Company cites need for new power plants, increased storm reserve and the growing costs to provide superior service

TALLAHASSEE, Fla. (April 29, 2005) -- To ensure that electric system investments continue to meet customer and regulatory expectations for reliability and performance, Progress Energy Florida today filed a request with the Florida Public Service Commission (PSC) for a new base rate plan beginning Jan. 1, 2006.

The company is seeking to increase base rates by roughly $206 million annually to support new power plants, increase the storm reserve fund and better reflect the costs of providing reliable service to customers in one of the fastest-growing regions of the country. If approved, the increase would raise a monthly residential customer bill of 1,000 kilowatt-hours by $3.79, or about 4 percent.

"In order to meet the growing electricity demands of our customers, and to maintain the superior reliability they expect, we must increase our base rates," said Bill Habermeyer, Progress Energy Florida president and CEO. "Our goal is to keep our prices as low as possible, but we have not increased our base rates in 12 years. In fact, while prices for other products and services have risen dramatically in the past decade, our prices have been reduced by more than 9 percent."

Progress Energy has added 350,000 new retail customers and more than one-third of its current power plant capacity during the last decade, while the company's current base rates are more than 9 percent lower than in 1994. Base rates were also lowered in 2002.

Progress Energy intends to continue the substantial investments made during the last four years to provide superior reliability and meet the challenges of customer growth, as well as increased per-person usage of electricity. The cost of generating, transmitting and distributing electricity and providing customer service has increased dramatically over the last decade. Among the largest components are the following:

?Roughly half of the requested amount is for new power plants needed to meet increasing customer electricity demand and new regulatory reserve expectations.

?About $50 million represents the company's recommended annual storm reserve fund contribution. Given last year's storm season, it is clear the amount collected for the storm reserve must be increased from the current $6 million per year.

?Another $30 million is needed for the company to continue to provide the level of service customers expect. Reliability and customer service have been improved dramatically during the last four years. The increase will help ensure that improvement continues.

?Roughly $22 million of the requested amount is to remove out-of-use fossil-fueled power plants from sites, and to return those sites to their original condition; as well as depreciation costs to reflect wear and tear on facilities the company placed in service.

The PSC has scheduled public hearings on Progress Energy's filing in July in Ocala, St. Petersburg and Clearwater and technical hearings in September in Tallahassee. The commission will rule on the issue in late 2005.

Progress Energy will post a summary of its rate case filings on its Web site later today.

Progress Energy Florida, a subsidiary of Progress Energy (NYSE: PGN), provides electricity and related services to more than 1.5 million customers in Florida. The company is headquartered in St. Petersburg, Fla., and serves a territory encompassing over 20,000 square miles including the cities of St. Petersburg, Clearwater, as well as the Central Florida area surrounding Orlando. For more information about Progress Energy, visit the company's Web site at: <http://www.progress-energy.com>.

This document contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve estimates, projections, goals, forecasts, assumptions, risk and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Any forward-looking statement speaks only as of the date such statement is made, and we undertake no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made. Examples of factors that you should consider with respect to any forward-looking statements made in this document include, but are not limited to, the following: the impact of fluid and complex government laws and regulations, including those relating to the environment; deregulation or restructuring in the electric industry that may result in increased competition and unrecovered (stranded) costs; our ability to implement the cost management initiatives as planned; the uncertainty regarding the timing, creation and structure of regional transmission organizations; weather conditions that directly influence the demand for electricity; our ability to recover through the regulatory process, and the timing of such recovery of, the costs associated with the four hurricanes that impacted our service territory in 2004 or other future significant weather events; recurring seasonal fluctuations in demand for electricity; fluctuations in the price of energy commodities and purchased power; economic fluctuations and the corresponding impact on our commercial and industrial customers; the ability of our subsidiaries to pay upstream dividends or distributions to us; the impact on our facilities and the businesses from a terrorist attack; the inherent risks associated with the operation of nuclear facilities, including environmental, health, regulatory and financial risks; the ability to successfully access capital markets on favorable terms; our ability to maintain our current credit ratings and the impact on our financial condition and ability to meet cash and other financial obligations in the event our credit ratings are downgraded below investment grade; the impact that increases in leverage may have on us; the impact of derivative contracts used in the normal course of business by us; investment performance of pension and benefit plans; our ability to control costs, including pension and benefit expense, and achieve its cost management targets for 2007; the availability and use of Internal Revenue Code Section 29 (Section 29) tax credits by synthetic fuel producers and our continued ability to use Section 29 tax credits related to our coal and synthetic fuel businesses; the impact to our financial condition and performance in the event it is determined we are not entitled to previously taken Section 29 tax credits; the impact of future accounting pronouncements regarding uncertain tax positions; the outcome of Progress Energy Florida's rate proceeding in 2005 regarding its future base rates; our ability to manage the risks involved with the operation of our nonregulated plants, including dependence on third parties and related counter-party risks, and a lack of operating history; our ability to manage the risks associated with our energy marketing operations; the outcome of any ongoing or future litigation or similar disputes and the impact of any such outcome or related settlements; and unanticipated changes in operating expenses and capital expenditures. Many of these risks similarly impact our subsidiaries.

These and other risk factors are detailed from time to time in our SEC reports. All such factors are difficult to predict, contain uncertainties that may materially affect actual results, and may be beyond our ability to control or estimate precisely. New factors emerge from time to time, and it is not possible for management to predict all such factors or to assess the effect each such factor will have on us.

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