. D. Frederick, Jr., Carlos A. Saladrigas, Ms. Theresa M. Stone, and Ms. Jean Giles Wittner. All members of the Committee are independent as that term is defined under the enhanced independence standards for audit committee members contained in the Securities Exchange Act of 1934 and rules thereunder, as amended, as incorporated into the listing standards of the New York Stock Exchange.

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Messrs. Burner and Saladrigas have been designated by the Board as the “Audit Committee Financial Experts,” as that term is defined in the SEC’s rules. The work of this Committee includes oversight responsibilities relating to the integrity of the Company’s financial statements, compliance with legal and regulatory requirements, the qualifications and independence of the Company’s independent registered public accounting firm, performance of the internal audit function and of the independent registered public accounting firm, and the Corporate Ethics Program. The role of the committee is further discussed under “Report of the Audit and Corporate Performance Committee” below.

Mr. David L. Burner serves simultaneously on the audit committees of more than three public companies. The Company does not limit the number of audit committees on which its Audit Committee members may serve; however, the Board of Directors has determined that such service by Mr. Burner, given his other commitments, does not impair Mr. Burner’s ability to serve effectively on the Company’s Audit Committee. The Audit Committee held nine meetings in 2005.

CORPORATE GOVERNANCE COMMITTEE

The Corporate Governance Committee is presently composed of the following five non-employee Directors: Messrs. John H. Mullin, III—Chairman, Edwin B. Borden, Charles W. Coker, Richard L. Daugherty and Peter S. Rummell. All members of the Committee are independent as that term is defined under the general independence standards contained in the New York Stock Exchange listing standards. This committee is responsible for making recommendations to the Board with respect to the governance of the Company and the Board. Its responsibilities include recommending amendments to the Company’s Charter and By-Laws, making recommendations regarding the structure, charter, practices and policies of the Board, ensuring that processes are in place for annual CEO performance appraisal and review of succession planning and management development, recommending a process for the annual assessment of Board performance, recommending criteria for Board membership, reviewing the qualifications of and recommending to the Board nominees for election. The Committee is responsible for conducting investigations into or studies of matters within the scope of its responsibilities and to retain outside advisors to identify Director candidates. The Committee will consider qualified candidates for Director nominated by shareholders at an annual meeting of shareholders; provided, however, that written notice of any shareholder nominations must be received by the Secretary of the Company no later than the close of business on the 120th calendar day before the date of the Company’s proxy statement released to shareholders in connection with the previous year’s annual meeting. See “Future Shareholder Proposals” below for more information regarding shareholder nominations of directors. The Corporate Governance Committee held five meetings in 2005.

FINANCE COMMITTEE

The Finance Committee is presently composed of the following seven non-employee Directors: Messrs. William O. McCoy—Chairman, David L. Burner, Charles W. Coker, W. Steven Jones, John H. Mullin, III, and Carlos A. Saladrigas, and Ms. Theresa M. Stone. The Committee reviews and oversees the Company’s financial policies and planning, financial position, strategic planning and investments, pension funds and financing plans. The Committee also monitors the Company’s risk management activities, financial position and recommends changes to the Company’s dividend policy and proposed budget. The Finance Committee held eight meetings in 2005.

COMMITTEE ON OPERATIONS, ENVIRONMENTAL, HEALTH AND SAFETY ISSUES

The Committee on Operations, Environmental, Health and Safety Issues is presently composed of the following seven non-employee Directors: Messrs. Edwin B. Borden—Chairman, James E. Bostic, Jr., Richard L. Daugherty, W. D. Frederick, Jr., and Peter S. Rummell, and Ms. E. Marie McKee and Ms. Jean Giles Wittner. The Committee reviews the Company’s load forecasts and plans for generation,

12

transmission and distribution, fuel production and transportation, customer service, energy trading and term marketing, and other Company operations. The Committee reviews and assesses Company policies, procedures, and practices relative to the protection of the environment and the health and safety of employees, customers, contractors and the public. The Committee advises the Board and makes recommendations for the Board’s consideration regarding operational, environmental and safety-related issues. The Committee on Operations, Environmental, Health and Safety Issues held three meetings in 2005.

COMMITTEE ON ORGANIZATION AND COMPENSATION

The Committee on Organization and Compensation is presently composed of the following seven non-employee Directors: Messrs. Charles W. Coker—Chairman, Edwin B. Borden, W. Steven Jones, William O. McCoy, John H. Mullin, III, Peter S. Rummell and Ms. E. Marie McKee. All members of the committee are independent as that term is defined under the general independence standards contained in the New York Stock Exchange listing standards. The Committee verifies that personnel policies and procedures are in keeping with all governmental rules and regulations and are designed to attract and retain competent, talented employees and develop the potential of these employees. The Committee reviews all executive development plans, makes executive compensation decisions, evaluates the performance of the Chief Executive Officer and oversees plans for management succession. The Committee on Organization and Compensation held seven meetings in 2005.

DIRECTOR NOMINATING PROCESS AND COMMUNICATIONS BETWEEN
SHAREHOLDERS AND BOARD OF DIRECTORS

The Corporate Governance Committee

The Corporate Governance Committee (“Governance Committee”) of the Board of Directors performs the functions of a nominating committee. The Governance Committee’s Charter describes the Governance Committee’s responsibilities, including recommending criteria for membership on the Board, reviewing qualifications of candidates and recommending to the Board nominees for election to the Board. The Corporate Governance Guidelines (the “Guidelines”) contain information concerning the Governance Committee’s responsibilities with respect to reviewing with the Board on an annual basis the qualification standards for Board membership and identifying, screening and recommending potential directors to the Board. All members of the Governance Committee are independent as defined under the general independence standards of the New York Stock Exchange’s listing standards. Additionally, the Guidelines require that all members of the Governance Committee be independent.

Director Candidate Recommendations and Nominations by Shareholders

Shareholders should submit any Director candidate recommendations in writing in accordance with the method described under “Communications with the Board of Directors” below. Any Director candidate recommendation that is submitted by a shareholder of the Company to the Governance Committee will be acknowledged, in writing, by the Corporate Secretary. The recommendation will be promptly forwarded to the Chairman of the Governance Committee, who will place consideration of the recommendation on the agenda for the Governance Committee’s regular December meeting. The Governance Committee will discuss candidates recommended by shareholders at its December meeting, and present information regarding such candidates, along with the Governance Committee’s recommendation regarding each candidate, to the full Board for consideration. The full Board will determine whether it will nominate a particular candidate for election to the Board.

Additionally, in accordance with Section 11 of the Company’s By-Laws, any shareholder of record entitled to vote for the election of Directors at the applicable meeting of shareholders may nominate

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persons for election to the Board of Directors if such shareholder complies with the notice procedure set forth in the By-Laws and summarized in “Future Shareholder Proposals” below.

Governance Committee Process for Identifying and Evaluating Director Candidates

The Governance Committee evaluates all Director candidates, including those nominated or recommended by shareholders, in accordance with the Board’s qualification standards, which are described in the Guidelines. The Governance Committee evaluates each candidate’s qualifications and assesses them against the perceived needs of the Board. Qualification standards for all Board members include: integrity, sound judgment, independence as defined under the general independence standards contained in the New York Stock Exchange listing standards, and the categorical standards adopted by the Board, financial acumen, strategic thinking, ability to work effectively as a team member, demonstrated leadership and excellence in a chosen field of endeavor, experience in a field of business, professional or other activities that bear a relationship to the Company’s mission and operations, appreciation of the business and social environment in which the Company operates, an understanding of the Company’s responsibilities to shareholders, employees, customers and the communities it serves, and service on other boards of directors that could detract from service on the Company’s Board.

Communications with the Board of Directors

The Board has approved a process for shareholders to send communications to the Board. That process provides that shareholders can send communications to the Board and, if applicable, to the Governance Committee or to specified individual directors in writing c/o John R. McArthur, Senior Vice President and Secretary, Carolina Power & Light Company, Post Office Box 1551, Raleigh, North Carolina 27602-1551.

The Company screens mail addressed to the Board, the Governance Committee or any specified individual Director for security purposes and to ensure that the mail relates to discrete business matters that are relevant to the Company. Mail that satisfies these screening criteria is forwarded to the appropriate Director.

Director Attendance at Annual Meeting

The Company expects all Directors to attend its annual meetings of shareholders. Such attendance is monitored by the Governance Committee. All Directors attended the 2005 Annual Meeting of Shareholders with the exception of Richard A. Nunis, who retired from the Board effective May 11, 2005.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

DIRECTORS’ COMPENSATION

Directors who are not employees of the Company receive an annual retainer of $45,000, of which $15,000 is automatically deferred under the Progress Energy Directors’ Deferred Compensation Plan (see below), and an attendance fee of $1,500 per meeting for regularly scheduled Board meetings. Directors who are not employees of the Company also receive an attendance fee for committee meetings of $1,500. The Chairman of each of the following standing Board Committees receives an additional retainer of $5,000 per year: Corporate Governance Committee; Finance Committee; Operations, Environmental, Health and Safety Issues Committee; and Organization and Compensation Committee. The Chairman of the Audit and Corporate Performance Committee receives an additional retainer of $10,000 per year. The Lead Director receives an additional retainer of $5,000 per year. Directors who are not employees of the Company receive an attendance fee of $1,500 for each day of a visit to a plant or office of the Company or its subsidiaries or for attendance at any other business meeting to which the Director is invited by the

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Company. Directors who are officers do not receive an annual retainer or attendance fees. All Directors are reimbursed for expenses incident to their service as Directors.

In addition to $15,000 from the annual retainer and any matching contributions under the incentive compensation program that are automatically deferred, outside Directors may elect to defer any portion of the remainder of their annual retainer and Board attendance fees until after the termination of their service on the Board under the Progress Energy Directors’ Deferred Compensation Plan. Any deferred fees are deemed to be invested in a number of units of Common Stock of Progress Energy, but participating Directors receive no equity interest or voting rights in any shares of the Common Stock. The number of units credited to the account of a participating Director is equal to the dollar amount of the deferred fees divided by the average of the high and low selling prices (i.e., market value) of Progress Energy Common Stock on the day the deferred fees would otherwise be payable to the participating Director. The number of units in each account is adjusted from time to time to reflect the payment of dividends on the number of shares of Progress Energy Common Stock represented by the units. Unless otherwise agreed to by the participant and the Board, when the participant ceases to be a member of the Board of Directors, he or she will receive cash equal to the market value of a share of Progress Energy’s Common Stock on the date of payment multiplied by the number of units credited to the participant’s account.

Directors are also eligible for matching contributions of up to $15,000 under an incentive compensation program. Awards under this program are based upon the achievement of the corporate incentive goals established each year by the Board of Progress Energy and used as the basis for a matching contribution of shares of Common Stock for participating employees in Progress Energy’s 401(k) Savings & Stock Ownership Plan. In the event that five of the corporate incentive goals are met, the $15,000 portion of the annual retainer that is automatically deferred pursuant to the Progress Energy Directors’ Deferred Compensation Plan will be increased by 50%, with an additional 10 percent increase for each corporate incentive goal met in excess of five (up to a maximum matching contribution of 100 percent). Such matching contribution is automatically deferred until the Director’s retirement.

Pursuant to Progress Energy’s 2002 Equity Incentive Compensation Plan, Directors are also eligible to receive grants of up to 2,000 non-qualified stock options on May 1 of each year, subject to the Board’s approval; however, Progress Energy ceased granting stock options in 2004. All stock options granted prior to January 1, 2005, remain valid in accordance with their terms and conditions.

Effective January 1, 1998, Progress Energy established the Progress Energy Non-Employee Director Stock Unit Plan (“Stock Unit Plan”). The Stock Unit Plan provides for an annual grant of 1,200 “stock units” to each non-employee Director who has served on the Board for at least one year. (Effective January 1, 2006, the Stock Unit Plan was amended to eliminate the one-year service requirement for eligibility.) Each unit is equal in economic value to one share of Progress Energy’s Common Stock, but does not represent an equity interest or entitle its holder to vote. The number of units is adjusted from time to time to reflect the payment of dividends with respect to the Common Stock of the Company. Benefits under the Progress Energy Stock Unit Plan vest after a participant has been a member of the Board for five years and are payable solely in cash.

The Company charges Directors with imputed income in connection with (i) their travel on Company aircraft for non-Company related purposes and (ii) their spouses’ travel on Company aircraft. When spousal travel is at the Company’s invitation, the Company will gross up the Directors for taxes incurred in connection with the imputed income related to the travel.

Directors are eligible to receive certain perquisites, including tickets to various cultural arts and sporting events, which are de minimis in value.

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The Company recognizes Directors retiring from the Board with a one-time gift valued at $10,000. Each gift is made upon a Director’s retirement and can be applied toward a tangible gift of the Director’s choice or made as a charitable contribution in the Director’s name to an Internal Revenue Code Section 501(c)(3) tax-exempt organization. (Effective March 15, 2006, the policy of providing the retirement gift valued at $10,000 was eliminated.) Each retiring Director also receives a gift valued at approximately $1,500 in appreciation for his/her service on the Board.

All of the Directors who were Directors or retired Directors on or prior to September 16, 1998, participate in a Directors’ Educational Contribution Plan. The Plan is funded by policies of corporate-owned life insurance on the lives of pairs of Directors, with proceeds payable to the Company at the death of the second to die in each pair. All costs of the Plan are expected to be covered from the life insurance proceeds to be received by the Company. Pursuant to this Plan, the Company will make a contribution in the name of each participating Director to an educational institution or approved educational foundation or fund in North Carolina or South Carolina selected by the participating Director and approved by the Executive Committee of the Board of Directors. The contribution will be made at the later to occur of the retirement of the participating Director from the Board of Directors or ten years from the date of adoption of the Plan. If a participating Director has served as a Director for at least five but less than 10 years at the time the contribution is to be made, the Company will contribute $250,000 in the name of the Director. If the participating Director has served for 10 or more years, the amount of the contribution will be $500,000. The Plan was discontinued September 16, 1998, and is not available as a benefit for any Director who joined the Board subsequent to that date. The Plan may be terminated at any time at the discretion of the Executive Committee without recourse or obligation to the Company. Current Board members who are eligible to participate in the Plan are Messrs. Borden, Coker, Daugherty and McCoy.

Service on Boards of Subsidiaries

All compensation paid to outside Directors is for services rendered on behalf of the Company’s Board of Directors and the boards of Progress Energy and FPC.

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SUMMARY COMPENSATION TABLE

								Long-Term Compensation
	Annual Compensation							Awards					Payouts
											Securities
					Other			Restricted			Underlying
					Annual			Stock			Options/		LTIP	All Other
Name and		Salary1	Bonus2		Compensation3			Award(s)4,5			SARs6		Payouts7	Compensation8
Principal Position	Year	($)	($)		($)			($)			(#)		($)	($)
Fred N. Day IV,	2005	$ 385,000	$ 315,000			$ 32,213			$ 263,812	9		0	$ 134,574		$ 92,464	10
President and Chief	2004	397,269	240,000			20,689			274,934			0	303,287		98,689
Executive Officer	2003	346,539	195,000			15,428			281,264			44,000	336,711		102,374
William D. Johnson,	2005	$ 648,365	$ 680,000			$ 110,117	11		$ 665,635	12		0	$ 182,182		$ 80,628	13
Group President	2004	583,981	375,000			24,461			646,905			0	384,189		92,599
	2003	503,654	315,000			24,512			413,815			56,000	336,711		87,122
Peter M. Scott III,	2005	$ 525,000	$ 500,000	14		$ 29,979			$ 951,893	15		0	$ 182,182		$ 119,816	16
Executive Vice	2004	542,442	335,000			29,283			378,583			0	424,619		128,933
President and Chief	2003	462,385	280,000			43,517			381,205			52,000	377,925		123,432
Financial Officer (as of November 15, 2005); and President and Chief Executive Officer, Progress Energy Service Co., LLC
C. S. Hinnant,	2005	$ 465,000	$ 285,000			$ 36,205			$ 268,331	17		0	$ 139,295		$ 105,169	18
Senior Vice President	2004	475,269	220,000			13,264			275,863			0	332,581		115,425
and Chief Nuclear Officer	2003	428,654	193,000			19,783			294,560			39,000	414,373		121,990
Donald K. Davis	2005	$ 345,000	$ 325,000	19		$ 28,665			$ 236,348	20		0	$ 132,487		$ 125,312	21
Executive Vice President	2004	355,732	205,000			41,193			245,598			0	318,454		131,868
(separating as of May 12,	2003	331,195	182,000			15,243			269,717			37,000	307,036		136,880
2006)
Geoffrey S. Chatas,	2005	$ 405,000	$ 277,750			$ 11,668			$ 282,000	22		0	N/A		$ 26,643	23
Executive Vice	2004	410,462	305,000	24		42,834			286,914			0	N/A		17,543
President and Chief	2003	67,502	110,000	25		99			357,025			29,000	N/A		1,385
Financial Officer (resigned as of November 14, 2005)

1Consists of base salary prior to (i) employee contributions to the Progress Energy 401(k) Savings & Stock Ownership Plan and (ii) voluntary deferrals, if any, under the Progress Energy Management Deferred Compensation Plan. See “Other Benefits” on page 34. Decreases in amounts reported for 2005 as compared to 2004 are due to the fact that the 2005 fiscal year had 26 pay periods while the 2004 fiscal year had 27 pay periods, and not due to any decrease in the base salaries of executives.

2Except as otherwise noted, consists of amounts awarded with respect to performance in the stated year under the Progress Energy Management Incentive Compensation Plan (the “MICP”). See “Other Annual Compensation Opportunities” on page 30. The MICP, as amended January 1, 2003, provided that even if the established performance levels are not met, the Committee on Organization and Compensation may, in its discretion, grant awards to MICP participants. Progress Energy did not meet the established threshold performance level under the MICP for ongoing earnings per share for 2004. The loss of taxable income in 2004 was attributable to the four hurricanes that struck portions of Progress Energy’s service territory and their impact on synthetic fuels production. Because these events were beyond the control of the Company’s officers, the Committee exercised its discretion and approved the payment of MICP awards listed above for 2004. At a meeting held on March 22, 2005, the Committee approved the specific awards earned in 2004 and paid in 2005. On December 7, 2004, the Committee on Organization and Compensation approved certain amendments to the MICP, which became effective on January 1, 2005.

3Consists of gross-up payments for certain federal and state income tax obligations, and where indicated by footnote disclosure, certain perquisites.

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4Includes the value of restricted stock awards as of the grant date (the market price at which the shares were purchased) granted pursuant to Progress Energy’s 2002 Equity Incentive Plan. During the period for which the shares are restricted, the grantee will receive all voting rights and cash dividends associated with the restricted stock.

5Includes the value of matchable deferrals credited to the account of a participant to replace the value of Company contributions to the Progress Energy 401(k) Savings & Stock Ownership Plan that would have been made on behalf of the participant but for the deferral of salary under the Progress Energy Management Deferred Compensation Plan (MDCP) and compensation limitations under Section 415 of the Internal Revenue Code of 1986, as amended. Previously, matchable deferrals were provided only in Phantom Stock Units, but effective January 1, 2003, and thereafter, the value of matchable deferrals is credited to a deemed stable value fund, rather than Phantom Stock Units to eliminate reporting requirements for de minimis incremental derivative security additions. Additional amounts are credited from time to time to reflect the payment of dividends on the underlying Progress Energy Common Stock. Participants with one or more years of service with Progress Energy or its affiliates are 100% vested in all matchable deferrals credited to their account under the MDCP Plan. Payment of the value of the deemed investment funds will be made in cash and will generally be made on one of the following dates in accordance with the participant’s deferral election: (i) the April 1 following the date that is five or more years from the last day of the MDCP Year for which the participant’s salary deferral is made, (ii) the April 1 following the participant’s retirement, or (iii) the April 1 following the first anniversary of the participant’s retirement. The amount of the payment will equal the fair market value of notational deemed investment funds on the valuation date. See “Other Benefits” on page 34.

6The Company ceased granting stock options in 2004.

7Consists of the value of payouts or deferrals of earned awards granted under the Company’s Performance Share Sub-Plan.

8Amounts reported in this column include dividends earned in 2005 on awards granted under the Long-Term Compensation Program and dividends allocated in 2005 on awards granted under the Performance Share Sub-Plan.

9Consists of (i) 6,000 shares of Restricted Stock valued at $253,578 as of March 15, 2005; and (ii) $10,234 representing matchable salary deferrals credited to a deemed stable investment fund pursuant to the terms of the Management Deferred Compensation Plan. As of December 31, 2005, Mr. Day owned a total of 25,800 shares of Restricted Stock, which were valued at $1,133,136 on that date.

10Consists of (i) $60,293 which represents dividends allocated in 2005 on performance shares awarded under the Performance Share Sub-Plan; (ii) $11,835 which represents Company contributions under the Progress Energy 401(k) Savings & Stock Ownership Plan; and (iii) $20,336 which represents the dollar value of the premium relating to the term portion and the present value of the premium relating to the whole life portion of the benefit to be received pursuant to the Executive Permanent Life Insurance Program.

11Consists of (i) $52,430 in gross-up payments for certain federal and state income tax obligations; and (ii) certain perquisites, including financial planning expenses of $17,194, which exceed thresholds for footnote disclosure.

12Consists of (i) 15,200 shares of Restricted Stock valued at $642,398 as of March 15, 2005; and (ii) $23,237 representing matchable salary deferrals credited to a deemed stable investment fund pursuant to the terms of the Management Deferred Compensation Plan. As of December 31, 2005, Mr. Johnson owned a total of 60,068 shares of Restricted Stock, which were valued at $2,638,187 on that date.

13Consists of (i) $52,015 which represents dividends allocated in 2005 on performance shares awarded under the Performance Share Sub-Plan; (ii) $11,835 which represents Company contributions under the Progress Energy 401(k) Savings & Stock Ownership Plan; and (iii) $16,778 which represents the dollar value of the premium relating to the term portion and the present value of the premium relating to the whole life portion of the benefit to be received pursuant to the Executive Permanent Life Insurance Program.

14Pursuant to the Amendment, dated August 5, 2005, to Mr. Scott’s Employment Agreement, the Chief Executive Officer exercised his discretion under the MICP to increase the award to Mr. Scott based on Mr. Scott’s performance, with such increase based on a target award equal to 63% of Mr. Scott’s base salary for the year.

15Consists of (i) 13,000 shares of Restricted Stock valued at $586,477 as of January 1, 2005 and 8,200 shares of Restricted Stock valued at $346,556 as of March 15, 2005; and (ii) $18,860 representing matchable salary deferrals credited to a deemed stable investment fund pursuant to the terms of the Management Deferred Compensation Plan. As of December 31, 2005, Mr. Scott owned a total of 64,201 shares of Restricted Stock, which were valued at $2,819,708 on that date.

16Consists of (i) $72,236 which represents dividends allocated in 2005 on performance shares awarded under the Performance Share Sub-Plan; (ii) $12,143 which represents Company contributions under the Progress Energy

18

401(k) Savings & Stock Ownership Plan; and (iii) $35,437 which represents the dollar value of the premium relating to the term portion and the present value of the premium relating to the whole life portion of the benefit to be received pursuant to the Executive Permanent Life Insurance Program.

17Consists of (i) 6,000 shares of Restricted Stock valued at $253,578 as of March 15, 2005; and (ii) $14,753 representing matchable salary deferrals credited to a deemed stable investment fund pursuant to the terms of the Management Deferred Compensation Plan. As of December 31, 2005, Mr. Hinnant owned a total of 23,734 shares of Restricted Stock, which were valued at $1,042,397 on that date.

18Consists of (i) $3,408 which represents dividends earned in 2005 on awards granted under the Long-Term Compensation Program; (ii) $67,758 which represents dividends allocated in 2005 on performance shares awarded under the Performance Share Sub-Plan; (iii) $11,835 which represents Company contributions under the Progress Energy 401(k) Savings & Stock Ownership Plan; and (iv) $22,168 which represents the dollar value of the premium relating to the term portion and the present value of the premium relating to the whole life portion of the benefit to be received pursuant to the Executive Permanent Life Insurance Program.

19Includes a retention incentive of $50,000.

20Consists of (i) 5,400 shares of Restricted Stock valued at $228,220 as of March 15, 2005, which will vest on April 1, 2006 if Mr. Davis achieves certain performance goals; and (ii) $8,128 representing matchable salary deferrals credited to a deemed stable investment fund pursuant to the terms of the Management Deferred Compensation Plan. As of December 31, 2005, Mr. Davis owned a total of 20,700 shares of Restricted Stock, which were valued at $909,144 on that date.

21Consists of (i) $70,784 which represents dividends allocated in 2005 on performance shares awarded under the Performance Share Sub-Plan; (ii) $12,143 which represents Progress Energy’s contributions under the Progress Energy 401(k) Savings & Stock Ownership Plan; and (iii) $42,385 which represents the dollar value of the premium relating to the term portion and the present value of the premium relating to the whole life portion of the benefit to be received pursuant to the Executive Permanent Life Insurance Program.

22Consists of (i) 6,400 shares of Restricted Stock valued at $270,483 as of March 15, 2005; and (ii) $11,517 representing matchable salary deferrals credited to a deemed stable investment fund pursuant to the terms of the Management Deferred Compensation Plan. As of December 31, 2005, Mr. Chatas owned a total of 14,967 shares of Restricted Stock, which were valued at $657,351 on that date.

23Consists of (i) $14,500 which represents dividends allocated in 2005 on performance shares awarded under the Performance Share Sub-Plan; and (ii) $12,143 which represents Company contributions under the Progress Energy 401(k) Savings & Stock Ownership Plan. See “Termination of Employment Agreement” on page 26 for a discussion of the benefits Mr. Chatas will receive in connection with the termination of his employment with the Company.

24Includes a signing bonus of $75,000.

25Includes a signing bonus of $75,000.

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OPTION/SAR GRANTS IN LAST FISCAL YEAR

The Company ceased granting stock options in 2004. Accordingly, no stock options were granted to employees during the fiscal year ended December 31, 2005.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FY-END OPTION/SAR VALUES

	Shares acquired on		Value		Number of securities underlying unexercised options/SARs at FY-end		Value of unexercised in-the-money options/SARs at FY-end Exercisable/
Name	exercise		realized		Exercisable	Unexercisable	Unexercisable
Fred N. Day IV, President and CEO		0	$	0.00	102,333	14,667		$	89,150/$0
William D. Johnson, Group President		0	$	0.00	130,333	18,667		$	116,750/$0
Peter M. Scott III, Executive Vice President and CFO (as of November 15, 2005); and President and CEO, Progress Energy Service Company, LLC		0	$	0.00	123,167	17,333		$	107,975/$0
C. S. Hinnant, Senior Vice President and Chief Nuclear Officer		0	$	0.00	93,100	13,000		$	82,053/$0
Donald K. Davis, Executive Vice President (separating as of May 12, 2006)		0	$	0.00	57,500	12,333		$	47,862/$0
Geoffrey S. Chatas, Executive Vice President and CFO (resigned as of November 14, 2005)		0	$	0.00	19,333	9,667		$	0/$0

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LONG-TERM INCENTIVE PLAN AWARDS IN LAST FISCAL YEAR

Name	Number of Units		Performance Period Ends
Fred N. Day IV, President and CEO		11,319		2007
William D. Johnson, Group President		28,736		2007
Peter M. Scott III, Executive VP and CFO (effective November 15, 2005); and President and CEO Progress Energy Service Company, LLC		19,148		2007
C. S. Hinnant, Senior Vice President and Chief Nuclear Officer		11,306		2007
Donald K. Davis, Executive Vice President (separating as of May 12, 2006)		10,143		2007
Geoffrey S. Chatas, Executive Vice President and CFO (resigned as of November 14, 2005)		11,906		2007

The number of units in the table above consists of the number of performance shares awarded in 2005 under the Executive and Key Manager Performance Share Sub-Plan (“Sub-Plan”) of the 2002 Equity Incentive Plan, based on the closing price of a share of Progress Energy’s Common Stock on December 31, 2004. Performance Share awards under the Sub-Plan range from 55% to 362.5% of a participant’s base salary depending on the participant’s position and job value. The number of performance shares awarded is recorded in a separate account for each participant and is adjusted to reflect dividends, stock splits or other adjustments in Progress Energy’s Common Stock. The performance period for an award under the Sub-Plan is the three-consecutive-year period beginning in the year in which the award is granted. There are two equally weighted performance measures under the Sub-Plan. One performance measure is Total Shareholder Return (“TSR”). The other performance measure is Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) growth. Awards under the Sub-Plan vest on January 1 following the end of the three-year performance period; provided, however, that to determine each award vested under the Sub-Plan, the TSR and EBITDA growth of Progress Energy are compared to the TSR and EBITDA growth of a Peer Group comprised of a group of utilities designated by the Committee each December. (The two highest and two lowest performing utilities within the peer group are excluded for purposes of determining the peer group performance.) The differences between Progress Energy TSR and EBITDA growth and the Peer Group TSR and EBITDA growth, respectively, are used to determine the multipliers that will be used to calculate the number of vested performance shares in each participant’s account. (Differences in TSR can range from a low of (2.0%) or less to a high of 5% or more, and correspond to multipliers of 0% to 200%, respectively. Differences in EBITDA growth can range from a low of less than 0% to a high of 5% or more and correspond to multipliers of 0% to 200%, respectively.) The multipliers each are applied independently to one-half of the number of performance shares in the participant’s performance share account to determine the actual number of vested performance shares in that account. The aggregate value of vested performance shares is paid out with an equivalent number of shares of Progress Energy Common Stock.

Awards under the Sub-Plan are paid in Progress Energy Common Stock after expiration of the performance period. Payment can be made either (i) during the month of April of the year immediately following the performance period or (ii) in accordance with an election to defer in 25% increments, made during the first year of the performance period. In the event of death, retirement or a divestiture, any award granted under the Sub-Plan immediately becomes vested. Grant awards that vest immediately due to retirement will be valued and distributed similar to regular, full-term awards, except the former will not accrue dividend equivalents between retirement and the end of the performance period. For grant awards that vest immediately in the event of death or divestiture, the aggregate value of the vested award is determined using multipliers that are based on the difference between the Company TSR and EBITDA growth and the Peer Group TSR and EBITDA growth, respectively, over the portion of the performance period that was completed before the terminating event occurred. See “Long-Term Incentive Compensation Opportunities” on page 31.

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PENSION PLAN TABLE

Average Base Pay  Compensation		Estimated Annual Pension at Normal Retirement (Years of Credited Service)
		10 years		15 years		151¤2 or more years
	$  190,000		$ 76,000		$114,000		$117,800
	255,000		102,000		153,000		158,100
	320,000		128,000		192,000		198,400
	385,000		154,000		231,000		238,700
	450,000		180,000		270,000		279,000
	515,000		206,000		309,000		319,300
	555,000		222,000		333,000		344,100
	595,000		238,000		357,000		368,900
	635,000		254,000		381,000		393,700
	675,000		270,000		405,000		418,500
	715,000		286,000		429,000		443,300
	760,000		304,000		456,000		471,200
	795,000		318,000		477,000		492,900
	840,000		336,000		504,000		520,800
	900,000		360,000		540,000		558,000
	960,000		384,000		576,000		595,200
	1,020,000		408,000		612,000		632,400
	1,080,000		432,000		648,000		669,600
	1,140,000		456,000		684,000		706,800
	1,200,000		480,000		720,000		744,000
	1,260,000		504,000		756,000		781,200
	1,320,000		528,000		792,000		818,400
	1,380,000		552,000		828,000		855,600
	1,490,000		596,000		894,000		923,800

The above table demonstrates senior executive pension benefits payable upon normal retirement under the Progress Energy Pension Plan and Progress Energy Supplemental Senior Executive Retirement Plan at age 65 as a function of average annual income and years of service. Covered compensation under these plans consists only of the amounts in the Salary and Bonus columns of the Summary Compensation Table. Pursuant to the Progress Energy Pension Plan, a defined benefit plan, benefits are partially offset by social security payments and the monthly pension benefit payable upon retirement is based on base pay earnings, age and years of credited service. Benefits under the Progress Energy Supplemental Senior Executive Retirement Plan are fully offset by social security benefits and by benefits paid under the Progress Energy Pension Plan. The monthly benefit payable upon retirement under this plan is equal to 4% of the average of a participant’s highest three years of eligible earnings for each year of credited service with the Company or its affiliates up to a maximum of 62%. Benefits under the Progress Energy Supplemental Executive Retirement Plan are payable to the participant from the date of his retirement until the participant’s death; provided, however, that in the event that the participant predeceases his spouse, 50% of the benefits will be payable to his spouse for the remainder of her life. Benefits listed in the table above do not reflect the social security or other offset. For purposes of benefits under these plans, Messrs. Day, Johnson and Hinnant each have more than 151¤2 years of credited service as well as three or more years of service or deemed service on the Progress Energy Senior Management Committee, and are thereby entitled to the maximum percentage allowable in the benefit formula under these plans. Mr. Scott has 14 years of credited service and  Mr. Davis has 111¤2 years of credited service.

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EMPLOYMENT AGREEMENTS

Messrs. Day, Johnson, Scott, Hinnant and Davis have entered into employment agreements with the Company or one of its subsidiaries, referred to collectively in this section as the “Company.” Each of these agreements has an effective date of August 1, 2000, except Mr. Johnson’s agreement, which has an effective date of January 1, 2005. Mr. Chatas entered into an employment agreement with the Company on October 1, 2003 which was terminated effective January 6, 2006. These agreements provide for base salary, bonuses, perquisites and participation in the various executive compensation plans offered to senior executives of the Company. The agreements all provide that they will remain in effect for three years from the effective date. Each agreement also includes an “Evergrow provision” which provides that each year, the agreement will be extended such that the prospective term will always be three years forward on the anniversary date of the effective date. The Company may elect not to extend an executive officer’s agreement and must notify the officer of such an election at least 60 days prior to the annual anniversary date of his agreement’s effective date. Executive benefit plan eligibility, termination and other key provisions of the agreements are discussed below. (The Company has filed each of the agreements, or forms of them, with the SEC.) For information regarding certain executive benefit plan targets, which are established by the Committee on Organization and Compensation, please see “Other Annual Compensation Opportunities” on page 30 and “Long-Term Incentive Compensation Opportunities” on page 31.

Agreement with Mr. Day

The agreement with Mr. Day provides that upon termination of employment without cause or constructive termination of employment, he will be provided with his base salary at the current rate for the remainder of the term of the agreement and will be eligible to retain all benefits in which he has vested under existing benefit plans. Additionally, the Company will reimburse him for certain health benefits for up to 18 months after the termination of his employment. The agreement provides that a constructive termination will be deemed to occur if (i) there is a change in the form of ownership of the Company and (ii) Mr. Day is offered a new position with a material change in authority, duty, wages or benefits, or Mr. Day is asked to relocate more than 50 miles. If Mr. Day’s employment is constructively terminated, he will be entitled to the greater of the benefits described above or the benefits, if any, to which he is entitled under the Company’s Management Change-in-Control Plan. If the Company terminates Mr. Day’s employment for cause, he will be eligible to retain all benefits in which he has vested under existing benefit plans, but shall not be entitled to any form of salary continuance or any form of severance benefits. He will also be entitled to any earned but unpaid salary. The agreement with Mr. Day provides that if he terminates his employment voluntarily at any time, he shall retain all vested benefits but shall not be entitled to any form of salary continuance or any form of severance benefit.

Agreement with Mr. Johnson

The agreement with Mr. Johnson notes that he was awarded seven years of deemed service toward the benefits and vesting requirements of the SERP. Three of those years will also be deemed service on the Senior Management Committee.

The agreement with Mr. Johnson provides that upon termination of employment without cause or constructive termination of employment, he will be provided with his base salary at the current rate for the remainder of the term of the agreement and will be eligible to retain all benefits in which he has vested under existing benefit plans. Additionally, the Company will reimburse him for certain health benefits for up to 18 months after the termination of his employment. The agreement provides that a constructive termination will be deemed to occur if (i) there is a change in the form of ownership of the Company and (ii) Mr. Johnson is offered a new position with a material change in authority, duty, wages or benefits, or Mr. Johnson is asked to relocate more than 50 miles. If Mr. Johnson’s employment is constructively terminated, he will be entitled to the greater of the benefits described above or the benefits, if any, to

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which he is entitled under the Company’s Management Change-in-Control Plan. If the Company terminates Mr. Johnson’s employment for cause, he will be eligible to retain all benefits in which he has vested under existing benefit plans, but he shall not be entitled to any form of salary continuance or any form of severance benefits. He will also be entitled to any earned but unpaid salary. The agreement with Mr. Johnson provides that if he terminates his employment voluntarily at any time, he shall retain all vested benefits but shall not be entitled to any form of salary continuance or any form of severance benefit.

Agreement with Mr. Scott

Pursuant to the terms of his agreement, Mr. Scott received transition compensation of $100,000, and has been awarded seven years of deemed service toward the benefits and vesting requirements of the SERP.

The agreement with Mr. Scott provides that upon termination of employment without cause or constructive termination of employment, he will be provided with his base salary at the current rate for the remainder of the term of the agreement and will be eligible to retain all benefits in which he has vested under existing benefit plans. Additionally, the Company will reimburse him for certain health benefits for up to 18 months after the termination of his employment. The agreement provides that a constructive termination will be deemed to occur if (i) there is a change in the form of ownership of the Company and (ii) Mr. Scott is offered a new position with a material change in authority, duty, wages or benefits, or Mr. Scott is asked to relocate more than 50 miles. If Mr. Scott’s employment is constructively terminated, he will be entitled to the greater of the benefits described above or the benefits, if any, to which he is entitled under the Company’s Management Change-in-Control Plan. If the Company terminates Mr. Scott’s employment for cause, he will be eligible to retain all benefits in which he has vested under existing benefit plans, but he shall not be entitled to any form of salary continuance or any form of severance benefits. He will also be entitled to any earned but unpaid salary. The agreement with Mr. Scott provides that if he terminates his employment voluntarily at any time, he shall retain all vested benefits but shall not be entitled to any form of salary continuance or any form of severance benefit.

In March of 2005, Mr. Scott was assigned increased responsibilities within the Company. In light of those increased responsibilities, on July 12, 2005, the Organization and Compensation Committee of the Company’s Board of Directors (the “Committee”) approved an amendment to Mr. Scott’s employment agreement (the “Amendment”). The Amendment provides for certain increases in Mr. Scott’s 2005 long and short-term compensation targets. Mr. Scott’s new annual targets for long-term compensation in the form of performance share awards granted pursuant to the Performance Share Sub-Plan (“PSSP”) of the Company’s 2002 Equity Incentive Plan and restricted stock increased to 165% and 85%, respectively, of his base salary for each of the years 2005, 2006 and 2007. Additionally, the amendment provides that at the time of each annual review of MICP awards for the years 2005, 2006 and 2007, the Chief Executive Officer of the Company will consider exercising his discretion under the MICP to increase the awards to Mr. Scott and that any such increase will be based upon a target award equal to 63% of Mr. Scott’s base salary for the year. Mr. Scott’s base salary for 2005 was $525,000. The Amendment also provides that if (i) prior to April 1, 2008, the Company terminates Mr. Scott’s employment without cause, or (ii) after April 1, 2008, either the Company terminates Mr. Scott’s employment without cause, or Mr. Scott voluntarily terminates his employment, then Mr. Scott’s PSSP grants for the 2006 and 2007 plan years will vest immediately upon his employment termination date, and any restricted stock awards granted to Mr. Scott in 2005, 2006 and 2007 will vest immediately upon his employment termination date. Additionally, the Amendment provides that in lieu of accelerating the vesting schedules of the above-referenced awards, the Company may provide Mr. Scott with the cash value of such PSSP grants and/or restricted stock awards as of his employment termination date. The Amendment also provides that the accelerated vesting terms outlined above will not apply in the event of a constructive termination of Mr. Scott’s employment.

24

Agreement with Mr. Hinnant

The agreement with Mr. Hinnant provides that upon termination of employment without cause or constructive termination of employment, he will be provided with his base salary at the current rate for the remainder of the term of the agreement and will be eligible to retain all benefits in which he has vested under existing benefit plans. Additionally, the Company will reimburse him for certain health benefits for up to 18 months after the termination of his employment. The agreement provides that a constructive termination will be deemed to occur if (i) there is a change in the form of ownership of the Company and (ii) Mr. Hinnant is offered a new position with a material change in authority, duty, wages or benefits, or Mr. Hinnant is asked to relocate more than 50 miles. If Mr. Hinnant’s employment is constructively terminated, he will be entitled to the greater of the benefits described above or the benefits, if any, to which he is entitled under the Company’s Management Change-in-Control Plan. If the Company terminates Mr. Hinnant’s employment for cause, he will be eligible to retain all benefits in which he has vested under existing benefit plans, but shall not be entitled to any form of salary continuance or any form of severance benefits. He will also be entitled to any earned but unpaid salary. The agreement with Mr. Hinnant provides that if he terminates his employment voluntarily at any time, he shall retain all vested benefits but shall not be entitled to any form of salary continuance or any form of severance benefit.

Agreement with Mr. Davis

The agreement with Mr. Davis notes that he was awarded 6 years of deemed service toward the benefits and vesting requirements of the SERP.

The agreement with Mr. Davis provides that upon termination of employment without cause or constructive termination of employment, he will be provided with his base salary at the current rate for the remainder of the term of the agreement and will be eligible to retain all benefits in which he has vested under existing benefit plans. Additionally, the Company will reimburse him for certain health benefits for up to 18 months after the termination of his employment. The agreement provides that a constructive termination will be deemed to occur if (i) there is a change in the form of ownership of the Company and (ii) Mr. Davis is offered a new position with a material change in authority, duty, wages or benefits, or Mr. Davis is asked to relocate more than 50 miles. If Mr. Davis’s employment is constructively terminated, he will be entitled to the greater of the benefits described above or the benefits, if any, to which he is entitled under the Company’s Management Change-in-Control Plan. If the Company terminates Mr. Davis’s employment for cause, he will be eligible to retain all benefits in which he has vested under existing benefit plans, but shall not be entitled to any form of salary continuance or any form of severance benefits. He will also be entitled to any earned but unpaid salary. The agreement with Mr. Davis provides that if he terminates his employment voluntarily at any time, he shall retain all vested benefits but shall not be entitled to any form of salary continuance or any form of severance benefit.

Based upon its desire to retain Mr. Davis until April 1, 2006, on July 13, 2005, the Company agreed to award Mr. Davis with a retention incentive in the amount of $50,000. He received the retention incentive award in cash when he received his 2005 MICP award. The retention incentive is to be included in the calculation of the benefits payable to Mr. Davis under the SERP.

The agreement with Mr. Davis will terminate effective May 12, 2006. Please see “Agreement with Mr. Davis” on page 27 for a discussion of the compensation and benefits that Mr. Davis will receive upon termination of the agreement.

Agreement with Mr. Chatas

Pursuant to the terms of his employment agreement, Mr. Chatas received a recruitment bonus in the amount of $150,000. Half of the recruitment bonus was paid within 30 days of his hire date and the other half was paid within 30 days following the first anniversary of his date of hire.

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The agreement with Mr. Chatas provides that upon termination of employment without cause or constructive termination of employment, he will be provided with his base salary at the current rate for the remainder of the term of the agreement and will be eligible to retain all benefits in which he has vested under existing benefit plans. Additionally, the Company will reimburse Mr. Chatas for certain health benefits for up to 18 months after the termination of his employment. The agreement provides that a constructive termination will be deemed to occur if (i) there is a change in the form of ownership of the Company and (ii) Mr. Chatas is offered a new position with a material change in authority, duty, wages or benefits, or Mr. Chatas is asked to relocate more than 50 miles. If Mr. Chatas’ employment is constructively terminated, he will be entitled to the greater of the benefits described above or the benefits, if any, to which he is entitled under the Company’s Management Change-in-Control Plan. If the Company terminates Mr. Chatas’ employment for cause, he will be eligible to retain all benefits in which he has vested under the existing benefit plans, but he shall not be entitled to any form of salary continuance or any form of severance benefits. He will also be entitled to any earned but unpaid salary. The agreement with Mr. Chatas provides that if he terminates his employment voluntarily at any time, he shall retain all vested benefits but shall not be entitled to any form of salary continuance or any form of severance benefit.

The agreement with Mr. Chatas was terminated, effective January 6, 2006. Please see “Termination of Employment Agreements” on this page for a discussion of the compensation and benefits Mr. Chatas received upon termination of the agreement.

TERMINATION OF EMPLOYMENT AGREEMENTS

Agreement with Mr. Chatas

Mr. Chatas resigned as an officer of the Company and its subsidiaries effective as of the close of business on November 14, 2005 to pursue other interests. Mr. Chatas’ separation from the Company did not involve any issues with the Company’s accounting matters, financial statements or internal controls. Mr. Chatas remained with the Company for transitional purposes through January 6, 2006. The salary, bonus and other compensation Mr. Chatas received in 2005 are reflected in the Summary Compensation Table on page 17. Mr. Chatas received a bonus of $277,750 for 2005 pursuant to the Company’s Management Incentive Compensation Plan.

Under the terms of his employment agreement with the Company, Mr. Chatas will continue to receive his annual salary of $405,000 for a period of 36 months with a six month lump sum payment in July, 2006 followed by bi-weekly payments through January 6, 2009. (Pursuant to the American Jobs Creation Act of 2004, the salary payments to Mr. Chatas cannot begin until at least six months after his separation date.)  In addition, Mr. Chatas will receive reimbursement for the cost of continued coverage under certain health and welfare benefit plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) for up to eighteen (18) months after the termination of his employment; provided, however that he is not otherwise eligible for coverage under benefit plans offering substantially equivalent or greater benefits than the plans in which he is eligible to participate under COBRA. The employment agreement also provides that Mr. Chatas is eligible to participate in the Company’s relocation program, and as a result, he was not required to repay approximately $75,142 in expenses incurred by the Company during the last 12 months of his employment in connection with his relocation to Raleigh, North Carolina.

The Company entered into an agreement with Mr. Chatas whereby Mr. Chatas will be able to participate in certain aspects of the Company’s relocation program pertaining to the sale of Mr. Chatas’ house. Mr. Chatas was allowed a six-month period following termination in which to market his residence. If an offer is received during the six-month period, Mr. Chatas will receive 2% of the sales price up to a maximum of $30,000. If Mr. Chatas’ residence is not sold during the six-month period, the Company will acquire the residence at the appraised value. The appraised value will be determined based on the average of two appraisals, provided the values of the appraisals are within 5% of each other. If the value of the two appraisals are not within 5% of each other, a third appraisal will be requested and the three values will be

26

averaged. Mr. Chatas will not receive any other perquisites after the date of his separation from the Company.

As of January 6, 2006, Mr. Chatas had 14,967 unvested shares of restricted stock, all of which he forfeited upon termination from the Company.

Mr. Chatas has been granted 29,000 stock options under the Company’s 2002 Equity Incentive Plan. As of January 6, 2006, 19,333 options have vested but have not been exercised. Pursuant to the terms of the Progress Energy, Inc. 2002 Equity Incentive Plan, Mr. Chatas’ last date to exercise all vested stock options is January 6, 2009. Upon separation from the Company, Mr. Chatas’ 9,667 unvested stock options were forfeited.

Mr. Chatas’ outstanding Executive and Key Manager Performance Share Sub-Plan awards for the 2004 and 2005 plan years (18,261 shares as of December 31, 2005) were forfeited.

Mr. Chatas had a balance of $20,048 in the Management Deferred Compensation Plan as of December 31, 2005. Mr. Chatas received a distribution of $14,129 in February 2006 and the balance will be paid in a lump sum during July of 2006.

Mr. Chatas did not meet the 5-year vesting requirement under the Company’s Pension Plan and was not vested for purposes of receiving benefits pursuant to the Supplemental Senior Executive Retirement Plan. All accrued benefits under these plans were forfeited upon termination. Mr. Chatas is fully vested in the Company’s 401(k) Plan which had a balance of $51,805 as of December 31, 2005.

Agreement with Mr. Davis

Mr. Davis will separate from Progress Energy, effective May 12, 2006. Mr. Davis’ employment agreement provided that in the event that he voluntarily terminated his employment, he would be entitled to retain all vested benefits but would not be entitled to any form of salary continuance or any form of severance benefit.

As reported in the Summary Compensation Table, Mr. Davis received a bonus of $325,000 for 2005 pursuant to the Management Incentive Compensation Plan (MICP). This amount includes a $50,000 retention incentive.  As of February 15, 2006, Mr. Davis’ balance of MICP deferrals was $415,117. Upon separation, the 15% discount applicable to the 2001 deferred plan year would be forfeited (currently $40,719).  The grandfathered amounts under Reg. 409A will be paid out in lump-sum the first of the month following the date of separation (approximately $353,000). The non-grandfathered amounts (approximately $21,000) will be paid out in lump-sum in November 2006.

Mr. Davis had a February 15, 2006 balance of $45,667 in the Management Deferred Compensation Plan (MDCP).  The Company matches for plan years 2000-2004 will be paid out in lump-sum the first of the month following the date of separation (approximately $41,000). The remaining balance will be paid out on or about November 1, 2006.

At the time of separation, Mr. Davis will have 11,267 unvested shares of restricted stock, all of which he forfeits upon his separation from Progress Energy.

Mr. Davis has been granted 102,200 stock options under Progress Energy’s 1997 and 2002 Equity Incentive Plans. Of that amount, Mr. Davis has exercised 32,367 stock options and 12,333 stock options are unvested and will be forfeited at the time of Mr. Davis’ separation. The remaining 57,500 stock options have vested but have not yet been exercised. If at the time of Mr. Davis’ separation any of the vested stock options remain unexercised, they will be cancelled.

Mr. Davis’ Performance Share Sub-Plan (PSSP) award for the 2003 plan year (7,822 shares as of February 1, 2006) has vested and any earned award will be paid out during April 2006.  Upon his separation from Progress Energy, Mr. Davis’ outstanding PSSP awards for the 2004 and 2005 plan years

27

(15,772 shares as of February 1, 2006) will be forfeited. The February 15, 2006 PSSP deferral balance was $728,038 and will be paid out in a lump-sum within a reasonable time after separation.

Mr. Davis was granted 6 years service toward the benefits and vesting requirements of the Supplemental Executive Retirement Plan (SERP). His retirement benefit under the SERP is estimated to be $20,100 per month payable beginning on or about August 1, 2010. In the event that Mr. Davis predeceases his wife, she will receive 50% of the benefits to which he is entitled under the SERP for the remainder of her life.

The current death benefit under the life insurance policies Progress Energy purchased for Mr. Davis pursuant to its Executive Permanent Life Insurance Plan is approximately $568,857. The policy will be surrendered at separation.  Mr. Davis will have the option to purchase the policies outright to retain coverage.  If not, Mr. Davis would receive any excess cash value from the policy.  Current projections indicate there is no excess cash value.

Mr. Davis’ benefits under Progress Energy’s Pension Plan and its 401(k) Plan are fully vested and he will receive them in accordance with the terms of those Plans that apply to all participants.

REPORT OF BOARD COMMITTEE ON ORGANIZATION
AND COMPENSATION

The composition of the Boards of Directors of the Company, FPC and Progress Energy is identical, as is the composition of the Committees on Organization and Compensation of those Boards (collectively, the “Committees”). The Committees are composed entirely of the same seven independent outside Directors who are not eligible to participate in any compensation program in which Progress Energy executives participate other than the Progress Energy 2002 Equity Incentive Plan. The following report is the joint report of the Committees with respect to the compensation of the executive officers of Progress Energy. Progress Energy’s executive officers serve as officers and/or Directors of various Progress Energy subsidiaries. They have multiple responsibilities within and provide various services to Progress Energy and its subsidiaries. The total compensation of Progress Energy’s executive officers is designed to cover the full range of services they provide to Progress Energy and its subsidiaries. It is not the policy of Progress Energy to allocate compensation paid to its executive officers among the various subsidiaries to which they provide services.

Compensation Principles

Comparison Groups

The Progress Energy Committee on Organization and Compensation (the “Progress Energy Committee”) has entered into a contract with an independent executive compensation and benefits consulting firm that assists the Progress Energy Committee in meeting its compensation objectives for Progress Energy’s executives. Each year this consulting firm provides the Progress Energy Committee with an analysis comparing overall compensation paid to Progress Energy’s executives with overall compensation paid to executives of two comparison groups of electric utility companies. One comparison group consists of 15 of the electric utility companies with fossil fuel and nuclear operations in the eastern portion of the United States. The other comparison group consists of a broad group of electric utilities across the United States. While these comparison groups are different from the group of companies comprising the Standard & Poor’s Electric Index, which is a published industry index, the Progress Energy Committee believes these electric utility companies are appropriate for overall compensation comparisons because they reflect the most appropriate labor markets for Progress Energy’s executives.

Progress Energy’s executive compensation program consists of four major elements: base salary, an annual incentive compensation opportunity, long-term incentive compensation opportunities, and other benefits. The Progress Energy Committee’s objective in administering the program is to target, through a

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combination of these elements, a total compensation opportunity for executives which approximates the 75th percentile of the total compensation opportunity offered by the companies included in the comparison groups. In structuring the compensation program, actual salary rates for executives are established at or near the 50th percentile of market rates, and the total compensation opportunity of 75th percentile can only be reached by participants meeting or exceeding all of the performance goals within Progress Energy’s annual and long-term incentive plans. The Progress Energy Committee believes that overall compensation paid to Progress Energy’s executives in 2005 met this objective.

Stock Ownership Guidelines

In an effort to more closely link the interests of Progress Energy’s management with those of its shareholders, in 1996 the Board of Directors adopted stock ownership guidelines which are designed to ensure that Progress Energy’s management has a significant financial equity investment in Progress Energy. Those guidelines require Progress Energy’s officers to own from one to four times their base salary in the form of Progress Energy Common Stock within five years. (The specific multiplier applied to base salary depends upon the individual’s position.) In addition to shares owned outright, the following are considered stock owned by executives and department heads for purposes of the guidelines: (i) stock held in any defined contribution, ESOP or other stock-based plan; (ii) performance shares/units or phantom stock (“derivative securities”) deferred under an annual incentive or base salary deferral plan; (iii) performance shares/units or phantom stock earned and deferred in any long-term incentive plan account; (iv) restricted stock awards; and (v) stock held in a family trust or immediate family holdings.

Section 162(m) and Related Tax Matters

Section 162(m) of the Internal Revenue Code of 1986, as amended (Code), imposes a limit, with certain exceptions, on the amount a publicly held corporation may deduct for compensation over $1 million paid or accrued with respect to the Company’s Chief Executive Officer and any of the other four most highly compensated officers. Certain performance-based compensation is, however, specifically exempt from the deduction limit. To qualify as exempt, compensation must be made pursuant to a plan that is (i) administered by a committee of outside directors, (ii) based on achieving objective performance goals and (iii) disclosed to and approved by the shareholders.

The Progress Energy Committee believes the current design of Progress Energy’s compensation program is sound in linking pay to performance and to the interests of shareholders and allowing appropriate flexibility in determining amounts to be awarded. Therefore, Progress Energy does not have a policy that requires the Progress Energy Committee to qualify compensation awarded to executive officers for deductibility under Section 162(m) of the Code. The Progress Energy Committee does, however, consider the impact of Section 162(m) when determining executive compensation, and the Progress Energy 2002 Equity Incentive Plan is intended to minimize the effect of this provision. Although the Progress Energy Committee is not required to qualify executive compensation paid to Progress Energy executives for exemption from Section 162(m), it will continue to consider the effects of Section 162(m) when making compensation decisions.

Approximately $20,000 was included in Progress Energy executives’ income for 2005 in accordance with the Internal Revenue Service (IRS) Standard Industry Fare Level formula for calculating the value of personal travel on corporate aircraft. Additionally, recent IRS changes for valuing personal travel on corporate aircraft require the use of actual costs. As a result, Progress Energy’s total business expense deduction for 2005 was reduced, resulting in an increase in taxes of approximately $80,000 due to executives’ spouses accompanying them on ordinary business trips; there was no personal travel on Progress Energy’s aircraft by any Company executives during 2005.

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Elements of Executive Compensation Program

Set forth below is a description of the major elements of Progress Energy’s executive compensation program and their relationship to corporate performance, as well as a summary of the actions taken by the Committee with respect to the compensation of  the Company’s Chief Executive Officer.

Base Salary

Executives within Progress Energy receive a base salary determined by the Progress Energy Committee based upon the value of their position compared to competitively established salary ranges, their individual performance and overall corporate performance. The Progress Energy Committee does not utilize a specific mathematical formula in determining base salaries. The Progress Energy Committee in its discretion approved the base salaries of the Company’s Chief Executive Officer and the other named executives, as set forth in the Summary Compensation Table. These salaries were based on each executive’s level of responsibility within Progress Energy, the competitive level of compensation for executives in the comparison group of utilities, the achievement of corporate goals and individual performance as qualitatively determined by the Progress Energy Committee. In an effort to mitigate cost increases, the decision was made that the Chief Executive Officer and the other senior executives would not receive any merit increase award during 2005; however, several senior management positions were eliminated as a part of Progress Energy’s cost management initiative. This resulted in the consolidation of certain duties with corresponding promotional increases being provided to those impacted senior executives who were assigned increased responsibilities.

Other Annual Compensation Opportunities

Management Incentive Compensation Plan

Progress Energy sponsors the Management Incentive Compensation Plan (the “MICP”) for its senior executives, department heads and select key employees. Award opportunities under the MICP are expressed as a percentage of annual base salary earnings. Under the terms of the MICP, eligible employees are awarded annual incentives based on Progress Energy’s and Individual Performance. Effective January 1, 2005, funds available for distribution are determined by the achievement of three performance measures: Progress Energy’s earnings per share (EPS), each participating subsidiary’s EBITDA and each business unit’s achievement of performance at the target level of the goals established for Progress Energy’s Employee Cash Incentive Plan (ECIP). Performance levels for the EPS and EBITDA components may range from 0% (below threshold) to 200% (outstanding). The achievement level for ECIP will be 100% (target) if the designated business unit achieves seven or more goals or 0% if less than seven goals are achieved. The maximum fund that the Progress Energy Committee of the Board of Directors can approve is equal to 4% of Progress Energy’s after-tax income for the Plan Year.

Individual employee payouts can range from 0% to 200% of an employees target award. Awards will be allocated based on management’s determination of each participant’s individual performance and leadership ratings.

If participants at the senior executive level of Progress Energy are eligible for awards, then the Progress Energy Committee in its discretion determines whether awards are to be made and, if so, in what amounts. If participants below the senior executive level of Progress Energy are eligible for awards, then the Chief Executive Officer of Progress Energy has sole and complete authority to approve such awards.

Progress Energy’s Chief Executive Officer’s target compensation under the MICP is 85% of his base salary earnings. Progress Energy’s Chief Operating Officer’s (Mr. Johnson) target compensation under the MICP is 70% of his base salary earnings. Presidents’ and Executive Vice Presidents’ (including Messrs. Day,  Scott, Davis and Chatas in 2005) target compensation under the MICP is 55% of their base salary earnings; provided, however, that an Amendment to Mr. Scott’s Employment Agreement dated

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August 5, 2005, provides that at the time of each annual review of MICP awards for the years 2005, 2006 and 2007, the Chief Executive Officer of Progress Energy will consider exercising his discretion under the MICP to increase the awards to Mr. Scott based upon his performance and that any such increase will be based upon a target award equal to 63% of Mr. Scott’s base salary for the year. The Chief Executive Officer of Progress Energy exercised this discretion in connection with Mr. Scott’s MICP award for 2005. See “Employment Agreements” on page 23 for more discussion of the Amendment to Mr. Scott’s Employment Agreement. Senior Vice Presidents’ (including Mr. Hinnant in 2005) target compensation under the MICP is 45% of their base salary earnings.

If earned, awards are either paid in cash in the succeeding year or deferred to a later date, as elected by each individual participant. Deferred awards are recorded in the form of performance units. Each performance unit is generally equivalent to a share of Progress Energy’s Common Stock.

At a meeting of the Progress Energy Committee on March 14, 2006, based on the factors discussed above, awards earned were approved at the discretion of Progress Energy’s Committee to the named executives, including the Chief Executive Officer, as set forth in the Summary Compensation Table under the Bonus column.

Long-Term Incentive Compensation Opportunities

2002 Equity Incentive Plan

The Progress Energy 2002 Equity Incentive Plan (the “Plan”), which was approved by Progress Energy’s shareholders in 2002, allows the Progress Energy Committee to make various types of awards to officers, other key employees, and also Directors of the Company, its affiliates and subsidiaries. Selection of non-Director participants is within the sole discretion of the Progress Energy Committee. Thus, the number of persons eligible to participate in the Plan and the number of grantees may vary from year to year. The Plan was effective as of May 8, 2002, and will expire on May 8, 2012. The Plan was further amended and restated effective July 10, 2002. All awards granted under Progress Energy’s 1997 Equity Incentive Plan prior to and outstanding on May 8, 2002 remain valid in accordance with their terms and conditions.

The Plan is a broad umbrella plan that allows Progress Energy to enter into Award Agreements with participants and adopt without further shareholder approval various individual Sub-Plans that will permit the grant of the following types of awards: nonqualified stock options, incentive stock options, stock appreciation rights, restricted stock, performance units, performance shares and other stock unit awards or stock-based forms of awards. The Plan sets forth certain minimum requirements for each type of award, with detailed provisions regarding awards to be set out either in Award Agreements or in the Sub-Plans adopted under the Plan. Subject to adjustment as provided in the Plan, the maximum aggregate number of shares that may be issued pursuant to awards made under the Plan cannot exceed 15,000,000 shares of Progress Energy Common Stock, which may be in any combination of options, restricted stock, performance shares or any other right or option that is payable in the form of stock. This limit does not apply to grants made to replace or assume existing awards in connection with the acquisition of a business. In addition, approximately 1,700,000 shares of Progress Energy Common Stock that remained available for issuance under the 1997 Progress Energy Equity Incentive Plan were transferred to the Plan.

Under the terms of the Plan, the Progress Energy Committee may grant awards in a manner that qualifies them for the performance-based exception to Section 162(m) of the Internal Revenue Code of 1986, as amended, or it may grant awards that do not qualify for the exemption.

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Performance Share Sub-Plan

Pursuant to the provisions of the Plan, the Progress Energy Committee adopted the Performance Share Sub-Plan (“PSSP”), which governs the issuance of performance share awards to Company officers and key employees, as selected by the Progress Energy Committee in its sole discretion. A “performance share” is a unit granted to a participant, the value of which is equal to the value of a share of Progress Energy’s Common Stock. The Progress Energy Committee may grant performance share awards ranging from 15% to 362.5% of a participant’s base salary, depending upon the participant’s position and job value. Effective January 1, 2005, the PSSP was bifurcated into two separate sub-plans. Under the Executive and Key Manager PSSP, the annual PSSP target awards for officers of the Company range from 55% to 290% of their base salary. Under the Broad-Based PSSP, targets for other “key employees” range from 15% to 25% of their base salary dependent on position and job value. Progress Energy’s Chief Executive Officer’s (Mr. Johnson) target long-term incentive percentage under the PSSP is 290% of his base salary. Progress Energy’s Chief Operating Officer’s target long-term incentive percentage under the PSSP is 200% of his base salary. Presidents’ and Executive Vice Presidents’ (including Messrs. Day, Scott, Davis and Chatas in 2005) target long-term incentive percentage under the PSSP is 133% of their base salary; provided, however, that the Progress Energy Committee increased Mr. Scott’s target award percentage for performance shares granted pursuant to the PSSP to 165% of Mr. Scott’s base salary for each of the years 2005, 2006 and 2007 pursuant to an Amendment to his Employment Agreement dated as of August 5, 2005. See “Employment Agreements” on page 23 for more discussion of the Amendment to Mr. Scott’s Employment Agreement. Senior Vice Presidents’ (including Mr. Hinnant in 2005) target long-term incentive percentage under the PSSP is 110% of their base salary. The number of performance shares awarded is recorded in a separate account for each participant, and is adjusted to reflect dividends, stock splits or other adjustments in Progress Energy’s Common Stock.

The performance period for an award under both PSSP sub-plans is the three-consecutive-year period beginning in the year in which the award is granted. There are two equally weighted performance measures under the PSSP. One performance measure is Total Shareholder Return (“TSR”), which is defined in the PSSP as the appreciation or depreciation in the value of stock (which is equal to the closing value of the stock on the last trading day of the relevant period minus the closing value of the stock on the last trading day of the preceding year) plus dividends declared during the relevant period, divided by the closing value of the stock on the last trading day of the preceding year. The other performance measure is EBITDA growth. Awards under the PSSP vest on January 1 following the end of a three-year performance period; provided, however, that the following methodology is used to determine each award vested under the PSSP: (i) the TSR and EBITDA growth for Progress Energy for each year during the performance period is determined; (ii) those annual figures are averaged to determine Progress Energy TSR and EBITDA growth, respectively; (iii) the average TSR and EBITDA growth for all Peer Group utilities for each year during the performance period is determined (the Peer Group is comprised of a group of utilities designated by the Progress Energy Committee each December to be utilized for the upcoming year’s award grant, and that the two highest and two lowest performing utilities within the peer group will be excluded for purposes of determining peer group performance at the end of each three-year performance period); (iv) those figures are averaged, respectively, to determine the Peer Group TSR and EBITDA growth; (v) the Peer Group TSR and EBITDA growth for the performance period is subtracted from Progress Energy TSR and EBITDA growth, respectively, for the performance period; (vi) the differences between Progress Energy TSR and EBITDA growth and the Peer Group TSR and EBITDA growth, respectively, are used to determine the multipliers that will be used to calculate the number of vested performance shares in each participant’s account. (Differences in TSR can range from a low of (2.0%) or less to a high of 5% or more, and correspond to multipliers of 0 to 200%, respectively. Differences in EBITDA growth can range from a low of less than 0% to a high of 5% or more and correspond to multipliers of 0 to 200%, respectively); and (vii) the multipliers are each applied independently to one-half of the number of performance shares in the participant’s performance share account to determine the actual number of

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vested performance shares in that account. The aggregate value of vested performance shares is paid out with an equivalent number of shares of Progress Energy common stock.

Awards are paid in Progress Energy Common Stock after expiration of the performance period under both PSSP sub-plans. Payment can be made either (i) during the month of April of the year immediately following the performance period or (ii) in accordance with an election to defer in 25% increments, made during the first year of the performance period. The PSSP permits only participants who are employed as department heads or in higher positions to defer payment of their PSSP awards. In the event of death, retirement or divestiture, any award granted under the Executive and Key Manager PSSP immediately becomes vested. Awards that vest immediately due to retirement will be valued and distributed similar to regular, full-term awards, except the former will not accrue dividend equivalents between retirement and the end of the performance period. For awards that vest immediately in the event of death or divestiture, the aggregate value of the vested award is determined using multipliers that are based on the difference between Progress Energy TSR and EBITDA growth and the Peer Group TSR and EBITDA growth, respectively, over the portion of the performance period that was completed before the termination event occurred. Under the Broad-Based PSSP, in the event of death, retirement or divestiture, the awards vest on a pro-rata basis, beginning with January 1 of the performance period and ending with the month prior to the termination event date. The vested portion of the award is then adjusted by the TSR and EBITDA multiplier Company performance against the Peer Group.

For information regarding PSSP awards granted to executives in 2005, see “Long-Term Incentive Plan Awards In Last Fiscal Year” on page 21.

Restricted Stock Awards

Section 9 of the Plan provides for the granting of shares of restricted stock by the Progress Energy Committee to “key employees” within Progress Energy in such amounts and for such duration and/or consideration as it shall determine. Each restricted stock grant must be evidenced by an agreement specifying the period of restriction, the conditions that must be satisfied prior to removal of the restriction, the number of shares granted and such other provisions as the Progress Energy Committee shall determine. Progress Energy’s Chief Executive Officer’s target long-term incentive percentage for restricted stock is 145% of his base salary. Progress Energy’s Chief Operating Officer’s (Mr. Johnson) target long-term incentive percentage for restricted stock is 100% of his base salary. Presidents’ and Executive Vice Presidents’ (including Messrs. Day, Scott, Davis and Chatas in 2005) target long-term incentive percentage for restricted stock is 67% of their base salary; provided however, that Mr. Scott’s target long-term incentive compensation for restricted stock was increased to 85% of his base salary for each of the years 2005, 2006 and 2007 pursuant to an Amendment to his Employment Agreement dated as of August 5, 2005. See “Employment Agreements” on page 23 for more information regarding the Amendment to Mr. Scott’s Employment Agreement. Senior Vice Presidents’ (including Mr. Hinnant in 2005) target long-term incentive percentage for restricted stock is 55% of their base salary.

Restricted stock covered by each award made under the Plan will be provided to and become freely transferable by the recipient after the last day of the period of restriction and/or upon the satisfaction of other conditions as determined by the Progress Energy Committee. If the grant of restricted stock is performance based, the total period of restriction for any or all shares or units of restricted stock granted shall be no less than one (1) year except as noted below. Any other shares of restricted stock issued pursuant to the Plan must provide that the minimum period of restrictions shall be three (3) years, which period of restriction may permit the removal of restrictions on no more than one-third (1¤3) of the shares of restricted stock at the end of the first year following the grant date, and the removal of the restrictions on an additional one-third (1¤3) of the shares at the end of each subsequent year. The Plan provides that in no event shall any restrictions be removed from shares of restricted stock during the first year following the grant date, except in the event of retirement or under certain situations following a change-in-control.

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During the period of restriction, recipients of shares of restricted stock granted under the Plan may exercise full voting rights with respect to those shares, and shall be entitled to receive all dividends and other distributions paid with respect to those shares. If any such dividends or distributions are paid in shares, those shares shall be subject to the same restrictions on transferability as the restricted stock with respect to which they were distributed. The maximum number of shares of Progress Energy’s Common Stock that may be granted in the form of Restricted Stock is 3,000,000. The maximum number of shares of Progress Energy Common Stock that may be granted in the form of restricted stock in a single calendar year to any one participant is 250,000.

For information regarding restricted stock awards granted to Progress Energy’s executive officers in 2005, see column 6 of the Summary Compensation Table on page 17.

Stock Options

Pursuant to Section 7 of the Plan, the Progress Energy Committee is authorized to grant stock options to “key employees;” however, in 2004, Progress Energy ceased granting stock options. All stock options granted prior to January 1, 2005, remain valid in accordance with their terms and conditions. Effective January 1, 2005, long-term compensation that was previously awarded to employees in the form of stock options is awarded pursuant to the Performance Share Sub-Plan.

Other Benefits

The following additional benefit opportunities are also available to Progress Energy’s senior executives:

·Progress Energy sponsors the Management Deferred Compensation Plan (the “MDCP”), an unfunded, deferred compensation arrangement established for the benefit of a select group of management and highly compensated employees of Progress Energy and its participating subsidiaries. Under the MDCP, an eligible employee may elect to defer a portion of his or her salary until the April 1 following the date that is five or more years from the last day of the MDCP Year for which the deferral is made, the April 1 following his or her date of retirement, or the April 1 following the first anniversary of his or her date of retirement. Deferrals will be made to deferral accounts administered pursuant to the MDCP in the form of deemed investments in certain deemed investment funds individually chosen by each participating employee from a list of investment options provided pursuant to the MDCP. Additionally, qualifying participants will receive matching allocations from Progress Energy (generally reflecting foregone Progress Energy allocations to participants’ 401(k) accounts due to such salary deferrals, and/or foregone Progress Energy allocations to the participants’ 401(k) accounts due to certain Internal Revenue Code limits), which will be allocated to a Progress Energy account that will be deemed initially to be invested in hypothetical shares of a stable value fund. Pursuant to the terms of the MDCP, the participant may reallocate any part of such account among the deemed investment funds chosen by the participant.

·Progress Energy sponsors a Management Change-In-Control Plan (the “C-I-C Plan”) for selected key management employees. The purpose of the C-I-C Plan is to retain key management employees who are critical to the success of any transition resulting from a change-in-control of Progress Energy. The Progress Energy Committee has the sole authority and discretion to designate employees and/or positions for participation in the C-I-C Plan. Participants are not eligible to receive any of the C-I-C Plan’s benefits unless both a change-in-control of Progress Energy and an involuntary termination of the participant’s employment occur. The C-I-C Plan provides three separate tiers of severance benefits ranging from 150% of base salary and MICP awards to 300% of base salary and MICP awards for participants depending upon the position(s) they hold within the

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Company. The continuation of health and welfare benefits coverage and the degree of excise tax protection for terminated participants align with the length of time during which they will receive severance benefits. In the event of a change-in-control of the Company, each C-I-C Plan participant can receive the greater of benefits provided under the C-I-C Plan or severance benefits provided under any employment agreement he or she has with Progress Energy or any of its affiliates.

·Progress Energy sponsors an executive split-dollar life insurance program. The plan provided life insurance coverage approximately equal to three times salary for senior executives. During 2003, the Company responded to final split dollar regulations as well as the Sarbanes-Oxley Act of 2002 prohibition on loans to corporate officers by discontinuing its executive split dollar program for all future executives and discontinuing Progress Energy’s payment of premiums on existing split dollar policies for senior executives.

·Progress Energy also sponsors broad-based employee benefit plans for senior executives of participating subsidiaries. Under the Progress Energy 401(k) Savings & Stock Ownership Plan, a salary reduction plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (“Code”), eligible, highly compensated employees of participating companies may invest up to 18% of eligible base salary earnings (up to a maximum of $14,000 in 2005 on a before-tax basis) in Progress Energy’s Common Stock and other investment options. Progress Energy makes a matching allocation of 50% of such investment (up to 3% of eligible base salary earnings), which is invested in Progress Energy Common Stock. Under an incentive feature, Progress Energy’s allocation may be increased by up to an additional 50% if certain strategic corporate and business unit financial, operating, safety, customer satisfaction and other performance goals are met. Progress Energy also sponsors the Progress Energy Pension Plan (the “Pension Plan”), a defined benefit plan which covers eligible employees of participating subsidiaries who have been employed with Progress Energy for at least one year. The right to receive pension benefits under the Pension Plan is vested after five years.

·Progress Energy sponsors the Restoration Retirement Plan (the “Restoration Plan”), an unfunded retirement plan for a select group of management or highly compensated employees of participating subsidiaries. The Restoration Plan “restores” the full benefit that would be provided under the Pension Plan but for certain Code limits imposed on the benefit levels of highly compensated employees. Generally, the benefit for participants is a monthly benefit payment equal to the difference between (i) a participant’s accrued benefit under the Pension Plan without regard to the Internal Revenue Service compensation and benefit limits and (ii) a participant’s accrued benefit as calculated under the Pension Plan. The Restoration Plan also applies to any employee who defers more than 10% of his or her base salary under the MDCP. The eligibility and vesting requirements for the Restoration Plan are the same as those for the Pension Plan. Participants eligible to receive benefits under the Supplemental Senior Executive Retirement Plan forego participation in and rights under the Restoration Plan.

·Progress Energy sponsors the Supplemental Senior Executive Retirement Plan which provides a retirement benefit for eligible senior executives equal to 4% of the average of their highest three years of base salary earnings and annual bonus for each year of credited service with Progress Energy up to a maximum of 62%. Benefits under the Supplemental Senior Executive Retirement Plan are fully offset by social security benefits and by benefits paid under Progress Energy’s Pension Plan.

·Progress Energy senior executives also receive certain perquisites, including club dues, financial planning services, annual automobile allowances, spousal travel and meals, at-home Internet service and security systems, tickets to cultural arts and sporting events and other personal benefits. In

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addition, executives received gross-up payments in 2005 for related federal and state income tax obligations, as disclosed in the Summary Compensation Table on page 17.

Compensation of Chief Executive Officer

Compensation in 2005 for Mr. Day was consistent with the compensation principles described above and reflected performance of the Company and Mr. Day in 2005, as well as his services in 2005. The Committee’s determination of Mr. Day’s compensation was qualitative in nature and based on a variety of factors, including comparison group compensation data, attainment of various corporate goals, total shareholder return, EBITDA growth, earnings per share and other financial and operating performance, individual performance and other factors. All of these factors were considered collectively and no specific mathematical weights were assigned to these factors.

In evaluating Mr. Day’s performance as Chief Executive Officer in 2005, the Committee considered the financial performance of the Company and the outstanding performance of the Company’s energy delivery facilities and operations in the areas of productivity, reliability and cost effectiveness. The Committee also considered the fact that the Company achieved high customer satisfaction and loyalty ratings for 2005. The Committee noted the Company’s commitment to a strong environmental policy, and also considered the success of Mr. Day’s efforts to foster a collaborative high-performance culture that provides challenging career development opportunities for employees. The Committee also noted Mr. Day’s role in fostering economic development and promoting positive community and stake holder relations within the Company’s service territory.

As indicated in the Summary Compensation Table on page 17, during 2005, Mr. Day received a base salary of $385,000. Based upon its review of Mr. Day’s performance in 2005, the Committee approved an annual incentive (MICP) award of $315,000 to Mr. Day, representing 149% of his target award of 55% of his base salary. The award will be paid to Mr. Day in March of 2006. The Committee also approved in 2005 (i) a PSSP grant to Mr. Day of 11,319 units, representing his target award of 133% of his base salary, and (ii) a grant of 6,000 shares of restricted stock to Mr. Day, representing his target award of 67% of his base salary.

Committee on Organization and Compensation:

Charles W. Coker, Chairman

Edwin B. Borden

W. Steven Jones

William O. McCoy

E. Marie McKee

John H. Mullin, III

Peter S. Rummell

The foregoing report of the Board Committee on Organization and Compensation shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933 or the Exchange Act of 1934 except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

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EQUITY COMPENSATION PLAN INFORMATION

Plan category	(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights		(b) Weighted-average exercise price of outstanding options, warrants and rights			(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by shareholders		6,961,221		$	43.58		10,938,651
Total		6,961,221		$	43.58		10,938,651

Progress Energy does not sponsor any equity compensation plans that have not been approved by its shareholders.

REPORT OF THE AUDIT AND CORPORATE
PERFORMANCE COMMITTEE

The Audit and Corporate Performance Committee of the Company’s Board of Directors (the “Audit Committee”) has reviewed and discussed the audited financial statements of the Company for the fiscal year ended December 31, 2005, with the Company’s management and with Deloitte & Touche LLP, the Company’s independent registered public accounting firm. The Audit Committee discussed with Deloitte & Touche LLP the matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), by the SEC’s Regulation S-X, Rule 2-07, and by the New York Stock Exchange’s Corporate Governance Rules, as may be modified, amended or supplemented.

The Audit Committee has received the written disclosures from Deloitte & Touche LLP required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) as may be modified or supplemented, and has discussed the independence of Deloitte & Touche LLP with that firm.

Based upon the review and discussions noted above, the Audit Committee recommended to the Board of Directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, for filing with the SEC.

Audit and Corporate Performance Committee:

Richard L. Daugherty, Chairman

James E. Bostic, Jr.

David L. Burner

W. D. Frederick, Jr.

Carlos A. Saladrigas

Theresa M. Stone

Jean Giles Wittner

Unless specifically stated otherwise in any of the Company’s filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, the foregoing Report of the Audit Committee shall not be incorporated by reference into any such filings and shall not otherwise be deemed filed under such Acts.

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DISCLOSURE OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S FEES

The Audit Committee has actively monitored all services provided by its independent registered public accounting firm, Deloitte & Touche LLP, the member firms of Deloitte & Touche Tohmatsu, and their respective affiliates (collectively, “Deloitte”) and the relationship between audit and non-audit services provided by Deloitte. Progress Energy, Inc. has adopted policies and procedures for approving all audit and permissible non-audit services rendered by Deloitte, and the fees billed for those services. Those policies and procedures apply to Progress Energy, Inc. and its subsidiaries, including the Company. The Chief Accounting Officer of Progress Energy, Inc. (the “CAO”) is responsible to the Audit Committee for enforcement of this procedure, and for reporting non-compliance. The Audit Committee specifically pre-approved the use of Deloitte for audit, audit-related, tax and non-audit services, subject to the limitations of our pre-approval policy. Audit and audit-related services include assurance and related activities, assurance services associated with internal control over financial reporting, reports related to regulatory filings, consultations on dispositions and discontinued operations, employee benefit plan audits and general accounting and reporting advice. The pre-approval policy provides that any audit and audit-related services covered by a detailed standing pre-approval whose project scope could not be defined at the time of standing approval that will involve an expenditure of over $50,000, will require individual approval by the Audit Committee in advance of Deloitte being engaged to render such services. Once the cumulative total of those projects less than $50,000 exceeds $500,000 for the year, each subsequent project, regardless of amount, must be approved individually in advance by the Audit Committee. Any approved projects with projected overruns must be communicated promptly to the CAO for review and approval. Projected overruns that exceed Audit Committee project approvals by more than $50,000 must be approved by the Audit Committee separately from the original project.

The pre-approval policy requires management to obtain specific pre-approval from the Audit Committee for the use of Deloitte for any permissible non-audit services, which, generally, are limited to tax services including tax compliance, tax planning, and tax advice services such as return review and consultation and assistance. Other types of permissible non-audit services will be considered for approval only in rare circumstances, which may include proposed services that provide significant economic or other benefits. In determining whether to approve these services, the Audit Committee will assess whether these services adversely impair the independence of Deloitte. Any permissible non-audit services provided during a fiscal year that (i) do not aggregate more than 5% of the total fees paid to Deloitte for all services rendered during that fiscal year and (ii) were not recognized as non-audit services at the time of the engagement must be brought to the attention of the CAO for prompt submission to the Audit Committee for approval. These “de minimis” non-audit services must be approved by the Audit Committee or its designated representative before the completion of the project. The policy also requires management to update the Audit Committee throughout the year as to the services provided by Deloitte and the costs of those services. The Audit Committee will assess the adequacy of this procedure as it deems necessary and revise it accordingly.

Set forth in the table below is certain information relating to the aggregate fees billed by Deloitte for professional services rendered to the Company for the fiscal years ended December 31, 2004 and December 31, 2005.

	2004		2005
Audit Fees	$	1,877,000	$	1,615,000
Audit-Related Fees	21,000		12,000
Tax Fees	2,893,000		259,000
All Other Fees	2,000		0
Total Fees	$	4,793,000	$	1,886,000

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Audit Fees include fees billed for services rendered in connection with (i) the audits of the annual financial statements of Progress Energy Carolinas (ii) the reviews of the financial statements included in the Quarterly Reports on Form 10-Q (iii) SEC filings, accounting consultations arising as part of the audits and comfort letters.

Audit-Related Fees include fees billed for (i) special procedures and letter reports and (ii) accounting consultations for prospective transactions not arising directly from the audits.

Tax Fees includes fees billed for tax compliance matters and tax planning and advisory services. Tax fees for 2004 include a $2,500,000 fixed fee paid to convert certain fee arrangements that were previously dependent on the benefit that taxing authorities would award to the Company. The Company will not enter into such fee arrangements that are dependent on the benefit received with its independent registered public accounting firm in the future.

All Other Fees includes fees billed for utility accounting training.

The Audit Committee has concluded that the provision of the non-audit services listed above as “All Other Fees” is compatible with maintaining Deloitte’s independence.

None of the services provided were approved by the Audit Committee pursuant to the de minimis waiver provisions described above.

FINANCIAL STATEMENTS

The Company’s 2005 Annual Report, which includes financial statements as of December 31, 2005, and 2004, and for each of the three years in the period ended December 31, 2005, together with the report of Deloitte & Touche LLP, the Company’s independent registered public accounting firm, was mailed to those who were shareholders of record as of the close of business on March 3, 2006.

FUTURE SHAREHOLDER PROPOSALS

Shareholder proposals submitted for inclusion in the proxy statement for the Company’s 2007 Annual Meeting must be received no later than December 7, 2006, at the Company’s principal executive offices, addressed to the attention of:

John R. McArthur

Senior Vice President and Secretary

Carolina Power & Light Company

Post Office Box 1551

Raleigh, North Carolina 27602-1551

Upon receipt of any such proposal, the Company will determine whether or not to include such proposal in the proxy statement and proxy in accordance with regulations governing the solicitation of proxies.

In order for a shareholder to nominate a candidate for Director, under the Company’s By-Laws timely notice of the nomination must be received by the Secretary of the Company either by personal delivery or by United States registered or certified mail, postage pre-paid, not later than the close of business on the 120th calendar day before the date of the Company’s proxy statement released to shareholders in connection with the previous year’s annual meeting. In no event shall the public announcement of an adjournment or postponement of an annual meeting or the fact that an annual meeting is held after the anniversary of the preceding annual meeting commence a new time period for a shareholder’s giving of notice as described above. The shareholder filing the notice of nomination must include:

·As to the shareholder giving the notice:

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·the name and address of record of the shareholder who intends to make the nomination, the beneficial owner, if any, on whose behalf the nomination is made and of the person or persons to be nominated;

·the class and number of shares of the Company that are owned by the shareholder and such beneficial owner;

·a representation that the shareholder is a holder of record of shares of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; and

·a description of all arrangements, understandings or relationships between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder.

·As to each person whom the shareholder proposes to nominate for election as a Director:

·the name, age, business address and, if known, residence address of such person;

·the principal occupation or employment of such person;

·the class and number of shares of stock of the Company that are beneficially owned by such person;

·any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors or is otherwise required by the rules and regulations of the SEC promulgated under the Securities Exchange Act of 1934; and

·the written consent of such person to be named in the proxy statement as a nominee and to serve as a Director if elected.

In order for a shareholder to bring other business before a shareholder meeting, timely notice must be received by the Company within the time limits described above. Such notice must include:

·the information described above with respect to the shareholder proposing such business;

·a brief description of the business desired to be brought before the annual meeting, including the complete text of any resolutions to be presented at the annual meeting, and the reasons for conducting such business at the annual meeting; and

·any material interest of such shareholder in such business.

These requirements are separate from the requirements a shareholder must meet to have a proposal included in the Company’s proxy statement.

Any shareholder desiring a copy of the Company’s By-Laws will be furnished one without charge upon written request to the Secretary. A copy of the By-Laws, as amended and restated on March 17, 2004, was filed as an exhibit to the Company’s Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2004, and is available at the Securities and Exchange Commission Internet Web site (www.sec.gov).

OTHER BUSINESS

The Board of Directors does not intend to bring any business before the meeting other than that stated in this Proxy Statement. The Board knows of no other matter to come before the meeting. If other matters are properly brought before the meeting, it is the intention of the Board of Directors that the persons named in the enclosed Proxy will vote on such matters pursuant to the Proxy in accordance with their best judgment.

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Exhibit A

Audit and Corporate Performance Committee Charter

Purpose and Composition

The Audit and Corporate Performance Committee (“Committee”) shall be a standing committee of theBoard of Directors (“Board”). The Committee shall assist, advise and report regularly to the Board in fulfilling its oversight responsibilities related to:

·The integrity of the Company’s financial statements

·The Company’s compliance with legal and regulatory requirements

·The independent auditor’s qualifications and independence

·The performance of the Company’s internal audit function and independent auditors, and

·The Corporate Ethics Program.

In meeting its responsibilities, the Committee is expected to provide an open channel of communication with management, internal audit, the external auditors, and the Board.

The Committee is composed of at least three members of the Board who are independent within the meaning of the Listing Standards of the New York Stock Exchange (NYSE). Committee members shall be appointed and/or removed by the Board. No member of the Committee shall be removed except by a majority vote of the independent directors then in office. Committee members shall be free from any relationships that would interfere with or give the appearance of interfering with the exercise of independent judgment as a Committee member. All members shall have a requisite working Familiarity with basic finance and accounting practices in compliance with the Listing Standards of the NYSE. Furthermore, at least one member of the Committee shall have sufficient accounting or financial expertise and be designated as a “financial expert” in compliance with the Listing Standards of the NYSE. Committee members shall be appointed by the Board normally at the Annual Organizational Meeting of the Board.

Director’s fees shall be the only compensation an audit committee member may receive from the Company. The Board shall designate one Committee member as Chairman, who shall preside over the meetings of the Committee and report Committee actions to the Board.

Duties and Responsibilities

Duties and responsibilities of the Committee shall include, but are not limited to the following:

1.Review with management and the external auditors the annual and quarterly financial results for the Company, including the disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Discussions with management will also include earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies. The review should focus on appropriate disclosure of key events, risk assessment and management, and actual or contingent liabilities that could materially impact the Company’s financial results or cause the reported information to be misleading. Also review the annual report to shareholders, the annual/quarterly reports on Forms l0-K/10-Q filed with the Securities and Exchange Commission, and legal and regulatory matters having a material impact on the financial statements. The external auditors will have discussions with the Committee on the quality of the accounting policies and practices used by the Company, any alternative treatments of financial information, their ramifications and the external auditors’ preferred treatments.

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2.Oversee and monitor the work of the external auditors to ensure they are independent of management and their objectivity is not impaired, recognizing that the external auditors are accountable to the Board and the Committee. In determining the independence of the external auditors, the Committee will annually obtain and review a formal report from the external auditors affirming their independence as prescribed by the NYSE, Review with the external auditors any audit problems or difficulties and management’s response.

The Committee has sole authority to retain and terminate the Company’s external auditors and will set clear hiring policies for employees or former employees of the independent auditors. Annually obtain and review a report from the external auditors describing the internal quality control process, including material issues raised by the most recent internal quality control review or by any inquiry or investigation by government, regulatory or professional authorities within the past five years.

Annually report to the Board the external audit firm(s) to be retained and preapprove all audit and non-audit services and fees as noted in the Committee’s Preapproval Procedure. The Committee will review the scope of any non-audit services to be performed by the external auditors and determine its impact on the auditors’ independence. Review the scope of the external audit plan and upon completion of the audit, review significant changes made in the scope of the audit plan. Meet with the external auditors privately, without management present, at each regular meeting.

3.Oversee and monitor the activities of the Audit Services Department to ensure the internal audit function maintains appropriate independence and objectivity in the fulfillment of its responsibilities. The Committee should review: the audit plan for the upcoming year, any planned significant outsourcing of internal audit work,and the results/changes made to the prior year’s plan; significant audit findings and recommendations and management’s action plans: the adequacy of the budget and staffing for the Department; and the appointment or dismissal and annual compensation of the Chief Audit Executive. Meet with the Chief Audit Executive privately, without management present, at each regular meeting.

4.Assess and monitor the overall control environment of the Company through discussions with management, the external auditors and the Chief Audit Executive. Assess the extent to which the audit plans of the external and internal auditors can be relied on to identify material internal control weaknesses or fraud.

5.Oversee and monitor the activities of the Corporate Ethics Program. As noted in the Committee’s Complaint Procedure, the Committee will review and take appropriate action on any complaints received by the Company regarding questionable accounting, internal controls or auditing matters.

6.Review and discuss with management the Company’s guidelines and policies governing risk assessment and risk management. Note: While the CEO and Senior Management have the responsibility to assess and manage the Company’s exposure to risk and the Finance Committee is responsible for the oversight of the Risk Management Committee Policy andGuidelines, the Audit Committee must discuss in a general manner the guidelines and policies used to govern the process.

7.Request the external auditors, the internal auditors, or management to conduct special reviews or studies, as appropriate. Also, the Committee may obtain advice and assistance from outside legal, accounting or other advisors, at Company expense.

8.Provide a report in the proxy statement stating that the Committee has reviewed and discussed the financial statements with management and the auditors. In addition, this report will include a

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recommendation to the Board that the audited financial statements be included in the Company’s annual report on Form l0-K.

9.Conduct an annual self-assessment of the effectiveness and performance of this Committee and review the adequacy of this Charter. This Charter and the Company’s Code of Ethics will be published on the Company’s website. In addition, the disclosure of this Charter will be stated annually in the proxy, which will contain a copy of the Charter in an appendix, as required.

Meetings

The Committee shall hold at least three regular meetings and four quarterly conferencecall meetings each year in order to accomplish the aforementioned duties and responsibilities. The Committee’s Chairman may call additional meetings as needed, to review matters of interest to the Committee. The Committee may form subcommittees for any purpose that the Committee deems appropriate and may delegate to such subcommittees such power and authority as the Audit and Corporate Performance Committee deems appropriate. As deemed necessary by the Committee, meetings shall be attended by appropriate Company personnel.

Following each of its meetings, the Committee shall deliver a report on the meeting to the Board, including a description of all actions taken by the Committee at the meeting. The Committee shall keep written minutes of its meetings, which minutes shall be maintained with the books and records of the Company. The President of the Service Company or his designee shall, at the request of’ the Chairman of the Committee, arrange meetings, prepare meeting agendas and serve as Secretary to the Committee.

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

o  Mark this box with an X if you have made
changes to your name or address details above.

Annual Meeting Proxy Card

A Election of Directors	PLEASE REFER TO THE REVERSE SIDE FOR TELEPHONE VOTING INSTRUCTIONS.
1. The Board of Directors recommends a vote FOR the listed nominees.

Class I	For	Withhold	Class II	For	Withhold	Class III	For	Withhold
01 - W. FREDERICK	o	o	04 - E. BORDEN	o	o	08 - H. DELOACH	o	o
02 - W. JONES	o	o	05 - J. BOSTIC	o	o
03 - T. STONE	o	o	06 - D. BURNER	o	o
			07 - R. DAUGHERTY	o	o

B Issues

The Board of Directors recommends a vote FOR the following proposal.

	For	Against	Abstain
2. Ratification of the selection of Deloitte & Touche LLP as Carolina Power & Light’s independent registered public accounting firm for 2006.	o	o	o
3. In their discretion the proxies are authorized to vote upon such other business that is properly brought before the meeting or any adjournment thereof.
4. Mark this box with an X if you have made comments below.	o

C Authorized Signatures - Sign Here - This section must be completed for your instructions to be executed.

NOTE: Please sign exactly as name(s) appear(s) hereon. When signing as attorney, executor, administrator, trustee or guardian, or as custodian for a minor, please give full title as such.

If a corporation, please have signed in full corporate name by any authorized officer, giving full title. If a partnership, sign in full partnership name by an authorized person, giving full title.

Signature 1 - Please keep signature within the box Signature 2 - Please keep signature within the box Date (mm/dd/yyyy)

Proxy

Carolina Power & Light Company
d/b/a Progress Energy Carolinas, Inc.

Dear Shareholder,

Please take note of the important information enclosed with the Proxy Card. That information relates to the management and operation of your Company and requires your immediate attention and approval. Details are discussed in the enclosed proxy materials.

Your vote counts, and you are strongly encouraged to exercise your right to vote your shares.

Please mark the boxes on this Proxy Card to indicate how you would like your shares to be voted, then sign the card and return it in the enclosed postage paid envelope. If you prefer, you may vote by telephone by following the instructions in the proxy materials.

Your vote must be submitted prior to the Annual Meeting of Shareholders to be held on May 10, 2006, unless you plan to vote in person at the Meeting.

Thank you in advance for your prompt consideration of these matters.

Carolina Power & Light Company
d/b/a Progress Energy Carolinas, Inc.
410 S. Wilmington Street
Raleigh, North Carolina 27601

This Proxy is Solicited on Behalf of the Board of Directors of the Company

The undersigned hereby appoints Robert B. McGehee and William D. Johnson, and each of them as Proxies, with full power of substitution, to vote the shares of stock of Carolina Power & Light Company (d/b/a Progress Energy Carolinas, Inc.) registered in the name of the undersigned, or which the undersigned has the power to vote, at the Annual Meeting of Shareholders of the Company to be held Wednesday, May 10, 2006, at 10:00 a.m., and at any adjournment thereof, for the election of directors and the ratification of the selection the Independent Registered Public Accounting firm for the Company for 2006 and upon other matters properly brought before the meeting. The undersigned acknowledges receipt of the notice of said Annual Meeting and the proxy statement.

THIS PROXY WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). UNLESS OTHERWISE SPECIFIED, IT WILL BE VOTED FOR THE ELECTION OF DIRECTORS AND THE RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE COMPANY FOR 2006, ALL AS SET FORTH IN THE PROXY STATEMENT. THE NOMINEES FOR DIRECTOR ARE: CLASS I - W. FREDERICK, W. JONES AND T. STONE; CLASS II - E. BORDEN, J. BOSTIC, D. BURNER AND
R. DAUGHERTY; AND CLASS III - H. DELOACH. IF ANY DIRECTOR BECOMES UNAVAILABLE, THE PROXIES WILL VOTE FOR A SUBSTITUTE DESIGNATED BY THE BOARD.

PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.

Telephone Voting Instructions

You can vote by telephone! Available 24 hours a day 7 days a week!

Instead of mailing your proxy, you may choose the voting method outlined below to vote your proxy.

To vote using the Telephone (within U.S. and Canada)

• Call toll free 1-800-652-VOTE (8683) in the United States or Canada any time on a touch tone telephone. There is NO CHARGE to you for the call.

• Follow the simple instructions provided by the recorded message.

If you vote by telephone, please DO NOT mail back this proxy card.

Proxies submitted by telephone must be received by 12:01 a.m., Eastern Daylight Time, on May 10, 2006.

THANK YOU FOR VOTING