Highlights:

-- Reports second-quarter GAAP earnings of $0.79 per share, compared to a loss of $0.75 per share for the same period last year, primarily due to prior-year losses from the final transactions associated with exiting the merchant energy business

-- Reports second-quarter ongoing earnings of $0.77 per share, compared to $0.56 per share for the same period last year, reflecting increased wholesale revenues and AFUDC equity, and an increase in net retail rates related to the Hines Energy Complex

-- Reaffirms 2008 ongoing earnings guidance of $3.05 per share, with a range of 10 cents above and below the target

RALEIGH, N.C., Aug. 7 /PRNewswire-FirstCall/ -- Progress Energy (NYSE: PGN) announced second-quarter reported GAAP earnings of $205 million, or $0.79 per share, compared with reported GAAP losses of $193 million, or $0.75 per share, for the same period last year. The favorable quarter-over- quarter variance in reported GAAP earnings is primarily due to prior-year losses from the final transactions associated with exiting the merchant energy business. Second-quarter ongoing earnings were $199 million, or $0.77 per share, compared to $142 million, or $0.56 per share, last year. The favorable quarter-over-quarter variance in ongoing earnings is primarily due to increased wholesale revenues and AFUDC equity, and an increase in net retail rates related to the Hines Energy Complex. (See the discussion later in this release for a reconciliation of ongoing earnings per share to reported GAAP earnings per share.)

(Logo: http://www.newscom.com/cgi-bin/prnh/20020923/CHM008LOGO-c )

'Overall, our company performed well operationally and financially during the second quarter,' said Bill Johnson, chairman, president and CEO. 'We are continuing to deliver on our strategy to generate solid earnings growth through our two utilities. To help mitigate the effects of weakness in the general economy and lower-than-forecasted customer growth in Florida, we have successfully taken steps to increase wholesale revenues and effectively manage our costs. We are reaffirming our 2008 ongoing earnings guidance of $3.05 per share, with a range of 10 cents above and below that target.'

The 2008 ongoing earnings guidance excludes any impact from CVO mark-to-market adjustment, potential impairments and discontinued operations. Progress Energy is not able to provide a corresponding GAAP equivalent for the 2008 earnings guidance due to the uncertain nature and amount of these adjustments.

See pages 3-5 for detailed second-quarter and year-to-date earnings variance analyses for the Progress Energy Carolinas (PEC), Progress Energy Florida (PEF) and Corporate and Other Businesses segments.

    RECENT DEVELOPMENTS
    -- Received notice that the Florida Public Service Commission (FPSC)
       unanimously approved PEF's need certification petition for two
       advanced, state-of-the-art nuclear power plant units at a site in Levy
       County, Florida.
    -- Submitted a combined license application with the Nuclear Regulatory
       Commission for two new reactors at the Levy County, Florida site.
    -- Received further evidence of strong policy support for new nuclear and
       transmission construction in Florida with the legislature's passage of
       comprehensive energy legislation.
    -- Issued a request for proposals to supply approximately 1,200 MW of
       generating capacity to PEF beginning in 2013, which will compete with
       the company's self-build option consisting of a combined-cycle natural
       gas unit to be built on company property at its existing Suwannee
       plant.
    -- Received approval from the FPSC to recover half of PEF's $213 million
       mid-course fuel cost correction from August to December 2008 and the
       remaining half in 2009.
    -- Received an order from the Federal Energy Regulatory Commission
       approving an annual increase of approximately $17 million to $19
       million in transmission rates for PEC pursuant to the company's revised
       Open Access Transmission Tariff filing.
    -- Filed a petition with the North Carolina Utilities Commission (NCUC) to
       terminate Clean Smokestacks Act amortizations in excess of $569.1
       million, and instead allow PEC to place into rate base all capital
       costs associated with its compliance with the Clean Smokestacks Act in
       excess of $569.1 million.
    -- Received notice that the U.S. Court of Appeals for the D.C. Circuit
       vacated the Environmental Protection Agency's 2005 Clean Air Interstate
       Rule.
    -- Achieved top-quartile ranking among energy providers in the latest
       residential customer satisfaction survey from J.D. Power & Associates.
    -- Made a number of announcements relating to energy conservation,
       demand-side management (DSM), and renewable energy:
        -- Established a new department, the Efficiency and Innovative
           Technology Department, to meet growing energy demand and address
           global climate change through the use of renewable and alternative
           energy, advanced technologies such as plug-in hybrid vehicles and
           new energy-efficiency and DSM programs.
        -- Filed an application with the NCUC for recovery of PEC's costs
           incurred for the adoption and implementation of DSM and
           energy-efficiency programs in North Carolina.
        -- Filed an application with the NCUC for recovery of PEC's costs
           associated with compliance with renewable energy portfolio
           standards in North Carolina.
        -- Announced PEC's power purchase agreement with SAS Institute, Inc.
           to buy Renewable Energy Certificates and electricity generated by
           its proposed 1-MW photovoltaic solar electric power farm.
        -- Issued second global climate change report, which outlines the
           company's initiatives and calls for a national policy to reduce
           carbon emissions across all sectors of the economy.

Press releases regarding various announcements are available on the company's Web site at www.progress-energy.com/aboutus/news .

SECOND-QUARTER 2008 BUSINESS HIGHLIGHTS

Below are the second-quarter and year-to-date 2008 earnings variance analyses for the company's business units. See the reconciliation table on pages 5-6 and pages S-1 and S-2 of the supplemental data for a reconciliation of reported GAAP earnings per share to ongoing earnings per share. Also see the attached supplemental data schedules for additional information on PEC and PEF electric revenues, energy sales, energy supply, weather impacts and other information.

    QUARTER-OVER-QUARTER ONGOING EPS VARIANCE ANALYSIS
    Progress Energy Carolinas
    -- Reported ongoing earnings per share of $0.41, compared with $0.34 for
       the same period last year; reported GAAP earnings per share of $0.40,
       compared with $0.34 for the same period last year
    -- Reported primary quarter-over-quarter ongoing earnings per share
       favorability of:
        -- $0.03 growth and usage
        -- $0.03 wholesale revenues primarily due to increased energy rates
           and sales with a major customer
        -- $0.02 other retail margin related to the expiration of a power
           buyback agreement and the impact of the comprehensive energy bill
           implementation
        -- $0.01 AFUDC equity related to an increase in eligible construction
           projects
        -- $0.01 other
    -- Reported primary quarter-over-quarter ongoing earnings per share
       unfavorability of:
        -- $(0.03) depreciation and amortization primarily associated with the
           accelerated cost recovery program for nuclear generating assets
    -- Added 25,000 customers (net) during the last 12 months

    Progress Energy Florida
    -- Reported ongoing earnings per share of $0.46, compared with $0.27 for
       the same period last year; reported GAAP earnings per share of $0.48,
       compared with $0.27 for the same period last year
    -- Reported primary quarter-over-quarter ongoing earnings per share
       favorability of:
        -- $0.05 wholesale revenues primarily due to two new contracts with
           one major customer
        -- $0.05 AFUDC equity related to an increase in eligible construction
           projects
        -- $0.04 weather
        -- $0.04 net retail rate increase related to the Hines Energy Complex
        -- $0.04 other operating expenses primarily due to prior-year
           disallowed fuel costs and a gain on a land sale in 2008
        -- $0.02 operation and maintenance expense (O&M) primarily due to a
           favorable sales and use tax audit adjustment
    -- Reported primary quarter-over-quarter ongoing earnings per share
       unfavorability of:
        -- $(0.02) income taxes primarily due to a prior-year benefit related
           to the closure of certain federal tax years and positions
        -- $(0.01) growth and usage
        -- $(0.02) other
    -- Added 2,000 customers (net) during the last 12 months

    Corporate and Other Businesses (includes primarily Holding Company Debt)
    -- Reported ongoing expenses of $0.10 per share, compared with expenses of
       $0.05 per share for the same period last year; reported GAAP expenses
       of $0.11 per share, compared with expenses of $0.07 per share for the
       same period last year
    -- Reported primary quarter-over-quarter ongoing expenses per share
       favorability of:
        -- $0.03 other primarily due to decreased legal expenses and increased
           investment gains
    -- Reported primary quarter-over-quarter ongoing expenses per share
       unfavorability of:
        -- $(0.05) income tax expense primarily due to a prior-year benefit
           from the closure of certain federal tax years and positions related
           to divested subsidiaries
        -- $(0.03) interest expense primarily due to a prior-year benefit from
           the closure of certain federal tax years and positions primarily
           related to divested subsidiaries and a decrease in interest
           allocated to discontinued operations

    YEAR-OVER-YEAR ONGOING EPS VARIANCE ANALYSIS
    Progress Energy Carolinas
    -- Reported year-to-date ongoing and reported GAAP earnings per share of
       $0.87, compared with $0.82 for the same period last year
    -- Reported primary year-over-year ongoing earnings per share favorability
       of:
        -- $0.08 other retail margin related to the expiration of a power
           buyback agreement and the impact of the comprehensive energy bill
           implementation
        -- $0.06 growth and usage
        -- $0.01 AFUDC equity related to an increase in eligible construction
           projects
        -- $0.01 other
    -- Reported primary year-over-year ongoing earnings per share
       unfavorability of:
        -- $(0.05) depreciation and amortization primarily associated with the
           accelerated cost recovery program for nuclear generating assets and
           higher depreciable base
        -- $(0.02) weather
        -- $(0.02) O&M primarily due to an increase in estimated environmental
           remediation expenses and increased spending on vegetation
           management in compliance with federal regulations
        -- $(0.02) changes in income tax estimates

    Progress Energy Florida
    -- Reported year-to-date ongoing earnings per share of $0.72, compared
       with $0.51 for the same period last year; reported GAAP earnings per
       share of $0.74, compared with $0.51 for the same period last year
    -- Reported primary year-over-year ongoing earnings per share favorability
       of:
        -- $0.10 AFUDC equity related to an increase in eligible construction
           projects
        -- $0.07 wholesale revenues primarily due to two new contracts with
           one major customer and a contract amendment with another major
           customer
        -- $0.06 net retail rate increase related to the Hines Energy Complex
           $0.04 weather
        -- $0.04 other operating expenses primarily due to prior-year
           disallowed fuel costs and a gain on a land sale in 2008
    -- Reported primary year-over-year ongoing earnings per share
       unfavorability of:
        -- $(0.03) growth and usage
        -- $(0.03) income taxes primarily due to a prior-year benefit related
           to the closure of certain federal tax years and positions
        -- $(0.02) depreciation due to higher depreciable base
        -- $(0.02) other

    Corporate and Other Businesses (includes primarily Holding Company Debt)
    -- Reported year-to-date ongoing expenses of $0.25 per share, compared
       with expenses of $0.17 per share for the same period last year;
       reported GAAP expenses of $0.26 per share, compared with expenses of
       $0.19 per share for the same period last year
    -- Reported primary year-over-year ongoing expenses per share favorability
       of:
        -- $0.04 other primarily due to decreased legal expenses
    -- Reported primary year-over-year ongoing expenses per share
       unfavorability of:
        -- $(0.07) income tax expense primarily due to a prior-year benefit
           from the closure of certain federal tax years and positions related
           to divested subsidiaries
        -- $(0.05) interest expense primarily due to a prior-year benefit from
           the closure of certain federal tax years and positions primarily
           related to divested subsidiaries and a decrease in interest
           allocated to discontinued operations

ONGOING EARNINGS ADJUSTMENTS

Progress Energy's management uses ongoing earnings per share to evaluate the operations of the company and to establish goals for management and employees. Management believes this presentation is appropriate and enables investors to more accurately compare the company's ongoing financial performance over the periods presented. Ongoing earnings as presented here may not be comparable to similarly titled measures used by other companies. The following table provides a reconciliation of ongoing earnings per share to reported GAAP earnings per share.

                            Progress Energy, Inc.
  Reconciliation of Ongoing Earnings per Share to Reported GAAP Earnings per
                                    Share
                                   Three months ended       Six months ended
                                         June 30                 June 30
                                     2008      2007*         2008       2007*
    Ongoing earnings per share      $0.77     $0.56         $1.34      $1.15
    Tax levelization                 0.01         -          0.02      (0.01)
    Discontinued operations          0.02     (1.29)         0.25      (0.81)
    CVO mark-to-market              (0.01)    (0.02)        (0.01)     (0.01)
    Reported GAAP earnings per
     share                          $0.79    $(0.75)        $1.60      $0.32
    Shares outstanding (millions)     260       256           259        255

* Previously reported 2007 results have been restated to reflect discontinued operations. See pages S-1 and S-2 of the supplemental data for information regarding 2007's core and non-core earnings.

Reconciling adjustments from ongoing earnings to GAAP earnings are as follows:

Tax Levelization

Generally accepted accounting principles require companies to apply an effective tax rate to interim periods that is consistent with a company's estimated annual tax rate. The company projects the effective tax rate for the year and, then, based upon projected operating income for each quarter, raises or lowers the tax expense recorded in that quarter to reflect the projected tax rate. The resulting tax adjustment increased earnings per share by $0.01 for the quarter and had no impact on earnings per share for the same period last year, and has no impact on the company's annual earnings. Because this adjustment varies by quarter but has no impact on annual earnings, management believes this adjustment is not representative of the company's ongoing quarterly earnings.

Discontinued Operations

The company has reduced its business risk by exiting nonregulated businesses to focus on the core operations of the utilities. The discontinued operations of these nonregulated businesses increased earnings per share by $0.02 for the quarter and decreased earnings per share by $1.29 for the same period last year. See page S-4 of the supplemental data for further information on the impact of discontinued operations. Due to disposition of these assets, management does not view this activity as representative of the ongoing operations of the company.

Contingent Value Obligation (CVO) Mark-to-Market

In connection with the acquisition of Florida Progress Corporation, Progress Energy issued 98.6 million CVOs. Each CVO represents the right of the holder to receive contingent payments based on after-tax cash flows above certain levels of four synthetic fuels facilities purchased by subsidiaries of Florida Progress Corporation in October 1999. The CVO liability is valued at fair value, and unrealized gains and losses from changes in fair value are recognized in earnings each quarter. The CVO mark-to-market decreased earnings per share by $0.01 for the quarter and decreased earnings per share by $0.02 for the same period last year. Progress Energy is unable to predict the changes in the fair value of the CVOs, and management does not consider the adjustment to be a component of ongoing earnings.

This earnings announcement, as well as a package of detailed financial information, is available on the company's Web site at www.progress-energy.com . Additionally, the slides accompanying the presentation may be downloaded beginning at 9:30 a.m. ET today at www.progress-energy.com/webcast .

Progress Energy's conference call with the investment community will be held August 7, 2008, at 10 a.m. ET (7 a.m. PT). Investors, media and the public may listen to the conference call by dialing 913-312-0691, confirmation code 1644230. If you encounter problems, please contact Investor Relations at 919-546-6057. A playback of the call will be available from 1 p.m. ET August 7 through midnight August 21. To listen to the recorded call, dial 719-457-0820 and enter confirmation code 1644230.

A webcast of the live conference call will be available at www.progress-energy.com/webcast. The webcast will be available in Windows Media format. The webcast will be archived on the site for at least 30 days following the call for those unable to listen in real time.

Progress Energy, headquartered in Raleigh, N.C., is a Fortune 250 energy company with more than 21,000 megawatts of generation capacity and $9 billion in annual revenues. The company is observing its 100th anniversary in 2008. Progress Energy includes two major utilities that serve 3.1 million customers in the Carolinas and Florida. The company 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 customer service. Progress Energy serves two growing areas of the country, and the company is pursuing a balanced strategy for a secure energy future. That balance includes aggressive energy-efficiency programs, investments in renewable energy technologies and a state-of-the-art electricity system. For more information about Progress Energy, visit the company's Web site at www.progress-energy.com .

Caution Regarding Forward-Looking Information:

This release contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.