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Press Release

06/28/2007

Stakeholders sign agreement on hydroelectric plant relicensing project

RALEIGH, N.C.(June 28, 2007) -- Progress Energy and a key group of stakeholders have reached an agreement on the company's pending application before the Federal Energy Regulatory Commission (FERC) to relicense the Tillery and Blewett hydroelectric plants. The terms of the agreement, which will be filed with FERC, could allow Progress Energy to continue supplying inexpensive, renewable power for the region for the next 50 years.

The stakeholder group, representing a diverse group of local interests, nongovernmental organizations and federal, state and local governments, worked diligently for more than four years to identify, study and analyze water quality, plant operations, recreational and environmental issues.

"The comprehensive plan reflects Progress Energy's and the stakeholder group's commitment to the community and strikes a balance between the many demands on this important public resource," said Phil Lucas, Progress Energy's hydroelectric relicensing project manager. "As a result, the entire Pee Dee River region of North Carolina and South Carolina will benefit from the plan."

The Tillery and Blewett hydroelectric plants, which are located on the Pee Dee River in central North Carolina, combine to generate 108 megawatts of electricity and are an important part of Progress Energy's balanced approach to meeting the generation needs of the company's 1.4 million customers in the Carolinas.

"The settlement agreement successfully balances Progress Energy's hydropower generation needs with improvements to the Pee Dee River, its riparian corridor and reservoir resources," said Secretary William G. Ross of the N.C. Department of Environment and Natural Resources. "We look forward to the framework of protected and improved aquatic ecosystems and riparian lands established in the heart of North Carolina by this agreement and the anticipated FERC license and are especially pleased that this agreement is supported by both North Carolina and South Carolina."

"The South Carolina Department of Natural Resources has been actively involved in the Progress Energy Yadkin-Pee Dee River hydropower relicensing process and appreciates the stakeholders' cooperative approach and willingness to include full consideration of our natural resource interests," added Ed Duncan, Director of Environmental Programs for the South Carolina Department of Natural Resources. "The comprehensive settlement agreement we have developed appropriately addresses our state's interest in the Pee Dee River's resources."

The plan includes provisions to enhance plant operations that will protect downstream resources. These provisions increase minimum flows from both plants and dictate seasonal adjustments to improve aquatic habitats, which will promote and sustain healthy fish populations. As part of the process, a drought protocol was also developed that can be enacted during periods of naturally occurring low river flows. This protocol coordinates releases from the hydroelectric facilities along the Pee Dee River to minimize impacts to lake elevations and downstream users.

If the settlement document is adopted by FERC as the new operating license, the plan calls for Progress Energy to donate more than 1,900 acres of riparian lands to the State of North Carolina. These riparian lands are important because they protect water quality and provide habitat for many species of plants and animals including rare and protected species. Several tracts included in the land donation are habitats for distinct plant and animal communities that are found nowhere else in the region.

"From a conservation and recreation perspective, this agreement is very positive," said Jason Walser, executive director of the Land Trust for Central North Carolina. "The tracts being donated to the North Carolina Wildlife Resources Commission are prime hunting and fishing lands -- lands that will forevermore be available for the public to enjoy. These lands include some of the most ecologically significant tracts in the southern Piedmont, and their protection is important for wildlife and humans alike."

Recreational enhancements are also included in the plan and will improve public access and lake use opportunities. Progress Energy plans to build new amenities including restrooms and picnic facilities at public access points located near both plants. Additionally, a new boat launch access area will be developed downstream of the Tillery Plant.

Progress Energy will file the comprehensive agreement with FERC and will request that this agreement take the place of the license application Progress Energy filed in April 2006. The application covers the Tillery and the Blewett hydroelectric plants, which have licensed generation capacities of 84 and 24 megawatts, respectively. The current operating license expires on April 30, 2008.

Progress Energy, headquartered in Raleigh, N.C., is a Fortune 250 energy company with more than 21,000 megawatts of generation capacity and $10 billion in annual revenues. The company's holdings include two electric utilities serving approximately 3.1 million customers in North Carolina, South Carolina and Florida. Progress Energy is the 2006 recipient of the Edison Electric Institute's Edison Award, the industry's highest honor, in recognition of its operational excellence. The company also is the first utility to receive the prestigious J.D. Power and Associates Founder's Award for dedication, commitment and sustained improvement in customer service. For more information about Progress Energy, visit the company's Web site at www.progress-energy.com.

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Contacts: Progress Energy -- 24-hour media line, (919) 546-6189

NC Department of Environment and Natural Resources -- Diana Kees, (919) 715-4112

Land Trust for Central North Carolina -- Jason Walser, (704) 647-0302

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