Exhibit
      10(b)


**PROGRESS
      ENERGY, INC.**




**AMENDED
      AND RESTATED**




**MANAGEMENT
      DEFERRED COMPENSATION PLAN**









Adopted
      as of January 1, 2000




(As
      Revised and Restated effective April 1,
      2005)










**TABLE
      OF CONTENTS**





**Page**




PREAMBLE 1




ARTICLE
      I  DEFINITIONS 2


1.1 Account
      Balance 2


1.2 Additional
      Deferral
      Election 2


1.3 Affiliated
      Company 2


1.4 Board 2


1.5 Board
      Committee 2


1.6 Change
      of
      Control 2


1.7 Change
      of
      Form
      Election 4


1.8 Change-of-Investment
      Election 4


1.9 Code 5


1.10 Committee 5


1.11 Company 5


1.12 Company
      Incentive
      Plans 5


1.13 Continuing
      Directors 5


1.14 Deemed
      Investment
      Return 5


1.15 Deferral
      Election 6


1.16 Deferrals 6


1.17 Effective
      Date 6


1.18 Eligible
      Employee 6


1.19 Employee
      Stock Incentive
      Plan 6


1.20 Enrollment
      Form 6


1.21 ERISA 6


1.22 Incentive
      Matching
      Allocations 7


1.23 Investment
      Election 7


1.24 Matching
      Allocation                      7


1.25 Net
      Salary 7


1.26 Participant 7


1.27 Participant
      Accounts 7


1.28 Participant
      Company Account 7


1.29 Participant
      Deferral Account 8


1.30 Participant
      Matchable Deferral 8


1.31 Payment
      Commencement 8


1.32 Phantom
      Investment
      Fund 8


1.33 Phantom
      Funds Account 9


1.34 Phantom
      Investment Subaccount 9


1.35 Phantom
      Stock Unit 9


1.36 Plan 9


1.37 Plan
      Year 9


1.38 Plan
      Year
      Accounts 9


1.39 Progress
      Energy 401(k) Savings & Stock Ownership
      Plan 10


1.40 Retirement
      Date 10


1.41 Salary 11


1.42 SMC
      Participant 11


1.43 Sponsor 11


1.44 SSERP 11


1.45 Valuation
      Date 11


1.46 Value 11


1.47 Years
      of
      Service 12




ARTICLE
      II PARTICIPATION 13


2.1 Eligibility 13


2.2 Commencement
      of Participation 13


2.3 Annual
      Participation Agreement 13


2.4 Election
      of Phantom Investment Subaccounts 14




ARTICLE
      III DEFERRAL
      ELECTIONS 15


3.1 Participant
      Deferred Salary Elections 15


3.2 Matching
      Allocations 16


3.3 Incentive
      Matching
      Allocations 17




ARTICLE
      IV ACCOUNTS 18


4.1 Maintenance
      of
      Accounts 18


4.2 Separate
      Plan Year Accounts 18


4.3 Phantom
      Investment Subaccounts 18


4.4 Administration
      of
      Deferral Accounts 18


4.5 Administration
      of
      Company
      Accounts 19


4.6 Change
      of
      Phantom Investment Subaccounts and Phantom Stock
      Units 21


4.7 Transferred
      Accounts 21




ARTICLE
      V VESTING 23


5.1 Vesting 23




ARTICLE
      VI DISTRIBUTIONS 24


6.1 Distribution
      Elections 24


6.2 Change-of-Form
      Elections and Additional Deferral
      Elections 25


6.3 Payment 25


6.4 Unforeseeable
      Emergency 26


6.5 Termination
      of Employment 27


6.6 Taxes 28


6.7 Acceleration
      of Payment 28




ARTICLE
      VII DEATH
      BENEFITS 29


7.1 Designation
      of Beneficiaries 29


7.2 Death
      Benefit 29




ARTICLE
      VIII CLAIMS 30


8.1 Claims
      Procedure 30


8.2 Claims
      Review
      Procedure 30




ARTICLE
      IX ADMINISTRATION 31


9.1 Committee 31


9.2 Authority 31




ARTICLE
      X AMENDMENT
      AND TERMINATION OF THE
      PLAN 33


10.1 Amendment
      of the Plan 33


10.2 Termination
      of the
      Plan 33


10.3 No
      Impairment of
      Benefits 33




ARTICLE
      XI FUNDING
      AND CLAIM STATUS 34


11.1 General
      Provisions 34




ARTICLE
      XII EFFECT
      ON
      EMPLOYMENT OR
      ENGAGEMENT 36


12.1 General 36




ARTICLE
      XIII GOVERNING
      LAW 37


13.1 General 37




EXHIBIT
      A 38










PREAMBLE




The
      Progress Energy, Inc. Management Deferred Compensation Plan (the “Plan”) was
      originally adopted by Carolina Power & Light Company effective as of January
      1, 2000, and was transferred to Progress Energy, Inc. (the “Sponsor”) effective
      August 1, 2000. The Plan is unfunded and will benefit only a select group of
      management or highly compensated employees within the meaning of Title I of
      the
      Employee Retirement Income Security Act of 1974, as amended
      (“ERISA”).


ARTICLE
      I







ARTICLE
      I


DEFINITIONS




1.1
            Account
                Balance




The
      value
      in terms of a dollar amount of a Participant’s Deferral Account or Company
      Account, as the case may be, as of the last Valuation Date.


1.2
            Additional
                Deferral Election




The
      election by a Participant under Section 6.2 to defer distribution from a Plan
      Year Account.


1.3
            Affiliated
                Company




Any
      corporation or other entity that is required to be aggregated with the Sponsor
      pursuant to Sections 414(b), (c), (m), or (o) of the Code.


1.4
            Board




The
      Board
      of Directors of the Sponsor.


1.5
            Board
                Committee




The
      Organization and Compensation Committee of the Board.


1.6
            Change
                of Control




The
      earliest of the following dates:


(a)
            the
                date any person or group of persons (within the meaning of Section
                13(d)
                or 14(d) of the Securities Exchange Act of 1934), excluding employee
                benefit plans of the Sponsor, becomes, directly or indirectly, the
                “beneficial owner” (as defined in Rule 13d-3 promulgated under the
                Securities Act of 1934) of securities of the Sponsor representing
                twenty-five percent (25%) or more of the combined voting power of
                the
                Sponsor’s then outstanding securities (excluding the acquisition of
                securities of the Sponsor by an entity at least eighty percent (80%)
                of
                the outstanding voting securities of which are, directly or indirectly,
                beneficially owned by the Sponsor);
                or


(b)
            the
                date of consummation of a tender offer for the ownership of more
                than
                fifty percent (50%) of the Sponsor’s then outstanding voting securities;
                or


(c)
            the
                date of consummation of a merger, share exchange or consolidation
                of the
                Sponsor with any other corporation or entity regardless of which
                entity is
                the survivor, other than a merger, share exchange or consolidation
                which
                would result in the voting securities of the Sponsor outstanding
                immediately prior thereto continuing to represent (either by remaining
                outstanding or being converted into voting securities of the surviving
                or
                acquiring entity) more than sixty percent (60%) of the combined voting
                power of the voting securities of the Sponsor or such surviving or
                acquiring entity outstanding immediately after such merger or
                consolidation; or


(d)
            the
                date, when as a result of a tender offer or exchange offer for the
                purchase of securities of the Sponsor (other than such an offer by
                the
                Sponsor for its own securities), or as a result of a proxy contest,
                merger, share exchange, consolidation or sale of assets, or as a
                result of
                any combination of the foregoing, individuals who are Continuing
                Directors
                cease for any reason to constitute at least two-thirds (2/3) of the
                members of the Board; or


(e)
            the
                date the shareholders of the Company approve a plan of complete
                liquidation or winding-up of the Company or an agreement for the
                sale or
                disposition by the Company of all or substantially all of the Company’s
                assets; or


(f)
            the
                date of any event which the Board determines should constitute a
                Change-of-Control.


A
      Change-of-Control shall not be deemed to have occurred until a majority of
      the
      members of the Board receive written certification from the Board Committee
      that
      one of the events set forth in this Section 1.6 has occurred. Any determination
      that an event described in this Section 1.6 has occurred shall, if made in
      good
      faith on the basis of information available at that time, be conclusive and
      binding on the Board Committee, the Company, the Participants and their
      beneficiaries for all purposes of the Plan.


1.7
            Change
                of Form Election




The
      election by a Participant under Section 6.2 to change the form of distribution
      of a Plan Year Account.


1.8
            Change-of-Investment
                Election




The
      election by a Participant under Section 4.6 to change a Phantom Subaccount
      for
      the Participant Deferral Account or Company Account.


1.9
            Code




The
      Internal Revenue Code of 1986, as amended, or any successor
      statute.


1.10
            Committee




The
      Administrative Committee described in Section 9.1 for administering the
      Plan.


1.11
            Company




Progress
      Energy, Inc. or any successor to it in the ownership of substantially all of
      its
      assets and each Affiliated Company that, with the consent of the Board
      Committee, adopts the Plan and is included in Exhibit A, as in effect from
      time
      to time.


1.12
            Company
                Incentive Plans




The
      Sponsor’s Management Incentive Compensation Plan, or any Company sales incentive
      plans, marketing incentive plans, and any other cash incentive plans as
      determined by the Committee.


1.13
            Continuing
                Directors




The
      members of the Board at the Effective Date; *provided,
      however* ,
      that
      any person becoming a director subsequent to such whose election or nomination
      for election was supported by 75% or more of the directors who then comprised
      Continuing Directors shall be considered to be a Continuing Director.


1.14
            Deemed
                Investment Return




The
      amounts that are credited (or charged) from time to time to each Participant’s
      Deferral Account and Company Account to reflect deemed investment gains and
      losses of Phantom Investment Subaccounts.


1.15
            Deferral
                Election




An
      election to defer Salary pursuant to Section 3.1.


1.16
            Deferrals




The
      deferrals of Salary of a Participant pursuant to Section 3.1.


1.17
            Effective
                Date




January
      1, 2000.


1.18
            Eligible
                Employee




An
      employee of the Company (a) who is eligible to participate in the Sponsor’s
      Management Incentive Compensation Plan, or (b) who is eligible to participate
      in
      any other eligible Company Incentive Plan and is determined by the Committee
      to
      be eligible to be a Participant; and who is not excluded from participation
      pursuant to Section 2.1(b).


1.19
            Employee
                Stock Incentive Plan




The
      Employee Stock Incentive Plan as adopted by the Board and any successor to
      such
      plan which provides additional matching allocations under the Progress Energy
      401(k) Savings & Stock Ownership Plan.


1.20
            Enrollment
                Form




The
      enrollment form prepared by the Company which a Participant must execute to
      have
      Deferrals with respect to a Plan Year.


1.21
            ERISA




The
      Employee Retirement Income Security Act of 1974, as amended.


1.22
            Incentive
                Matching Allocations




The
      additional match allocation which is to be allocated to a Participant's Company
      Account in accordance with Section 3.3.


1.23
            Investment
                Election




The
      election by a Participant under Sections 2.4 and 4.6 of the Phantom Investment
      Subaccounts in which the Participant’s Deferral Accounts and Company Accounts
      will be allocated.


1.24
            Matching
                Allocation




A
      match
      allocation to a Participant's Company Account of a Participant’s Matchable
      Deferrals in accordance with Section 3.2.


1.25
            Net
                Salary




The
      Salary of a Participant projected to be payable (assuming no deferral elections
      under the Plan or the Progress Energy 401(k) Savings & Stock Ownership Plan)
      with respect to a Plan Year reduced by the projected Deferrals of a Participant
      for the Plan Year under the Plan.


1.26
            Participant




An
      Eligible Employee participating in the Plan pursuant to ARTICLE II.


1.27
            Participant
                Accounts




The
      aggregate of a Participant’s Deferral Account and Participant’s Company
      Accounts.


1.28
            Participant
                Company Account




The
      notational bookkeeping account maintained under Sections 4.1 and 4.5 to record
      Matching Allocations and Incentive Matching Allocations on behalf of a
      Participant and the Deemed Investment Return thereon pursuant to the provisions
      of the Plan.


1.29
            Participant
                Deferral Account




The
      notational bookkeeping account maintained under Section 4.1 of the Plan to
      record Deferrals of a Participant and the Deemed Investment Return thereon
      pursuant to the provisions of the Plan.


1.30
            Participant
                Matchable Deferral




6%
      of the
      amount of Deferrals of a Participant for a Plan Year but no greater than 6%
      of
      (A-B) where A is the compensation limit under Section 401(a)(17) of the Code
      for
      the Plan Year and B is the Net Salary of a Participant for the Plan Year (with
      any negative differences equating to $0 for purposes of this calculation); *provided,
      however* ,
      that
      the Participant Matchable Deferrals for an SMC Participant for a Plan Year
      shall
      be an amount equal to 6% of (C - D) where C is the projected Salary of a
      Participant for the Plan Year and D is the compensation limit under Section
      401(a)(17) of the Code for the Plan Year. Participant Matchable Deferrals for
      a
      Plan Year shall be determined for each payroll period during the Plan Year
      based
      on projected Matchable Deferrals for the entire Plan Year.


1.31
            Payment
                Commencement




The
      date
      payments are to commence with respect to a Plan Year Account in accordance
      with
      Section 6.1.


1.32
            Phantom
                Investment Fund




A
      deemed
      investment option for purposes of the Plan, each of which shall be the same
      as
      those investment options generally available to all participants in the Progress
      Energy 401(k) Savings & Stock Ownership Plan, or as otherwise selected by
      the Committee.


1.33
            Phantom
                Funds Account




Notational
      bookkeeping accounts maintained under the Plan at the direction of the Committee
      representing allocations of Participants of Phantom Investment Subaccounts
      in a
      Phantom Investment Fund.


1.34
            Phantom
                Investment Subaccount




A
      notational bookkeeping account maintained under the Plan at the direction of
      the
      Committee representing a deemed investment in one or more Phantom Investment
      Funds as directed by the Participant under Sections 2.4 and 4.6.


1.35
            Phantom
                Stock Unit




A
      hypothetical share of common stock of the Sponsor or its parent company, as
      applicable.


1.36
            Plan




The
      Progress Energy, Inc. Management Deferred Compensation Plan as set forth herein
      and as amended from time to time.


1.37
            Plan
                Year




The
      twelve (12) consecutive month periods beginning January 1 and ending the
      following December 31 commencing with the Effective Date.


1.38
            Plan
                Year Accounts




The
      separate Participant Deferral Account and Participant Company Account maintained
      under the Plan pursuant to Section 4.2 with respect to a Participant for each
      Plan Year a Participant has Deferrals.


1.39
            Progress
                Energy 401(k) Savings & Stock Ownership
                Plan




The
      Progress Energy 401(k) Savings & Stock Ownership Plan of the Company adopted
      by the Board, as amended from time to time, and any successor to such
      plan.


1.40
            Retirement
                Date




The
      date
      a Participant retires from the Company on or after attaining (i) age 65 with
      5
      years of service, (ii) age 55 with 15 years of service, (iii) 35 years of
      service ,
      (iv)
      eligibility for retirement under the SSERP if covered under such plan, or (v)
      age 50 with 5 years of service as of March 31, 2005, and where the Participant
      elects during the period beginning March 15, 2005, and ending April 15, 2005,
      to
      retire no later than December 1, 2005, pursuant to the terms of the Voluntary
      Enhanced Retirement Program (a “VERP Participant”). Notwithstanding any other
      provision of the Plan to the contrary, a VERP Participant may elect on or before
      December 31, 2005, to (a) commence payment of the Plan Year Accounts as of
      (i)
      April 1, 2006, (ii) April 1, 2007, or (iii) April 1, 2011 (each a
“Payment Commencement Date”) and (b) provide for the payment of such Plan Year
      Accounts in the form of (i) a lump sum or (ii) annual installments over a period
      extending from two years to ten years following the Payment Commencement Date.
      In the event no other payment election is made by the VERP Participant prior
      to
      January 1, 2006, the VERP Participant shall be deemed to have elected for
      payment of the Plan Year Accounts to be made in accordance with the Enrollment
      Form submitted by the VERP Participant; provided, that if the VERP Participant
      is a “key employee” as defined in Section 416(i) of the Code (but determined
      without regard to the 50 employee limit on the number of officers treated as
      key
      employees), the Payment Commencement Date shall not be earlier than six months
      after the date of Retirement of the VERP Participant (or, if earlier, the date
      of death of the Participant). A VERP Participant may not make any election
      with
      respect to the payment of the Plan Year Accounts after December 31,
      2005.


1.41
            Salary




The
      amount of an Eligible Employee's regular annual base salary, payable from time
      to time by the Company prior to a Deferral Election under the Plan and prior
      to
      any deferral election under the Progress Energy 401(k) Savings & Stock
      Ownership Plan.


1.42
            SMC
                Participant




A
      senior
      executive officer of the Company who is a member of the “Senior Management
      Committee” of the Sponsor.


1.43
            Sponsor




Progress
      Energy, Inc. and its successors in interest.


1.44
            SSERP




The
      Supplemental Senior Executive Retirement Plan of the Company.


1.45
            Valuation
                Date




The
      last
      day of each calendar month and such other dates as selected by the Committee,
      in
      its sole discretion.


1.46
            Value




The
      value
      of an account maintained under the Plan based on the fair market value of
      notational investments of Phantom Investment Subaccounts and Phantom Stock
      Units, as the case may be, as of the last Valuation Date. For purposes of
      calculating Value as of the end of a Plan Year, accrued but unallocated
      Incentive Matching Allocations shall be taken into consideration with respect
      to
      Participant Company Accounts.


1.47
            Years
                of Service




Years
      of
      service of a Participant as calculated under the Progress Energy 401(k) Savings
      & Stock Ownership Plan.








ARTICLE
      II


PARTICIPATION




2.1
            Eligibility




(a)  Participation
      in the Plan shall be limited to Eligible Employees.


(b)  The
      Committee, in its sole discretion, may at any time limit the participation
      of an
      Eligible Employee in the Plan so as to assure that the Plan will not be subject
      to the provisions of parts 2, 3 and 4 of Title I of ERISA.


2.2
            Commencement
                of Participation




Each
      Eligible Employee on the Effective Date may elect to become a Participant as
      of
      the Effective Date by completing and submitting an Enrollment Form to the
      Sponsor’s designated agent by November 30, 1999. An employee of the Company
      first becoming an Eligible Employee after January 1, 2000, may elect to
      become a Participant effective as of thirty days after first becoming an
      Eligible Employee by completing and submitting an Enrollment Form to the
      Sponsor’s designated agent within such thirty-day period. An Eligible Employee
      who is not a Participant may elect to become a Participant as of the first
      day
      of a Plan Year commencing after December 31, 2000, by completing and
      submitting an Enrollment Form to the Sponsor’s designated agent by
      November 30  prior
      to
      the first day of the Plan Year as of which participation is to
      commence.


2.3
            Annual
                Participation Agreement




Each
      Participant shall complete a new Enrollment Form with respect to a Plan Year
      by
      November 30 prior to the commencement of the Plan Year. If the Participant
      does not complete such form and submit it to the Sponsor’s designated agent by
      November 30, the Participant will have no Deferrals for the following Plan
      Year.


2.4
            Election
                of Phantom Investment
                Subaccounts




Each
      Participant shall elect on his Enrollment Form the allocation of his Plan Year
      Participant Deferral Account among the Phantom Investment
      Subaccounts.








ARTICLE
      III


DEFERRAL
      ELECTIONS




3.1
            Participant
                Deferred Salary Elections




(a)  A
      Participant completing an Enrollment Form in accordance with Sections 2.2 or
      2.3
      may make an election, pursuant to this Section 3.1, to defer his or her Salary
      (a “Deferral Election”) in accordance with the Plan. A Deferral Election shall
      apply only to the Participant’s Salary for the Plan Year specified in the
      Enrollment Form.


(b)  The
      amount of Salary that may be deferred by a Participant shall be based on their
      target incentive level under the Sponsor’s Management Incentive Compensation
      Plan (“MICP”); or, for Participants in Company Incentive Plans other than the
      MICP, their target incentive level assuming that they participated in the MICP.
      Deferral Elections shall be made on the Enrollment Form for the applicable
      Plan
      Year pursuant to the following limitations:


(i)  A
      Participant who is (or would be) eligible for a bonus at the 20% of salary
      target incentive level (the “Target”) for the


PlanYear under
      the MICP may defer up to 15% of
      Salary.


(ii)  A
      Participant who is (or would be) eligible for a bonus at the 25% of salary
      Target for the Plan Year under the MICP may defer


up
      to 25%
      of Salary.


(iii)  A
      Participant who is (or would be) eligible for a bonus at the 35% or more of
      salary Target under the MICP may defer up to


50%
      of Salary.


All
      Deferrals shall be in increments of 5% of Salary. The minimum projected
      Deferrals for a Plan Year for a Participant who commences Deferrals after the
      beginning of a Plan Year in accordance with Section 2.2 shall be
      $1,000.


(c)  A
      Deferral Election once made with respect to a Plan Year, cannot be changed
      or
      revoked. In the case of a new Participant, the Deferral Election will apply
      only
      to amounts that are both paid after the election is made and earned for services
      performed after the election is made. The amount of Salary that is deferred
      pursuant to a Deferral Election will reduce the Participant Salary
      proportionately throughout the applicable Plan Year or, in the case of a new
      Participant, throughout the portion of the Plan Year to which the Deferral
      Election is applicable.


(d)  A
      dollar
      amount equal to the Salary deferred pursuant to this Section 3.1 (“Deferrals”)
      at each applicable payroll date shall be credited to the Participant’s Deferral
      Account within ten business days following the applicable payroll
      date.


3.2
            Matching
                Allocations




A
      Participant who has made a Deferral Election with respect to a Plan Year and
      has
      Participant Matchable Deferrals for such Plan Year shall receive a credit to
      his
      Participant Company Account of a Matching Allocation for such Plan Year. The
      Matching Allocation with respect to a Plan Year shall equal 50% of the
      Participant Matchable Deferrals. Matching Allocations shall be credited to
      the
      Participant Company Account within ten business days following the applicable
      payroll date, based on a pro-rata portion of projected Matchable Deferrals
      for
      the Plan Year applicable to each payroll period during the Plan
      Year.


3.3
            Incentive
                Matching Allocations




Participants
      with Matchable Deferrals for a Plan Year shall receive a credit to their
      Participant Company Account for the Plan Year of an Incentive Matching
      Allocation if an “Incentive Matching Allocation” is provided under the Progress
      Energy 401(k) Savings & Stock Ownership Plan for the Plan Year. The
      Incentive Matching Allocation shall equal that percentage of the Participant
      Matchable Deferrals for the Plan Year equal to the “Incentive Matching
      Allocation” (stated as a percentage) provided (or that would have been provided
      if the Participant participated) under the Progress Energy 401(k) Savings &
Stock Ownership Plan for such Plan Year. Incentive Matching Allocations with
      respect to a Plan Year, if any, shall be credited to a Participant’s Company
      Account in accordance with Section 4.5 pursuant to rules and procedures adopted
      by the Committee approximately coincident with the credit under the Progress
      Energy 401(k) Savings & Stock Ownership Plan of “Incentive Matching
      Allocations” following the end of a Plan Year; *provided,
      however,* no such
      allocation shall be made if a Participant is not employed at the end of the
      applicable Plan Year, unless the Participant retired, died, or became disabled
      during the Plan Year.








ARTICLE
      IV


ACCOUNTS




4.1
            Maintenance
                of Accounts




The
      Committee shall maintain a Participant Deferral Account and a Participant
      Company Account for each Participant. There shall be credited to a Participant's
      Deferral Account all Deferrals by a Participant under the Plan and there shall
      be credited to a Participant's Company Account all Matching Allocations and
      Incentive Matching Allocations with respect to a Participant under the Plan
      in
      accordance with Sections 3.2 and 3.3.


4.2
            Separate
                Plan Year Accounts




The
      Committee shall maintain a separate Participant Deferral Account and Participant
      Company Account for each Plan Year a Participant has Deferrals (separately
      a
“Plan Year Deferral Account” and a “Plan Year Company Account” and together the
“Plan Year Account”).


4.3
            Phantom
                Investment Subaccounts




The
      Committee shall maintain separate Phantom Investment Subaccounts representing
      deemed investments in Phantom Investment Funds as directed by the Participant.
      Phantom Investment Subaccounts shall be valued as of each Valuation Date based
      on the notional investments of each such account, pursuant to rules and
      procedures adopted by the Committee.


4.4
            Administration
                of Deferral Accounts




(a)  A
      Participant's Deferral Accounts shall be comprised in total, of units in Phantom
      Investment Subaccounts.


(b)  Participants
      shall allocate their Deferrals among Phantom Investment Subaccounts pursuant
      to
      elections under Section 2.4.


(c)  The
      Value
      of that portion of a Participant’s Deferral Account allocated to a Phantom
      Investment Subaccount shall be changed on each Valuation Date to reflect the
      new
      Value of the Phantom Investment Subaccount.


(d)  The
      interest of a Participant’s Deferral Account in a Phantom Investment Subaccount
      shall be stated in a unit value or dollar amount, as determined by the
      Committee.


4.5
            Administration
                of Company Accounts




(a)  A
      Participant’s Company Account shall be comprised of Phantom Investment Fund
      units which shall be recorded in Phantom Investment Subaccounts. All Matching
      Allocations and Incentive Matching Allocations shall be recorded in Phantom
      Investment Subaccounts and shall be deemed invested in Phantom Stock Units,
      units of other Phantom Investment Funds, or a combination of Phantom Stock
      Units
      and other Phantom Investment Funds as determined by the Committee in its sole
      discretion. To the extent the Matching Allocations and Incentive Matching
      Allocations are initially deemed to be invested in Phantom Stock Units, the
      number of Phantom Stock Units will be determined on the date of each allocation
      under the Plan based on the closing price of a share of common stock of the
      Sponsor on the New York Stock Exchange on the date of each allocation. To the
      extent the Matching Allocations and Incentive Matching Allocations are initially
      deemed to be invested in one or more Phantom Investment Funds (other than
      Phantom Stock Units), the number of units in these Phantom Investment Funds
      will
      be determined on the date of each allocation under the Plan, using the closing
      price of the units of the underlying investment fund on which the Phantom
      Investment fund is based, on the date of each allocation.


(b)  The
      number of Phantom Stock Units allocated to a Participant’s Company Account shall
      be adjusted periodically to reflect the deemed reinvestment of dividends on
      Sponsor common stock in additional Phantom Stock Units.


(c)  In
      the
      event there is any change in the common stock of the Sponsor, through merger,
      consolidation, reorganization, recapitalization (other than pursuant to
      bankruptcy proceedings), stock dividend, stock split, reverse stock split,
      split-up, split-off, spin-off, combination of shares, exchange of shares,
      dividend in kind or other like change in capital structure (an “Adjustment
      Event”), the number of Phantom Stock Units subject to the Plan shall be adjusted
      by the Committee in its sole judgment so as to give appropriate effect to such
      Adjustment Event. Any fractional units resulting from such adjustment may be
      eliminated. Each successive Adjustment Event shall result in the consideration
      by the Committee of whether any adjustment to the number of Phantom Stock Units
      subject to the Plan is necessary in the Committee’s judgment. Issuance of common
      stock or securities convertible into common stock for value will not be deemed
      to be an Adjustment Event unless otherwise expressly determined by the
      Committee.


4.6
            Change
                of Phantom Investment Subaccountsand Phantom Stock Units




(a)  A
      Participant may elect to reallocate the value of his Phantom Investment
      Subaccounts comprising his Deferral Accounts among other Phantom Investment
      Subaccounts and change the allocation of future Deferrals among Phantom
      Investment Subaccounts once per calendar month, pursuant to uniform rules and
      procedures adopted by the Committee.


(b)  A
      Participant may elect to reallocate Phantom Investment Subaccounts comprising
      his Company Account, once per calendar month, pursuant to uniform rules adopted
      by the Committee.


4.7
            Transferred
                Accounts




(a)  Effective
      as of the Effective Date, the Value of a SMC Participant’s Company Account shall
      include the value of such Participant’s deferral account as of such date (being
      a “Transferred Account”) under the Carolina Power & Light Executive Deferred
      Compensation Plan, but only to the extent the Participant acknowledges in
      writing he has no further interest in the Executive Deferred Compensation
      Plan.


(b)  Effective
      on the Effective Date, the Value of any Participant’s Company Account shall
      include the value of such Participant’s additional benefits (currently recorded
      as phantom Company stock units) granted under Article VIII.2. (also being a
      “Transferred Account”) under the Company’s Deferred Compensation Plan for Key
      Management Employees, but only to the extent the Participant acknowledges in
      writing that he has no further interest in these benefits in the Company’s
      Deferred Compensation Plan for key Management Employees.


(c)  The
      total
      value of the Transferred Accounts as described in this Section 4.7 shall be
      deemed a vested Company Account for all purposes of the Plan.








ARTICLE
      V


VESTING




5.1
            Vesting




A
      Participant’s Deferral Accounts shall be 100% vested at all times. A
      Participant’s Company Accounts shall vest in accordance with the following
      schedule:


Years
                of Service
            Percent
                of VestingLess
                than 1
            01
                or more
            100%











ARTICLE
      VI


DISTRIBUTIONS




6.1
            DistributionElections




A
      Participant when making a Deferral Election pursuant to an Enrollment Form
      with
      respect to a Plan Year shall elect on such Enrollment Form (a) to defer the
      payment of his Plan Year Accounts with respect to such Plan Year, in accordance
      with the Plan until (i) the April 1 following the date that is five years
      from the last day of such Plan Year, (ii) the April 1 following the
      Participant’s Retirement or (iii) the April 1 following the first
      anniversary of the Participant’s Retirement (each a “Payment Commencement Date”)
      and (b) to provide for the payment of such Plan Year Account in the form of
      (i)
      a lump sum or (ii) approximately equal installments over a period extending
      from
      two years to ten years (by paying a fraction of the account balance each year
      during such period), as elected by the Participant. Except as otherwise provided
      in this ARTICLE VI, such elections may not be changed or revoked.
      Notwithstanding the foregoing, if the Participant is a “key employee” as defined
      in Section 416(i) of the Code (but determined without regard to the 50 employee
      limit on the number of officers treated as key employees), payment of amounts
      deferred after December 31, 2004, shall not be made pursuant to an election
      under Section 6.1(a)(ii) above before six months after the date of separation
      from service for any reason including Retirement (or, if earlier, the date
      of
      death of the Participant). For this purpose, an amount will be considered
      deferred after December 31, 2004, if it is not earned and vested on such date,
      and shall include the Matching Allocation, Incentive Matching Allocation and
      Deemed Investment Return with respect to such Deferrals.


6.2
            Change-of-Form
                Elections and Additional Deferral
                Elections




(a)  Any
      Participant who has made elections under Section 6.1 with respect to amounts
      deferred before January 1, 2005, may change such elections pursuant to this
      Section 6.2(a) as in effect prior to January 1, 2005, unless such provisions
      are
      materially modified after October 3, 2004. For this purpose, an amount is
      considered deferred before January 1, 2005, if the amount is earned and vested
      before such date. Such Participant may elect at least one year prior to the
      Payment Commencement Date with respect to such Plan Year Accounts a new Payment
      Commencement Date that either is five years from the then current Payment
      Commencement Date or otherwise is permitted under Section 6.1(a)(ii) or (iii).
      Only one such Additional Deferral Election will be permitted with respect to
      Plan Year Accounts relating to a particular Plan Year. In addition, the
      Participant may elect to change the form of distribution to any of the forms
      permitted under Section 6.1(b) by completing a Change-of-Form Elections with
      respect to Plan Year Accounts at least one year prior to the applicable Payment
      Commencement Date for such accounts.


(b)  Any
      elections made under Section 6.1 with respect to amounts deferred after December
      31, 2004, shall be irrevocable.


6.3
            Payment




Upon
      occurrence of an event specified in the Participant’s distribution election
      under Section 6.1 (a “Distribution Event”) with respect to Plan Year Accounts,
      as modified by any applicable subsequent Additional Deferral Election under
      Section 6.2, the Account Balance of a Participant’s Plan Year Accounts shall be
      paid by the Company to the Participant in the form elected under Section 6.1.
      Such payments shall commence as soon as practicable and in no event more than
      30
      days following the occurrence of the Distribution Event.


6.4
            Unforeseeable
                Emergency




In
      case
      of an unforeseeable emergency, a Participant may request the Committee, on
      a
      form to be provided by the Committee or its delegate, that payment of the vested
      portion of Participant Accounts be made earlier than the date provided under
      the
      Plan.


An
      “unforeseeable emergency” shall mean a severe financial hardship to the
      Participant resulting from an illness or accident of the Participant, the
      Participant’s spouse or a dependent (as defined in Section 152(a) of the Code)
      of the Participant, loss of the Participant’s property due to casualty, or other
      unforeseeable circumstances arising as a result of events beyond the control
      of
      the Participant.


The
      Committee shall consider any requests for payment under this Section 6.4 on
      a
      uniform and nondiscriminatory basis and in accordance with the standards of
      interpretation described in Section 409A of the Code and the regulations
      thereunder. If the request is granted, the amounts distributed will not exceed
      the amounts necessary to alleviate the unforeseeable emergency plus amounts
      necessary to pay taxes reasonably anticipated as result of the distribution,
      after taking into account the extent to which the unforeseeable emergency may
      be
      relieved through reimbursement or compensation by insurance or otherwise or
      by
      liquidation of the Participant’s assets (to the extent such liquidation would
      not itself cause severe financial hardship).


In
      the
      event of a hardship determination by the Committee, the Company shall pay out
      in
      a lump sum to the Participant such portion of the Participant Accounts as
      determined by the Committee and Deferrals by the Participant for the Plan Year
      in which the hardship distribution is made will cease.


6.5
            Termination
                of Employment




In
      the
      event of the termination of the employment of a Participant with the Company
      and
      any parent, subsidiary or affiliate for any reason, prior to the Retirement
      or
      death of the Participant, the vested portion of the Participant Accounts of
      such
      Participant shall be paid in a lump sum to such Participant based on the Value
      of such accounts as of the Valuation Date coincident with or immediately
      preceding the date of distribution. Such payment shall be made as soon as
      administratively practicable following the Participant’s termination date as
      determined under the Company’s normal administrative practices. The nonvested
      portion of a terminated Participant’s Company Account shall be forfeited by the
      Participant. In the event of the termination of employment of a SMC Participant
      for whom no Deferral Election was made for a Plan Year, any Matching Allocation,
      Incentive Matching Allocation and Deemed Investment Return allocated to such
      Participant shall be distributed to the Participant following termination of
      employment in accordance with this Section 6.5. In the event of the Retirement
      of a Participant prior to the Payment Commencement Date elected by the
      Participant under Section 6.1(a)(i) with respect to a Plan Year Account,
      distribution of such account shall commence no later than April 1 following
      the
      first anniversary of the Participant’s Retirement. Notwithstanding the
      foregoing, if the Participant is a “key employee” as defined in Section 416(i)
      of the Code (but determined without regard to the 50 employee limit on the
      number of officers treated as key employees), payment of amounts deferred after
      December 31, 2004, shall not be made before six months after the date of
      separation from service for any reason including Retirement (or, if earlier,
      the
      date of death of the Participant). For this purpose, an amount will be
      considered deferred after December 31, 2004, if it is not earned and vested
      on
      such date, and shall include the Matching Allocation, Incentive Matching
      Allocation and Deemed Investment Return with respect to such
      Deferrals.


6.6
            Taxes




The
      Company shall deduct from all payments under the Plan federal, state and local
      income and employment taxes, as required by applicable law. Deferrals will
      be
      taken into account for purposes of any tax or withholding obligation under
      the
      Federal Insurance Contributions Act and Federal Unemployment Tax Act in the
      year
      of the Deferrals, as required by Sections 3121(v) and 3306(r) of the Code and
      the regulations thereunder. Amounts required to be withheld in the year of the
      Deferrals pursuant to Sections 3121(v) and 3306(r) shall be withheld out of
      current wages or other compensation paid by the Company to the
      Participant.


6.7
            Acceleration
                of Payment




The
      acceleration of the time or schedule of any payment due under the Plan is
      prohibited except as provided in regulations and administrative guidance
      provided under Section 409A of the Code. It is not an acceleration of the time
      or schedule of payment if the Company waives or accelerates the vesting
      requirements applicable to a benefit under the Plan.








ARTICLE
      VI


DEATH
      BENEFITS




7.1
            Designation
                of Beneficiaries




The
      Participant’s beneficiary under this Plan entitled to receive benefits under the
      Plan in the event of the Participant’s death shall be designated by the
      Participant on a form provided by the Committee. In the absence of such
      designation or in the event the designated beneficiary has predeceased the
      Participant, the beneficiary shall be deemed the estate of the
      Participant.


7.2
            Death
                Benefit




In
      the
      event of the death of a Participant prior to the payout of his Participant
      Accounts, the Value of the remaining portion of the Participant Accounts shall
      be paid by the Company in a lump sum to the Participant’s beneficiary (as
      defined under Section 7.1) based on the Value of such accounts on the Valuation
      Date immediately following the date of death. Payment shall be made as soon
      as
      administratively practicable following such Valuation Date pursuant to rules
      and
      procedures adopted by the Committee.








ARTICLE
      VIII


CLAIMS




8.1
            Claims
                Procedure




If
      any
      Participant or his or her beneficiary has a claim for benefits which is not
      being paid, such claimant may file with the Committee a written claim setting
      forth the amount and nature of the claim, supporting facts, and the claimant’s
      address. The Committee shall notify each claimant of its decision in writing
      by
      registered or certified mail within sixty (60) days after its receipt of a
      claim
      or, under special circumstances, within ninety (90) days after its receipt
      of a
      claim. If a claim is denied, the written notice of denial shall set forth the
      reasons for such denial, refer to pertinent Plan provisions on which the denial
      is based, describe any additional material or information necessary for the
      claimant to realize the claim, and explain the claims review procedure under
      the
      Plan.


8.2
            Claims
                Review Procedure




A
      claimant whose claim has been denied, or such claimant’s duly authorized
      representative, may file, within sixty (60) days after notice of such denial
      is
      received by the claimant, a written request for review of such claim by the
      Committee. If a request is so filed, the Committee shall review the claim and
      notify the claimant in writing of its decision within sixty (60) days after
      receipt of such request. In special circumstances, the Committee may extend
      for
      up to sixty (60) additional days the deadline for its decision. The notice
      of
      the final decision of the Committee shall include the reasons for its decision
      and specific references to the Plan provisions on which the decision is based.
      The decision of the Committee shall be final and binding on all
      parties.








ARTICLE
      IX


ADMINISTRATION




9.1
            Committee




The
      Administrative Committee consisting of not less than three (3) or more than
      seven (7) persons appointed by the Board Committee or its delegate to administer
      the Plan.


9.2
            Authority




(a)  The
      Committee shall have the exclusive right to interpret the Plan to the maximum
      extent permitted by law, to prescribe, amend and rescind rules and regulations
      relating to it, and to make all other determinations necessary or advisable
      for
      the administration of the Plan, including the determination under Section 9.2(b)
      herein. The decisions, actions and records of the Committee shall be conclusive
      and binding upon the Company and all persons having or claiming to have any
      right or interest in or under the Plan


(b)  The
      Committee may delegate to one or more agents, or to the Company such
      administrative duties as it may deem advisable. The Committee may employ such
      legal or other counsel and consultants as it may deem desirable for the
      administration of the Plan and may rely upon any opinion or determination
      received from counsel or consultant.


(c)  No
      member
      of the Committee shall be directly or indirectly responsible or otherwise liable
      for any action taken or any failure to take action as a member of the Committee,
      except for such action, default, exercise or failure to exercise resulting
      from
      such member’s gross negligence or willful misconduct. No member of the Committee
      shall be liable in any way for the acts or defaults of any other member of
      the
      Committee, or any of its advisors, agents or representatives.


(d)  The
      Company shall indemnify and hold harmless each member of the Committee against
      any and all expenses and liabilities arising out of his or her own activities
      relating to the Committee, except for expenses and liabilities arising out
      of a
      member’s gross negligence or willful misconduct.


(e)  The
      Company shall furnish to the Committee all information the Committee may deem
      appropriate for the exercise of its powers and duties in the administration
      of
      the Plan. The Committee shall be entitled to rely on any information provided
      by
      the Company without any investigation thereof.


(f)  No
      member
      of the Committee may act, vote or otherwise influence a decision of such
      Committee relating to his or her benefits, if any, under the Plan .








ARTICLE
      X


AMENDMENT
      AND TERMINATION OF THE PLAN




10.1
            Amendment
                of the Plan




The
      Plan
      may be wholly or partially amended or otherwise modified at any time by the
      Board or the Board Committee consistent with the requirements of Section 409A
      of
      the Code.


10.2
            Termination
                of the Plan




The
      Plan
      may be terminated at any time by written action of the Board or the Board
      Committee or by the Committee as provided under the Plan; provided, that
      termination of the Plan shall not affect the distribution of the Participant
      Accounts (except as otherwise permitted under Section 409A of the Code).
      Notwithstanding the foregoing, the Plan may be terminated and Participant
      Accounts distributed to Participants within twelve months of a “change in
      control” as defined for purposes of Section 409A of the Code.


10.3
            No
                Impairment of Benefits




Notwithstanding
      the provisions of Sections 10.1 and 10.2, no amendment to or termination of
      the
      Plan shall impair any rights to benefits which theretofore accrued hereunder; *provided,
      however,* the
      payout of all Plan benefits on termination of the Plan, if permitted pursuant
      to
      Section 10.2, or a change of any Phantom Investment Funds or creation of a
      substitute for Phantom Investment Funds as a result of a Plan amendment or
      action of the Committee shall not constitute an impairment of any rights or
      benefits.








ARTICLE
      XI


FUNDING
      AND CLAIM STATUS




11.1
            General
                Provisions




(a)  The
      Company shall make no provision for the funding of any Participant Accounts
      payable hereunder that (i) would cause the Plan to be a funded plan for purposes
      of Section 404(a)(5) of the Code or for purposes of Title I of ERISA, or (ii)
      would cause the Plan to be other than an “unfunded and unsecured promise to pay
      money or other property in the future” under Treasury Regulations
§ 1.83-3(e); and, except in the case of a Change of Control of the Sponsor,
      the Company shall have no obligation to make any arrangements for the
      accumulation of funds to pay any amounts under this Plan. Subject to the
      restrictions of this Section 11.1(a), the Company, in its sole discretion,
      may
      establish one or more grantor trusts described in Treasury Regulations §
1.677(a)-1(d) to accumulate funds to pay amounts under this Plan, provided
      that
      the assets of such trust(s) shall be required to be used to satisfy the claims
      of the Company’s general creditors in the event of the Company’s bankruptcy or
      insolvency.


(b)  In
      the
      case of a Change of Control, the Company shall, subject to the restrictions
      in
      this paragraph and in Section 11.1(a), irrevocably set aside funds in one or
      more such grantor trusts in an amount that is sufficient to pay each Participant
      employed by such Company (or beneficiary) the net present value as of the date
      on which the Change of Control occurs, of the benefits to which Participants
      (or
      their beneficiaries) would be entitled pursuant to the terms of the Plan if
      the
      Value of their Participant Account would be paid in a lump sum upon the Change
      of Control.


(c)  In
      the
      event that the Company shall decide to establish an advance accrual reserve
      on
      its books against the future expense of payments from any Participant, such
      reserve shall not under any circumstances be deemed to be an asset of this
      Plan
      but, at all times, shall remain a part of the general assets of the Company,
      subject to claims of the Company’s creditors.


(d)  Participants,
      their legal representatives and their beneficiaries shall have no right to
      anticipate, alienate, sell, assign, transfer, pledge or encumber their interests
      in the Plan, nor shall such interests be subject to attachment, garnishment,
      levy or execution by or on behalf of creditors of the Participants or of their
      beneficiaries.


(e)  Participants
      shall have no right, title, or interest whatsoever in or to any investments
      which the Company may make to aid it in meeting its obligations under the Plan.
      Nothing contained in the Plan, and no action taken pursuant to its provisions,
      shall create a trust of any kind, or a fiduciary relationship between the
      Company and any Participant, beneficiary, legal representative or any other
      person. To the extent that any person acquires a right to receive payments
      from
      the Company under the Plan, such right shall be no greater than the right of
      an
      unsecured general creditor of the Company. All payments to be made hereunder
      with respect to a Participant shall be paid from the general funds of the
      Company employing such Participant.








ARTICLE
      XII


EFFECT
      ON
      EMPLOYMENT OR ENGAGEMENT




12.1
            General




Nothing
      contained in the Plan shall affect, or be construed as affecting, the terms
      of
      employment or engagement of any Participant except to the extent specifically
      provided herein. Nothing contained in the Plan shall impose, or be construed
      as
      imposing, an obligation on the Company to continue the employment or engagement
      of any Participant.








ARTICLE
      XIII


GOVERNING
      LAW




13.1
            General




The
      Plan
      and all actions taken in connection with the Plan shall be governed by and
      construed in accordance with the laws of the State of North Carolina without
      reference to principles of conflict of laws, except as superseded by applicable
      federal law.


*
      *
      *
















EXHIBIT
      A




Progress
      Energy Carolinas, Inc.


Progress
      Energy Service Company, LLC


Progress
      Energy Ventures, Inc.


Progress
      Energy Florida, Inc.


Progress
      Fuels Corporation (corporate employees only)