Highlights:    Second Quarter 2009   --  Reports second-quarter GAAP earnings of $0.62 per share, compared to       $0.78 per share for the same period last year    --  Reports second-quarter ongoing earnings of $181 million, or $0.64 per       share, compared to $199 million, or $0.76 per share, for the same       period last year   Year-to-date 2009   --  Reports GAAP earnings for the first six months of 2009 of $1.28 per       share, compared to $1.59 per share for the same period last year,       primarily driven by the divestiture of non-utility businesses in 2008   --  Reports ongoing earnings for the first six months of 2009 of $363       million, or $1.30 per share, compared to $346 million, or $1.33 per       share, for the same period last year    --  Reaffirms 2009 ongoing earnings guidance of $2.95 to $3.15 per share    

Progress Energy announced second-quarter GAAP earnings of $174 million, or $0.62 per share, compared with GAAP earnings of $205 million, or $0.78 per share, for the same period last year. Second-quarter ongoing earnings were $181 million, or $0.64 per share, compared to $199 million, or $0.76 per share, for the same period last year. The significant drivers in ongoing earnings per share were lower retail growth and usage, increased interest expense and share dilution, partially offset by favorable AFUDC equity. (See the discussion later in this release for a reconciliation of ongoing earnings per share to GAAP earnings per share.)

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"Despite the lingering effects of the economic recession, our company has performed well operationally and financially through the first two quarters of the year," said Bill Johnson, chairman, president and CEO. "There have been positive regulatory outcomes on issues vital to our utilities, which help us attract the capital to make smart long-term investments for our customers. Our leadership team is committed to effectively managing our business and executing our capital plan. We continue to aggressively pursue the three major components of our balanced solution strategy: significant expansion of our energy efficiency programs, greater investment in cost-effective renewable energy and needed investments in state-of-the-art plants and other facilities.

"Halfway through the year in a challenging economy, we are well positioned to achieve our earnings goals. Across the company, our employees continue to identify and implement significant cost savings and process improvements to provide outstanding service as efficiently as possible. Our focus is on the fundamentals of safety, customer service, operational excellence and creating value for our shareholders," Johnson said.

Progress Energy reaffirms its 2009 ongoing earnings guidance range of $2.95 to $3.15 per share. The ongoing earnings guidance excludes the impact, if any, from CVO mark-to-market adjustment, potential impairments and discontinued operations. Progress Energy is not able to provide a corresponding GAAP equivalent for the 2009 earnings guidance due to the uncertain nature and amount of these adjustments.

See pages 3-6 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    Financial and Regulatory   --  Received approval from the Florida Public Service Commission (FPSC)       for a $69.5 million increase in rates for the second half of 2009,       consisting of $6.5 million interim relief related to PEF's return on       equity and $63 million limited relief for the Bartow Plant repowering,       effective July 2009.  Future recovery of the Bartow repowering will be       addressed in the pending base rate proceeding.   --  Received approval from the FPSC to defer PEF's estimated $31.5 million       2009 pension expense, half of which was deferred in the second       quarter. This deferral does not affect PEF's 2009 customer rates.   --  Ordered by the FPSC to refund $7.7 million of disallowed fuel costs       plus interest to PEF's ratepayers. The company is evaluating its       options, including a request for reconsideration or appeal.   --  North Carolina Governor signed into law legislation that included       three key provisions that may impact PEC:       --  Abbreviates the certification process for PEC to construct a new           natural gas plant as long as PEC permanently retires the existing           coal unit at that specific site.       --  Provides a recovery mechanism for utilities if they invest in zero           emissions renewable energy facilities within the next five years.       --  Changes the state's Dam Safety Act such that dams at utility           coal-fired power plants will now be subject to the Act's           applicable provisions, including state inspection.   --  Signed 20-year wholesale contract extension to continue to supply       electricity to the city of Fayetteville, N.C., through mid-2032.   --  Filed petition with the North Carolinas Utilities Commission to       decrease the fuel component of customer rates and adjust the       components of energy-efficiency programs and renewable energy       resources, resulting in a slight net reduction in customer bills. If       approved, rates would be effective December 2009.   --  Received approval from the South Carolina Public Service Commission to       decrease customer bills by approximately 2 percent through reduced       fuel costs and a slight increase in costs related to energy-efficiency       and demand-side management programs, with new rates effective July       2009.    --  Ordered by a South Carolina jury to pay $9 million in damages related       to a wrongful death lawsuit from 2003.     State-of-the-Art Power Plants   --  Completed outage at PEF's 720-megawatt, coal-fired Crystal River Unit       5, which included installation of low-NOx burners and a selective       catalytic reduction system, which are the first steps in reducing the       plant's sulfur dioxide and nitrogen oxide emissions by 90 percent and       mercury emissions by 80 percent.   --  Completed two-year, $800 million repowering of PEF's Bartow Plant from       oil to natural gas, more than doubling the plant's generating capacity       to 1,200 megawatts and reducing emissions by more than 80 percent,       including a 98 percent reduction in sulfur dioxide emissions.   --  Placed in service 157-megawatt combustion turbine unit at PEC's Wayne       County Energy Complex.    --  Broke ground on 600-megawatt combined cycle gas turbine at PEC's       existing Richmond County Energy Complex, scheduled for completion in       June 2011.     Alternative Energy & Energy Efficiency   --  Filed 10-year demand-side management plan with the FPSC:       --  Surpassed $1 billion in energy-cost savings in Florida through           participation in energy-efficiency programs since 1981.       --  Proposed to increase the existing energy-efficiency goal of 412           million kilowatt-hours by 50 percent.   --  Received approval for eight new energy-efficiency programs in North       Carolina and South Carolina, which will help retail customers save       money and reduce their energy use.   --  Announced SunSense(SM) an expanded solar energy strategy in the       Carolinas and Florida, which is expected to expand the scope and use       of solar energy by more than 100 megawatts over the next decade.        SunSense includes a range of new solar incentives and programs.    --  Signed agreement with Southern Energy and NxGen Power to purchase the       energy produced by a new 1.3-megawatt solar photovoltaic plant in       Raleigh, N.C., scheduled to begin operation in early 2010.  This       brings the total amount of solar-generated electricity scheduled to be       purchased by PEC to 5 megawatts.     Awards, Honors & Recognitions   --  PEC received top-quartile ranking in the latest residential customer       satisfaction survey from J.D. Power & Associates.    --  Selected by the Environmental Protection Agency as a recipient of the       2009 Energy Star Leadership in Housing Award for efforts to promote       energy-efficient construction and environmental protection in the       Carolinas.    

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

SECOND-QUARTER 2009 BUSINESS HIGHLIGHTS

Below are the second-quarter and year-to-date 2009 earnings variance analyses for the company's segments. See the reconciliation tables on pages 7-8 and on pages S-1 and S-2 of the supplemental data for a reconciliation of ongoing earnings per share to GAAP 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 topics.

   QUARTER-OVER-QUARTER ONGOING EPS VARIANCE ANALYSIS    Progress Energy Carolinas   --  Reported second-quarter ongoing earnings per share of $0.33, compared       with $0.41 for the same period last year; GAAP earnings per share of       $0.33, compared with $0.40 for the same period last year.   --  Reported primary quarter-over-quarter ongoing earnings per share       favorability of:       --  $0.02 weather       --  $0.02 depreciation and amortization primarily due to depreciation           associated with accelerated cost-recovery program for nuclear           generating assets recognized during 2008, partially offset by           impact of depreciable asset base increases       --  $0.01 AFUDC equity   --  Reported primary quarter-over-quarter ongoing earnings per share       unfavorability of:       --  $(0.04) wholesale revenues primarily due to lower energy rates           with a major customer       --  $(0.03) retail growth and usage, primarily in the industrial           sector       --  $(0.01) O&M       --  $(0.01) other operating       --  $(0.01) income taxes       --  $(0.03) share dilution primarily due to Progress Energy's issuance           of 14.4 million shares of common stock in January 2009     --  15,000 net increase in the average number of customers for the three       months ended June 30, 2009, compared to the same period in 2008     Progress Energy Florida   --  Reported second-quarter ongoing earnings per share of $0.43, compared       with $0.46 for the same period last year; GAAP earnings per share of       $0.42, compared with $0.48 for the same period last year.   --  Reported primary quarter-over-quarter ongoing earnings per share       favorability of:       --  $0.04 other margin primarily due to returns on nuclear and           environmental cost-recovery clause assets       --  $0.03 AFUDC equity primarily due to increased eligible           construction project costs       --  $0.02 retail rates primarily due to impact of interim and limited           rate relief       --  $0.01 O&M       --  $0.01 other   --  Reported primary quarter-over-quarter ongoing earnings per share       unfavorability of:       --  $(0.04) interest expense primarily due to higher average debt           outstanding and prior-year interest benefit resulting from the           resolution of tax matters       --  $(0.03) retail growth and usage       --  $(0.03) other operating primarily due to regulatory disallowance           of fuel costs and prior-year gain on land sales       --  $(0.01) depreciation and amortization       --  $(0.03) share dilution primarily due to Progress Energy's issuance           of 14.4 million shares of common stock in January 2009     --  8,000 net decrease in the average number of customers for the three       months ended June 30, 2009, compared to the same period in 2008     Corporate and Other Businesses (includes primarily Holding Company Debt)   --  Reported second-quarter ongoing after-tax expenses of $0.12 per share       compared with after-tax expenses of $0.11 per share for the same       period last year; GAAP after-tax expenses of $0.13 per share, compared       with after-tax expenses of $0.10 per share for the same period last       year.   --  Reported primary quarter-over-quarter ongoing after-tax expenses per       share favorability of:       --  $0.01 share dilution   --  Reported primary quarter-over-quarter ongoing after-tax expenses per       share unfavorability of:       --  $(0.01) other        --  $(0.01) interest expense     YEAR-OVER-YEAR ONGOING EPS VARIANCE ANALYSIS    Progress Energy Carolinas   --  Reported year-to-date ongoing and GAAP earnings per share of $0.80,       compared with $0.87 for the same period last year.   --  Reported primary year-over-year ongoing earnings per share       favorability of:       --  $0.05 weather       --  $0.05 depreciation and amortization primarily due to Clean           Smokestacks Act amortization and depreciation associated with           accelerated cost-recovery program for nuclear generating assets           recognized in 2008, partially offset by impact of depreciable           asset base increases       --  $0.02 AFUDC equity primarily due to increased eligible           construction project costs       --  $0.02 income taxes primarily due to deduction related to nuclear           decommissioning trust funds       --  $0.01 interest expense   --  Reported primary year-over-year ongoing earnings per share       unfavorability of:       --  $(0.04) retail growth and usage, primarily in the industrial           sector       --  $(0.03) wholesale revenues primarily due to lower energy rates           with a major customer       --  $(0.03) O&M primarily due to higher net nuclear plant outage and           maintenance costs, as a result of two nuclear refueling and           maintenance outages in the current year compared to one in the           prior year       --  $(0.03) other primarily due to losses on balanced billing program           and lower interest income       --  $(0.02) other operating primarily due to prior-year gain on land           sales       --  $(0.01) other margin       --  $(0.06) share dilution primarily due to Progress Energy's issuance           of 14.4 million shares of common stock in January 2009     --  16,000 net increase in the average number of customers for the six       months ended June 30, 2009, compared to the same period in 2008    Progress Energy Florida   --  Reported year-to-date ongoing earnings per share of $0.76, compared       with $0.72 for the same period last year; GAAP earnings per share of       $0.74, compared with $0.74 for the same period last year.   --  Reported primary year-over-year ongoing earnings per share       favorability of:       --  $0.07 other margin primarily due to returns on nuclear and           environmental cost-recovery clause assets and transmission           revenues       --  $0.07 AFUDC equity primarily due to increased eligible           construction project costs       --  $0.04 weather       --  $0.04 income taxes primarily due to deduction related to nuclear           decommissioning trust funds       --  $0.03 wholesale revenues primarily due to increased capacity           charges from new and amended contracts       --  $0.02 retail rates primarily due to impact of interim and limited           rate relief       --  $0.01 other   --  Reported primary year-over-year ongoing earnings per share       unfavorability of:       --  $(0.08) interest expense primarily due to higher average debt           outstanding       --  $(0.06) retail growth and usage       --  $(0.03) other operating primarily due to regulatory disallowance           of fuel costs and prior-year gain on land sales       --  $(0.01) O&M       --  $(0.01) depreciation and amortization       --  $(0.05) share dilution primarily due to Progress Energy's issuance           of 14.4 million shares of common stock in January 2009     --  8,000 net decrease in the average number of customers for the six       months ended June 30, 2009, compared to the same period in 2008     Corporate and Other Businesses (includes primarily Holding Company Debt)   --  Reported year-to-date ongoing after-tax expenses of $0.26 per share       compared with after-tax expenses of $0.26 per share for the same       period last year; GAAP after-tax expenses of $0.26 per share, compared       with after-tax expenses of $0.02 per share for the same period last       year.   --  Reported primary year-over-year ongoing after-tax expenses per share       favorability of:       --  $0.01 other       --  $0.02 share dilution primarily due to Progress Energy's issuance           of 14.4 million shares of common stock in January 2009   --  Reported primary year-over-year ongoing after-tax expenses per share       unfavorability of:       --  $(0.02) income taxes primarily due to the impact at the Corporate           level resulting from the deductions taken by the Utilities related           to nuclear decommissioning trust funds        --  $(0.01) interest expense     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                                    ------------------  ----------------                                        2009   2008*  2009   2008*                                        ----   ----   ----   ----    Ongoing earnings per share          $0.64  $0.76  $1.30  $1.33   Tax levelization                    (0.02)  0.01  (0.04)  0.02   Discontinued operations                 -   0.02      -   0.25   CVO mark-to-market                   0.01  (0.01)  0.03  (0.01)   Impairment                          (0.01)     -  (0.01)     -                                       -----      -  -----      -   Reported GAAP earnings per share    $0.62  $0.78  $1.28  $1.59                                       =====  =====  =====  =====    Shares outstanding (millions)         280    261    278    261                                         ===    ===    ===    ===   

* Previously reported 2008 earnings per share have been restated to reflect the adoption of new accounting guidance that changed the calculation of the number of average common shares outstanding.

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 decreased earnings per share by $0.02 for the quarter and increased earnings per share by $0.01 for the same period last year, but 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 had no impact on earnings for the quarter and increased earnings per share by $0.02 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 net 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 increased earnings per share by $0.01 for the quarter and decreased earnings per share by $0.01 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.