Income Taxes

9 Months Ended

Sep. 30, 2012

Income Taxes Disclosure [Line Items]

Income Taxes

14.       INCOME TAXES AND OTHER TAXES

INCOME TAXES

Progress Energy and its subsidiaries file income tax returns in the U.S. with federal and various state governmental authorities. Progress Energy and its subsidiaries have a tax sharing agreement where the separate return method is used to allocate tax expenses and benefits to the subsidiaries whose investments or results of operations provide these tax expenses and benefits. The accounting for income taxes essentially represents the income taxes that each of these subsidiaries would incur if it were a separate company filing its own tax return as a C-corporation.

The effective tax rates for each of the Progress Energy Registrants are as follows:

	Three months ended September 30				Nine months ended September 30
	2012		2011		2012		2011
Progress Energy	32.8	%	37.8	%	34.7	%	36.9	%
PEC	31.9	%	33.4	%	31.6	%	34.2	%
PEF	35.9	%	37.0	%	36.9	%	37.0	%

For the three and nine months ended September 30, 2012, Progress Energy's effective tax rate decreased primarily due toadecrease in pretax income as well as adecrease in the changein fair value of outstanding CVOs.

In addition, for the three and nine months ended September 30, 2012, PEC's effective tax rate decreased primarily due to a decrease in pretax income.

In addition, for the three and nine months ended September 30, 2012, PEF's effective tax ratehad an insignificant change.

For the three and nine months ended September 30, 2012, Progress Energy's effective tax rate decreased primarily due toadecrease in pretax income as well as adecrease in the changein fair value of outstanding CVOs.

In addition, for the three and nine months ended September 30, 2012, PEC's effective tax rate decreased primarily due to a decrease in pretax income.

In addition, for the three and nine months ended September 30, 2012, PEF's effective tax ratehad an insignificant change.

EXCISE TAXES

Certain excise taxes levied by state or local governments are collected by the Utilities from their customers. Taxesthat are required to be paid regardless of the ability to collect from the customer are accounted for on a gross basis. When the Utilities act as an agent, and the tax is not required to be remitted if it is not collected from the customer, the taxes are accounted for on a net basis. Excise taxes accounted for on a gross basis and recorded as revenues and other tax expense in the respective Statements of Operations and Comprehensive Income were as follows:

	Three months ended September 30				Nine months ended September 30
(in millions)	2012		2011		2012		2011
PEC	$	33	$	33	$	85	$	86
PEF		62		63		156		159
Progress Energy	$	95	$	96	$	241	$	245