Contingencies and significant changes to the commitments discussed in Notes 21 and 22 in the 2011 Form 10-K are described below.

The Progress Energy Registrants are subject to federal, state and local regulations regarding air and water quality, hazardous and solid waste disposal and other environmental matters. These regulations can be changed from time to time, imposing new obligations on the Progress Energy Registrants.

The following environmental matters impact all of the Progress Energy Registrants.

The Progress Energy Registrants are responsible for environmental remediation at various contaminated sites. These include some properties that are part of ongoing operations and sites formerly owned or used by Progress Energy entities. In some cases, Progress Energy no longer owns the property. Managed in conjunction with relevant federal, state and local agencies, activities vary with site conditions and locations, remediation requirements, complexity and sharing of responsibility. If remediation activities involve statutory joint and several liability provisions, strict liability, or cost recovery or contribution actions, the Progress Energy Registrants could potentially be held responsible for contamination caused by other parties. In some instances, the Progress Energy Registrants may share liability associated with contamination with other potentially responsible parties, and may also benefit from insurance policies or contractual indemnities that cover some or all cleanup costs. Reserves associated with remediation activities at certain sites have been recorded and it is anticipated that additional costs associated with remediation activities at certain sites will be incurred in the future. All of these sites generally are managed in the normal course of business or affiliate operations. The Progress Energy Registrants have accrued costs associated with remediation activities at some of their current and former sites, as well as other relevant environmental contingent liabilities. Management, in the normal course of business, continually assesses the nature and extent of known or potential environmentally related contingencies and records liabilities when losses become probable and are reasonably estimable. Costs associated with remediation activities within the Progress Energy Registrants' operations are typically expensed unless regulatory recovery of the costs is deemed probable.

The following tables contain information about accruals for probable and estimable costs related to various environmental sites, which were included in other current liabilities and other deferred credits and other liabilities in the Balance Sheets. Amounts accrued and expenditures for environmental loss contingencies presented below are for the nine months ended September 30, 2012 and 2011. Such amounts for the three months ended September 30, 2012 and 2011 were not material.

PROGRESS ENERGY
(in millions)		Total
Balance, December 31, 2011		$	23
Amount accrued for environmental loss contingencies			16
Expenditures for environmental loss contingencies			(7)
Balance, September 30, 2012^(a)		$	32

Balance, December 31, 2010		$	35
Amount accrued for environmental loss contingencies			7
Expenditures for environmental loss contingencies			(17)
Balance, September 30, 2011^(a)		$	25

^(a)	Expected to be paid out over one to 12 years.

PEC
(in millions)		Total
Balance, December 31, 2011		$	11
Amount accrued for environmental loss contingencies			4
Expenditures for environmental loss contingencies			(2)
Balance, September 30, 2012^(a)		$	13

Balance, December 31, 2010		$	12
Amount accrued for environmental loss contingencies			-
Expenditures for environmental loss contingencies			(1)
Balance, September 30, 2011^(a)		$	11

^(a)	Expected to be paid out over one to ten years.

PEF
(in millions)		Total
Balance, December 31, 2011		$	12
Amount accrued for environmental loss contingencies			12
Expenditures for environmental loss contingencies			(5)
Balance, September 30, 2012^(a)		$	19

Balance, December 31, 2010		$	23
Amount accrued for environmental loss contingencies			7
Expenditures for environmental loss contingencies			(16)
Balance, September 30, 2011^(a)		$	14

^(a)	Expected to be paid out over one to 12 years.

PEC's accruals relate to one former manufactured gas plant (MGP) site and other sites associated with PEC that have required, or are anticipated to require, investigation and/or remediation. Remediation of PEC's other MGP sites has been substantially completed. During the nine months ended September 30, 2012, PEC completed a preliminary remedial action plan for its remaining MGP site, which indicates a range of viable remedial approaches with estimated costs up to $25 million. PEC has accrued approximately $7 million to reflect the estimated cost for the remedial approach considered to have more merit. The maximum amount of the range for all of PEC's environmental sites cannot be determined at this time. Actual experience may differ from current estimates, and it is probable that estimates will continue to change in the future.

PEF's accruals relate to two former MGP sites and other sites associated with PEF that have required, or are anticipated to require, investigation and/or remediation. Remediation of one MGP site has been substantially completed. At September 30, 2012, PEF's accrual primarily relates to an MGP site located in Orlando, Fla. The potentially responsible parties (PRPs) for the Orlando MGP site have agreed to an interim allocation for the Orlando MGP site and are conducting a feasibility study for remediation of soil and groundwater down to 50 feet, which has not been completed. The study preliminarily indicates a range of viable remedial approaches. During the nine months ended September 30, 2012, the PRPs received refined estimates for the range of viable remedial approaches. Additionally, the PRPs believe one approach has more merit than the other approaches; however, the recommendation has not been submitted to or approved by the United States Environmental Protection Agency (EPA) at this time. The PRPs for the Orlando MGP site intend to seek recovery from the non-participating PRP, but no amount for recovery has been recorded. PEF has accrued its best estimate of its obligation with respect to the Orlando MGP site. Based on current estimates for the remedial approach considered to have more merit and its current allocation share, PEF accrued additional obligations of approximately $9 million during the nine months ended September 30, 2012, for remediation of soil and groundwater down to 50 feet. Based on current estimates for the range of viable remedial approaches and its current allocation share, PEF could incur additional obligations of up to approximately $8 million for remediation of soil and groundwater down to 50 feet. Results of an investigative study revealed the presence of MGP byproduct material at least 200 feet below the surface. The layer between approximately 50 feet and 200 feet below the surface, which is clay, is not impacted. The maximum amount of the range for remediation, if any, below 200 feet at the Orlando MGP site and for PEF's other sites cannot be determined at this time. Actual experience may differ from current estimates, and it is probable that estimates will continue to change in the future. We cannot predict the outcome of this matter.

The EPA published its proposed cooling water intake structures rule on April 20, 2011. The proposed rule advances one main approach and three alternatives. The main approach establishes aquatic protection requirements for existing facilities and new on-site facility additions that withdraw 2 million gallons or more of water per day from rivers, streams, lakes, reservoirs, estuaries, oceans, or other U.S. waters for cooling purposes. Based on the main approach proposed, most, if not all of the coal, natural gas and nuclear-fueled steam electric-generating facilities in which the Progress Energy Registrants are either a whole or partial owner are likely affected sources unless retired prior to implementation of the 316(b) rule requirements. Additional sources, including some combined-cycle combustion turbine facilities may also be impacted, at least for intake modifications.

The EPA recently modified a previous settlement agreement that now calls for the EPA to finalize the 316(b) rule by June 2013. Compliance with portions of the rule could begin as early as 2016. Because of the wide range of potential outcomes, including the other three alternative proposals, the Progress Energy Registrants are unable to estimate their costs to comply at this time.

On June 21, 2010, the EPA issued a proposal to regulate, under the Resource Conservation and Recovery Act, CCRs, a term the EPA uses to describe the coal combustion products associated with the generation of electricity. The EPA proposal contains two regulatory options whereby CCRs not employed in approved beneficial use applications would either be regulated as hazardous waste or would continue to be regulated as non-hazardous waste. We cannot predict the outcome of this rulemaking. However, based on the proposal, the cost of complying with the final regulation will be material. The timing of a final rule is uncertain. In response to a motion filed in federal court by environmental groups asking the court to compel the EPA to issue a final rule, the EPA filed a declaration on October 11, 2012, suggesting that it could take more than a year to complete the regulation.

On August 8, 2011, the final CSAPR was published in the Federal Register. The CSAPR established state-level annual SO2 and NOx budgets that were to take effect on January 1, 2012, and state-level ozone-season NOx budgets that were to take effect on May 1, 2012, allocating emission allowances to affected sources in each state equal to the state budget less an allowance set-aside for new sources. The budget levels were set to decline in 2014 for many states, including North Carolina. In South Carolina and Florida, the budgets were to remain constant. The rule allowed both intrastate and limited interstate allowance trading.

Numerous petitions for review of the CSAPR were filed with the United States Court of Appeals for the District of Columbia (D.C. Court of Appeals). On August 21, 2012, by a 2-1 decision, the D.C. Court of Appeals vacated the CSAPR. The court also directed the EPA to continue administering the Clean Air Interstate Rule (CAIR) that the Progress Energy Registrants have been complying with since 2009 pending completion of a remand rulemaking to replace CSAPR with a valid rule. CAIR requires additional Phase II reductions in SO2 and NOx emissions beginning in 2015. The court's decision to vacate the CSAPR leaves the future of the rule uncertain. The EPA has filed a petition with the D.C. Court of Appeals for en banc rehearing of the CSAPR decision. If the court's August 21, 2012 decision is upheld, the CAIR will remain in force for an unknown period of time until EPA develops a replacement rule. If the decision is overturned on rehearing, it is not known when EPA would move to implement the CSAPR.

The Progress Energy Registrants cannot predict the outcome of the rehearing process or how it could affect future emission reduction requirements that might apply to the Progress Energy Registrants as a result of a potential CSAPR replacement rulemaking. The continued implementation of the CAIR pending the outcome of the rehearing process and a potential CSAPR replacement rulemaking, including the potential implementation of CAIR Phase II in 2015, will not result in the Progress Energy Registrants adding new emission controls.

The final Mercury and Air Toxics Standards rule (previously referred to as the Utility maximum achievable control technology (MACT) Rule) was published in the Federal Register on February 16, 2012. The final rule establishes emission limits for hazardous air pollutants from new and existing coal-fired and oil-fired steam electric generating units. The rule requires sources to comply with the emission limits by April 16, 2015. Under the Clean Air Act, permitting authorities have the discretion to grant up to a 1-year compliance extension, on a case-by-case basis, to sources that are unable to complete the installation of emission controls before the compliance deadline. The Progress Energy Registrants continue to evaluate the requirements of the rule and develop strategies for complying with the rule's requirements. Strategies to achieve compliance with the final MATS rule are likely to include installing new or upgrading existing air emission control equipment, developing monitoring processes and accelerating retirement of some coal-fired electric generating units. Due to significant investments in nitrogen oxides (NOx) and sulfur dioxide (SO2) emission controls and fleet modernization projects completed or under way, we believe PEC is relatively well positioned to comply with the MATS. However, PEF will be required to complete additional emissions controls and/or fleet modernization projects in order to meet the compliance timeframe for the MATS. On March 29, 2012, PEF announced plans to convert Anclote to 100 percent natural gas, which will substantially reduce emissions, as part of its MATS compliance strategy. For additional information, refer to Note 4.

Numerous petitions for review of the final MATS rule have been filed with the D.C. Court of Appeals. The court established a schedule for the litigation that has final briefs being filed on April 8, 2013. The Progress Energy Registrants cannot predict the outcome of the litigation or how it might affect the MATS requirements as they apply to the Progress Energy Registrants.

As finalized, the cost to the Progress Energy Registrants to comply with the regulation will be material.

The EPA's Clean Air Visibility Rule (CAVR) is an implementing regulation in its Regional Haze program that requires states to identify facilities, including power plants, built between August 1962 and August 1977 with the potential to produce emissions that affect visibility in certain specially protected areas, including national parks and wilderness areas, designated as Class I areas. To help restore visibility in those areas, states must require the identified facilities to install best available retrofit technology (BART) to control their emissions. PEF's BART-eligible units are Anclote and CR1 and CR2. Under an agreement with the Florida Department of Environmental Protection (FDEP) that is reflected in a BART permit issued in final form on October 10, 2012, PEF will either retire its Crystal River Units No. 1 and No. 2 coal-fired steam turbines (CR1 and CR2) as coal-fired units by December 31, 2020 or install pollution control equipment by January 1, 2018. In addition, PEF will convert Anclote to 100 percent natural gas.

The FDEP is working with the EPA to complete development of an approvable regional haze state implementation plan by July 5, 2013, which is consistent with the BART permit issued by the FDEP on October 10, 2012. The outcome of these matters cannot be predicted.

On April 13, 2012, the EPA published in the Federal Register its proposed rule to establish carbon dioxide (CO2) emissions standards for pulverized coal, integrated gasification combined cycle, and natural gas combined cycle electric-generating units that are permitted and constructed in the future. The proposal would not apply to any of the Progress Energy Registrants' coal and natural gas electric generation plants that are currently under construction or in operation. Any future pulverized coal and integrated gasification combined cycle units will have to employ carbon capture and storage technology to meet the CO2 emission standard the EPA has proposed. The proposed standard will not require new natural gas combined cycle facilities to install carbon capture and storage technology.

Management does not expect any material impact on the Progress Energy Registrants' future results of operations or cash flows based on the EPA's proposal. The final rule, however, could be significantly different from the proposal. It is not known when the EPA might finalize the rule.

While the ultimate compliance requirements for the Progress Energy Registrants for MATS, Clean Water Act 316(b) and CCRs will not be known until all the rules have been finalized, for planning purposes, we currently estimate that if the decision is made to retire PEF's CR1 and CR2, MATS compliance costs at the Utilities could range from $150 million to $320 million. If the units are not retired, PEF's MATS compliance costs could exceed $1 billion. The Progress Energy Registrants also expect to incur increased fuel, purchased power, operation and maintenance, and other expenses in conjunction with these EPA regulations, and also expect to incur costs for replacement generation for potential coal-fired power plant retirements. Until the final regulatory requirements of the group of EPA regulations are known and can be fully evaluated, the potential compliance costs associated with these EPA regulatory actions are subject to considerable uncertainty. Therefore, the actual compliance costs incurred may be materially different from these estimates based on the timing and requirements of the final EPA regulations.

The Progress Energy Registrants intend to seek regulatory recovery of amounts incurred associated with regulated operations in complying with these regulations. Refer to Note 4 for further information regarding potential plant retirements and related regulatory filings.

On August 3, 2012, Duke Energy was served with a shareholder Derivative Complaint, which has been transferred to the North Carolina Business Court (Krieger v. Johnson, et al). The lawsuit names as defendants, William D. Johnson, James E. Rogers and the Legacy Duke Energy Directors. Duke Energy is named as a nominal defendant. The lawsuit alleges claims for breach of fiduciary duty in granting excessive compensation to Mr. Johnson. We cannot predict the outcome of this matter.

Pursuant to the Nuclear Waste Policy Act of 1982, the Utilities entered into contracts with the U.S. Department of Energy (DOE) under which the DOE agreed to begin taking spent nuclear fuel by no later than January 31, 1998. All similarly situated utilities were required to sign the same Standard Contract for Disposal of Spent Nuclear Fuel.

The DOE failed to begin taking spent nuclear fuel by January 31, 1998. In January 2004, the Utilities filed a complaint in the U.S. Court of Federal Claims against the DOE, claiming that the DOE breached the standard contract and asserting damages incurred through 2005. In 2011, the judge in the U.S. Court of Federal Claims issued a ruling to award PEC substantially all their asserted damages. As a result, PEC recorded the award in 2011 as an offset for past spent fuel storage costs incurred.

On December 12, 2011, the Utilities filed another complaint in the U.S. Court of Federal Claims against the DOE, claiming damages incurred from January 1, 2006, through December 31, 2010. The damages stem from the same breach of contract asserted in the previous litigation. On March 23, 2012, the Utilities filed their initial disclosure of $113 million of damages with the U.S. Court of Federal Claims and the DOE. The total amount of damages could change during discovery, which is set to end on May 31, 2013. The Utilities may file subsequent damage claims as they incur additional costs. The next status conference to discuss trial dates is scheduled for May 10, 2013. We cannot predict the outcome of this matter.

In October 2009, a jury delivered a verdict in a lawsuit against Progress Energy and a number of our subsidiaries and affiliates arising out of an Asset Purchase Agreement dated as of October 19, 1999, and amended as of August 23, 2000 (the Asset Purchase Agreement) by and among U.S. Global, LLC (Global); Earthco synthetic fuels facilities (Earthco); certain affiliates of Earthco; EFC Synfuel LLC (which was owned indirectly by Progress Energy, Inc.) and certain of its affiliates, including Solid Energy LLC; Solid Fuel LLC; Ceredo Synfuel LLC; Gulf Coast Synfuel LLC (renamed Sandy River Synfuel LLC) (collectively, the Progress Affiliates), as amended by an amendment to the Asset Purchase Agreement. In a case filed in the Circuit Court for Broward County, Fla., in March 2003 (the Florida Global Case), Global requested an unspecified amount of compensatory damages, as well as declaratory relief. Global asserted (1) that pursuant to the Asset Purchase Agreement, it was entitled to an interest in two synthetic fuels facilities previously owned by the Progress Affiliates and an option to purchase additional interests in the two synthetic fuels facilities and (2) that it was entitled to damages because the Progress Affiliates prohibited it from procuring purchasers for the synthetic fuels facilities. As a result of the 2007 expiration of the Internal Revenue Code Section 29 tax credit program, all of our synthetic fuels businesses were abandoned and we reclassified our synthetic fuels businesses as discontinued operations.

The jury awarded Global $78 million. In November 2009, the court assessed $55 million in prejudgment interest and entered judgment in favor of Global in a total amount of $133 million. During the year ended December 31, 2009, we recorded an after-tax charge of $74 million to discontinued operations. In December 2009, we appealed the Broward County judgment to the Florida Fourth District Court of Appeals. Also in December 2009, we made a $154 million payment, which represented payment of the total judgment and a required premium equivalent to two years of interest at the then statutory rate, to the Broward County Clerk of Court bond account. The appellate briefing process has been completed. Oral argument on the appeal was held on September 27, 2011. On October 3, 2012, the Florida appellate court reversed the trial court ruling and directed a verdict on damages. The case was remanded to the trial court to determine whether specific performance is an appropriate remedy. On October 18, 2012, Global filed a Motion for Clarification and Rehearing of Panel Decision, which has yet to be ruled upon. On November 1, 2012, we filed a response in opposition to U.S. Global's motion. We cannot predict the outcome of this matter.

In a second suit filed in the Superior Court for Wake County, N.C., Progress Synfuel Holdings, Inc. et al. v. U.S. Global, LLC (the North Carolina Global Case), the Progress Affiliates seek declaratory relief consistent with our interpretation of the Asset Purchase Agreement. Global was served with the North Carolina Global Case on April 17, 2003. In May 2003, Global moved to dismiss the North Carolina Global Case for lack of personal jurisdiction over Global. In the alternative, Global requested that the court decline to exercise its discretion to hear the Progress Affiliates' declaratory judgment action. In August 2003, the Wake County Superior Court denied Global's motion to dismiss, but stayed the North Carolina Global Case, pending the outcome of the Florida Global Case. The Progress Affiliates appealed the superior court's order staying the case. By order dated September 7, 2004, the North Carolina Court of Appeals dismissed the Progress Affiliates' appeal. Based upon the outcome of the Florida Global Case, we anticipate dismissal of the North Carolina Global Case.

We and our subsidiaries are involved in various litigation matters in the ordinary course of business, some of which involve substantial amounts. While the results of litigation and claims cannot be predicted with certainty, we believe the reasonably possible losses of such matters, individually and in the aggregate, are not material. Additionally, we believe the final outcome of such matters will not have a material adverse effect on our consolidated results of operations, financial position or cash flows.

As a part of normal business, we enter into various agreements providing future financial or performance assurances to third parties. Such agreements include guarantees, standby letters of credit and surety bonds. At September 30, 2012, we do not believe conditions are likely for significant performance under these guarantees. To the extent liabilities are incurred as a result of the activities covered by the guarantees, such liabilities are included in the accompanying Balance Sheets.

At September 30, 2012, we have issued guarantees and indemnifications of and for certain asset performance, legal, tax and environmental matters to third parties, including indemnifications made in connection with sales of businesses. At September 30, 2012, our estimated maximum exposure for guarantees and indemnifications for which a maximum exposure is determinable was $219 million, including $45 million at PEF. Related to the sales of businesses, the latest specified notice period extends until 2013 for the majority of legal, tax and environmental matters provided for in the indemnification provisions. Indemnifications for the performance of assets extend to 2016. For certain matters for which we receive timely notice, our indemnity obligations may extend beyond the notice period. Certain indemnifications related to discontinued operations have no limitations as to time or maximum potential future payments. At September 30, 2012 and December 31, 2011, we had recorded liabilities related to guarantees and indemnifications to third parties of $28 million and $63 million, respectively. These amounts included $20 million and $37 million for PEF at September 30, 2012 and December 31, 2011, respectively. Our liabilities decreased primarily due to the reversal of certain environmental indemnification liabilities for which the indemnification period has expired (See Note 2) and the adjustment to the indemnification for the estimated future years' joint owner replacement power costs related to the CR3 outage (See Note 8C of the 2011 Form 10-K). PEF's liabilities decreased primarily due to the previously mentioned indemnification adjustment related to CR3. During the three and nine months ended September 30, 2012, our and the Utilities' accruals and expenditures related to guarantees and indemnifications were not material. As current estimates change, additional losses related to guarantees and indemnifications to third parties, which could be material, may be recorded in the future.

In addition, the Parent has issued $300 million in guarantees for certain payments of two wholly owned indirect subsidiaries (See Note 17).

As part of its normal business, the Progress Energy Registrants enter into various fixed-price, non-cancelable commitments to purchase or sell power (tolling agreements or power purchase contracts), take-or-pay arrangements, transportation or throughput agreements and other contracts that may or may not be recognized in the respective Balance Sheets. Some of these arrangements may be recognized at fair value in the respective Balance Sheets if such contracts meet the definition of a derivative and the normal purchase normal sale (NPNS) exception does not apply.

During the three and nine months ended September 30, 2012, there were no material changes in the Progress Energy Registrants' other commitments and contingencies other than as follows:

As described in Note 22A in the 2011 Form 10-K, PEC entered into conditional agreements for firm pipeline transportation capacity to support PEC's gas supply needs. As the transactions are subject to several conditions precedent, the estimated costs associated with these agreements were not included in PEC's fuel commitments at December 31, 2011. The estimated total cost to PEC associated with these agreements at December 31, 2011, was approximately $1.510 billion, approximately $380 million of which relates to a capital lease. The agreements pertain to the period from July 2012 through May 2033. During the nine months ended September 30, 2012, the conditions precedent for two of the agreements, including the capital lease agreement, were satisfied. The agreements are through 2032 and have an estimated total cost of approximately $1.030 billion, including $20 million, $103 million, $103 million and $804 million, respectively, for less than one year, one to three years, three to five years and more than five years from December 31, 2011.