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Press Release

06/03/2011

Progress Energy files for increase to recover fuel, efficiency, renewable costs

RALEIGH, N.C.  (June 3, 2011) – After two years of rate reductions, Progress Energy Carolinas today filed requests to recover increased costs in three components of the rates paid by its North Carolina customers. The filings reflect higher costs the company has paid for fuel used in electricity generation, as well as investments in energy-efficiency programs and renewable energy required to comply with state law.

If approved by the N.C. Utilities Commission, the filings would increase a monthly residential bill for 1,000 kilowatt-hours (kWh) by $3.87, from the current $102.19 to $106.06. New rates take effect annually on Dec. 1.

The largest portion of the proposed increase is for the fuel component in customer rates. As proposed, the increase would be $2.66 per month on a residential bill of 1,000 kWh. The proposed change reflects higher prices paid for power plant fuels, particularly coal, as well as the cost of materials required for emission reductions from coal-fired power plants.

As filed, the energy-efficiency/demand-side management charge would increase $1.16 per month, and the charge for renewable energy would increase 5 cents for the residential 1,000 kWh bill (to 63 cents per month). Residential bills would increase a total of 3.8 percent; bills for commercial customers would increase approximately 4.4 percent, and industrial customer bills would increase 5.8 percent, on average.

The proposed increase would raise prices to approximately the level they were in 2009. The residential price for 1,000 kWh of electricity dropped $4.12 last year.

Progress Energy maintains a diverse mix of power plant resources – including nuclear, coal, natural gas, oil and hydroelectric energy – to maintain a reliable supply of electricity for the utility's customers while keeping fuel expenses as low as possible.

"We're working every day to increase efficiency in our operations, while continuing to meet our customers' and regulators' expectations for reliable and environmentally sound service," said Lloyd Yates, CEO and president of Progress Energy Carolinas, which serves 1.5 million customers, including 1.3 million in North Carolina. "Our customers and regulators expect nothing less, and we are committed to doing all we can to mitigate the impact of rising prices on the people who depend on us."

The fuel portion of the company's rates is adjusted annually by the Utilities Commission to reflect the actual cost of fuel the utility uses to produce electricity to meet customer demand. By law, Progress Energy does not make a profit from the fuel charge. The company also files annually to recover the costs of implementing programs designed to help reduce energy consumption and save customers money on their energy bills, as well as the portion in customer rates that pays for renewable energy investments.

Under North Carolina's energy law passed in 2007, Progress Energy must provide an increasing percentage of energy sales from renewable resources. The requirement grows from 3 percent in 2012 to 12.5 percent in 2021. The company has signed contracts to purchase energy from a number of solar photovoltaic arrays, biofuels facilities and other renewable sources, and continues to scour the market for additional cost-effective renewable energy opportunities.

Apart from fuel, energy-efficiency and renewable energy expenses, the other main component of customer rates is the base retail rate. Progress Energy Carolinas has not sought an increase in the base rate since 1988.

Progress Energy encourages customers to learn all they can about using energy wisely – to save energy and money. Customers can save up to 20 percent on their energy costs by making simple changes at home. Cleaning air filters, replacing incandescent light bulbs with compact-fluorescent bulbs, adjusting the thermostat and sealing windows and doors can result in noticeable savings. For more energy-efficiency tips, visit www.savethewatts.com. Customers also can learn about energy-efficiency programs and incentives at www.progress-energy.com.

Progress Energy (NYSE: PGN), headquartered in Raleigh, N.C., is a Fortune 500 energy company with more than 22,000 megawatts of generation capacity and approximately $10 billion in annual revenues. Progress Energy includes two major electric utilities that serve about 3.1 million customers in the Carolinas and Florida. The company has earned the Edison Electric Institute's Edison Award, the industry's highest honor, in recognition of its operational excellence, and was the first utility to receive the prestigious J.D. Power and Associates Founder's Award for customer service. The company is pursuing a balanced strategy for a secure energy future, which includes aggressive energy-efficiency programs, investments in renewable energy technologies and a state-of-the-art electricity system. Progress Energy celebrated a century of service in 2008. Visit the company's website at www.progress-energy.com.

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Contact: Corporate Communications 24-Hour Media Line 919/877-(NEWS) 6397

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