Filing reflects higher cost of fuel used in generating electricity to meet customer demand

FLORENCE, S.C. (April 27, 2005) -- Reflecting significant increases in the cost of fuel used to produce electricity, Progress Energy Carolinas today filed for an increase in the fuel rate charged to its South Carolina customers.

Progress Energy Carolinas is asking the South Carolina Public Service Commission to approve a $97 million, or 21 percent, increase in the fuel components of its rates. The company requested the change to recoup unrecovered fuel costs for the previous 15 months and to meet expected fuel costs in the near future. If approved, the increase would take effect July 1, 2005.

Progress Energy Carolinas does not make a profit from the increase. The fuel rate is a regulated, direct pass-through charge to all electric consumers for the actual cost of fuel the utility uses to produce electricity to meet customer electricity demand. Progress Energy Carolinas has not requested a general rate increase since 1988.

"Progress Energy Carolinas remains committed to providing reliable energy for our customers at the least possible cost," said Emerson Gower, vice president of Progress Energy Carolinas' Southern Region, which includes all of the company's South Carolina service area. "Just as each of us is paying more at the gas pump, the cost of all types of fuel has increased significantly in the last year."

If approved, the average increase would be 16 percent for residential customers. This translates into a $13.23 per month increase for a residential electric bill, based on usage of 1,000 kilowatt-hours (from $84.18 currently to $97.41).

The primary cause of the increase is the rising cost of coal and natural gas needed to run Progress Energy's generating plants. Coal market prices increased more than 60 percent in the last year. In addition, the cost of transporting fuel to the company's generating plants has also increased. This increase is due to significantly higher freight rates, the cost of fuel used to operate rail cars and other rail maintenance expenses.

International economics also play a role in the price of fuel. A significant increase in demand for coal to fuel China's growing economy has had dramatic impacts on price and supply in the United States, as more U.S. coal is being shipped abroad. This has forced Progress Energy and other utilities to pay higher prices for coal to meet customer electricity needs.

Progress Energy is able to mitigate the impact somewhat with a diverse mix of power plant resources. The company's generating plants continue to set the industry standard in safety, reliability and cost performance. The company's efficient use of nuclear, fossil-fueled and hydroelectric plants helps lessen the impacts of volatility in price or supply of any one fuel source.

Progress Energy has absorbed the rising cost of fuel over the last 15 months without any recovery from customers. The increase requested is critical to fueling generation plants and providing a reliable flow of energy to customers. Increases are being felt across the country in virtually all fuel sources. Other utilities have recently filed, or will likely be filing, for increases to cover the additional expense as well.

"We know any increase is a strain on customers, coupled with higher prices at the pump and increased costs for heating and cooling with natural gas," added Gower. "As always, we're willing to work with customers on payment options if they need assistance."

Customers who qualify for assistance from Progress Energy's Project Share program may contact the Customer Service Center. The program provides assistance to residential customers whose income is at or below 150 percent of the federal poverty level and who are experiencing a heating- or cooling-related crisis. The South Carolina Division of Economic Opportunity determines customer eligibility.

The Progress Energy Project Share program is maintained through voluntary contributions from employees of Progress Energy subsidiaries, shareholders, customers, civic organizations, churches and the Progress Energy Foundation, which provided $250,000 in matching funds in 2004. Since it began in 1982, the program has provided more than $15 million to families in need who live in the Progress Energy Carolinas service area.

Progress Energy (NYSE: PGN), headquartered in Raleigh, N.C., is a Fortune 250 diversified energy company with more than 24,000 megawatts of generation capacity and $9 billion in annual revenues. The company's holdings include two electric utilities serving more than 2.9 million customers in North Carolina, South Carolina and Florida. Progress Energy also includes nonregulated operations covering merchant generation, energy marketing and natural gas exploration. For more information about Progress Energy, visit the company's Web site at http://www.progress-energy.com.

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