TALLAHASSEE, Fla., Sept. 7 /PRNewswire-FirstCall/ -- The Florida Public Service Commission (PSC) today approved an agreement that would maintain Progress Energy Florida's base rates at their current levels (comparable to rates set in 1983) through late 2007. The agreement had been negotiated among Progress Energy Florida, the Florida Attorney General, the Office of Public Counsel and other parties.

The agreement takes effect Jan. 1, 2006, for four years.

"This is a significant agreement that works to the benefit of our customers, as it keeps base rates stable," said Bill Habermeyer, president and CEO of Progress Energy Florida. "As the costs of fuel continue to rise, base rate stability is particularly important. We are committed to maintaining our strong performance in the areas of reliability, service and overall value for our customers."

The average residential bill for 1,000 kilowatt-hours (kWh) of electricity is $97.78. The base rate comprises a significant portion of most customer bills, while the fuel expense (reviewed and adjusted by the PSC annually to reflect the cost of fuel used in electricity generation) comprises the remainder. Like other utilities around the country, Progress Energy's cost of fuel used in electricity generation has increased significantly in recent months. Under state regulation, the company will be seeking to recover those higher fuel costs in a separate filing in the near future. Progress Energy makes no profit from the fuel component in rates.

Under the base rate settlement, the company will continue collecting $231.8 million in storm costs incurred during the 2004 hurricane season. The agreement allows the company to seek replenishment of its depleted storm reserve fund through the issuance of bonds, which, if used, will reduce the price impact on customers.

Other issues addressed by the settlement include:
• Revenue sharing between the company and its customers, which will return funds to customers if the company's revenues exceed a threshold amount;
• The continued suspension of the company's collection from customers of the expenses to dismantle fossil-fueled power plants;
• The continued collection of the cost to construct Progress Energy's Hines Unit 2 power plant in Polk County through the fuel-adjustment clause through late 2007, when it will be transferred to base rates;
• The inclusion in base rates of the company's cost to construct and operate its Hines Unit 4 power plant when that unit comes into service in late 2007.

Financial implications

"We believe this agreement is not only good for Florida consumers, it also represents a balanced approach for the company and its shareholders," said Geoff Chatas, Progress Energy's chief financial officer.

Chatas will host a conference call with the investment community in the next week. More details will be provided as they become available. The public will be permitted to listen to the conference call via webcast.

Progress Energy Florida, a subsidiary of Progress Energy (NYSE: PGN - News), 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 more than 20,000 square miles, including the cities of St. Petersburg and 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.

Caution regarding forward-looking statements:

Some of the information contained in this release constitutes forward- looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. This information, including, among other things, impacts on the earnings, cash flow, balance sheet and other financial results, as well as operational impacts, is not historical information but is forward-looking and, accordingly, involves estimates, projections, goals, forecasts, assumptions, risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements.

Any forward-looking statement is based on information current as of the date of this report and speaks only as of the date on which such statement is made, and neither Progress Energy, Inc. ("Progress Energy" or the "Company"), Florida Progress Corporation ("FPC"), Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. ("PEC") nor Florida Power Corporation d/b/a Progress Energy Florida, Inc. ("PEF") undertakes any 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 on-going earnings guidance 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 and the
       uncertainty regarding the timing, creation and structure of regional
       transmission organizations;
     - weather conditions that directly influence the demand for electricity;
     - the Company's timing of recovery of the costs associated with the four
       hurricanes that impacted our service territory in 2004 or the ability
       to recover through the regulatory process other significant weather
       events;
     - recurring seasonal fluctuations in demand for electricity and
       fluctuations in the price of energy commodities and purchased power;
     - economic fluctuations and the corresponding impact on the Company and
       its subsidiaries' commercial and industrial customers;
     - the ability of the Company's subsidiaries to pay upstream dividends or
       distributions to it;
     - the impact on the facilities and the businesses of the company 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;
     - the ability of the Company to maintain its current credit ratings and
       the impact on the Company's financial condition and ability to meet its
       cash and other financial obligations in the event its credit ratings
       are downgraded below investment grade;
     - the impact that increases in leverage may have on the Company;
     - the impact of derivative contracts used in the normal course of
       business by the Company;
     - investment performance of pension and benefit plans;
     - the Company's 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 the Company's continued
       ability to use Section 29 tax credits related to its coal-based solid
       synthetic fuel businesses and the impact to the Company's financial
       condition and performance in the event it is determined the Company is
       not entitled to previously taken Section 29 tax credits;
     - the outcome of PEF's rate proceeding in 2005 regarding its future base
       rates;
     - the Company's ability to manage the risks involved with the operation
       of its nonregulated plants, including dependence on third parties and
       related counter-party risks, and a lack of operating history;
     - the Company's ability to manage the risks associated with its 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 the Company's subsidiaries. These and other risk factors are detailed from time to time in the company's, FPC's, PEC's and PEF's filings with the United States Securities and Exchange Commission (SEC). Many, but not all of the factors that may impact actual results are discussed in the Risk Factors sections of the Company's, FPC's, PEC's and PEF's annual reports on Form 10-K for the year ended December 31, 2004, which were filed with the SEC on March 16, 2005. These reports should be read carefully. All such factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond the control of the Company, FPC, PEC and PEF. New factors emerge from time to time, and it is not possible for management to predict all such factors, nor can it assess the effect of each such factor on the Company, FPC, PEC and PEF.