| Commission File Number | Exact name of registrants as specified in their charters, states of incorporation, addresses of principal executive offices,and telephone numbers                                                                               | I.R.S. Employer Identification Number |
|------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|
|                   |                                                                                                                                                                                                                                 |                                  |
|                   |                                                                                                                                                                                                                            |                                  |
| 1-15929                | Progress Energy, Inc.410 South Wilmington StreetRaleigh, North Carolina 27601-1748Telephone:   (919) 546-6111State of Incorporation: North Carolina                                                              | 56-2155481                            |
|                   |                                                                                                                                                                                                                            |                                  |
| 1-3382                 | Carolina Power & Light Companyd/b/a Progress Energy Carolinas, Inc.410 South Wilmington StreetRaleigh, North Carolina  27601-1748Telephone:   (919) 546-6111State of Incorporation: North Carolina | 56-0165465                            |
|                   |                                                                                                                                                                                                                            |                                  |
| 1-3274                 | Florida Power Corporationd/b/a Progress Energy Florida, Inc.299 First Avenue NorthSt. Petersburg, Florida  33701Telephone:   (727) 820-5151State of Incorporation: Florida                             | 59-0247770                            |

| Progress Energy, Inc. (Progress Energy)  | Yes | x | No | o |
|------------------------------------------|-----|---|----|---|
| Carolina Power & Light Company (PEC) | Yes | x | No | o |
| Florida Power Corporation (PEF)          | Yes | o | No | x |

----

| Progress Energy | Yes | x | No | o |
|-----------------|-----|---|----|---|
| PEC             | Yes | o | No | o |
| PEF             | Yes | o | No | o |

| Progress Energy | Large accelerated filer | x      | Accelerated filer         | o      |
|-----------------|-------------------------|--------|---------------------------|--------|
|            | Non-accelerated filer   | o      | Smaller reporting company | o      |
|            |                    |   |                      |   |
| PEC             | Large accelerated filer | o      | Accelerated filer         | o      |
|            | Non-accelerated filer   | x      | Smaller reporting company | o      |
|            |                    |   |                      |   |
| PEF             | Large accelerated filer | o      | Accelerated filer         | o      |
|            | Non-accelerated filer   | x      | Smaller reporting company | o      |

| Progress Energy | Yes | o | No | x |
|-----------------|-----|---|----|---|
| PEC             | Yes | o | No | x |
| PEF             | Yes | o | No | x |

|             Registrant |                       Description |                                                    Shares |
|-------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Progress Energy                                                               | Common Stock (Without Par Value)                                                                                                                | 292,581,000                                                                                                                                                                                                                                                                                                              |
|                                                                          |                                                                                                                                            |                                                                                                                                                                                                                                                                                                                     |
| PEC                                                                           | Common Stock (Without Par Value)                                                                                                                | 159,608,055 (all of which were held directly by Progress Energy, Inc.)                                                                                                                                                                                                                                                   |
|                                                                          |                                                                                                                                            |                                                                                                                                                                                                                                                                                                                     |
| PEF                                                                           | Common Stock (Without Par Value)                                                                                                                | 100 (all of which were held indirectly by Progress Energy, Inc.)                                                                                                                                                                                                                                                         |

----

| TABLE OF CONTENTS                          |
|--------------------------------------------|
| GLOSSARY OF TERMS                          | 2 |
|                                       |
| SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS | 5 |
|                                       |
| PART I.  FINANCIAL INFORMATION   |
|                                       |
| ITEM 1.                                    | FINANCIAL STATEMENTS | 6 |
|                                       |   |   |
|                                       | Unaudited Condensed Interim Financial Statements: |   |
|                                       |   |   |
|                                       | Progress Energy, Inc. (Progress Energy) |   |
|                                       | Unaudited Condensed Consolidated Statements of Income | 6 |
|                                       | Unaudited Condensed Consolidated Balance Sheets | 7 |
|                                       | Unaudited Condensed Consolidated Statements of Cash Flows | 8 |
|                                       |   |   |
|                                       | Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. (PEC) |   |
|                                       | Unaudited Condensed Consolidated Statements of Income | 9 |
|                                       | Unaudited Condensed Consolidated Balance Sheets | 10 |
|                                       | Unaudited Condensed Consolidated Statements of Cash Flows | 11 |
|                                       |   |   |
|                                       | Florida Power Corporation d/b/a Progress Energy Florida, Inc. (PEF) |   |
|                                       | Unaudited Condensed Statements of Income | 12 |
|                                       | Unaudited Condensed Balance Sheets | 13 |
|                                       | Unaudited Condensed Statements of Cash Flows | 14 |
|                                       |   |   |
|                                       | Combined Notes to Unaudited Condensed Interim Financial Statements for Progress Energy, Inc., Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. and Florida Power Corporation d/b/a Progress Energy Florida, Inc. | 15 |
|                                       |   |   |
| ITEM 2.                               | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 66 |
|                                       |   |   |
| ITEM 3.                                    | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 109 |
|                                       |   |   |
| ITEM 4.                                    | CONTROLS AND PROCEDURES | 113 |
|                                       |   |   |
| ITEM 4T.                                   | CONTROLS AND PROCEDURES | 113 |
|                                       |   |   |
| PART II.  OTHER INFORMATION      |
|                                       |
| ITEM 1.                                    | LEGAL PROCEEDINGS | 114 |
|                                       |   |   |
| ITEM 1A.                                   | RISK FACTORS | 114 |
|                                       |   |   |
| ITEM 2.                                    | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 114 |
|                                       |   |   |
| ITEM 5.                                    | OTHER INFORMATION | 115 |
|                                       |   |   |
| ITEM 6.                                    | EXHIBITS | 116 |
|                                       |   |   |
| SIGNATURES                                 | 117 |

----

GLOSSARY

| TERM                     | DEFINITION                                                                                                                                                      |
|--------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |                                                                                                                                                            |
| 2009 Form 10-K           | Progress Registrants’ annual report on Form 10-K for the fiscal year ended December 31, 2009                                                              |
| 401(k)                   | Progress Energy 401(k) Savings & Stock Ownership Plan                                                                                                       |
| AFUDC                    | Allowance for funds used during construction                                                                                                                    |
| ARO                      | Asset retirement obligation                                                                                                                                     |
| ASLB                     | Atomic Safety and Licensing Board                                                                                                                               |
| Asset Purchase Agreement | Agreement by and among Global, Earthco and certain affiliates, and the Progress Affiliates as amended on August 23, 2000                                        |
| ASC                      | FASB Accounting Standards Codification                                                                                                                          |
| ASU                      | Accounting Standards Update                                                                                                                                     |
| Audit Committee          | Audit and Corporate Performance Committee of Progress Energy’s board of directors                                                                         |
| BART                     | Best Available Retrofit Technology                                                                                                                              |
| Base Revenues            | Non-GAAP measure defined as operating revenues excluding clause recoverable regulatory returns, miscellaneous revenues and fuel and other pass-through revenues |
| Brunswick                | PEC’s Brunswick Nuclear Plant                                                                                                                             |
| Btu                      | British thermal unit                                                                                                                                            |
| CAA                      | Clean Air Act                                                                                                                                                   |
| CAIR                     | Clean Air Interstate Rule                                                                                                                                       |
| CAMR                     | Clean Air Mercury Rule                                                                                                                                          |
| CAVR                     | Clean Air Visibility Rule                                                                                                                                       |
| CCRC                     | Capacity Cost-Recovery Clause                                                                                                                                   |
| CERCLA or Superfund      | Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended                                                                        |
| Ceredo                   | Ceredo Synfuel LLC                                                                                                                                              |
| CIGFUR                   | Carolina Industrial Group for Fair Utility Rates II                                                                                                             |
| Clean Smokestacks Act    | North Carolina Clean Smokestacks Act                                                                                                                            |
| the Code                 | Internal Revenue Code                                                                                                                                           |
| CO2                      | Carbon dioxide                                                                                                                                                  |
| COL                      | Combined license                                                                                                                                                |
| Corporate and Other      | Corporate and Other segment primarily includes the Parent, Progress Energy Service Company and miscellaneous other nonregulated businesses                      |
| CR1 and CR2              | PEF’s Crystal River Units No. 1 and No. 2 coal-fired steam turbines                                                                                       |
| CR3                      | PEF’s Crystal River Unit No. 3 Nuclear Plant                                                                                                              |
| CR4 and CR5              | PEF’s Crystal River Units No. 4 and No. 5 coal-fired steam turbines                                                                                       |
| CUCA                     | Carolina Utility Customer Association                                                                                                                           |
| CVO                      | Contingent value obligation                                                                                                                                     |
| D.C. Court of Appeals    | U.S. Court of Appeals for the District of Columbia Circuit                                                                                                      |
| DOE                      | United States Department of Energy                                                                                                                              |
| DSM                      | Demand-side management                                                                                                                                          |
| Earthco                  | Four coal-based solid synthetic fuels limited liability companies of which three were wholly owned                                                              |
| ECCR                     | Energy Conservation Cost Recovery Clause                                                                                                                        |
| ECRC                     | Environmental Cost Recovery Clause                                                                                                                              |

----

| EE                         | Energy efficiency                                                                                                                                                                           |
|----------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| EIP                        | Equity Incentive Plan                                                                                                                                                                       |
| EPACT                      | Energy Policy Act of 2005                                                                                                                                                                   |
| EPC                        | Engineering, procurement and construction                                                                                                                                                   |
| ESOP                       | Employee Stock Ownership Plan                                                                                                                                                               |
| FASB                       | Financial Accounting Standards Board                                                                                                                                                        |
| FDEP                       | Florida Department of Environmental Protection                                                                                                                                              |
| FERC                       | Federal Energy Regulatory Commission                                                                                                                                                        |
| FGT                        | Florida Gas Transmission Company, LLC                                                                                                                                                       |
| Fitch                      | Fitch Ratings                                                                                                                                                                               |
| the Florida Global Case    | U.S. Global, LLC v. Progress Energy, Inc. et al                                                                                                                                             |
| Florida Progress           | Florida Progress Corporation                                                                                                                                                                |
| FPSC                       | Florida Public Service Commission                                                                                                                                                           |
| FRCC                       | Florida Reliability Coordinating Council                                                                                                                                                    |
| Funding Corp.              | Florida Progress Funding Corporation, a wholly owned subsidiary of Florida Progress                                                                                                         |
| GAAP                       | Accounting principles generally accepted in the United States of America                                                                                                                    |
| GHG                        | Greenhouse gas                                                                                                                                                                              |
| Global                     | U.S. Global, LLC                                                                                                                                                                            |
| GridSouth                  | GridSouth Transco, LLC                                                                                                                                                                      |
| GWh                        | Gigawatt-hours                                                                                                                                                                              |
| Harris                     | PEC’s Shearon Harris Nuclear Plant                                                                                                                                                    |
| IPP                        | Progress Energy Investor Plus Plan                                                                                                                                                          |
| kV                         | Kilovolt                                                                                                                                                                                    |
| kVA                        | Kilovolt-ampere                                                                                                                                                                             |
| kWh                        | Kilowatt-hours                                                                                                                                                                              |
| Levy                       | PEF’s proposed nuclear plant in Levy County, Fla.                                                                                                                                     |
| LIBOR                      | London Inter Bank Offered Rate                                                                                                                                                              |
| MACT                       | Maximum achievable control technology                                                                                                                                                       |
| MD&A                   | Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in PART I, Item 2 of this Form 10-Q                                                   |
| Medicare Act               | Medicare Prescription Drug, Improvement and Modernization Act of 2003                                                                                                                       |
| MGP                        | Manufactured gas plant                                                                                                                                                                      |
| MW                         | Megawatts                                                                                                                                                                                   |
| MWh                        | Megawatt-hours                                                                                                                                                                              |
| Moody’s              | Moody’s Investors Service, Inc.                                                                                                                                                       |
| NAAQS                      | National Ambient Air Quality Standards                                                                                                                                                      |
| NC REPS                    | North Carolina Renewable Energy and Energy Efficiency Portfolio Standard                                                                                                                    |
| NCUC                       | North Carolina Utilities Commission                                                                                                                                                         |
| NDT                        | Nuclear decommissioning trust                                                                                                                                                               |
| NEIL                       | Nuclear Electric Insurance Limited                                                                                                                                                          |
| NERC                       | North American Electric Reliability Corporation                                                                                                                                             |
| North Carolina Global Case | Progress Synfuel Holdings, Inc. et al. v. U.S. Global, LLC                                                                                                                                  |
| the Notes Guarantee        | Florida Progress’ full and unconditional guarantee of the Subordinated Notes                                                                                                          |
| NOx                        | Nitrogen oxides                                                                                                                                                                             |
| NRC                        | United States Nuclear Regulatory Commission                                                                                                                                                 |
| O&M                    | Operation and maintenance expense                                                                                                                                                           |
| OATT                       | Open Access Transmission Tariff                                                                                                                                                             |
| OCI                        | Other comprehensive income                                                                                                                                                                  |
| Ongoing Earnings           | Non-GAAP financial measure defined as GAAP net income attributable to controlling interests after excluding discontinued operations and the effects of certain identified gains and charges |
| OPC                        | Florida’s Office of Public Counsel                                                                                                                                                    |

----

| OPEB                           | Postretirement benefits other than pensions                                                                                                 |
|--------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
| the Parent                     | Progress Energy, Inc. holding company on an unconsolidated basis                                                                            |
| PEC                            | Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc.                                                                    |
| PEF                            | Florida Power Corporation d/b/a Progress Energy Florida, Inc.                                                                               |
| PESC                           | Progress Energy Service Company, LLC                                                                                                        |
| Power Agency                   | North Carolina Eastern Municipal Power Agency                                                                                               |
| PPACA                          | Patient Protection and Affordable Care Act and the related Health Care and Education Reconciliation Act                                     |
| Preferred Securities           | 7.10% Cumulative Quarterly Income Preferred Securities due 2039, Series A issued by the Trust                                               |
| Preferred Securities Guarantee | Florida Progress’ guarantee of all distributions related to the Preferred Securities                                                  |
| Progress Affiliates            | Five affiliated coal-based solid synthetic fuels facilities                                                                                 |
| Progress Energy                | Progress Energy, Inc. and subsidiaries on a consolidated basis                                                                              |
| Progress Registrants           | The reporting registrants within the Progress Energy consolidated group. Collectively, Progress Energy, Inc., PEC and PEF                   |
| Progress Fuels                 | Progress Fuels Corporation, formerly Electric Fuels Corporation                                                                             |
| PRP                            | Potentially responsible party, as defined in CERCLA                                                                                         |
| PSSP                           | Performance Share Sub-Plan                                                                                                                  |
| PUHCA 2005                     | Public Utility Holding Company Act of 2005                                                                                                  |
| PVI                            | Progress Energy Ventures, Inc., formerly referred to as Progress Ventures, Inc.                                                             |
| QF                             | Qualifying facility                                                                                                                         |
| RCA                            | Revolving credit agreement                                                                                                                  |
| Reagents                       | Commodities such as ammonia and limestone used in emissions control technologies                                                            |
| REPS                           | Renewable energy portfolio standard                                                                                                         |
| RDS                            | Retiree Drug Subsidy related to benefits under Medicare Part D                                                                              |
| Robinson                       | PEC’s Robinson Nuclear Plant                                                                                                          |
| ROE                            | Return on equity                                                                                                                            |
| RSU                            | Restricted stock unit                                                                                                                       |
| RTO                            | Regional transmission organization                                                                                                          |
| SCPSC                          | Public Service Commission of South Carolina                                                                                                 |
| Section 29                     | Section 29 of the Code                                                                                                                      |
| Section 29/45K                 | General business tax credits earned after December 31, 2005 for synthetic fuels production in accordance with Section 29               |
| Section 316(b)                 | Section 316(b) of the Clean Water Act                                                                                                       |
| (See Note/s “#”)   | For all sections, this is a cross-reference to the Combined Notes to the Financial Statements contained in PART I, Item I of this Form 10-Q |
| SERC                           | SERC Reliability Corporation                                                                                                                |
| S&P                        | Standard & Poor’s Rating Services                                                                                                 |
| SNG                            | Southern Natural Gas Company                                                                                                                |
| SO2                            | Sulfur dioxide                                                                                                                              |
| Subordinated Notes             | 7.10% Junior Subordinated Deferrable Interest Notes due 2039 issued by Funding Corp.                                                        |
| Tax Agreement                  | Intercompany Income Tax Allocation Agreement                                                                                                |
| Terminals                      | Coal terminals and docks in West Virginia and Kentucky, which were sold on March 7, 2008                                                    |
| the Trust                      | FPC Capital I                                                                                                                               |
| the Utilities                  | Collectively, PEC and PEF                                                                                                                   |
| VIE                            | Variable interest entity                                                                                                                    |
| Ward                           | Ward Transformer site located in Raleigh, N.C.                                                                                              |
| Ward OU1                       | Operable unit for stream segments downstream from the Ward site                                                                             |
| Ward OU2                       | Operable unit for further investigation at the Ward facility and certain adjacent areas                                                     |

----

SAFE HARBOR

----

| PROGRESS ENERGY, INC.                                                                                   |   |
|---------------------------------------------------------------------------------------------------------|--------|
| UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS                                           |   |
| June 30, 2010                                                                                           |   |
|                                                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of INCOME                                                   |   |
|                                                                                                    |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
| (in millions except per share data)                                                                     |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| Operating revenues                                                                                      |   | $ | 2,372 |   |   | $ | 2,312 |   |   | $ | 4,907 |   |   | $ | 4,754 |   |
| Operating expenses                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel used in electric generation                                                                        |   |   | 743 |   |   |   | 826 |   |   |   | 1,639 |   |   |   | 1,780 |   |
| Purchased power                                                                                         |   |   | 315 |   |   |   | 257 |   |   |   | 578 |   |   |   | 474 |   |
| Operation and maintenance                                                                               |   |   | 505 |   |   |   | 484 |   |   |   | 985 |   |   |   | 937 |   |
| Depreciation, amortization and accretion                                                                |   |   | 233 |   |   |   | 226 |   |   |   | 479 |   |   |   | 506 |   |
| Taxes other than on income                                                                              |   |   | 133 |   |   |   | 130 |   |   |   | 287 |   |   |   | 273 |   |
| Other                                                                                                   |   |   | 3 |   |   |   | 10 |   |   |   | 5 |   |   |   | 12 |   |
| Total operating expenses                                                                                |   |   | 1,932 |   |   |   | 1,933 |   |   |   | 3,973 |   |   |   | 3,982 |   |
| Operating income                                                                                        |   |   | 440 |   |   |   | 379 |   |   |   | 934 |   |   |   | 772 |   |
| Other income                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                                         |   |   | 1 |   |   |   | 2 |   |   |   | 3 |   |   |   | 6 |   |
| Allowance for equity funds used during construction                                                     |   |   | 25 |   |   |   | 36 |   |   |   | 46 |   |   |   | 75 |   |
| Other, net                                                                                              |   |   | 5 |   |   |   | 13 |   |   |   | - |   |   |   | 12 |   |
| Total other income, net                                                                                 |   |   | 31 |   |   |   | 51 |   |   |   | 49 |   |   |   | 93 |   |
| Interest charges                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest charges                                                                                        |   |   | 199 |   |   |   | 181 |   |   |   | 390 |   |   |   | 360 |   |
| Allowance for borrowed funds used during construction                                                   |   |   | (7 | ) |   |   | (12 | ) |   |   | (16 | ) |   |   | (24 | ) |
| Total interest charges, net                                                                             |   |   | 192 |   |   |   | 169 |   |   |   | 374 |   |   |   | 336 |   |
| Income from continuing operations before income tax                                                     |   |   | 279 |   |   |   | 261 |   |   |   | 609 |   |   |   | 529 |   |
| Income tax expense                                                                                      |   |   | 98 |   |   |   | 86 |   |   |   | 237 |   |   |   | 171 |   |
| Income from continuing operations before cumulative effect  of change in accounting principle |   |   | 181 |   |   |   | 175 |   |   |   | 372 |   |   |   | 358 |   |
| Discontinued operations, net of tax                                                                     |   |   | (1 | ) |   |   | (1 | ) |   |   | - |   |   |   | (1 | ) |
| Cumulative effect of change in accounting principle, net of tax                                         |   |   | - |   |   |   | - |   |   |   | (2 | ) |   |   | - |   |
| Net income                                                                                              |   |   | 180 |   |   |   | 174 |   |   |   | 370 |   |   |   | 357 |   |
| Net income attributable to noncontrolling interests, net of tax                                         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (1 | ) |
| Net income attributable to controlling interests                                                        |   | $ | 180 |   |   | $ | 174 |   |   | $ | 370 |   |   | $ | 356 |   |
| Average common shares outstanding – basic                                                         |   |   | 290 |   |   |   | 280 |   |   |   | 287 |   |   |   | 278 |   |
| Basic and diluted earnings per common share                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations attributable to controlling  interests, net of tax          |   | $ | 0.62 |   |   | $ | 0.62 |   |   | $ | 1.29 |   |   | $ | 1.28 |   |
| Discontinued operations attributable to controlling interests,  net of tax                    |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Net income attributable to controlling interests                                                        |   | $ | 0.62 |   |   | $ | 0.62 |   |   | $ | 1.29 |   |   | $ | 1.28 |   |
| Dividends declared per common share                                                                     |   | $ | 0.620 |   |   | $ | 0.620 |   |   | $ | 1.240 |   |   | $ | 1.240 |   |
| Amounts attributable to controlling interests                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income from continuing operations, net of tax                                                           |   | $ | 181 |   |   | $ | 175 |   |   | $ | 370 |   |   | $ | 357 |   |
| Discontinued operations, net of tax                                                                     |   |   | (1 | ) |   |   | (1 | ) |   |   | - |   |   |   | (1 | ) |
| Net income attributable to controlling interests                                                        |   | $ | 180 |   |   | $ | 174 |   |   | $ | 370 |   |   | $ | 356 |   |
|                                                                                                    |   |
| See Notes to Progress Energy, Inc. Unaudited Condensed Consolidated Interim Financial Statements.       |   |

----

| PROGRESS ENERGY, INC.                                                                                                                             |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS                                                                                                   |   |
| (in millions)                                                                                                                                     |   | June 30, 2010 |   |   | December 31, 2009 |   |
| ASSETS                                                                                                                                            |   |   |   |   |   |   |
| Utility plant                                                                                                                                     |   |   |   |   |   |   |
| Utility plant in service                                                                                                                          |   | $ | 29,728 |   |   | $ | 28,918 |   |
| Accumulated depreciation                                                                                                                          |   |   | (11,777 | ) |   |   | (11,576 | ) |
| Utility plant in service, net                                                                                                                     |   |   | 17,951 |   |   |   | 17,342 |   |
| Held for future use                                                                                                                               |   |   | 48 |   |   |   | 47 |   |
| Construction work in progress                                                                                                                     |   |   | 1,914 |   |   |   | 1,790 |   |
| Nuclear fuel, net of amortization                                                                                                                 |   |   | 599 |   |   |   | 554 |   |
| Total utility plant, net                                                                                                                          |   |   | 20,512 |   |   |   | 19,733 |   |
| Current assets                                                                                                                                    |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                                                                                         |   |   | 690 |   |   |   | 725 |   |
| Receivables, net                                                                                                                                  |   |   | 999 |   |   |   | 800 |   |
| Inventory                                                                                                                                         |   |   | 1,237 |   |   |   | 1,325 |   |
| Regulatory assets                                                                                                                                 |   |   | 324 |   |   |   | 142 |   |
| Derivative collateral posted                                                                                                                      |   |   | 194 |   |   |   | 146 |   |
| Income taxes receivable                                                                                                                           |   |   | 21 |   |   |   | 145 |   |
| Prepayments and other current assets                                                                                                              |   |   | 195 |   |   |   | 248 |   |
| Total current assets                                                                                                                              |   |   | 3,660 |   |   |   | 3,531 |   |
| Deferred debits and other assets                                                                                                                  |   |   |   |   |   |   |   |   |
| Regulatory assets                                                                                                                                 |   |   | 2,211 |   |   |   | 2,179 |   |
| Nuclear decommissioning trust funds                                                                                                               |   |   | 1,341 |   |   |   | 1,367 |   |
| Miscellaneous other property and investments                                                                                                      |   |   | 437 |   |   |   | 438 |   |
| Goodwill                                                                                                                                          |   |   | 3,655 |   |   |   | 3,655 |   |
| Other assets and deferred debits                                                                                                                  |   |   | 321 |   |   |   | 333 |   |
| Total deferred debits and other assets                                                                                                            |   |   | 7,965 |   |   |   | 7,972 |   |
| Total assets                                                                                                                                      |   | $ | 32,137 |   |   | $ | 31,236 |   |
| CAPITALIZATION AND LIABILITIES                                                                                                                    |   |   |   |   |   |   |   |   |
| Common stock equity                                                                                                                               |   |   |   |   |   |   |   |   |
| Common stock without par value, 500 million shares authorized, 293  million and 281 million shares issued and outstanding, respectively |   | $ | 7,304 |   |   | $ | 6,873 |   |
| Unearned ESOP shares (- and 1 million shares, respectively)                                                                                       |   |   | - |   |   |   | (12 | ) |
| Accumulated other comprehensive loss                                                                                                              |   |   | (131 | ) |   |   | (87 | ) |
| Retained earnings                                                                                                                                 |   |   | 2,684 |   |   |   | 2,675 |   |
| Total common stock equity                                                                                                                         |   |   | 9,857 |   |   |   | 9,449 |   |
| Noncontrolling interests                                                                                                                          |   |   | 2 |   |   |   | 6 |   |
| Total equity                                                                                                                                      |   |   | 9,859 |   |   |   | 9,455 |   |
| Preferred stock of subsidiaries                                                                                                                   |   |   | 93 |   |   |   | 93 |   |
| Long-term debt, affiliate                                                                                                                         |   |   | 272 |   |   |   | 272 |   |
| Long-term debt, net                                                                                                                               |   |   | 11,664 |   |   |   | 11,779 |   |
| Total capitalization                                                                                                                              |   |   | 21,888 |   |   |   | 21,599 |   |
| Current liabilities                                                                                                                               |   |   |   |   |   |   |   |   |
| Current portion of long-term debt                                                                                                                 |   |   | 705 |   |   |   | 406 |   |
| Short-term debt                                                                                                                                   |   |   | - |   |   |   | 140 |   |
| Accounts payable                                                                                                                                  |   |   | 954 |   |   |   | 835 |   |
| Interest accrued                                                                                                                                  |   |   | 209 |   |   |   | 206 |   |
| Dividends declared                                                                                                                                |   |   | 182 |   |   |   | 175 |   |
| Customer deposits                                                                                                                                 |   |   | 316 |   |   |   | 300 |   |
| Derivative liabilities                                                                                                                            |   |   | 250 |   |   |   | 190 |   |
| Accrued compensation and other benefits                                                                                                           |   |   | 100 |   |   |   | 167 |   |
| Other current liabilities                                                                                                                         |   |   | 387 |   |   |   | 239 |   |
| Total current liabilities                                                                                                                         |   |   | 3,103 |   |   |   | 2,658 |   |
| Deferred credits and other liabilities                                                                                                            |   |   |   |   |   |   |   |   |
| Noncurrent income tax liabilities                                                                                                                 |   |   | 1,288 |   |   |   | 1,196 |   |
| Accumulated deferred investment tax credits                                                                                                       |   |   | 113 |   |   |   | 117 |   |
| Regulatory liabilities                                                                                                                            |   |   | 2,479 |   |   |   | 2,510 |   |
| Asset retirement obligations                                                                                                                      |   |   | 1,200 |   |   |   | 1,170 |   |
| Accrued pension and other benefits                                                                                                                |   |   | 1,330 |   |   |   | 1,339 |   |
| Derivative liabilities                                                                                                                            |   |   | 324 |   |   |   | 240 |   |
| Other liabilities and deferred credits                                                                                                            |   |   | 412 |   |   |   | 407 |   |
| Total deferred credits and other liabilities                                                                                                      |   |   | 7,146 |   |   |   | 6,979 |   |
| Commitments and contingencies (Notes 12 and 13)                                                                                                   |   |   |   |   |   |   |   |   |
| Total capitalization and liabilities                                                                                                              |   | $ | 32,137 |   |   | $ | 31,236 |   |
|                                                                                                                                              |   |   |
| See Notes to Progress Energy, Inc. Unaudited Condensed Consolidated Interim Financial Statements.                                                 |   |

----

| PROGRESS ENERGY, INC.                                                                             |   |
|---------------------------------------------------------------------------------------------------|--------|
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS                                         |   |
| (in millions)                                                                                     |   |   |   |   |   |   |
| Six months ended June 30                                                                          |   | 2010 |   |   | 2009 |   |
| Operating activities                                                                              |   |   |   |   |   |   |
| Net income                                                                                        |   | $ | 370 |   |   | $ | 357 |   |
| Adjustments to reconcile net income to net cash provided by operating activities                  |   |   |   |   |   |   |   |   |
| Depreciation, amortization and accretion                                                          |   |   | 555 |   |   |   | 576 |   |
| Deferred income taxes and investment tax credits, net                                             |   |   | 117 |   |   |   | 13 |   |
| Deferred fuel (credit) cost                                                                       |   |   | (137 | ) |   |   | 129 |   |
| Allowance for equity funds used during construction                                               |   |   | (46 | ) |   |   | (75 | ) |
| Other adjustments to net income                                                                   |   |   | 136 |   |   |   | 118 |   |
| Cash (used) provided by changes in operating assets and liabilities                               |   |   |   |   |   |   |   |   |
| Receivables                                                                                       |   |   | (126 | ) |   |   | (36 | ) |
| Inventory                                                                                         |   |   | 87 |   |   |   | (118 | ) |
| Derivative collateral posted                                                                      |   |   | (40 | ) |   |   | 47 |   |
| Other assets                                                                                      |   |   | (13 | ) |   |   | 41 |   |
| Income taxes, net                                                                                 |   |   | 152 |   |   |   | 110 |   |
| Accounts payable                                                                                  |   |   | 110 |   |   |   | (30 | ) |
| Other liabilities                                                                                 |   |   | (6 | ) |   |   | (37 | ) |
| Net cash provided by operating activities                                                         |   |   | 1,159 |   |   |   | 1,095 |   |
| Investing activities                                                                              |   |   |   |   |   |   |   |   |
| Gross property additions                                                                          |   |   | (1,116 | ) |   |   | (1,172 | ) |
| Nuclear fuel additions                                                                            |   |   | (119 | ) |   |   | (60 | ) |
| Purchases of available-for-sale securities and other investments                                  |   |   | (3,815 | ) |   |   | (982 | ) |
| Proceeds from available-for-sale securities and other investments                                 |   |   | 3,792 |   |   |   | 960 |   |
| Other investing activities                                                                        |   |   | 14 |   |   |   | (3 | ) |
| Net cash used by investing activities                                                             |   |   | (1,244 | ) |   |   | (1,257 | ) |
| Financing activities                                                                              |   |   |   |   |   |   |   |   |
| Issuance of common stock, net                                                                     |   |   | 405 |   |   |   | 545 |   |
| Dividends paid on common stock                                                                    |   |   | (354 | ) |   |   | (347 | ) |
| Payments of short-term debt with original maturities greater than 90 days                         |   |   | - |   |   |   | (129 | ) |
| Net decrease in short-term debt                                                                   |   |   | (140 | ) |   |   | (521 | ) |
| Proceeds from issuance of long-term debt, net                                                     |   |   | 591 |   |   |   | 1,337 |   |
| Retirement of long-term debt                                                                      |   |   | (400 | ) |   |   | (400 | ) |
| Other financing activities                                                                        |   |   | (52 | ) |   |   | (51 | ) |
| Net cash provided by financing activities                                                         |   |   | 50 |   |   |   | 434 |   |
| Net (decrease) increase in cash and cash equivalents                                              |   |   | (35 | ) |   |   | 272 |   |
| Cash and cash equivalents at beginning of period                                                  |   |   | 725 |   |   |   | 180 |   |
| Cash and cash equivalents at end of period                                                        |   | $ | 690 |   |   | $ | 452 |   |
| Supplemental disclosures                                                                          |   |   |   |   |   |   |   |   |
| Significant noncash transactions                                                                  |   |   |   |   |   |   |   |   |
| Accrued property additions                                                                        |   | $ | 274 |   |   | $ | 301 |   |
|                                                                                              |   |
| See Notes to Progress Energy, Inc. Unaudited Condensed Consolidated Interim Financial Statements. |   |

----

| CAROLINA POWER & LIGHT COMPANY                                                                          |   |
|-------------------------------------------------------------------------------------------------------------|--------|
| d/b/a PROGRESS ENERGY CAROLINAS, INC.                                                                       |   |
| UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS                                               |   |
| June 30, 2010                                                                                               |   |
|                                                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of INCOME                                                       |   |
|                                                                                                        |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
| (in millions)                                                                                               |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| Operating revenues                                                                                          |   | $ | 1,117 |   |   | $ | 1,076 |   |   | $ | 2,380 |   |   | $ | 2,254 |   |
| Operating expenses                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel used in electric generation                                                                            |   |   | 375 |   |   |   | 383 |   |   |   | 858 |   |   |   | 825 |   |
| Purchased power                                                                                             |   |   | 76 |   |   |   | 57 |   |   |   | 126 |   |   |   | 114 |   |
| Operation and maintenance                                                                                   |   |   | 300 |   |   |   | 283 |   |   |   | 585 |   |   |   | 542 |   |
| Depreciation, amortization and accretion                                                                    |   |   | 120 |   |   |   | 118 |   |   |   | 238 |   |   |   | 235 |   |
| Taxes other than on income                                                                                  |   |   | 51 |   |   |   | 51 |   |   |   | 111 |   |   |   | 105 |   |
| Other                                                                                                       |   |   | (1 | ) |   |   | 2 |   |   |   | - |   |   |   | 2 |   |
| Total operating expenses                                                                                    |   |   | 921 |   |   |   | 894 |   |   |   | 1,918 |   |   |   | 1,823 |   |
| Operating income                                                                                            |   |   | 196 |   |   |   | 182 |   |   |   | 462 |   |   |   | 431 |   |
| Other income (expense)                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                                             |   |   | 1 |   |   |   | 1 |   |   |   | 2 |   |   |   | 3 |   |
| Allowance for equity funds used during construction                                                         |   |   | 15 |   |   |   | 7 |   |   |   | 28 |   |   |   | 16 |   |
| Other, net                                                                                                  |   |   | 4 |   |   |   | 4 |   |   |   | (3 | ) |   |   | (3 | ) |
| Total other income, net                                                                                     |   |   | 20 |   |   |   | 12 |   |   |   | 27 |   |   |   | 16 |   |
| Interest charges                                                                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest charges                                                                                            |   |   | 53 |   |   |   | 52 |   |   |   | 103 |   |   |   | 109 |   |
| Allowance for borrowed funds used during construction                                                       |   |   | (5 | ) |   |   | (3 | ) |   |   | (9 | ) |   |   | (6 | ) |
| Total interest charges, net                                                                                 |   |   | 48 |   |   |   | 49 |   |   |   | 94 |   |   |   | 103 |   |
| Income before income tax                                                                                    |   |   | 168 |   |   |   | 145 |   |   |   | 395 |   |   |   | 344 |   |
| Income tax expense                                                                                          |   |   | 57 |   |   |   | 51 |   |   |   | 146 |   |   |   | 122 |   |
| Income before cumulative effect of change in accounting  principle                                |   |   | 111 |   |   |   | 94 |   |   |   | 249 |   |   |   | 222 |   |
| Cumulative effect of change in accounting principle, net of tax                                             |   |   | - |   |   |   | - |   |   |   | (2 | ) |   |   | - |   |
| Net income                                                                                                  |   |   | 111 |   |   |   | 94 |   |   |   | 247 |   |   |   | 222 |   |
| Net loss attributable to noncontrolling interests, net of tax                                               |   |   | 1 |   |   |   | 1 |   |   |   | 3 |   |   |   | 1 |   |
| Net income attributable to controlling interests                                                            |   |   | 112 |   |   |   | 95 |   |   |   | 250 |   |   |   | 223 |   |
| Preferred stock dividend requirement                                                                        |   |   | - |   |   |   | - |   |   |   | (1 | ) |   |   | (1 | ) |
| Net income available to parent                                                                              |   | $ | 112 |   |   | $ | 95 |   |   | $ | 249 |   |   | $ | 222 |   |
|                                                                                                        |   |
| See Notes to Progress Energy Carolinas, Inc. Unaudited Condensed Consolidated Interim Financial Statements. |   |

----

| CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY CAROLINAS, INC.                                            |   |
|---------------------------------------------------------------------------------------------------------------------|--------|
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS                                                                     |   |
| (in millions)                                                                                                       |   | June 30, 2010 |   |   | December 31, 2009 |   |
| ASSETS                                                                                                              |   |   |   |   |   |   |
| Utility plant                                                                                                       |   |   |   |   |   |   |
| Utility plant in service                                                                                            |   | $ | 16,553 |   |   | $ | 16,297 |   |
| Accumulated depreciation                                                                                            |   |   | (7,631 | ) |   |   | (7,520 | ) |
| Utility plant in service, net                                                                                       |   |   | 8,922 |   |   |   | 8,777 |   |
| Held for future use                                                                                                 |   |   | 12 |   |   |   | 11 |   |
| Construction work in progress                                                                                       |   |   | 1,060 |   |   |   | 702 |   |
| Nuclear fuel, net of amortization                                                                                   |   |   | 430 |   |   |   | 396 |   |
| Total utility plant, net                                                                                            |   |   | 10,424 |   |   |   | 9,886 |   |
| Current assets                                                                                                      |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                                                           |   |   | 206 |   |   |   | 35 |   |
| Receivables, net                                                                                                    |   |   | 508 |   |   |   | 442 |   |
| Receivables from affiliated companies                                                                               |   |   | 15 |   |   |   | 33 |   |
| Notes receivable from affiliated companies                                                                          |   |   | 2 |   |   |   | 204 |   |
| Inventory                                                                                                           |   |   | 591 |   |   |   | 677 |   |
| Deferred fuel cost                                                                                                  |   |   | 101 |   |   |   | 88 |   |
| Income taxes receivable                                                                                             |   |   | 26 |   |   |   | 38 |   |
| Prepayments and other current assets                                                                                |   |   | 61 |   |   |   | 61 |   |
| Total current assets                                                                                                |   |   | 1,510 |   |   |   | 1,578 |   |
| Deferred debits and other assets                                                                                    |   |   |   |   |   |   |   |   |
| Regulatory assets                                                                                                   |   |   | 894 |   |   |   | 873 |   |
| Nuclear decommissioning trust funds                                                                                 |   |   | 859 |   |   |   | 871 |   |
| Miscellaneous other property and investments                                                                        |   |   | 187 |   |   |   | 199 |   |
| Other assets and deferred debits                                                                                    |   |   | 92 |   |   |   | 95 |   |
| Total deferred debits and other assets                                                                              |   |   | 2,032 |   |   |   | 2,038 |   |
| Total assets                                                                                                        |   | $ | 13,966 |   |   | $ | 13,502 |   |
| CAPITALIZATION AND LIABILITIES                                                                                      |   |   |   |   |   |   |   |   |
| Common stock equity                                                                                                 |   |   |   |   |   |   |   |   |
| Common stock without par value, 200 million shares authorized, 160  million shares issued and outstanding |   | $ | 2,125 |   |   | $ | 2,108 |   |
| Unearned ESOP shares                                                                                                |   |   | - |   |   |   | (12 | ) |
| Accumulated other comprehensive loss                                                                                |   |   | (41 | ) |   |   | (27 | ) |
| Retained earnings                                                                                                   |   |   | 2,785 |   |   |   | 2,588 |   |
| Total common stock equity                                                                                           |   |   | 4,869 |   |   |   | 4,657 |   |
| Noncontrolling interests                                                                                            |   |   | - |   |   |   | 3 |   |
| Total equity                                                                                                        |   |   | 4,869 |   |   |   | 4,660 |   |
| Preferred stock                                                                                                     |   |   | 59 |   |   |   | 59 |   |
| Long-term debt, net                                                                                                 |   |   | 3,688 |   |   |   | 3,703 |   |
| Total capitalization                                                                                                |   |   | 8,616 |   |   |   | 8,422 |   |
| Current liabilities                                                                                                 |   |   |   |   |   |   |   |   |
| Current portion of long-term debt                                                                                   |   |   | 6 |   |   |   | 6 |   |
| Accounts payable                                                                                                    |   |   | 426 |   |   |   | 355 |   |
| Payables to affiliated companies                                                                                    |   |   | 87 |   |   |   | 72 |   |
| Interest accrued                                                                                                    |   |   | 72 |   |   |   | 70 |   |
| Customer deposits                                                                                                   |   |   | 101 |   |   |   | 95 |   |
| Derivative liabilities                                                                                              |   |   | 48 |   |   |   | 29 |   |
| Accrued compensation and other benefits                                                                             |   |   | 53 |   |   |   | 86 |   |
| Other current liabilities                                                                                           |   |   | 122 |   |   |   | 50 |   |
| Total current liabilities                                                                                           |   |   | 915 |   |   |   | 763 |   |
| Deferred credits and other liabilities                                                                              |   |   |   |   |   |   |   |   |
| Noncurrent income tax liabilities                                                                                   |   |   | 1,327 |   |   |   | 1,258 |   |
| Accumulated deferred investment tax credits                                                                         |   |   | 107 |   |   |   | 110 |   |
| Regulatory liabilities                                                                                              |   |   | 1,307 |   |   |   | 1,293 |   |
| Asset retirement obligations                                                                                        |   |   | 822 |   |   |   | 801 |   |
| Accrued pension and other benefits                                                                                  |   |   | 703 |   |   |   | 708 |   |
| Other liabilities and deferred credits                                                                              |   |   | 169 |   |   |   | 147 |   |
| Total deferred credits and other liabilities                                                                        |   |   | 4,435 |   |   |   | 4,317 |   |
| Commitments and contingencies (Notes 12 and 13)                                                                     |   |   |   |   |   |   |   |   |
| Total capitalization and liabilities                                                                                |   | $ | 13,966 |   |   | $ | 13,502 |   |
|                                                                                                                |   |   |
| See Notes to Progress Energy Carolinas, Inc. Unaudited Condensed Consolidated Interim Financial Statements.         |   |

----

| CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY CAROLINAS, INC.                                    |   |
|-------------------------------------------------------------------------------------------------------------|--------|
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of CASH FLOWS                                                   |   |
| (in millions)                                                                                               |   |   |   |   |   |   |
| Six months ended June 30                                                                                    |   | 2010 |   |   | 2009 |   |
| Operating activities                                                                                        |   |   |   |   |   |   |
| Net income                                                                                                  |   | $ | 247 |   |   | $ | 222 |   |
| Adjustments to reconcile net income to net cash provided by operating activities                            |   |   |   |   |   |   |   |   |
| Depreciation, amortization and accretion                                                                    |   |   | 294 |   |   |   | 286 |   |
| Deferred income taxes and investment tax credits, net                                                       |   |   | 55 |   |   |   | 10 |   |
| Deferred fuel cost                                                                                          |   |   | 21 |   |   |   | 92 |   |
| Allowance for equity funds used during construction                                                         |   |   | (28 | ) |   |   | (16 | ) |
| Other adjustments to net income                                                                             |   |   | 47 |   |   |   | 52 |   |
| Cash (used) provided by changes in operating assets and liabilities                                         |   |   |   |   |   |   |   |   |
| Receivables                                                                                                 |   |   | (39 | ) |   |   | 42 |   |
| Receivables from affiliated companies                                                                       |   |   | 18 |   |   |   | 13 |   |
| Inventory                                                                                                   |   |   | 85 |   |   |   | (60 | ) |
| Other assets                                                                                                |   |   | (18 | ) |   |   | 32 |   |
| Income taxes, net                                                                                           |   |   | 12 |   |   |   | 63 |   |
| Accounts payable                                                                                            |   |   | 20 |   |   |   | (43 | ) |
| Payables to affiliated companies                                                                            |   |   | 15 |   |   |   | (24 | ) |
| Other liabilities                                                                                           |   |   | (12 | ) |   |   | (23 | ) |
| Net cash provided by operating activities                                                                   |   |   | 717 |   |   |   | 646 |   |
| Investing activities                                                                                        |   |   |   |   |   |   |   |   |
| Gross property additions                                                                                    |   |   | (580 | ) |   |   | (402 | ) |
| Nuclear fuel additions                                                                                      |   |   | (106 | ) |   |   | (42 | ) |
| Purchases of available-for-sale securities and other investments                                            |   |   | (252 | ) |   |   | (517 | ) |
| Proceeds from available-for-sale securities and other investments                                           |   |   | 227 |   |   |   | 492 |   |
| Changes in advances to affiliated companies                                                                 |   |   | 202 |   |   |   | (75 | ) |
| Net cash used by investing activities                                                                       |   |   | (509 | ) |   |   | (544 | ) |
| Financing activities                                                                                        |   |   |   |   |   |   |   |   |
| Dividends paid on preferred stock                                                                           |   |   | (1 | ) |   |   | (1 | ) |
| Dividends paid to parent                                                                                    |   |   | (50 | ) |   |   | (200 | ) |
| Net decrease in short-term debt                                                                             |   |   | - |   |   |   | (110 | ) |
| Proceeds from issuance of long-term debt, net                                                               |   |   | - |   |   |   | 595 |   |
| Retirement of long-term debt                                                                                |   |   | - |   |   |   | (400 | ) |
| Contributions from parent                                                                                   |   |   | 14 |   |   |   | 15 |   |
| Other financing activities                                                                                  |   |   | - |   |   |   | (1 | ) |
| Net cash used by financing activities                                                                       |   |   | (37 | ) |   |   | (102 | ) |
| Net increase in cash and cash equivalents                                                                   |   |   | 171 |   |   |   | - |   |
| Cash and cash equivalents at beginning of period                                                            |   |   | 35 |   |   |   | 18 |   |
| Cash and cash equivalents at end of period                                                                  |   | $ | 206 |   |   | $ | 18 |   |
| Supplemental disclosures                                                                                    |   |   |   |   |   |   |   |   |
| Significant noncash transactions                                                                            |   |   |   |   |   |   |   |   |
| Accrued property additions                                                                                  |   | $ | 158 |   |   | $ | 128 |   |
|                                                                                                        |   |
| See Notes to Progress Energy Carolinas, Inc. Unaudited Condensed Consolidated Interim Financial Statements. |   |

----

| FLORIDA POWER CORPORATION                                                                    |   |
|----------------------------------------------------------------------------------------------|--------|
| d/b/a PROGRESS ENERGY FLORIDA, INC.                                                          |   |
| UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS                                             |   |
| June 30, 2010                                                                                |   |
|                                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |
| UNAUDITED CONDENSED STATEMENTS of INCOME                                                     |   |
|                                                                                         |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
| (in millions)                                                                                |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| Operating revenues                                                                           |   | $ | 1,252 |   |   | $ | 1,234 |   |   | $ | 2,522 |   |   | $ | 2,496 |   |
| Operating expenses                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel used in electric generation                                                             |   |   | 368 |   |   |   | 443 |   |   |   | 781 |   |   |   | 955 |   |
| Purchased power                                                                              |   |   | 239 |   |   |   | 200 |   |   |   | 452 |   |   |   | 360 |   |
| Operation and maintenance                                                                    |   |   | 208 |   |   |   | 204 |   |   |   | 413 |   |   |   | 406 |   |
| Depreciation, amortization and accretion                                                     |   |   | 110 |   |   |   | 105 |   |   |   | 234 |   |   |   | 265 |   |
| Taxes other than on income                                                                   |   |   | 83 |   |   |   | 80 |   |   |   | 176 |   |   |   | 168 |   |
| Other                                                                                        |   |   | - |   |   |   | 7 |   |   |   | - |   |   |   | 7 |   |
| Total operating expenses                                                                     |   |   | 1,008 |   |   |   | 1,039 |   |   |   | 2,056 |   |   |   | 2,161 |   |
| Operating income                                                                             |   |   | 244 |   |   |   | 195 |   |   |   | 466 |   |   |   | 335 |   |
| Other income                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                              |   |   | 1 |   |   |   | - |   |   |   | 1 |   |   |   | 1 |   |
| Allowance for equity funds used during construction                                          |   |   | 10 |   |   |   | 29 |   |   |   | 18 |   |   |   | 59 |   |
| Other, net                                                                                   |   |   | 1 |   |   |   | 7 |   |   |   | 3 |   |   |   | 7 |   |
| Total other income, net                                                                      |   |   | 12 |   |   |   | 36 |   |   |   | 22 |   |   |   | 67 |   |
| Interest charges                                                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest charges                                                                             |   |   | 70 |   |   |   | 64 |   |   |   | 134 |   |   |   | 131 |   |
| Allowance for borrowed funds used during construction                                        |   |   | (2 | ) |   |   | (9 | ) |   |   | (7 | ) |   |   | (18 | ) |
| Total interest charges, net                                                                  |   |   | 68 |   |   |   | 55 |   |   |   | 127 |   |   |   | 113 |   |
| Income before income tax                                                                     |   |   | 188 |   |   |   | 176 |   |   |   | 361 |   |   |   | 289 |   |
| Income tax expense                                                                           |   |   | 69 |   |   |   | 57 |   |   |   | 140 |   |   |   | 81 |   |
| Net income                                                                                   |   |   | 119 |   |   |   | 119 |   |   |   | 221 |   |   |   | 208 |   |
| Preferred stock dividend requirement                                                         |   |   | - |   |   |   | - |   |   |   | (1 | ) |   |   | (1 | ) |
| Net income available to parent                                                               |   | $ | 119 |   |   | $ | 119 |   |   | $ | 220 |   |   | $ | 207 |   |
|                                                                                         |   |
| See Notes to Progress Energy Florida, Inc. Unaudited Condensed Interim Financial Statements. |   |

----

| FLORIDA POWER CORPORATION d/b/a PROGRESS ENERGY FLORIDA, INC.                                              |   |
|------------------------------------------------------------------------------------------------------------|--------|
| UNAUDITED CONDENSED BALANCE SHEETS                                                                         |   |
| (in millions)                                                                                              |   | June 30, 2010 |   |   | December 31, 2009 |   |
| ASSETS                                                                                                     |   |   |   |   |   |   |
| Utility plant                                                                                              |   |   |   |   |   |   |
| Utility plant in service                                                                                   |   | $ | 12,993 |   |   | $ | 12,438 |   |
| Accumulated depreciation                                                                                   |   |   | (4,075 | ) |   |   | (3,987 | ) |
| Utility plant in service, net                                                                              |   |   | 8,918 |   |   |   | 8,451 |   |
| Held for future use                                                                                        |   |   | 36 |   |   |   | 36 |   |
| Construction work in progress                                                                              |   |   | 854 |   |   |   | 1,088 |   |
| Nuclear fuel, net of amortization                                                                          |   |   | 169 |   |   |   | 158 |   |
| Total utility plant, net                                                                                   |   |   | 9,977 |   |   |   | 9,733 |   |
| Current assets                                                                                             |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                                                                                  |   |   | 113 |   |   |   | 17 |   |
| Receivables, net                                                                                           |   |   | 488 |   |   |   | 356 |   |
| Receivables from affiliated companies                                                                      |   |   | 6 |   |   |   | 8 |   |
| Inventory                                                                                                  |   |   | 647 |   |   |   | 648 |   |
| Regulatory assets                                                                                          |   |   | 223 |   |   |   | 54 |   |
| Derivative collateral posted                                                                               |   |   | 174 |   |   |   | 139 |   |
| Deferred tax assets                                                                                        |   |   | 78 |   |   |   | 115 |   |
| Prepayments and other current assets                                                                       |   |   | 18 |   |   |   | 80 |   |
| Total current assets                                                                                       |   |   | 1,747 |   |   |   | 1,417 |   |
| Deferred debits and other assets                                                                           |   |   |   |   |   |   |   |   |
| Regulatory assets                                                                                          |   |   | 1,317 |   |   |   | 1,307 |   |
| Nuclear decommissioning trust funds                                                                        |   |   | 482 |   |   |   | 496 |   |
| Miscellaneous other property and investments                                                               |   |   | 43 |   |   |   | 42 |   |
| Other assets and deferred debits                                                                           |   |   | 127 |   |   |   | 105 |   |
| Total deferred debits and other assets                                                                     |   |   | 1,969 |   |   |   | 1,950 |   |
| Total assets                                                                                               |   | $ | 13,693 |   |   | $ | 13,100 |   |
| CAPITALIZATION AND LIABILITIES                                                                             |   |   |   |   |   |   |   |   |
| Common stock equity                                                                                        |   |   |   |   |   |   |   |   |
| Common stock without par value, 60 million shares authorized,  100 shares issued and outstanding |   | $ | 1,747 |   |   | $ | 1,744 |   |
| Accumulated other comprehensive (loss) income                                                              |   |   | (7 | ) |   |   | 3 |   |
| Retained earnings                                                                                          |   |   | 2,912 |   |   |   | 2,743 |   |
| Total common stock equity                                                                                  |   |   | 4,652 |   |   |   | 4,490 |   |
| Preferred stock                                                                                            |   |   | 34 |   |   |   | 34 |   |
| Long-term debt, net                                                                                        |   |   | 4,481 |   |   |   | 3,883 |   |
| Total capitalization                                                                                       |   |   | 9,167 |   |   |   | 8,407 |   |
| Current liabilities                                                                                        |   |   |   |   |   |   |   |   |
| Current portion of long-term debt                                                                          |   |   | - |   |   |   | 300 |   |
| Notes payable to affiliated companies                                                                      |   |   | 7 |   |   |   | 221 |   |
| Accounts payable                                                                                           |   |   | 509 |   |   |   | 451 |   |
| Payables to affiliated companies                                                                           |   |   | 56 |   |   |   | 62 |   |
| Interest accrued                                                                                           |   |   | 76 |   |   |   | 72 |   |
| Customer deposits                                                                                          |   |   | 215 |   |   |   | 205 |   |
| Derivative liabilities                                                                                     |   |   | 179 |   |   |   | 161 |   |
| Accrued compensation and other benefits                                                                    |   |   | 29 |   |   |   | 53 |   |
| Other current liabilities                                                                                  |   |   | 247 |   |   |   | 89 |   |
| Total current liabilities                                                                                  |   |   | 1,318 |   |   |   | 1,614 |   |
| Deferred credits and other liabilities                                                                     |   |   |   |   |   |   |   |   |
| Noncurrent income tax liabilities                                                                          |   |   | 877 |   |   |   | 767 |   |
| Regulatory liabilities                                                                                     |   |   | 1,060 |   |   |   | 1,103 |   |
| Asset retirement obligations                                                                               |   |   | 378 |   |   |   | 369 |   |
| Accrued pension and other benefits                                                                         |   |   | 389 |   |   |   | 395 |   |
| Capital lease obligations                                                                                  |   |   | 204 |   |   |   | 208 |   |
| Derivative liabilities                                                                                     |   |   | 223 |   |   |   | 174 |   |
| Other liabilities and deferred credits                                                                     |   |   | 77 |   |   |   | 63 |   |
| Total deferred credits and other liabilities                                                               |   |   | 3,208 |   |   |   | 3,079 |   |
| Commitments and contingencies (Notes 12 and 13)                                                            |   |   |   |   |   |   |   |   |
| Total capitalization and liabilities                                                                       |   | $ | 13,693 |   |   | $ | 13,100 |   |
|                                                                                                       |   |   |
| See Notes to Progress Energy Florida, Inc. Unaudited Condensed Interim Financial Statements.               |   |

----

| FLORIDA POWER CORPORATION d/b/a PROGRESS ENERGY FLORIDA, INC.                                |   |
|----------------------------------------------------------------------------------------------|--------|
| UNAUDITED CONDENSED STATEMENTS of CASH FLOWS                                                 |   |
| (in millions)                                                                                |   |   |   |   |   |   |
| Six months ended June 30                                                                     |   | 2010 |   |   | 2009 |   |
| Operating activities                                                                         |   |   |   |   |   |   |
| Net income                                                                                   |   | $ | 221 |   |   | $ | 208 |   |
| Adjustments to reconcile net income to net cash provided by operating activities             |   |   |   |   |   |   |   |   |
| Depreciation, amortization and accretion                                                     |   |   | 244 |   |   |   | 280 |   |
| Deferred income taxes and investment tax credits, net                                        |   |   | 138 |   |   |   | (41 | ) |
| Deferred fuel (credit) cost                                                                  |   |   | (158 | ) |   |   | 37 |   |
| Allowance for equity funds used during construction                                          |   |   | (18 | ) |   |   | (59 | ) |
| Other adjustments to net income                                                              |   |   | 62 |   |   |   | 47 |   |
| Cash (used) provided by changes in operating assets and liabilities                          |   |   |   |   |   |   |   |   |
| Receivables                                                                                  |   |   | (87 | ) |   |   | (76 | ) |
| Receivables from affiliated companies                                                        |   |   | 2 |   |   |   | 8 |   |
| Inventory                                                                                    |   |   | 1 |   |   |   | (58 | ) |
| Derivative collateral posted                                                                 |   |   | (27 | ) |   |   | 38 |   |
| Other assets                                                                                 |   |   | (10 | ) |   |   | 22 |   |
| Income taxes, net                                                                            |   |   | 122 |   |   |   | 16 |   |
| Accounts payable                                                                             |   |   | 98 |   |   |   | 16 |   |
| Payables to affiliated companies                                                             |   |   | (6 | ) |   |   | (7 | ) |
| Other liabilities                                                                            |   |   | 28 |   |   |   | 14 |   |
| Net cash provided by operating activities                                                    |   |   | 610 |   |   |   | 445 |   |
| Investing activities                                                                         |   |   |   |   |   |   |   |   |
| Gross property additions                                                                     |   |   | (543 | ) |   |   | (770 | ) |
| Nuclear fuel additions                                                                       |   |   | (13 | ) |   |   | (18 | ) |
| Purchases of available-for-sale securities and other investments                             |   |   | (3,505 | ) |   |   | (415 | ) |
| Proceeds from available-for-sale securities and other investments                            |   |   | 3,508 |   |   |   | 420 |   |
| Other investing activities                                                                   |   |   | 15 |   |   |   | (4 | ) |
| Net cash used by investing activities                                                        |   |   | (538 | ) |   |   | (787 | ) |
| Financing activities                                                                         |   |   |   |   |   |   |   |   |
| Dividends paid on preferred stock                                                            |   |   | (1 | ) |   |   | (1 | ) |
| Dividends paid to parent                                                                     |   |   | (50 | ) |   |   | - |   |
| Net decrease in short-term debt                                                              |   |   | - |   |   |   | (371 | ) |
| Proceeds from issuance of long-term debt, net                                                |   |   | 591 |   |   |   | - |   |
| Retirement of long-term debt                                                                 |   |   | (300 | ) |   |   | - |   |
| Changes in advances from affiliated companies                                                |   |   | (214 | ) |   |   | 406 |   |
| Contributions from parent                                                                    |   |   | - |   |   |   | 310 |   |
| Other financing activities                                                                   |   |   | (2 | ) |   |   | (2 | ) |
| Net cash provided by financing activities                                                    |   |   | 24 |   |   |   | 342 |   |
| Net increase in cash and cash equivalents                                                    |   |   | 96 |   |   |   | - |   |
| Cash and cash equivalents at beginning of period                                             |   |   | 17 |   |   |   | 19 |   |
| Cash and cash equivalents at end of period                                                   |   | $ | 113 |   |   | $ | 19 |   |
| Supplemental disclosures                                                                     |   |   |   |   |   |   |   |   |
| Significant noncash transactions                                                             |   |   |   |   |   |   |   |   |
| Accrued property additions                                                                   |   | $ | 113 |   |   | $ | 172 |   |
|                                                                                         |   |
| See Notes to Progress Energy Florida, Inc. Unaudited Condensed Interim Financial Statements. |   |

----

| Registrant | Applicable Notes              |
|------------|-------------------------------|
|       |                          |
| PEC        | 1 through 9 and 11 through 13 |
|       |                          |
| PEF        | 1 through 9 and 11 through 13 |

----

| 1. | ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|----|-------------------------------------------------------------|

| A. | ORGANIZATION |
|----|--------------|

| B. | BASIS OF PRESENTATION |
|----|-----------------------|

----

|            |   |                        |   |   |                      |   |   |   |   |   |   |   |
|-----------------|--------|-----------------------------|--------|--------|---------------------------|--------|--------|--------|--------|--------|--------|--------|
|            |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
| (in millions)   |   | 2010                        |   |   | 2009                      |   |   | 2010   |   |   | 2009   |   |
| Progress Energy |   | $                           | 81     |   |                      | $      | 77     |   |   | $      | 164    |   |   | $ | 156 |   |
| PEC             |   |                        | 27     |   |                      |   | 26     |   |   |   | 57     |   |   |   | 52 |   |
| PEF             |   |                        | 54     |   |                      |   | 51     |   |   |   | 107    |   |   |   | 104 |   |
|            |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |

| C. | CONSOLIDATION OF VARIABLE INTEREST ENTITIES |
|----|---------------------------------------------|

----

|                                         |   |          |   |   |              |   |
|----------------------------------------------|--------|---------------|--------|--------|-------------------|--------|
| (in millions)                                |   | June 30, 2010 |   |   | December 31, 2009 |   |
| Miscellaneous other property and investments |   | $             | 15     |   |              | $      | 17 |   |
| Other assets and deferred debits             |   |          | 1      |   |              |   | 1 |   |
| Accounts payable                             |   |          | 5      |   |              |   | 4 |   |
|                                         |   |          |   |   |              |   |   |   |

| D. | SIGNIFICANT ACCOUNTING POLICIES |
|----|---------------------------------|

----

| 2. | NEW ACCOUNTING STANDARDS |
|----|--------------------------|

| 3. | REGULATORY MATTERS |
|----|--------------------|

| A. | PEC RETAIL RATE MATTERS |
|----|-------------------------|

----

| B. | PEF RETAIL RATE MATTERS |
|----|-------------------------|

----

----

----

| 4. | EQUITY AND COMPREHENSIVE INCOME |
|----|---------------------------------|

| A. | EARNINGS PER COMMON SHARE |
|----|---------------------------|

----

| B. | RECONCILIATION OF TOTAL EQUITY |
|----|--------------------------------|

|                                                                                                    |   |                     |   |   |                    |   |   |         |   |
|---------------------------------------------------------------------------------------------------------|--------|--------------------------|--------|--------|-------------------------|--------|--------|--------------|--------|
|  (in millions)                                                                                     |   | Total CommonStock Equity |   |   | NoncontrollingInterests |   |   | Total Equity |   |
|  Balance, December 31, 2009                                                                   |   | $                        | 9,449  |   |                    | $      | 6      |         |   | $ | 9,455 |   |
|  Net income (loss)(a)                                                                              |   |                     | 370    |   |                    |   | (2     | )            |   |   | 368 |   |
|  Other comprehensive loss                                                                          |   |                     | (44    | )      |                    |   | -      |         |   |   | (44 | ) |
|  Issuance of shares through offerings and stock-  based compensation plans (See Note 4D) |   |                     | 443    |   |                    |   | -      |         |   |   | 443 |   |
|  Dividends declared                                                                           |   |                     | (361   | )      |                    |   | -      |         |   |   | (361 | ) |
|  Distributions to noncontrolling interests                                                         |   |                     | -      |   |                    |   | (2     | )            |   |   | (2 | ) |
|  Balance, June 30, 2010                                                                       |   | $                        | 9,857  |   |                    | $      | 2      |         |   | $ | 9,859 |   |
|                                                                                                    |   |                     |   |   |                    |   |   |         |   |   |   |   |
|  Balance, December 31, 2008                                                                   |   | $                        | 8,687  |   |                    | $      | 6      |         |   | $ | 8,693 |   |
|  Net income (loss)(a)                                                                              |   |                     | 356    |   |                    |   | (1     | )            |   |   | 355 |   |
|  Other comprehensive income                                                                        |   |                     | 20     |   |                    |   | -      |         |   |   | 20 |   |
|  Issuance of shares through offerings and stock-  based compensation plans (See Note 4D) |   |                     | 582    |   |                    |   | -      |         |   |   | 582 |   |
|  Dividends declared                                                                                |   |                     | (356   | )      |                    |   | -      |         |   |   | (356 | ) |
|  Distributions to noncontrolling interests                                                         |   |                     | -      |   |                    |   | (1     | )            |   |   | (1 | ) |
|  Other                                                                                             |   |                     | -      |   |                    |   | 2      |         |   |   | 2 |   |
|  Balance, June 30, 2009                                                                       |   | $                        | 9,289  |   |                    | $      | 6      |         |   | $ | 9,295 |   |

| (a) | For the six months ended June 30, 2010, consolidated net income of $370 million includes $2 million attributable to preferred shareholders of subsidiaries, which is not a component of total equity and is excluded from the table above. For the six months ended June 30, 2009, consolidated net income of $357 million includes $2 million attributable to preferred shareholders of subsidiaries, which is not a component of total equity and is excluded from the table above. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (in millions)                                                        |   | Total CommonStock Equity |   |   | NoncontrollingInterests |   |   | Total Equity |   |
|----------------------------------------------------------------------|--------|--------------------------|--------|--------|-------------------------|--------|--------|--------------|--------|
| Balance, December 31, 2009                                           |   | $                        | 4,657  |   |                    | $      | 3      |         |   | $ | 4,660 |   |
| Net income (loss)                                                    |   |                     | 250    |   |                    |   | (3     | )            |   |   | 247 |   |
| Other comprehensive loss                                             |   |                     | (14    | )      |                    |   |   |         |   |   | (14 | ) |
| Issuance of shares through stock-based  compensation plans |   |                     | 29     |   |                    |   | -      |         |   |   | 29 |   |
| Dividends paid to parent                                             |   |                     | (50    | )      |                    |   | -      |         |   |   | (50 | ) |
| Preferred stock dividends at stated rate                             |   |                     | (1     | )      |                    |   | -      |         |   |   | (1 | ) |
| Tax benefit dividend                                                 |   |                     | (2     | )      |                    |   | -      |         |   |   | (2 | ) |
| Balance, June 30, 2010                                          |   | $                        | 4,869  |   |                    | $      | -      |         |   | $ | 4,869 |   |
|                                                                 |   |                     |   |   |                    |   |   |         |   |   |   |   |
| Balance, December 31, 2008                                      |   | $                        | 4,301  |   |                    | $      | 4      |         |   | $ | 4,305 |   |
| Net income (loss)                                                    |   |                     | 223    |   |                    |   | (1     | )            |   |   | 222 |   |
| Other comprehensive income                                           |   |                     | 4      |   |                    |   | -      |         |   |   | 4 |   |
| Issuance of shares through stock-based  compensation plans |   |                     | 29     |   |                    |   | -      |         |   |   | 29 |   |
| Dividends paid to parent                                             |   |                     | (200   | )      |                    |   | -      |         |   |   | (200 | ) |
| Preferred stock dividends at stated rate                             |   |                     | (1     | )      |                    |   | -      |         |   |   | (1 | ) |
| Tax benefit dividend                                                 |   |                     | (2     | )      |                    |   | -      |         |   |   | (2 | ) |
| Balance, June 30, 2009                                          |   | $                        | 4,354  |   |                    | $      | 3      |         |   | $ | 4,357 |   |

----

| C. | COMPREHENSIVE INCOME |
|----|----------------------|

| PROGRESS ENERGY                                                                                                                       |   |                        |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                                                                  |   | Three months ended June 30, |   |
| (in millions)                                                                                                                         |   | 2010                        |   |   | 2009 |   |
| Net income                                                                                                                            |   | $                           | 180    |   |   | $ | 174 |   |
| Other comprehensive income (loss)                                                                                                     |   |                        |   |   |   |   |   |   |
| Reclassification adjustments included in net income                                                                                   |   |                        |   |   |   |   |   |   |
| Change in cash flow hedges (net of tax expense of $1 and $1, respectively)                                                            |   |                        | 2      |   |   |   | 2 |   |
| Change in unrecognized items for pension and other postretirement benefits  (net of tax expense of $- and $1, respectively) |   |                        | 1      |   |   |   | 1 |   |
| Net unrealized (losses) gains on cash flow hedges (net of tax benefit (expense)  of $28 and $(5), respectively)             |   |                        | (44    | ) |   |   | 8 |   |
| Other (net of tax expense of $-)                                                                                                      |   |                        | 1      |   |   |   | - |   |
| Other comprehensive (loss) income                                                                                                     |   |                        | (40    | ) |   |   | 11 |   |
| Comprehensive income                                                                                                                  |   |                        | 140    |   |   |   | 185 |   |
| Comprehensive income attributable to noncontrolling interests                                                                         |   |                        | -      |   |   |   | - |   |
| Comprehensive income attributable to controlling interests                                                                            |   | $                           | 140    |   |   | $ | 185 |   |
|                                                                                                                                  |   |                        |   |   |   |   |   |   |
|                                                                                                                                  |   |                        |   |
|                                                                                                                                  |   | Six months ended June 30,   |   |
| (in millions)                                                                                                                         |   |                        | 2010   |   |   |   | 2009 |   |
| Net income                                                                                                                            |   | $                           | 370    |   |   | $ | 357 |   |
| Other comprehensive income (loss)                                                                                                     |   |                        |   |   |   |   |   |   |
| Reclassification adjustments included in net income                                                                                   |   |                        |   |   |   |   |   |   |
| Change in cash flow hedges (net of tax expense of $2 and $2, respectively)                                                            |   |                        | 3      |   |   |   | 3 |   |
| Change in unrecognized items for pension and other postretirement benefits  (net of tax expense of $1 and $1, respectively) |   |                        | 2      |   |   |   | 2 |   |
| Net unrealized (losses) gains on cash flow hedges (net of tax benefit (expense)  of $32 and $(9), respectively)             |   |                        | (50    | ) |   |   | 14 |   |
| Other (net of tax expense of $-)                                                                                                      |   |                        | 1      |   |   |   | 1 |   |
| Other comprehensive (loss) income                                                                                                     |   |                        | (44    | ) |   |   | 20 |   |
| Comprehensive income                                                                                                                  |   |                        | 326    |   |   |   | 377 |   |
| Comprehensive income attributable to noncontrolling interests                                                                         |   |                        | -      |   |   |   | (1 | ) |
| Comprehensive income attributable to controlling interests                                                                            |   | $                           | 326    |   |   | $ | 376 |   |
|                                                                                                                                  |   |                        |   |   |   |   |   |   |

----

| PEC                                                                                                                       |   |                        |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                                                      |   | Three months ended June 30, |   |
| (in millions)                                                                                                             |   | 2010                        |   |   | 2009 |   |
| Net income                                                                                                                |   | $                           | 111    |   |   | $ | 94 |   |
| Other comprehensive income (loss)                                                                                         |   |                        |   |   |   |   |   |   |
| Reclassification adjustments included in net income                                                                       |   |                        |   |   |   |   |   |   |
| Change in cash flow hedges (net of tax expense of $1 and $1, respectively)                                                |   |                        | 1      |   |   |   | 2 |   |
| Net unrealized (losses) gains on cash flow hedges (net of tax benefit (expense)  of $10 and $(2), respectively) |   |                        | (15    | ) |   |   | 2 |   |
| Other comprehensive (loss) income                                                                                         |   |                        | (14    | ) |   |   | 4 |   |
| Comprehensive income                                                                                                      |   |                        | 97     |   |   |   | 98 |   |
| Comprehensive loss attributable to noncontrolling interests                                                               |   |                        | 1      |   |   |   | 1 |   |
| Comprehensive income attributable to controlling interests                                                                |   | $                           | 98     |   |   | $ | 99 |   |
|                                                                                                                      |   |                        |   |   |   |   |   |   |
|                                                                                                                      |   |                        |   |
|                                                                                                                      |   | Six months ended June 30,   |   |
| (in millions)                                                                                                             |   |                        | 2010   |   |   |   | 2009 |   |
| Net income                                                                                                                |   | $                           | 247    |   |   | $ | 222 |   |
| Other comprehensive income (loss)                                                                                         |   |                        |   |   |   |   |   |   |
| Reclassification adjustments included in net income                                                                       |   |                        |   |   |   |   |   |   |
| Change in cash flow hedges (net of tax expense of $1 and $1, respectively)                                                |   |                        | 2      |   |   |   | 2 |   |
| Net unrealized (losses) gains on cash flow hedges (net of tax benefit (expense)  of $10 and $(2), respectively) |   |                        | (16    | ) |   |   | 2 |   |
| Other comprehensive (loss) income                                                                                         |   |                        | (14    | ) |   |   | 4 |   |
| Comprehensive income                                                                                                      |   |                        | 233    |   |   |   | 226 |   |
| Comprehensive loss attributable to noncontrolling interests                                                               |   |                        | 3      |   |   |   | 1 |   |
| Comprehensive income attributable to controlling interests                                                                |   | $                           | 236    |   |   | $ | 227 |   |
|                                                                                                                      |   |                        |   |   |   |   |   |   |

| PEF                                                                                                                      |   |                        |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|--------|
|                                                                                                                     |   | Three months ended June 30, |   |
| (in millions)                                                                                                            |   | 2010                        |   |   | 2009 |   |
| Net income                                                                                                               |   | $                           | 119    |   |   | $ | 119 |   |
| Other comprehensive income (loss)                                                                                        |   |                        |   |   |   |   |   |   |
| Net unrealized (losses) gains on cash flow hedges (net of tax benefit (expense)  of $4 and $(2), respectively) |   |                        | (7     | ) |   |   | 3 |   |
| Other comprehensive (loss) income                                                                                        |   |                        | (7     | ) |   |   | 3 |   |
| Comprehensive income                                                                                                     |   | $                           | 112    |   |   | $ | 122 |   |
|                                                                                                                     |   |                        |   |   |   |   |   |   |
|                                                                                                                     |   |                        |   |
|                                                                                                                     |   | Six months ended June 30,   |   |
| (in millions)                                                                                                            |   |                        | 2010   |   |   |   | 2009 |   |
| Net income                                                                                                               |   | $                           | 221    |   |   | $ | 208 |   |
| Other comprehensive income (loss)                                                                                        |   |                        |   |   |   |   |   |   |
| Net unrealized (losses) gains on cash flow hedges (net of tax benefit (expense)  of $7 and $(2), respectively) |   |                        | (10    | ) |   |   | 3 |   |
| Other comprehensive (loss) income                                                                                        |   |                        | (10    | ) |   |   | 3 |   |
| Comprehensive income                                                                                                     |   | $                           | 211    |   |   | $ | 211 |   |
|                                                                                                                     |   |                        |   |   |   |   |   |   |

----

| D. | COMMON STOCK |
|----|--------------|

|                                      |   |
|-------------------------------------------|--------|
|                                      |   | Three months ended June 30, |   |
|                                      |   | 2010 |   |   | 2009 |   |
|  (in millions)                       |   | Shares |   |   | NetProceeds |   |   | Shares |   |   | NetProceeds |   |
|  Total issuances                     |   |   | 5.4 |   |   | $ | 208 |   |   |   | - |   |   | $ | - |   |
|  Issuances through 401(k) and/or IPP |   |   | 5.4 |   |   |   | 208 |   |   |   | - |   |   |   | - |   |

|                                                     |   |                      |   |   |        |   |   |   |   |   |        |   |
|----------------------------------------------------------|--------|---------------------------|--------|--------|-------------|--------|--------|--------|--------|--------|-------------|--------|
|                                                     |   | Six months ended June 30, |   |
|                                                     |   | 2010                      |   |   | 2009        |   |
|  (in millions)                                      |   | Shares                    |   |   | NetProceeds |   |   | Shares |   |   | NetProceeds |   |
|  Total issuances                                    |   |                      | 11.5   |   |        | $      | 405    |   |   |   | 15.5        |   |   | $ | 545 |   |
|  Issuances under an underwritten public offering(a) |   |                      | -      |   |        |   | -      |   |   |   | 14.4        |   |   |   | 523 |   |
|  Issuances through 401(k) and/or IPP                |   |                      | 10.7   |   |        |   | 405    |   |   |   | 0.6         |   |   |   | 22 |   |

| (a)    | The shares issued under an underwritten public offering were issued on January 12, 2009, at a public offering price of $37.50. |
|--------|--------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                           |   |   |   |   |   |   |

| 5. | PREFERRED STOCK OF SUBSIDIARIES |
|----|---------------------------------|

| 6. | DEBT AND CREDIT FACILITIES |
|----|----------------------------|

----

| 7. | FAIR VALUE DISCLOSURES |
|----|------------------------|

| A. | DEBT AND INVESTMENTS |
|----|----------------------|

|                                        |   |       |   |   |             |   |   |            |   |
|---------------------------------------------|--------|------------|--------|--------|------------------|--------|--------|-----------------|--------|
| (in millions)                               |   | Fair Value |   |   | UnrealizedLosses |   |   | UnrealizedGains |   |
| June 30, 2010                               |   |       |   |   |             |   |   |            |   |
| Common stock equity securities              |   | $          | 785    |   |             | $      | 30     |            |   | $ | 242 |   |
| Preferred stock and other equity securities |   |       | 17     |   |             |   | -      |            |   |   | 6 |   |
| Corporate debt securities                   |   |       | 95     |   |             |   | -      |            |   |   | 6 |   |
| U.S. state and municipal debt securities    |   |       | 124    |   |             |   | 2      |            |   |   | 4 |   |
| U.S. and foreign government debt securities |   |       | 256    |   |             |   | 1      |            |   |   | 13 |   |
| Money market funds and other securities     |   |       | 99     |   |             |   | -      |            |   |   | 1 |   |
| Total                                       |   | $          | 1,376  |   |             | $      | 33     |            |   | $ | 272 |   |
|                                        |   |       |   |   |             |   |   |            |   |   |   |   |
| December 31, 2009                           |   |       |   |   |             |   |   |            |   |   |   |   |
| Common stock equity securities              |   | $          | 839    |   |             | $      | 22     |            |   | $ | 301 |   |
| Preferred stock and other equity securities |   |       | 16     |   |             |   | -      |            |   |   | 5 |   |
| Corporate debt securities                   |   |       | 71     |   |             |   | 1      |            |   |   | 5 |   |
| U.S. state and municipal debt securities    |   |       | 118    |   |             |   | 2      |            |   |   | 3 |   |
| U.S. and foreign government debt securities |   |       | 197    |   |             |   | 1      |            |   |   | 8 |   |
| Money market funds and other securities     |   |       | 161    |   |             |   | -      |            |   |   | - |   |
| Total                                       |   | $          | 1,402  |   |             | $      | 26     |            |   | $ | 322 |   |
|                                        |   |       |   |   |             |   |   |            |   |   |   |   |

----

|                             |   |   |   |
|----------------------------------|--------|--------|--------|
| (in millions)                    |   |   |   |
| Due in one year or less          |   | $      | 21     |   |
| Due after one through five years |   |   | 232    |   |
| Due after five through 10 years  |   |   | 141    |   |
| Due after 10 years               |   |   | 96     |   |
| Total                            |   | $      | 490    |   |
|                             |   |   |   |   |

|            |   |                        |   |   |                      |   |   |   |   |   |   |   |
|-----------------|--------|-----------------------------|--------|--------|---------------------------|--------|--------|--------|--------|--------|--------|--------|
|            |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
| (in millions)   |   | 2010                        |   |   | 2009                      |   |   | 2010   |   |   | 2009   |   |
| Proceeds        |   | $                           | 1,755  |   |                      | $      | 222    |   |   | $      | 3,692  |   |   | $ | 903 |   |
| Realized gains  |   |                        | 6      |   |                      |   | 3      |   |   |   | 10     |   |   |   | 15 |   |
| Realized losses |   |                        | 10     |   |                      |   | 22     |   |   |   | 16     |   |   |   | 74 |   |
|            |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |

----

|                                        |   |       |   |   |              |   |   |             |   |
|---------------------------------------------|--------|------------|--------|--------|-------------------|--------|--------|------------------|--------|
| (in millions)                               |   | Fair Value |   |   | Unrealized Losses |   |   | Unrealized Gains |   |
| June 30, 2010                               |   |       |   |   |              |   |   |             |   |
| Common stock equity securities              |   | $          | 504    |   |              | $      | 22     |             |   | $ | 149 |   |
| Preferred stock and other equity securities |   |       | 11     |   |              |   | -      |             |   |   | 4 |   |
| Corporate debt securities                   |   |       | 70     |   |              |   | -      |             |   |   | 5 |   |
| U.S. state and municipal debt securities    |   |       | 42     |   |              |   | -      |             |   |   | 1 |   |
| U.S. and foreign government debt securities |   |       | 212    |   |              |   | 1      |             |   |   | 12 |   |
| Money market funds and other securities     |   |       | 22     |   |              |   | -      |             |   |   | 1 |   |
| Total                                       |   | $          | 861    |   |              | $      | 23     |             |   | $ | 172 |   |
|                                        |   |       |   |   |              |   |   |             |   |   |   |   |
| December 31, 2009                           |   |       |   |   |              |   |   |             |   |   |   |   |
| Common stock equity securities              |   | $          | 545    |   |              | $      | 19     |             |   | $ | 186 |   |
| Preferred stock and other equity securities |   |       | 10     |   |              |   | -      |             |   |   | 3 |   |
| Corporate debt securities                   |   |       | 67     |   |              |   | 1      |             |   |   | 4 |   |
| U.S. state and municipal debt securities    |   |       | 37     |   |              |   | -      |             |   |   | 1 |   |
| U.S. and foreign government debt securities |   |       | 177    |   |              |   | 1      |             |   |   | 8 |   |
| Money market funds and other securities     |   |       | 35     |   |              |   | -      |             |   |   | - |   |
| Total                                       |   | $          | 871    |   |              | $      | 21     |             |   | $ | 202 |   |
|                                        |   |       |   |   |              |   |   |             |   |   |   |   |

|                             |   |   |   |
|----------------------------------|--------|--------|--------|
| (in millions)                    |   |   |   |
| Due in one year or less          |   | $      | 17     |   |
| Due after one through five years |   |   | 182    |   |
| Due after five through 10 years  |   |   | 85     |   |
| Due after 10 years               |   |   | 47     |   |
| Total                            |   | $      | 331    |   |
|                             |   |   |   |   |

|            |   |                        |   |   |                      |   |   |   |   |   |   |   |
|-----------------|--------|-----------------------------|--------|--------|---------------------------|--------|--------|--------|--------|--------|--------|--------|
|            |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
| (in millions)   |   | 2010                        |   |   | 2009                      |   |   | 2010   |   |   | 2009   |   |
| Proceeds        |   | $                           | 115    |   |                      | $      | 83     |   |   | $      | 222    |   |   | $ | 477 |   |
| Realized gains  |   |                        | 3      |   |                      |   | 1      |   |   |   | 6      |   |   |   | 5 |   |
| Realized losses |   |                        | 7      |   |                      |   | 9      |   |   |   | 12     |   |   |   | 30 |   |
|            |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |

----

|                                        |   |       |   |   |             |   |   |            |   |
|---------------------------------------------|--------|------------|--------|--------|------------------|--------|--------|-----------------|--------|
| (in millions)                               |   | Fair Value |   |   | UnrealizedLosses |   |   | UnrealizedGains |   |
| June 30, 2010                               |   |       |   |   |             |   |   |            |   |
| Common stock equity securities              |   | $          | 281    |   |             | $      | 8      |            |   | $ | 93 |   |
| Preferred stock and other equity securities |   |       | 6      |   |             |   | -      |            |   |   | 2 |   |
| Corporate debt securities                   |   |       | 13     |   |             |   | -      |            |   |   | 1 |   |
| U.S. state and municipal debt securities    |   |       | 81     |   |             |   | 2      |            |   |   | 3 |   |
| U.S. and foreign government debt securities |   |       | 31     |   |             |   | -      |            |   |   | 1 |   |
| Money market funds and other securities     |   |       | 67     |   |             |   | -      |            |   |   | - |   |
| Total                                       |   | $          | 479    |   |             | $      | 10     |            |   | $ | 100 |   |
|                                        |   |       |   |   |             |   |   |            |   |   |   |   |
| December 31, 2009                           |   |       |   |   |             |   |   |            |   |   |   |   |
| Common stock equity securities              |   | $          | 294    |   |             | $      | 3      |            |   | $ | 115 |   |
| Preferred stock and other equity securities |   |       | 6      |   |             |   | -      |            |   |   | 2 |   |
| Corporate debt securities                   |   |       | 4      |   |             |   | -      |            |   |   | 1 |   |
| U.S. state and municipal debt securities    |   |       | 80     |   |             |   | 2      |            |   |   | 2 |   |
| U.S. and foreign government debt securities |   |       | 13     |   |             |   | -      |            |   |   | - |   |
| Money market funds and other securities     |   |       | 99     |   |             |   | -      |            |   |   | - |   |
| Total                                       |   | $          | 496    |   |             | $      | 5      |            |   | $ | 120 |   |
|                                        |   |       |   |   |             |   |   |            |   |   |   |   |

----

|                             |   |   |   |
|----------------------------------|--------|--------|--------|
| (in millions)                    |   |   |   |
| Due in one year or less          |   | $      | 4      |   |
| Due after one through five years |   |   | 46     |   |
| Due after five through 10 years  |   |   | 46     |   |
| Due after 10 years               |   |   | 30     |   |
| Total                            |   | $      | 126    |   |
|                             |   |   |   |   |

|            |   |                        |   |   |                      |   |   |   |   |   |   |   |
|-----------------|--------|-----------------------------|--------|--------|---------------------------|--------|--------|--------|--------|--------|--------|--------|
|            |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
| (in millions)   |   | 2010                        |   |   | 2009                      |   |   | 2010   |   |   | 2009   |   |
| Proceeds        |   | $                           | 1,624  |   |                      | $      | 120    |   |   | $      | 3,414  |   |   | $ | 370 |   |
| Realized gains  |   |                        | 3      |   |                      |   | 2      |   |   |   | 4      |   |   |   | 9 |   |
| Realized losses |   |                        | 3      |   |                      |   | 13     |   |   |   | 4      |   |   |   | 44 |   |
|            |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |

| B. | FAIR VALUE MEASUREMENTS |
|----|-------------------------|

----

|                                      |   |    |   |   |    |   |   |    |   |   |   |   |
|-------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
| PROGRESS ENERGY                           |   |    |   |   |    |   |   |    |   |   |   |   |
| (in millions)                             |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total  |   |
| Assets                                    |   |    |   |   |    |   |   |    |   |   |   |   |
| Nuclear decommissioning trust funds       |   |    |   |   |    |   |   |    |   |   |   |   |
| Common stock equity                       |   | $       | 785    |   |    | $      | -      |    |   | $      | -      |   |   | $ | 785 |   |
| Preferred stock and other equity          |   |    | 17     |   |    |   | -      |    |   |   | -      |   |   |   | 17 |   |
| Corporate debt                            |   |    | -      |   |    |   | 83     |    |   |   | -      |   |   |   | 83 |   |
| U.S. state and municipal debt             |   |    | -      |   |    |   | 124    |    |   |   | -      |   |   |   | 124 |   |
| U.S. and foreign government debt          |   |    | 101    |   |    |   | 142    |    |   |   | -      |   |   |   | 243 |   |
| Money market funds and other              |   |    | 2      |   |    |   | 87     |    |   |   | -      |   |   |   | 89 |   |
| Total nuclear decommissioning trust funds |   |    | 905    |   |    |   | 436    |    |   |   | -      |   |   |   | 1,341 |   |
| Derivatives                               |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Commodity forward contracts               |   |    | -      |   |    |   | 14     |    |   |   | -      |   |   |   | 14 |   |
| Interest rate contracts                   |   |    | -      |   |    |   | 1      |    |   |   | -      |   |   |   | 1 |   |
| Other marketable securities               |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Corporate debt                            |   |    | -      |   |    |   | 12     |    |   |   | -      |   |   |   | 12 |   |
| U.S. state and municipal debt             |   |    | -      |   |    |   | 1      |    |   |   | -      |   |   |   | 1 |   |
| U.S. and foreign government debt          |   |    | 1      |   |    |   | 12     |    |   |   | -      |   |   |   | 13 |   |
| Money market funds and other              |   |    | 22     |   |    |   | 10     |    |   |   | -      |   |   |   | 32 |   |
| Total assets                              |   | $       | 928    |   |    | $      | 486    |    |   | $      | -      |   |   | $ | 1,414 |   |
|                                      |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Liabilities                               |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Derivatives                               |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Commodity forward contracts               |   | $       | -      |   |    | $      | 444    |    |   | $      | 62     |   |   | $ | 506 |   |
| Interest rate contracts                   |   |    | -      |   |    |   | 63     |    |   |   | -      |   |   |   | 63 |   |
| Contingent value obligations derivatives  |   |    | -      |   |    |   | 15     |    |   |   | -      |   |   |   | 15 |   |
| Total liabilities                         |   | $       | -      |   |    | $      | 522    |    |   | $      | 62     |   |   | $ | 584 |   |
|                                      |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |

----

| PEC                                       |   |    |   |   |    |   |   |    |   |   |   |   |
|-------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
| (in millions)                             |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total  |   |
| Assets                                    |   |    |   |   |    |   |   |    |   |   |   |   |
| Nuclear decommissioning trust funds       |   |    |   |   |    |   |   |    |   |   |   |   |
| Common stock equity                       |   | $       | 504    |   |    | $      | -      |    |   | $      | -      |   |   | $ | 504 |   |
| Preferred stock and other equity          |   |    | 11     |   |    |   | -      |    |   |   | -      |   |   |   | 11 |   |
| Corporate debt                            |   |    | -      |   |    |   | 70     |    |   |   | -      |   |   |   | 70 |   |
| U.S. state and municipal debt             |   |    | -      |   |    |   | 43     |    |   |   | -      |   |   |   | 43 |   |
| U.S. and foreign government debt          |   |    | 82     |   |    |   | 130    |    |   |   | -      |   |   |   | 212 |   |
| Money market funds and other              |   |    | 1      |   |    |   | 18     |    |   |   | -      |   |   |   | 19 |   |
| Total nuclear decommissioning trust funds |   |    | 598    |   |    |   | 261    |    |   |   | -      |   |   |   | 859 |   |
| Derivatives                               |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Interest rate contracts                   |   |    | -      |   |    |   | 1      |    |   |   | -      |   |   |   | 1 |   |
| Other marketable securities               |   |    | 5      |   |    |   | -      |    |   |   | -      |   |   |   | 5 |   |
| Total assets                              |   | $       | 603    |   |    | $      | 262    |    |   | $      | -      |   |   | $ | 865 |   |
|                                      |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Liabilities                               |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Derivatives                               |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Commodity forward contracts               |   | $       | -      |   |    | $      | 74     |    |   | $      | 42     |   |   | $ | 116 |   |
| Interest rate contracts                   |   |    | -      |   |    |   | 20     |    |   |   | -      |   |   |   | 20 |   |
| Total liabilities                         |   | $       | -      |   |    | $      | 94     |    |   | $      | 42     |   |   | $ | 136 |   |
|                                      |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |

| PEF                                       |   |    |   |   |    |   |   |    |   |   |   |   |
|-------------------------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
| (in millions)                             |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total  |   |
| Assets                                    |   |    |   |   |    |   |   |    |   |   |   |   |
| Nuclear decommissioning trust funds       |   |    |   |   |    |   |   |    |   |   |   |   |
| Common stock equity                       |   | $       | 281    |   |    | $      | -      |    |   | $      | -      |   |   | $ | 281 |   |
| Preferred stock and other equity          |   |    | 6      |   |    |   | -      |    |   |   | -      |   |   |   | 6 |   |
| Corporate debt                            |   |    | -      |   |    |   | 13     |    |   |   | -      |   |   |   | 13 |   |
| U.S. state and municipal debt             |   |    | -      |   |    |   | 81     |    |   |   | -      |   |   |   | 81 |   |
| U.S. and foreign government debt          |   |    | 19     |   |    |   | 12     |    |   |   | -      |   |   |   | 31 |   |
| Money market funds and other              |   |    | 1      |   |    |   | 69     |    |   |   | -      |   |   |   | 70 |   |
| Total nuclear decommissioning trust funds |   |    | 307    |   |    |   | 175    |    |   |   | -      |   |   |   | 482 |   |
| Derivatives                               |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Commodity forward contracts               |   |    | -      |   |    |   | 14     |    |   |   | -      |   |   |   | 14 |   |
| Other marketable securities               |   |    | 3      |   |    |   | -      |    |   |   | -      |   |   |   | 3 |   |
| Total assets                              |   | $       | 310    |   |    | $      | 189    |    |   | $      | -      |   |   | $ | 499 |   |
|                                      |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Liabilities                               |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Derivatives                               |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Commodity forward contracts               |   | $       | -      |   |    | $      | 370    |    |   | $      | 20     |   |   | $ | 390 |   |
| Interest rate contracts                   |   |    | -      |   |    |   | 12     |    |   |   | -      |   |   |   | 12 |   |
| Total liabilities                         |   | $       | -      |   |    | $      | 382    |    |   | $      | 20     |   |   | $ | 402 |   |
|                                      |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |

----

|                                               |   |                        |   |   |                      |   |   |   |   |   |   |   |
|----------------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|--------|--------|--------|--------|--------|--------|
| PROGRESS ENERGY                                    |   |
|                                               |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
| (in millions)                                      |   | 2010                        |   |   | 2009                      |   |   | 2010   |   |   | 2009   |   |
| Derivatives, net at beginning of period            |   | $                           | 52     |   |                      | $      | 43     |   |   | $      | 39     |   |   | $ | 41 |   |
| Total losses (gains), realized and unrealized      |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |
| deferred as regulatory assets and liabilities, net |   |                        | 10     |   |                      |   | (12    | )      |   |   | 23     |   |   |   | (10 | ) |
| Derivatives, net at end of period                  |   | $                           | 62     |   |                      | $      | 31     |   |   | $      | 62     |   |   | $ | 31 |   |
|                                               |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |

| PEC                                                |   |
|----------------------------------------------------|--------|
|                                               |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
| (in millions)                                      |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| Derivatives, net at beginning of period            |   | $ | 36 |   |   | $ | 23 |   |   | $ | 27 |   |   | $ | 22 |   |
| Total losses (gains), realized and unrealized      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| deferred as regulatory assets and liabilities, net |   |   | 6 |   |   |   | (4 | ) |   |   | 15 |   |   |   | (3 | ) |
| Derivatives, net at end of period                  |   | $ | 42 |   |   | $ | 19 |   |   | $ | 42 |   |   | $ | 19 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| PEF                                                |   |
|----------------------------------------------------|--------|
|                                               |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
| (in millions)                                      |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| Derivatives, net at beginning of period            |   | $ | 16 |   |   | $ | 20 |   |   | $ | 12 |   |   | $ | 19 |   |
| Total losses (gains), realized and unrealized      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| deferred as regulatory assets and liabilities, net |   |   | 4 |   |   |   | (8 | ) |   |   | 8 |   |   |   | (7 | ) |
| Derivatives, net at end of period                  |   | $ | 20 |   |   | $ | 12 |   |   | $ | 20 |   |   | $ | 12 |   |
|                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| 8. | BENEFIT PLANS |
|----|---------------|

|                                    |   |             |   |   |                          |   |   |   |   |   |   |   |
|-----------------------------------------|--------|------------------|--------|--------|-------------------------------|--------|--------|--------|--------|--------|--------|--------|
|  PROGRESS ENERGY                   |   |             |   |   |                          |   |
|                                    |   | Pension Benefits |   |   | Other Postretirement Benefits |   |
|  (in millions)                     |   | 2010             |   |   | 2009                          |   |   | 2010   |   |   | 2009   |   |
|  Service cost                      |   | $                | 12     |   |                          | $      | 10     |   |   | $      | 2      |   |   | $ | 2 |   |
|  Interest cost                     |   |             | 35     |   |                          |   | 34     |   |   |   | 8      |   |   |   | 9 |   |
|  Expected return on plan assets    |   |             | (39    | )      |                          |   | (35    | )      |   |   | (1     | )      |   |   | (1 | ) |
|  Amortization of actuarial loss(a) |   |             | 12     |   |                          |   | 12     |   |   |   | -      |   |   |   | 1 |   |
|  Other amortization, net (a)       |   |             | 2      |   |                          |   | 2      |   |   |   | 1      |   |   |   | 1 |   |
| Net periodic cost before deferral(b)    |   | $                | 22     |   |                          | $      | 23     |   |   | $      | 10     |   |   | $ | 12 |   |

| (a) | Adjusted to reflect PEF’s rate treatment. See Note 16B in the 2009 Form 10-K.                                                                                                                                                                                                                                                                                                                              |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | PEF received permission from the FPSC to defer the retail portion of certain 2009 pension expense. The FPSC order did not change the total net periodic pension cost, but deferred a portion of the costs to be recovered in future periods. For the three months ended June 30, 2009, PEF deferred $16 million of net periodic pension costs as a regulatory asset. See Notes 7C and 16A in the 2009 Form 10-K. |

|  PEC                            |   |             |   |   |                          |   |
|--------------------------------------|--------|------------------|--------|--------|-------------------------------|--------|
|                                 |   | Pension Benefits |   |   | Other Postretirement Benefits |   |
|  (in millions)                  |   | 2010             |   |   | 2009                          |   |   | 2010 |   |   | 2009 |   |
|  Service cost                   |   | $                | 5      |   |                          | $      | 4 |   |   | $ | 1 |   |   | $ | 1 |   |
|  Interest cost                  |   |             | 16     |   |                          |   | 16 |   |   |   | 4 |   |   |   | 5 |   |
|  Expected return on plan assets |   |             | (19    | )      |                          |   | (17 | ) |   |   | - |   |   |   | (1 | ) |
|  Amortization of actuarial loss |   |             | 4      |   |                          |   | 2 |   |   |   | - |   |   |   | 1 |   |
|  Other amortization, net        |   |             | 1      |   |                          |   | 1 |   |   |   | - |   |   |   | - |   |
| Net periodic cost                    |   | $                | 7      |   |                          | $      | 6 |   |   | $ | 5 |   |   | $ | 6 |   |
|                                 |   |             |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |

----

|  PEF                            |   |             |   |   |                          |   |
|--------------------------------------|--------|------------------|--------|--------|-------------------------------|--------|
|                                 |   | Pension Benefits |   |   | Other Postretirement Benefits |   |
|  (in millions)                  |   | 2010             |   |   | 2009                          |   |   | 2010 |   |   | 2009 |   |
|  Service cost                   |   | $                | 5      |   |                          | $      | 5 |   |   | $ | - |   |   | $ | 1 |   |
|  Interest cost                  |   |             | 15     |   |                          |   | 14 |   |   |   | 3 |   |   |   | 3 |   |
|  Expected return on plan assets |   |             | (17    | )      |                          |   | (15 | ) |   |   | - |   |   |   | - |   |
|  Amortization of actuarial loss |   |             | 7      |   |                          |   | 9 |   |   |   | - |   |   |   | - |   |
|  Other amortization, net        |   |             | -      |   |                          |   | - |   |   |   | 1 |   |   |   | 1 |   |
| Net periodic cost before deferral(a) |   | $                | 10     |   |                          | $      | 13 |   |   | $ | 4 |   |   | $ | 5 |   |

| (a)    | PEF received permission from the FPSC to defer the retail portion of certain 2009 pension expense. The FPSC order did not change the total net periodic pension cost, but deferred a portion of the costs to be recovered in future periods. For the three months ended June 30, 2009, PEF deferred $16 million of net periodic pension costs as a regulatory asset. See Notes 7C and 16A in the 2009 Form 10-K. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                             |   |   |   |   |   |   |   |   |   |   |   |

|                                    |   |             |   |   |                          |   |   |   |   |   |   |   |
|-----------------------------------------|--------|------------------|--------|--------|-------------------------------|--------|--------|--------|--------|--------|--------|--------|
|  PROGRESS ENERGY                   |   |             |   |   |                          |   |
|                                    |   | Pension Benefits |   |   | Other Postretirement Benefits |   |
|  (in millions)                     |   | 2010             |   |   | 2009                          |   |   | 2010   |   |   | 2009   |   |
|  Service cost                      |   | $                | 23     |   |                          | $      | 21     |   |   | $      | 4      |   |   | $ | 4 |   |
|  Interest cost                     |   |             | 70     |   |                          |   | 68     |   |   |   | 16     |   |   |   | 18 |   |
|  Expected return on plan assets    |   |             | (78    | )      |                          |   | (69    | )      |   |   | (2     | )      |   |   | (3 | ) |
|  Amortization of actuarial loss(a) |   |             | 25     |   |                          |   | 24     |   |   |   | 1      |   |   |   | 2 |   |
|  Other amortization, net (a)       |   |             | 3      |   |                          |   | 3      |   |   |   | 2      |   |   |   | 3 |   |
| Net periodic cost before deferral(b)    |   | $                | 43     |   |                          | $      | 47     |   |   | $      | 21     |   |   | $ | 24 |   |

| (a) | Adjusted to reflect PEF’s rate treatment. See Note 16B in the 2009 Form 10-K.                                                                                                                                                                                                                                                                                                                            |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | PEF received permission from the FPSC to defer the retail portion of certain 2009 pension expense. The FPSC order did not change the total net periodic pension cost, but deferred a portion of the costs to be recovered in future periods. For the six months ended June 30, 2009, PEF deferred $16 million of net periodic pension costs as a regulatory asset. See Notes 7C and 16A in the 2009 Form 10-K. |

|  PEC                            |   |             |   |   |                          |   |
|--------------------------------------|--------|------------------|--------|--------|-------------------------------|--------|
|                                 |   | Pension Benefits |   |   | Other Postretirement Benefits |   |
|  (in millions)                  |   | 2010             |   |   | 2009                          |   |   | 2010 |   |   | 2009 |   |
|  Service cost                   |   | $                | 9      |   |                          | $      | 8 |   |   | $ | 2 |   |   | $ | 3 |   |
|  Interest cost                  |   |             | 32     |   |                          |   | 31 |   |   |   | 8 |   |   |   | 9 |   |
|  Expected return on plan assets |   |             | (38    | )      |                          |   | (34 | ) |   |   | (1 | ) |   |   | (2 | ) |
|  Amortization of actuarial loss |   |             | 8      |   |                          |   | 4 |   |   |   | - |   |   |   | 1 |   |
|  Other amortization, net        |   |             | 3      |   |                          |   | 3 |   |   |   | 1 |   |   |   | 1 |   |
| Net periodic cost                    |   | $                | 14     |   |                          | $      | 12 |   |   | $ | 10 |   |   | $ | 12 |   |
|                                 |   |             |   |   |                          |   |   |   |   |   |   |   |   |   |   |   |

----

|  PEF                            |   |             |   |   |                          |   |
|--------------------------------------|--------|------------------|--------|--------|-------------------------------|--------|
|                                 |   | Pension Benefits |   |   | Other Postretirement Benefits |   |
|  (in millions)                  |   | 2010             |   |   | 2009                          |   |   | 2010 |   |   | 2009 |   |
|  Service cost                   |   | $                | 10     |   |                          | $      | 9 |   |   | $ | 1 |   |   | $ | 1 |   |
|  Interest cost                  |   |             | 29     |   |                          |   | 28 |   |   |   | 6 |   |   |   | 7 |   |
|  Expected return on plan assets |   |             | (34    | )      |                          |   | (29 | ) |   |   | (1 | ) |   |   | (1 | ) |
|  Amortization of actuarial loss |   |             | 15     |   |                          |   | 18 |   |   |   | - |   |   |   | 1 |   |
|  Other amortization, net        |   |             | -      |   |                          |   | - |   |   |   | 2 |   |   |   | 2 |   |
| Net periodic cost before deferral(a) |   | $                | 20     |   |                          | $      | 26 |   |   | $ | 8 |   |   | $ | 10 |   |

| (a)    | PEF received permission from the FPSC to defer the retail portion of certain 2009 pension expense. The FPSC order did not change the total net periodic pension cost, but deferred a portion of the costs to be recovered in future periods. For the six months ended June 30, 2009, PEF deferred $16 million of net periodic pension costs as a regulatory asset. See Notes 7C and 16A in the 2009 Form 10-K. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |

| 9. | RISK MANAGEMENT ACTIVITIES AND DERIVATIVE TRANSACTIONS |
|----|--------------------------------------------------------|

| A. | COMMODITY DERIVATIVES |
|----|-----------------------|

----

----

| B. | INTEREST RATE DERIVATIVES – FAIR VALUE OR CASH FLOW HEDGES |
|----|------------------------------------------------------------------|

| C. | CONTINGENT FEATURES |
|----|---------------------|

----

| D. | DERIVATIVE INSTRUMENT AND HEDGING ACTIVITY INFORMATION |
|----|--------------------------------------------------------|

| The following table presents the fair value of derivative instruments at June 30, 2010 and December 31, 2009: |   |
|---------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
|  Instrument / Balance sheet location                                                                     |   | June 30, 2010 |   |   | December 31, 2009 |   |
|  (in millions)                                                                                           |   | Asset |   |   | Liability |   |   | Asset |   |   | Liability |   |
| Derivatives designated as hedging instruments                                                                 |   |
|  Interest rate derivatives                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Prepayments and other current assets                                                                          |   | $ | - |   |   |   |   |   | $ | 5 |   |   |   |   |
| Other assets and deferred debits                                                                              |   |   | 1 |   |   |   |   |   |   | 14 |   |   |   |   |
| Derivative liabilities, current                                                                               |   |   |   |   |   | $ | 32 |   |   |   |   |   | $  | - |   |
| Derivative liabilities, long-term                                                                             |   |   |   |   |   |   | 31 |   |   |   |   |   |   | - |   |
| Total derivatives designated as hedging instruments                                                           |   |   | 1 |   |   |   | 63 |   |   |   | 19 |   |   | - |   |
|                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivatives not designated as hedging instruments                                                             |   |
|  Commodity derivatives(a)                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Prepayments and other current assets                                                                          |   |   | 9 |   |   |   |   |   |   |   | 11 |   |   |   |   |
| Other assets and deferred debits                                                                              |   |   | 5 |   |   |   |   |   |   |   | 9 |   |   |   |   |
| Derivative liabilities, current                                                                               |   |   |   |   |   |   | 217 |   |   |   |   |   |   |   | 189 |   |
| Derivative liabilities, long-term                                                                             |   |   |   |   |   |   | 289 |   |   |   |   |   |   |   | 236 |   |
|  CVOs(b)                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other liabilities and deferred credits                                                                        |   |   |   |   |   |   | 15 |   |   |   |   |   |   |   | 15 |   |
| Fair value of derivatives not designated as hedging instruments                                          |   |   | 14 |   |   |   | 521 |   |   |   | 20 |   |   |   | 440 |   |
|  Fair value loss transition adjustment(c)                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivative liabilities, current                                                                               |   |   |   |   |   |   | 1 |   |   |   |   |   |   |   | 1 |   |
| Derivative liabilities, long-term                                                                             |   |   |   |   |   |   | 4 |   |   |   |   |   |   |   | 4 |   |
| Total derivatives not designated as hedging instruments                                                  |   |   | 14 |   |   |   | 526 |   |   |   | 20 |   |   |   | 445 |   |
| Total derivatives                                                                                             |   | $ | 15 |   |   | $ | 589 |   |   | $ | 39 |   |   | $ | 445 |   |

| (a) | Substantially all of these contracts receive regulatory treatment.                                                                                                                                                                                                          |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | As discussed in Note 15 of the 2009 Form 10-K, the Parent issued 98.6 million CVOs in connection with the acquisition of Florida Progress during 2000.                                                                                                                      |
| (c) | In 2003, PEC recorded a $38 million pre-tax ($23 million after-tax) fair value loss transition adjustment pursuant to the adoption of new accounting guidance for derivatives. The related liability is being amortized to earnings over the term of the related contracts. |

----

| Derivatives Designated as Hedging Instruments for the Three Months Ended June 30, |   |
|-----------------------------------------------------------------------------------|--------|
|  Instrument                                                                  |   | Amount of Gain or (Loss)Recognized in OCI, Net of Taxon Derivatives(a) |   |   | Amount of Gain or (Loss),Net of Tax Reclassified fromAccumulated OCI into Income(a) |   |   | Amount of Pre-tax Gain or(Loss) Recognized in Incomeon Derivatives(b) |   |
|  (in millions)                                                               |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
|  Interest rate derivatives(c) (d)                                            |   | $ | (44 | ) |   | $ | 8 |   |   | $ | (2 | ) |   | $ | (2 | ) |   | $ | - |   |   | $ | - |   |

| (a) | Effective portion.                                                                                                                                                                                                                     |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Related to ineffective portion and amount excluded from effectiveness testing.                                                                                                                                                         |
| (c) | Amounts in accumulated OCI related to terminated hedges are reclassified to earnings as the interest expense is recorded. The effective portion of the hedges will be amortized to interest expense over the term of the related debt. |
| (d) | Amounts recorded in the Consolidated Statements of Income are classified in interest charges.                                                                                                                                          |

| Derivatives Not Designated as Hedging Instruments for the Three Months Ended June 30, |   |
|---------------------------------------------------------------------------------------|--------|
|  Instrument                                                                      |   | Realized Gain or (Loss)(a) |   |   | Unrealized Gain or (Loss)(b) |   |
|  (in millions)                                                                   |   | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
|  Commodity derivatives(a)                                                        |   | $ | (91 | ) |   | $ | (185 | ) |   | $ | (2 | ) |   | $ | 77 |   |

| (a) | After settlement of the derivatives and the fuel is consumed, gains or losses are passed through the fuel cost-recovery clause.            |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Amounts are recorded in regulatory liabilities and assets, respectively, on the Consolidated Balance Sheets until derivatives are settled. |

|  Instrument                               |   | Amount of Gain or (Loss) Recognized inIncome on Derivatives |   |
|------------------------------------------------|--------|-------------------------------------------------------------|--------|
|  (in millions)                            |   | 2010                                                        |   |   | 2009 |   |
|  Commodity derivatives(a)                 |   | $                                                           | 1      |   |   | $ | 1 |   |
|  Fair value loss transition adjustment(a) |   |                                                        | -      |   |   |   | 1 |   |
|  CVOs(a)                                  |   |                                                        | -      |   |   |   | 1 |   |
| Total                                          |   | $                                                           | 1      |   |   | $ | 3 |   |

| (a) | Amounts recorded in the Consolidated Statements of Income are classified in other, net. |
|-----|-----------------------------------------------------------------------------------------|

----

|                                                                            |
|---------------------------------------------------------------------------------|
| Derivatives Designated as Hedging Instruments for the Six Months Ended June 30, |

|  Instrument                       |   | Amount of Gain or (Loss)Recognized in OCI, Net of Taxon Derivatives(a) |   |   | Amount of Gain or (Loss),Net of Tax Reclassified fromAccumulated OCI into Income(a) |   |   | Amount of Pre-tax Gain or(Loss) Recognized in Incomeon Derivatives(b) |   |
|----------------------------------------|--------|------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------|--------|
|  (in millions)                    |   | 2010                                                                   |   |   | 2009                                                                                |   |   | 2010                                                                  |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
|  Commodity cash flow derivatives  |   | $                                                                      | -      |   |                                                                                | $      | 1      |                                                                  |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
|  Interest rate derivatives(c) (d) |   |                                                                   | (50    | )      |                                                                                |   | 13     |                                                                  |   |   | (3 | ) |   |   | (3 | ) |   |   | - |   |   |   | (3 | ) |
| Total                                  |   | $                                                                      | (50    | )      |                                                                                | $      | 14     |                                                                  |   | $ | (3 | ) |   | $ | (3 | ) |   | $ | - |   |   | $ | (3 | ) |

| (a) | Effective portion.                                                                                                                                                                                                                     |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Related to ineffective portion and amount excluded from effectiveness testing.                                                                                                                                                         |
| (c) | Amounts in accumulated OCI related to terminated hedges are reclassified to earnings as the interest expense is recorded. The effective portion of the hedges will be amortized to interest expense over the term of the related debt. |
| (d) | Amounts recorded in the Consolidated Statements of Income are classified in interest charges.                                                                                                                                          |

|                                                                                |
|-------------------------------------------------------------------------------------|
| Derivatives Not Designated as Hedging Instruments for the Six Months Ended June 30, |

|  Instrument               |   | Realized Gain or (Loss)(a) |   |   | Unrealized Gain or (Loss)(b) |   |
|--------------------------------|--------|----------------------------|--------|--------|------------------------------|--------|
|  (in millions)            |   | 2010                       |   |   | 2009                         |   |   | 2010 |   |   | 2009 |   |
|  Commodity derivatives(a) |   | $                          | (150   | )      |                         | $      | (312 | ) |   | $ | (236 | ) |   | $ | (264 | ) |

| (a) | After settlement of the derivatives and the fuel is consumed, gains or losses are passed through the fuel cost-recovery clause.            |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Amounts are recorded in regulatory liabilities and assets, respectively, on the Consolidated Balance Sheets until derivatives are settled. |

|                                           |   |                                                        |   |
|------------------------------------------------|--------|-------------------------------------------------------------|--------|
|  Instrument                               |   | Amount of Gain or (Loss) Recognized inIncome on Derivatives |   |
|  (in millions)                            |   | 2010                                                        |   |   | 2009 |   |
|  Fair value loss transition adjustment(a) |   | $                                                           | -      |   |   | $ | 1 |   |
|  CVOs(a)                                  |   |                                                        | -      |   |   |   | 8 |   |
| Total                                          |   | $                                                           | -      |   |   | $ | 9 |   |

| (a) | Amounts recorded in the Consolidated Statements of Income are classified in other, net. |
|-----|-----------------------------------------------------------------------------------------|

----

| PEC                                                                                                           |   |
|---------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
| The following table presents the fair value of derivative instruments at June 30, 2010 and December 31, 2009: |   |
|                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |
|  Instrument / Balance sheet location                                                                     |   | June 30, 2010 |   |   | December 31, 2009 |   |
|  (in millions)                                                                                           |   | Asset |   |   | Liability |   |   | Asset |   |   | Liability |   |
| Derivatives designated as hedging instruments                                                                 |   |
|  Interest rate derivatives                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |
| Other assets and deferred debits                                                                              |   | $ | 1 |   |   |   |   |   | $ | 8 |   |   |   |   |
| Derivative liabilities, current                                                                               |   |   |   |   |   | $ | 9 |   |   |   |   |   |   | $ | - |   |
| Other liabilities and deferred credits                                                                        |   |   |   |   |   |   | 11 |   |   |   |   |   |   |   | - |   |
| Total derivatives designated as hedging instruments                                                           |   |   | 1 |   |   |   | 20 |   |   |   | 8 |   |   |   | - |   |
|                                                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivatives not designated as hedging instruments                                                             |   |
|  Commodity derivatives(a)                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivative liabilities, current                                                                               |   |   |   |   |   |   | 38 |   |   |   |   |   |   |   | 28 |   |
| Other liabilities and deferred credits                                                                        |   |   |   |   |   |   | 78 |   |   |   |   |   |   |   | 62 |   |
| Fair value of derivatives not designated as hedging instruments                                          |   |   | - |   |   |   | 116 |   |   |   | - |   |   |   | 90 |   |
|  Fair value loss transition adjustment(b)                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Derivative liabilities, current                                                                               |   |   |   |   |   |   | 1 |   |   |   |   |   |   |   | 1 |   |
| Other liabilities and deferred credits                                                                        |   |   |   |   |   |   | 4 |   |   |   |   |   |   |   | 4 |   |
| Total derivatives not designated as hedging instruments                                                  |   |   | - |   |   |   | 121 |   |   |   | - |   |   |   | 95 |   |
| Total derivatives                                                                                             |   | $ | 1 |   |   | $ | 141 |   |   | $ | 8 |   |   | $ | 95 |   |

| (a) | Substantially all of these contracts receive regulatory treatment.                                                                                                                                                                                                          |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | In 2003, PEC recorded a $38 million pre-tax ($23 million after-tax) fair value loss transition adjustment pursuant to the adoption of new accounting guidance for derivatives. The related liability is being amortized to earnings over the term of the related contracts. |

|                                                                              |   |                                                                   |   |   |                                                                                |   |   |                                                                  |   |   |   |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Derivatives Designated as Hedging Instruments for the Three Months Ended June 30, |   |
|  Instrument                                                                  |   | Amount of Gain or (Loss)Recognized in OCI, Net of Taxon Derivatives(a) |   |   | Amount of Gain or (Loss),Net of Tax Reclassified fromAccumulated OCI into Income(a) |   |   | Amount of Pre-tax Gain or(Loss) Recognized in Incomeon Derivatives(b) |   |
|  (in millions)                                                               |   | 2010                                                                   |   |   | 2009                                                                                |   |   | 2010                                                                  |   |   | 2009   |   |   | 2010   |   |   | 2009   |   |
|  Interest rate derivatives(c) (d)                                            |   | $                                                                      | (15    | )      |                                                                                | $      | 2      |                                                                  |   | $      | (1     | )      |   | $      | (2     | )      |   | $      | - |   |   | $ | - |   |

| (a) | Effective portion.                                                                                                                                                                                                                     |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Related to ineffective portion and amount excluded from effectiveness testing.                                                                                                                                                         |
| (c) | Amounts in accumulated OCI related to terminated hedges are reclassified to earnings as the interest expense is recorded. The effective portion of the hedges will be amortized to interest expense over the term of the related debt. |
| (d) | Amounts recorded in the Consolidated Statements of Income are classified in interest charges.                                                                                                                                          |

----

|                                                                                  |
|---------------------------------------------------------------------------------------|
| Derivatives Not Designated as Hedging Instruments for the Three Months Ended June 30, |

|  Instrument            |   | Realized Gain or (Loss)(a) |   |   | Unrealized Gain or (Loss)(b) |   |
|-----------------------------|--------|----------------------------|--------|--------|------------------------------|--------|
|  (in millions)         |   | 2010                       |   |   | 2009                         |   |   | 2010 |   |   | 2009 |   |
|  Commodity derivatives |   | $                          | (12    | )      |                         | $      | (21 | ) |   | $ | (2 | ) |   | $ | 7 |   |

|   |                                                                                                                                       |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------|
| (a)    | After settlement of the derivatives and the fuel is consumed, gains or losses are passed through the fuel cost-recovery clause.            |
| (b)    | Amounts are recorded in regulatory liabilities and assets, respectively, on the Consolidated Balance Sheets until derivatives are settled. |

|                                           |   |                                                        |   |   |   |   |
|------------------------------------------------|--------|-------------------------------------------------------------|--------|--------|--------|--------|
|  Instrument                               |   | Amount of Gain or (Loss) Recognized inIncome on Derivatives |   |
|  (in millions)                            |   | 2010                                                        |   |   | 2009   |   |
|  Commodity derivatives(a)                 |   | $                                                           | 1      |   |   | $      | 1 |   |
|  Fair value loss transition adjustment(a) |   |                                                        | -      |   |   |   | 1 |   |
| Total                                          |   | $                                                           | 1      |   |   | $      | 2 |   |
|                                           |   |                                                        |   |   |   |   |   |   |

| (a) | Amounts recorded in the Consolidated Statements of Income are classified in other, net. |
|-----|-----------------------------------------------------------------------------------------|

|  The following tables present the effect of derivative instruments on OCI (See Note 4C) and the Consolidated Statements of Income for the six months ended June 30, 2010 and 2009: |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                            |   |                                                                   |   |   |                                                                                |   |   |                                                                  |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Derivatives Designated as Hedging Instruments for the Six Months Ended June 30, |   |
|  Instrument                                                                |   | Amount of Gain or (Loss)Recognized in OCI, Net of Taxon Derivatives(a) |   |   | Amount of Gain or (Loss),Net of Tax Reclassified fromAccumulated OCI into Income(a) |   |   | Amount of Pre-tax Gain or(Loss) Recognized in Incomeon Derivatives(b) |   |
|  (in millions)                                                             |   | 2010                                                                   |   |   | 2009                                                                                |   |   | 2010                                                                  |   |   | 2009   |   |   | 2010   |   |   | 2009   |   |
|  Interest rate derivatives(c) (d)                                          |   | $                                                                      | (16    | )      |                                                                                | $      | 2      |                                                                  |   | $      | (2     | )      |   | $      | (2     | )      |   | $      | - |   |   | $ | (2 | ) |
|                                                                            |   |                                                                   |   |   |                                                                                |   |   |                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (a) | Effective portion.                                                                                                                                                                                                                     |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Related to ineffective portion and amount excluded from effectiveness testing.                                                                                                                                                         |
| (c) | Amounts in accumulated OCI related to terminated hedges are reclassified to earnings as the interest expense is recorded. The effective portion of the hedges will be amortized to interest expense over the term of the related debt. |
| (d) | Amounts recorded in the Consolidated Statements of Income are classified in interest charges.                                                                                                                                          |

|                                                                                |
|-------------------------------------------------------------------------------------|
| Derivatives Not Designated as Hedging Instruments for the Six Months Ended June 30, |

|  Instrument            |   | Realized Gain or (Loss)(a) |   |   | Unrealized Gain or (Loss)(b) |   |
|-----------------------------|--------|----------------------------|--------|--------|------------------------------|--------|
|  (in millions)         |   | 2010                       |   |   | 2009                         |   |   | 2010 |   |   | 2009 |   |
|  Commodity derivatives |   | $                          | (19    | )      |                         | $      | (39 | ) |   | $ | (44 | ) |   | $ | (40 | ) |
|                        |   |

| (a) | After settlement of the derivatives and the fuel is consumed, gains or losses are passed through the fuel cost-recovery clause.            |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Amounts are recorded in regulatory liabilities and assets, respectively, on the Consolidated Balance Sheets until derivatives are settled. |

----

|                                           |   |                                                        |   |   |   |   |
|------------------------------------------------|--------|-------------------------------------------------------------|--------|--------|--------|--------|
|  Instrument                               |   | Amount of Gain or (Loss) Recognized inIncome on Derivatives |   |
|  (in millions)                            |   | 2010                                                        |   |   | 2009   |   |
|  Fair value loss transition adjustment(a) |   | $                                                           | -      |   |   | $      | 1 |   |
|                                           |   |                                                        |   |   |   |   |   |   |

| (a) | Amounts recorded in the Consolidated Statements of Income are classified in other, net. |
|-----|-----------------------------------------------------------------------------------------|

|  PEF                                                                                                           |   |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  The following table presents the fair value of derivative instruments at June 30, 2010 and December 31, 2009: |

|                                                         |   |          |   |   |              |   |   |   |   |   |      |   |
|--------------------------------------------------------------|--------|---------------|--------|--------|-------------------|--------|--------|--------|--------|--------|-----------|--------|
|  Instrument / Balance sheet location                    |   | June 30, 2010 |   |   | December 31, 2009 |   |
|  (in millions)                                          |   | Asset         |   |   | Liability         |   |   | Asset  |   |   | Liability |   |
| Derivatives designated as hedging instruments                |   |
|  Interest rate derivatives                              |   |          |   |   |              |   |   |   |   |   |      |   |
| Prepayments and other current assets                         |   | $             | -      |   |              |   |   |   | $      | 5      |      |   |   |   |
| Derivative liabilities, long-term                            |   |          |   |   |              | $      | 12     |   |   |   |      |   |   | $ | - |   |
| Total derivatives designated as hedging instruments          |   |          | -      |   |              |   | 12     |   |   |   | 5         |   |   |   | - |   |
|                                                         |   |          |   |   |              |   |   |   |   |   |      |   |   |   |   |   |
| Derivatives not designated as hedging instruments            |   |
|  Commodity derivatives(a)                               |   |          |   |   |              |   |   |   |   |   |      |   |   |   |   |   |
| Prepayments and other current assets                         |   |          | 9      |   |              |   |   |   |   |   | 11        |   |   |   |   |   |
| Other assets and deferred debits                             |   |          | 5      |   |              |   |   |   |   |   | 9         |   |   |   |   |   |
| Derivative liabilities, current                              |   |          |   |   |              |   | 179    |   |   |   |      |   |   |   | 161 |   |
| Derivative liabilities, long-term                            |   |          |   |   |              |   | 211    |   |   |   |      |   |   |   | 174 |   |
| Total derivatives not designated as hedging instruments |   |          | 14     |   |              |   | 390    |   |   |   | 20        |   |   |   | 335 |   |
| Total derivatives                                            |   | $             | 14     |   |              | $      | 402    |   |   | $      | 25        |   |   | $ | 335 |   |
|                                                         |   |          |   |   |              |   |   |   |   |   |      |   |   |   |   |   |

| (a) | Substantially all of these contracts receive regulatory treatment. |
|-----|--------------------------------------------------------------------|

|  The following tables present the effect of derivative instruments on OCI (See Note 4C) and the Statements of Income for the three months ended June 30, 2010 and 2009: |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                              |   |                                                                   |   |   |                                                                                |   |   |                                                                  |   |   |   |   |   |   |   |   |   |   |
|-----------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Derivatives Designated as Hedging Instruments for the Three Months Ended June 30, |   |
|  Instrument                                                                  |   | Amount of Gain or (Loss)Recognized in OCI, Net of Taxon Derivatives(a) |   |   | Amount of Gain or (Loss),Net of Tax Reclassified fromAccumulated OCI into Income(a) |   |   | Amount of Pre-tax Gain or(Loss) Recognized in Incomeon Derivatives(b) |   |
|  (in millions)                                                               |   | 2010                                                                   |   |   | 2009                                                                                |   |   | 2010                                                                  |   |   | 2009   |   |   | 2010   |   |   | 2009   |   |
|  Interest rate derivatives(c) (d)                                            |   | $                                                                      | (7     | )      |                                                                                | $      | 3      |                                                                  |   | $      | -      |   |   | $      | -      |   |   | $      | - |   |   | $ | - |   |
|                                                                              |   |                                                                   |   |   |                                                                                |   |   |                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (a) | Effective portion.                                                                                                                                                                                                                     |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Related to ineffective portion and amount excluded from effectiveness testing.                                                                                                                                                         |
| (c) | Amounts in accumulated OCI related to terminated hedges are reclassified to earnings as the interest expense is recorded. The effective portion of the hedges will be amortized to interest expense over the term of the related debt. |
| (d) | Amounts recorded in the Statements of Income are classified in interest charges.                                                                                                                                                       |

----

|                                                                                  |
|---------------------------------------------------------------------------------------|
| Derivatives Not Designated as Hedging Instruments for the Three Months Ended June 30, |

|  Instrument            |   | Realized Gain or (Loss)(a) |   |   | Unrealized Gain or (Loss)(b) |   |
|-----------------------------|--------|----------------------------|--------|--------|------------------------------|--------|
|  (in millions)         |   | 2010                       |   |   | 2009                         |   |   | 2010 |   |   | 2009 |   |
|  Commodity derivatives |   | $                          | (79    | )      |                         | $      | (164 | ) |   | $ | - |   |   | $ | 70 |   |
|                        |   |

| (a) | After settlement of the derivatives and the fuel is consumed, gains or losses are passed through the fuel cost-recovery clause. |
|-----|---------------------------------------------------------------------------------------------------------------------------------|
| (b) | Amounts are recorded in regulatory liabilities and assets, respectively, on the Balance Sheets until derivatives are settled.   |

|  The following tables present the effect of derivative instruments on OCI (See Note 4C) and the Statements of Income for the six months ended June 30, 2010 and 2009: |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                            |   |                                                                   |   |   |                                                                                |   |   |                                                                  |   |   |   |   |   |   |   |   |   |   |
|---------------------------------------------------------------------------------|--------|------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Derivatives Designated as Hedging Instruments for the Six Months Ended June 30, |   |
|  Instrument                                                                |   | Amount of Gain or (Loss)Recognized in OCI, Net of Taxon Derivatives(a) |   |   | Amount of Gain or (Loss),Net of Tax Reclassified fromAccumulated OCI into Income(a) |   |   | Amount of Pre-tax Gain or(Loss) Recognized in Incomeon Derivatives(b) |   |
|  (in millions)                                                             |   | 2010                                                                   |   |   | 2009                                                                                |   |   | 2010                                                                  |   |   | 2009   |   |   | 2010   |   |   | 2009   |   |
|  Interest rate derivatives(c) (d)                                          |   | $                                                                      | (10    | )      |                                                                                | $      | 3      |                                                                  |   | $      | -      |   |   | $      | -      |   |   | $      | - |   |   | $ | - |   |
|                                                                            |   |                                                                   |   |   |                                                                                |   |   |                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| (a) | Effective portion.                                                                                                                                                                                                                     |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Related to ineffective portion and amount excluded from effectiveness testing.                                                                                                                                                         |
| (c) | Amounts in accumulated OCI related to terminated hedges are reclassified to earnings as the interest expense is recorded. The effective portion of the hedges will be amortized to interest expense over the term of the related debt. |
| (d) | Amounts recorded in the Consolidated Statements of Income are classified in interest charges.                                                                                                                                          |

|                                                                                |
|-------------------------------------------------------------------------------------|
| Derivatives Not Designated as Hedging Instruments for the Six Months Ended June 30, |

|  Instrument            |   | Realized Gain or (Loss)(a) |   |   | Unrealized Gain or (Loss)(b) |   |
|-----------------------------|--------|----------------------------|--------|--------|------------------------------|--------|
|  (in millions)         |   | 2010                       |   |   | 2009                         |   |   | 2010 |   |   | 2009 |   |
|  Commodity derivatives |   | $                          | (131   | )      |                         | $      | (273 | ) |   | $ | (192 | ) |   | $ | (224 | ) |
|                        |   |

| (a) | After settlement of the derivatives and the fuel is consumed, gains or losses are passed through the fuel cost-recovery clause. |
|-----|---------------------------------------------------------------------------------------------------------------------------------|
| (b) | Amounts are recorded in regulatory liabilities and assets, respectively, on the Balance Sheets until derivatives are settled.   |

----

| 10. | FINANCIAL INFORMATION BY BUSINESS SEGMENT |
|-----|-------------------------------------------|

| (in millions)                                   |   | PEC    |   |   | PEF    |   |   | Corporateand Other |   |   | Eliminations |   |   | Totals |    |
|-------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------------------|--------|--------|--------------|--------|--------|--------|---------|
| At and for the three months ended June 30, 2010 |   |   |   |   |   |   |   |               |   |   |
| Revenues                                        |   |   |   |   |   |   |   |               |   |   |         |   |   |   |    |
| Unaffiliated                                    |   | $      | 1,117  |   |   | $      | 1,252  |               |   | $      | 3            |   |   | $      | -       |   |   | $ | 2,372 |   |
| Intersegment                                    |   |   | -      |   |   |   | -      |               |   |   | 53           |   |   |   | (53     | ) |   |   | - |   |
| Total revenues                                  |   |   | 1,117  |   |   |   | 1,252  |               |   |   | 56           |   |   |   | (53     | ) |   |   | 2,372 |   |
| Ongoing Earnings (loss)                         |   |   | 112    |   |   |   | 119    |               |   |   | (50          | )      |   |   | -       |   |   |   | 181 |   |
| Assets                                          |   |   | 13,966 |   |   |   | 13,693 |               |   |   | 20,690       |   |   |   | (16,212 | ) |   |   | 32,137 |   |
|                                            |   |   |   |   |   |   |   |               |   |   |         |   |   |   |    |   |   |   |   |   |
| For the three months ended June 30, 2009        |   |   |   |   |   |   |   |               |   |   |         |   |   |   |    |   |
| Revenues                                        |   |   |   |   |   |   |   |               |   |   |         |   |   |   |    |   |   |   |   |   |
| Unaffiliated                                    |   | $      | 1,076  |   |   | $      | 1,234  |               |   | $      | 2            |   |   | $      | -       |   |   | $ | 2,312 |   |
| Intersegment                                    |   |   | -      |   |   |   | -      |               |   |   | 55           |   |   |   | (55     | ) |   |   | - |   |
| Total revenues                                  |   |   | 1,076  |   |   |   | 1,234  |               |   |   | 57           |   |   |   | (55     | ) |   |   | 2,312 |   |
| Ongoing Earnings (loss)                         |   |   | 94     |   |   |   | 121    |               |   |   | (34          | )      |   |   | -       |   |   |   | 181 |   |
|                                            |   |   |   |   |   |   |   |               |   |   |         |
| At and for the six months ended June 30, 2010   |   |   |   |   |   |   |   |               |   |   |         |   |   |
| Revenues                                        |   |   |   |   |   |   |   |               |   |   |         |   |   |   |    |   |   |   |   |   |
| Unaffiliated                                    |   | $      | 2,380  |   |   | $      | 2,522  |               |   | $      | 5            |   |   | $      | -       |   |   | $ | 4,907 |   |
| Intersegment                                    |   |   | -      |   |   |   | -      |               |   |   | 114          |   |   |   | (114    | ) |   |   | - |   |
| Total revenues                                  |   |   | 2,380  |   |   |   | 2,522  |               |   |   | 119          |   |   |   | (114    | ) |   |   | 4,907 |   |
| Ongoing Earnings (loss)                         |   |   | 260    |   |   |   | 232    |               |   |   | (97          | )      |   |   | -       |   |   |   | 395 |   |
| Assets                                          |   |   | 13,966 |   |   |   | 13,693 |               |   |   | 20,690       |   |   |   | (16,212 | ) |   |   | 32,137 |   |
|                                            |   |   |   |   |   |   |   |               |   |   |         |   |   |   |    |   |   |   |   |   |
| For the six months ended June 30, 2009          |   |   |   |   |   |   |   |               |   |   |         |   |   |   |    |   |
| Revenues                                        |   |   |   |   |   |   |   |               |   |   |         |   |   |   |    |   |   |   |   |   |
| Unaffiliated                                    |   | $      | 2,254  |   |   | $      | 2,496  |               |   | $      | 4            |   |   | $      | -       |   |   | $ | 4,754 |   |
| Intersegment                                    |   |   | -      |   |   |   | -      |               |   |   | 120          |   |   |   | (120    | ) |   |   | - |   |
| Total revenues                                  |   |   | 2,254  |   |   |   | 2,496  |               |   |   | 124          |   |   |   | (120    | ) |   |   | 4,754 |   |
| Ongoing Earnings (loss)                         |   |   | 223    |   |   |   | 212    |               |   |   | (72          | )      |   |   | -       |   |   |   | 363 |   |
|                                            |   |   |   |   |   |   |   |               |   |   |         |   |   |   |    |   |   |   |   |   |

----

|                                                                                                    |   | For the three months ended June 30, |   |
|---------------------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|
| (in millions)                                                                                           |   | 2010                                |   |   | 2009 |   |
| Ongoing Earnings                                                                                        |   | $                                   | 181    |   |   | $ | 181 |   |
| Tax levelization                                                                                        |   |                                | -      |   |   |   | (5 | ) |
| CVO mark-to-market (Note 9D)                                                                            |   |                                | -      |   |   |   | 1 |   |
| Impairment, net of tax benefit of $1                                                                    |   |                                | (1     | ) |   |   | (2 | ) |
| Plant retirement adjustment, net of tax expense of $-                                                   |   |                                | 1      |   |   |   | - |   |
| Income from continuing operations before cumulative effect of change in  accounting principle |   |                                | 181    |   |   |   | 175 |   |
| Discontinued operations, net of tax                                                                     |   |                                | (1     | ) |   |   | (1 | ) |
| Net income attributable to controlling interests                                                        |   | $                                   | 180    |   |   | $ | 174 |   |
|                                                                                                    |   |                                |   |   |   |   |   |   |
|                                                                                                    |   | For the six months ended June 30,   |   |
| (in millions)                                                                                           |   |                                | 2010   |   |   |   | 2009 |   |
| Ongoing Earnings                                                                                        |   | $                                   | 395    |   |   | $ | 363 |   |
| Tax levelization                                                                                        |   |                                | (2     | ) |   |   | (12 | ) |
| CVO mark-to-market (Note 9D)                                                                            |   |                                | -      |   |   |   | 8 |   |
| Impairment, net of tax benefit of $1                                                                    |   |                                | (2     | ) |   |   | (2 | ) |
| Plant retirement adjustment, net of tax expense of $1                                                   |   |                                | 1      |   |   |   | - |   |
| Change in tax treatment of the Medicare Part D subsidy (Note 8)                                         |   |                                | (22    | ) |   |   | - |   |
| Continuing income attributable to noncontrolling interests, net of tax                                  |   |                                | 2      |   |   |   | 1 |   |
| Income from continuing operations before cumulative effect of change in  accounting principle |   |                                | 372    |   |   |   | 358 |   |
| Discontinued operations, net of tax                                                                     |   |                                | -      |   |   |   | (1 | ) |
| Cumulative effect of change in accounting principle, net of tax                                         |   |                                | (2     | ) |   |   | - |   |
| Net income attributable to noncontrolling interests, net of tax                                         |   |                                | -      |   |   |   | (1 | ) |
| Net income attributable to controlling interests                                                        |   | $                                   | 370    |   |   | $ | 356 |   |
|                                                                                                    |   |                                |   |   |   |   |   |   |

----

| 11. | OTHER INCOME AND OTHER EXPENSE |
|-----|--------------------------------|

|                                                  |                        |
|-------------------------------------------------------|-----------------------------|
| PROGRESS ENERGY                                       |                        |   |   |   |   |   |   |
|                                                  | Three months ended June 30, |   | Six months ended June 30, |   |
| (in millions)                                         |                        | 2010 |   |   | 2009 |   |   | 2010 |   |   | 2009 |   |
| Nonregulated energy and delivery services income, net |                        | $ | 8 |   |   | $ | 8 |   |   | $ | 7 |   |   | $ | 9 |   |
| CVOs unrealized gain, net                             |                        |   | - |   |   |   | 1 |   |   |   | - |   |   |   | 8 |   |
| Donations                                             |                        |   | (2 | ) |   |   | (2 | ) |   |   | (6 | ) |   |   | (5 | ) |
| Other, net                                            |                        |   | (1 | ) |   |   | 6 |   |   |   | (1 | ) |   |   | - |   |
| Other, net                                            |                        | $ | 5 |   |   | $ | 13 |   |   | $ | - |   |   | $ | 12 |   |
|                                                  |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PEC                                                   |                        |   |   |   |   |   |   |   |   |
|                                                  | Three months ended June 30, |   | Six months ended June 30, |   |
| (in millions)                                         |                        |   | 2010 |   |   |   | 2009 |   |   |   | 2010 |   |   |   | 2009 |   |
| Nonregulated energy and delivery services income, net |                        | $ | 6 |   |   | $ | 6 |   |   | $ | 2 |   |   | $ | 4 |   |
| Donations                                             |                        |   | (1 | ) |   |   | (2 | ) |   |   | (3 | ) |   |   | (3 | ) |
| Other, net                                            |                        |   | (1 | ) |   |   | - |   |   |   | (2 | ) |   |   | (4 | ) |
| Other, net                                            |                        | $ | 4 |   |   | $ | 4 |   |   | $ | (3 | ) |   | $ | (3 | ) |
|                                                  |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PEF                                                   |                        |   |   |   |   |   |   |   |   |
|                                                  | Three months ended June 30, |   | Six months ended June 30, |   |
| (in millions)                                         |                        |   | 2010 |   |   |   | 2009 |   |   |   | 2010 |   |   |   | 2009 |   |
| Nonregulated energy and delivery services income, net |                        | $ | 2 |   |   | $ | 3 |   |   | $ | 5 |   |   | $ | 6 |   |
| Donations                                             |                        |   | (1 | ) |   |   | (1 | ) |   |   | (2 | ) |   |   | (3 | ) |
| Other, net                                            |                        |   | - |   |   |   | 5 |   |   |   | - |   |   |   | 4 |   |
| Other, net                                            |                        | $ | 1 |   |   | $ | 7 |   |   | $ | 3 |   |   | $ | 7 |   |
|                                                  |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

| 12. | ENVIRONMENTAL MATTERS |
|-----|-----------------------|

| A. | HAZARDOUS AND SOLID WASTE |
|----|---------------------------|

----

|                                                         |   |               |   |   |                                                  |   |   |   |   |
|--------------------------------------------------------------|--------|--------------------|--------|--------|-------------------------------------------------------|--------|--------|--------|--------|
|  PROGRESS ENERGY                                        |   |               |   |   |                                                  |   |   |   |   |
|  (in millions)                                          |   | MGP andOther Sites |   |   | Remediationof Distributionand Substation Transformers |   |   | Total  |   |
|  Balance, December 31, 2009                        |   | $                  | 22     |   |                                                  | $      | 20     |   |   | $ | 42 |   |
|  Amount accrued for environmental loss contingencies(a) |   |               | 4      |   |                                                  |   | 10     |   |   |   | 14 |   |
|  Expenditures for environmental loss contingencies(b)   |   |               | (7     | )      |                                                  |   | (9     | )      |   |   | (16 | ) |
|  Balance, June 30, 2010(c)                         |   | $                  | 19     |   |                                                  | $      | 21     |   |   | $ | 40 |   |
|                                                         |   |               |   |   |                                                  |   |   |   |   |   |   |   |
|  Balance, December 31, 2008                        |   | $                  | 31     |   |                                                  | $      | 22     |   |   | $ | 53 |   |
|  Amount accrued for environmental loss contingencies(a) |   |               | 4      |   |                                                  |   | 2      |   |   |   | 6 |   |
|  Expenditures for environmental loss contingencies(b)   |   |               | (6     | )      |                                                  |   | (7     | )      |   |   | (13 | ) |
|  Balance, June 30, 2009(c)                         |   | $                  | 29     |   |                                                  | $      | 17     |   |   | $ | 46 |   |
|                                                         |   |               |   |   |                                                  |   |   |   |   |   |   |   |

| (a)    | Amounts accrued are for the six months ended June 30, 2010 and 2009. For the three months ended June 30, 2010, we accrued $2 million for the remediation of MGP and other sites and $8 million for the remediation of distribution and substation transformers. For the three months ended June 30, 2009, our accruals for the remediation of MGP and other sites and for the remediation of distribution and substation transformers were not material. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b)    | Expenditures are for the six months ended June 30, 2010 and 2009. For the three months ended June 30, 2010, we spent $5 million for the remediation of MGP and other sites and $5 million for the remediation of distribution and substation transformers. For the three months ended June 30, 2009 our expenditures for the remediation of MGP and other sites and for the remediation of distribution and substation transformers were not material.   |
| (c)    | Expected to be paid out over one to 15 years.                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |   |   |   |   |   |   |   |

----

| PEC                                                          |   |               |   |
|--------------------------------------------------------------|--------|--------------------|--------|
|  (in millions)                                          |   | MGP andOther Sites |   |
|  Balance, December 31, 2009                        |   | $                  | 13     |   |
|  Amount accrued for environmental loss contingencies(a) |   |               | 2      |   |
|  Expenditures for environmental loss contingencies(b)   |   |               | (3     | ) |
|  Balance, June 30, 2010(c)                         |   | $                  | 12     |   |
|                                                         |   |               |   |   |
|  Balance, December 31, 2008                        |   | $                  | 16     |   |
|  Amount accrued for environmental loss contingencies(a) |   |               | 4      |   |
|  Expenditures for environmental loss contingencies(b)   |   |               | (4     | ) |
|  Balance, June 30, 2009(c)                         |   | $                  | 16     |   |
|                                                         |   |               |   |   |

| (a) | Amounts accrued are for the six months ended June 30, 2010 and 2009. For the three months ended June 30, 2010 and 2009, PEC's accruals for the remediation of MGP and other sites were not material.  |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Expenditures are for the six months ended June 30, 2010 and 2009. For the three months ended June 30, 2010 and 2009, PEC's expenditures for the remediation of MGP and other sites were not material. |
| (c) | Expected to be paid out over one to five years.                                                                                                                                                       |   |   |   |   |   |   |   |   |

|  PEF                                                    |   |               |   |   |                                                  |   |   |   |   |
|--------------------------------------------------------------|--------|--------------------|--------|--------|-------------------------------------------------------|--------|--------|--------|--------|
|  (in millions)                                          |   | MGP andOther Sites |   |   | Remediationof Distributionand Substation Transformers |   |   | Total  |   |
|  Balance, December 31, 2009                        |   | $                  | 9      |   |                                                  | $      | 20     |   |   | $ | 29 |   |
|  Amount accrued for environmental loss contingencies(a) |   |               | 2      |   |                                                  |   | 10     |   |   |   | 12 |   |
|  Expenditures for environmental loss contingencies(b)   |   |               | (4     | )      |                                                  |   | (9     | )      |   |   | (13 | ) |
|  Balance, June 30, 2010(c)                         |   | $                  | 7      |   |                                                  | $      | 21     |   |   | $ | 28 |   |
|                                                         |   |               |   |   |                                                  |   |   |   |   |   |   |   |
|  Balance, December 31, 2008                        |   | $                  | 15     |   |                                                  | $      | 22     |   |   | $ | 37 |   |
|  Amount accrued for environmental loss contingencies(a) |   |               | -      |   |                                                  |   | 2      |   |   |   | 2 |   |
|  Expenditures for environmental loss contingencies(b)   |   |               | (2     | )      |                                                  |   | (7     | )      |   |   | (9 | ) |
|  Balance, June 30, 2009(c)                         |   | $                  | 13     |   |                                                  | $      | 17     |   |   | $ | 30 |   |
|                                                         |   |               |   |   |                                                  |   |   |   |   |   |   |   |

| (a) | Amounts accrued are for the six months ended June 30, 2010 and 2009. For the three months ended June 30, 2010, PEF accrued $2 million for the remediation of MGP and other sites and $8 million for the remediation of distribution and substation transformers. For the three months ended June 30, 2009, PEF's accruals for the remediation of MGP and other sites and for the remediation of distribution and substation transformers were not material. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b) | Expenditures are for the six months ended June 30, 2010 and 2009. For the three months ended June 30, 2010, PEF spent $4 million for the remediation of MGP and other sites and $5 million for the remediation of distribution and substation transformers. For the three months ended June 30, 2009, PEF's expenditures for the remediation of MGP and other sites and for the remediation of distribution and substation transformers were not material.  |
| (c) | Expected to be paid out over one to 15 years.                                                                                                                                                                                                                                                                                                                                                                                                               |   |   |   |   |   |   |   |   |

----

----

| B. | AIR AND WATER QUALITY |
|----|-----------------------|

----

| 13. | COMMITMENTS AND CONTINGENCIES |
|-----|-------------------------------|

| A. | PURCHASE OBLIGATIONS |
|----|----------------------|

----

| B. | GUARANTEES |
|----|------------|

| C. | OTHER COMMITMENTS AND CONTINGENCIES |
|----|-------------------------------------|

----

----

| 14. | CONDENSED CONSOLIDATING STATEMENTS |
|-----|------------------------------------|

----

| Condensed Consolidating Statement of Income                                                                                          |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|
| Three months ended June 30, 2010                                                                                                     |   |
| (in millions)                                                                                                                        |   | Parent |   |   | SubsidiaryGuarantor |   |   | Non-GuarantorSubsidiaries |   |   | Other |   |   | ProgressEnergy, Inc. |   |
| Operating revenues                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating revenues                                                                                                                   |   | $ | - |   |   | $ | 1,255 |   |   | $ | 1,117 |   |   | $ | - |   |   | $ | 2,372 |   |
| Affiliate revenues                                                                                                                   |   |   | - |   |   |   | - |   |   |   | 52 |   |   |   | (52 | ) |   |   | - |   |
| Total operating revenues                                                                                                             |   |   | - |   |   |   | 1,255 |   |   |   | 1,169 |   |   |   | (52 | ) |   |   | 2,372 |   |
| Operating expenses                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel used in electric generation                                                                                                     |   |   | - |   |   |   | 368 |   |   |   | 375 |   |   |   | - |   |   |   | 743 |   |
| Purchased power                                                                                                                      |   |   | - |   |   |   | 239 |   |   |   | 76 |   |   |   | - |   |   |   | 315 |   |
| Operation and maintenance                                                                                                            |   |   | - |   |   |   | 208 |   |   |   | 347 |   |   |   | (50 | ) |   |   | 505 |   |
| Depreciation, amortization and accretion                                                                                             |   |   | - |   |   |   | 110 |   |   |   | 123 |   |   |   | - |   |   |   | 233 |   |
| Taxes other than on income                                                                                                           |   |   | - |   |   |   | 83 |   |   |   | 51 |   |   |   | (1 | ) |   |   | 133 |   |
| Other                                                                                                                                |   |   | - |   |   |   | 3 |   |   |   | - |   |   |   | - |   |   |   | 3 |   |
| Total operating expenses                                                                                                             |   |   | - |   |   |   | 1,011 |   |   |   | 972 |   |   |   | (51 | ) |   |   | 1,932 |   |
| Operating income (loss)                                                                                                              |   |   | - |   |   |   | 244 |   |   |   | 197 |   |   |   | (1 | ) |   |   | 440 |   |
| Other income (expense)                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                                                                      |   |   | 2 |   |   |   | - |   |   |   | 2 |   |   |   | (3 | ) |   |   | 1 |   |
| Allowance for equity funds used during construction                                                                                  |   |   | - |   |   |   | 10 |   |   |   | 15 |   |   |   | - |   |   |   | 25 |   |
| Other, net                                                                                                                           |   |   | - |   |   |   | - |   |   |   | 3 |   |   |   | 2 |   |   |   | 5 |   |
| Total other income (expense), net                                                                                                    |   |   | 2 |   |   |   | 10 |   |   |   | 20 |   |   |   | (1 | ) |   |   | 31 |   |
| Interest charges                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest charges                                                                                                                     |   |   | 72 |   |   |   | 75 |   |   |   | 54 |   |   |   | (2 | ) |   |   | 199 |   |
| Allowance for borrowed funds used during  construction                                                                     |   |   | - |   |   |   | (2 | ) |   |   | (5 | ) |   |   | - |   |   |   | (7 | ) |
| Total interest charges, net                                                                                                          |   |   | 72 |   |   |   | 73 |   |   |   | 49 |   |   |   | (2 | ) |   |   | 192 |   |
| (Loss) income from continuing operations before  income tax and equity in earnings of consolidated  subsidiaries |   |   | (70 | ) |   |   | 181 |   |   |   | 168 |   |   |   | - |   |   |   | 279 |   |
| Income tax (benefit) expense                                                                                                         |   |   | (28 | ) |   |   | 67 |   |   |   | 57 |   |   |   | 2 |   |   |   | 98 |   |
| Equity in earnings of consolidated subsidiaries                                                                                      |   |   | 222 |   |   |   | - |   |   |   | - |   |   |   | (222 | ) |   |   | - |   |
| Income (loss) from continuing operations                                                                                             |   |   | 180 |   |   |   | 114 |   |   |   | 111 |   |   |   | (224 | ) |   |   | 181 |   |
| Discontinued operations, net of tax                                                                                                  |   |   | - |   |   |   | - |   |   |   | (1 | ) |   |   | - |   |   |   | (1 | ) |
| Net income (loss)                                                                                                                    |   |   | 180 |   |   |   | 114 |   |   |   | 110 |   |   |   | (224 | ) |   |   | 180 |   |
| Net (income) loss attributable to noncontrolling  interests, net of tax                                                    |   |   | - |   |   |   | (1 | ) |   |   | 1 |   |   |   | - |   |   |   | - |   |
| Net income (loss) attributable to controlling interests                                                                              |   | $ | 180 |   |   | $ | 113 |   |   | $ | 111 |   |   | $ | (224 | ) |   | $ | 180 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Condensed Consolidating Statement of Income                                                                                          |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|
| Three months ended June 30, 2009                                                                                                     |   |
| (in millions)                                                                                                                        |   | Parent |   |   | SubsidiaryGuarantor |   |   | Non-GuarantorSubsidiaries |   |   | Other |   |   | ProgressEnergy,Inc. |   |
| Operating revenues                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating revenues                                                                                                                   |   | $ | - |   |   | $ | 1,236 |   |   | $ | 1,076 |   |   | $ | - |   |   | $ | 2,312 |   |
| Affiliate revenues                                                                                                                   |   |   | - |   |   |   | - |   |   |   | 54 |   |   |   | (54 | ) |   |   | - |   |
| Total operating revenues                                                                                                             |   |   | - |   |   |   | 1,236 |   |   |   | 1,130 |   |   |   | (54 | ) |   |   | 2,312 |   |
| Operating expenses                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel used in electric generation                                                                                                     |   |   | - |   |   |   | 443 |   |   |   | 383 |   |   |   | - |   |   |   | 826 |   |
| Purchased power                                                                                                                      |   |   | - |   |   |   | 200 |   |   |   | 57 |   |   |   | - |   |   |   | 257 |   |
| Operation and maintenance                                                                                                            |   |   | 2 |   |   |   | 204 |   |   |   | 331 |   |   |   | (53 | ) |   |   | 484 |   |
| Depreciation, amortization and accretion                                                                                             |   |   | - |   |   |   | 105 |   |   |   | 121 |   |   |   | - |   |   |   | 226 |   |
| Taxes other than on income                                                                                                           |   |   | - |   |   |   | 80 |   |   |   | 51 |   |   |   | (1 | ) |   |   | 130 |   |
| Other                                                                                                                                |   |   | - |   |   |   | 8 |   |   |   | 2 |   |   |   | - |   |   |   | 10 |   |
| Total operating expenses                                                                                                             |   |   | 2 |   |   |   | 1,040 |   |   |   | 945 |   |   |   | (54 | ) |   |   | 1,933 |   |
| Operating (loss) income                                                                                                              |   |   | (2 | ) |   |   | 196 |   |   |   | 185 |   |   |   | - |   |   |   | 379 |   |
| Other income (expense)                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                                                                      |   |   | 3 |   |   |   | 1 |   |   |   | 1 |   |   |   | (3 | ) |   |   | 2 |   |
| Allowance for equity funds used during construction                                                                                  |   |   | - |   |   |   | 29 |   |   |   | 7 |   |   |   | - |   |   |   | 36 |   |
| Other, net                                                                                                                           |   |   | 1 |   |   |   | 6 |   |   |   | 5 |   |   |   | 1 |   |   |   | 13 |   |
| Total other income (expense), net                                                                                                    |   |   | 4 |   |   |   | 36 |   |   |   | 13 |   |   |   | (2 | ) |   |   | 51 |   |
| Interest charges                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest charges                                                                                                                     |   |   | 58 |   |   |   | 71 |   |   |   | 54 |   |   |   | (2 | ) |   |   | 181 |   |
| Allowance for borrowed funds used during  construction                                                                     |   |   | - |   |   |   | (9 | ) |   |   | (3 | ) |   |   | - |   |   |   | (12 | ) |
| Total interest charges, net                                                                                                          |   |   | 58 |   |   |   | 62 |   |   |   | 51 |   |   |   | (2 | ) |   |   | 169 |   |
| (Loss) income from continuing operations before  income tax and equity in earnings of consolidated  subsidiaries |   |   | (56 | ) |   |   | 170 |   |   |   | 147 |   |   |   | - |   |   |   | 261 |   |
| Income tax (benefit) expense                                                                                                         |   |   | (26 | ) |   |   | 55 |   |   |   | 53 |   |   |   | 4 |   |   |   | 86 |   |
| Equity in earnings of consolidated subsidiaries                                                                                      |   |   | 204 |   |   |   | - |   |   |   | - |   |   |   | (204 | ) |   |   | - |   |
| Income (loss) from continuing operations                                                                                             |   |   | 174 |   |   |   | 115 |   |   |   | 94 |   |   |   | (208 | ) |   |   | 175 |   |
| Discontinued operations, net of tax                                                                                                  |   |   | - |   |   |   | - |   |   |   | (1 | ) |   |   | - |   |   |   | (1 | ) |
| Net income (loss)                                                                                                                    |   |   | 174 |   |   |   | 115 |   |   |   | 93 |   |   |   | (208 | ) |   |   | 174 |   |
| Net (income) loss attributable to noncontrolling  interests, net of tax                                                    |   |   | - |   |   |   | - |   |   |   | 1 |   |   |   | (1 | ) |   |   | - |   |
| Net income (loss) attributable to controlling interests                                                                              |   | $ | 174 |   |   | $ | 115 |   |   | $ | 94 |   |   | $ | (209 | ) |   | $ | 174 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Condensed Consolidating Statement of Income                                                                                          |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|
| Six months ended June 30, 2010                                                                                                       |   |
| (in millions)                                                                                                                        |   | Parent |   |   | SubsidiaryGuarantor |   |   | Non-GuarantorSubsidiaries |   |   | Other |   |   | ProgressEnergy,Inc. |   |
|                                                                                                                                 |
| Operating revenues                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating revenues                                                                                                                   |   | $ | - |   |   | $ | 2,527 |   |   | $ | 2,380 |   |   | $ | - |   |   | $ | 4,907 |   |
| Affiliate revenues                                                                                                                   |   |   | - |   |   |   | - |   |   |   | 113 |   |   |   | (113 | ) |   |   | - |   |
| Total operating revenues                                                                                                             |   |   | - |   |   |   | 2,527 |   |   |   | 2,493 |   |   |   | (113 | ) |   |   | 4,907 |   |
| Operating expenses                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel used in electric generation                                                                                                     |   |   | - |   |   |   | 781 |   |   |   | 858 |   |   |   | - |   |   |   | 1,639 |   |
| Purchased power                                                                                                                      |   |   | - |   |   |   | 452 |   |   |   | 126 |   |   |   | - |   |   |   | 578 |   |
| Operation and maintenance                                                                                                            |   |   | 3 |   |   |   | 413 |   |   |   | 676 |   |   |   | (107 | ) |   |   | 985 |   |
| Depreciation, amortization and accretion                                                                                             |   |   | - |   |   |   | 234 |   |   |   | 245 |   |   |   | - |   |   |   | 479 |   |
| Taxes other than on income                                                                                                           |   |   | - |   |   |   | 176 |   |   |   | 115 |   |   |   | (4 | ) |   |   | 287 |   |
| Other                                                                                                                                |   |   | - |   |   |   | 5 |   |   |   | - |   |   |   | - |   |   |   | 5 |   |
| Total operating expenses                                                                                                             |   |   | 3 |   |   |   | 2,061 |   |   |   | 2,020 |   |   |   | (111 | ) |   |   | 3,973 |   |
| Operating (loss) income                                                                                                              |   |   | (3 | ) |   |   | 466 |   |   |   | 473 |   |   |   | (2 | ) |   |   | 934 |   |
| Other income (expense)                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                                                                      |   |   | 4 |   |   |   | - |   |   |   | 3 |   |   |   | (4 | ) |   |   | 3 |   |
| Allowance for equity funds used during construction                                                                                  |   |   | - |   |   |   | 18 |   |   |   | 28 |   |   |   | - |   |   |   | 46 |   |
| Other, net                                                                                                                           |   |   | (1 | ) |   |   | 3 |   |   |   | (4 | ) |   |   | 2 |   |   |   | - |   |
| Total other income (expense), net                                                                                                    |   |   | 3 |   |   |   | 21 |   |   |   | 27 |   |   |   | (2 | ) |   |   | 49 |   |
| Interest charges                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest charges                                                                                                                     |   |   | 143 |   |   |   | 145 |   |   |   | 106 |   |   |   | (4 | ) |   |   | 390 |   |
| Allowance for borrowed funds used during  construction                                                                     |   |   | - |   |   |   | (7 | ) |   |   | (9 | ) |   |   | - |   |   |   | (16 | ) |
| Total interest charges, net                                                                                                          |   |   | 143 |   |   |   | 138 |   |   |   | 97 |   |   |   | (4 | ) |   |   | 374 |   |
| (Loss) income from continuing operations before  income tax and equity in earnings of consolidated  subsidiaries |   |   | (143 | ) |   |   | 349 |   |   |   | 403 |   |   |   | - |   |   |   | 609 |   |
| Income tax (benefit) expense                                                                                                         |   |   | (58 | ) |   |   | 136 |   |   |   | 154 |   |   |   | 5 |   |   |   | 237 |   |
| Equity in earnings of consolidated subsidiaries                                                                                      |   |   | 455 |   |   |   | - |   |   |   | - |   |   |   | (455 | ) |   |   | - |   |
| Income (loss) from continuing operations before  cumulative effect of change in accounting principle                       |   |   | 370 |   |   |   | 213 |   |   |   | 249 |   |   |   | (460 | ) |   |   | 372 |   |
| Discontinued operations, net of tax                                                                                                  |   |   | - |   |   |   | 1 |   |   |   | (1 | ) |   |   | - |   |   |   | - |   |
| Cumulative effect of change in accounting principle,  net of tax                                                           |   |   | - |   |   |   | - |   |   |   | (2 | ) |   |   | - |   |   |   | (2 | ) |
| Net income (loss)                                                                                                                    |   |   | 370 |   |   |   | 214 |   |   |   | 246 |   |   |   | (460 | ) |   |   | 370 |   |
| Net (income) loss attributable to noncontrolling  interests, net of tax                                                    |   |   | - |   |   |   | (2 | ) |   |   | 3 |   |   |   | (1 | ) |   |   | - |   |
| Net income (loss) attributable to controlling interests                                                                              |   | $ | 370 |   |   | $ | 212 |   |   | $ | 249 |   |   | $ | (461 | ) |   | $ | 370 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Condensed Consolidating Statement of Income                                                                                          |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|
| Six months ended June 30, 2009                                                                                                       |   |
| (in millions)                                                                                                                        |   | Parent |   |   | SubsidiaryGuarantor |   |   | Non-GuarantorSubsidiaries |   |   | Other |   |   | ProgressEnergy,Inc. |   |
| Operating revenues                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating revenues                                                                                                                   |   | $ | - |   |   | $ | 2,500 |   |   | $ | 2,254 |   |   | $ | - |   |   | $ | 4,754 |   |
| Affiliate revenues                                                                                                                   |   |   | - |   |   |   | - |   |   |   | 119 |   |   |   | (119 | ) |   |   | - |   |
| Total operating revenues                                                                                                             |   |   | - |   |   |   | 2,500 |   |   |   | 2,373 |   |   |   | (119 | ) |   |   | 4,754 |   |
| Operating expenses                                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel used in electric generation                                                                                                     |   |   | - |   |   |   | 955 |   |   |   | 825 |   |   |   | - |   |   |   | 1,780 |   |
| Purchased power                                                                                                                      |   |   | - |   |   |   | 360 |   |   |   | 114 |   |   |   | - |   |   |   | 474 |   |
| Operation and maintenance                                                                                                            |   |   | 3 |   |   |   | 406 |   |   |   | 642 |   |   |   | (114 | ) |   |   | 937 |   |
| Depreciation, amortization and accretion                                                                                             |   |   | - |   |   |   | 265 |   |   |   | 241 |   |   |   | - |   |   |   | 506 |   |
| Taxes other than on income                                                                                                           |   |   | - |   |   |   | 168 |   |   |   | 109 |   |   |   | (4 | ) |   |   | 273 |   |
| Other                                                                                                                                |   |   | - |   |   |   | 10 |   |   |   | 2 |   |   |   | - |   |   |   | 12 |   |
| Total operating expenses                                                                                                             |   |   | 3 |   |   |   | 2,164 |   |   |   | 1,933 |   |   |   | (118 | ) |   |   | 3,982 |   |
| Operating (loss) income                                                                                                              |   |   | (3 | ) |   |   | 336 |   |   |   | 440 |   |   |   | (1 | ) |   |   | 772 |   |
| Other income (expense)                                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest income                                                                                                                      |   |   | 6 |   |   |   | 2 |   |   |   | 4 |   |   |   | (6 | ) |   |   | 6 |   |
| Allowance for equity funds used during construction                                                                                  |   |   | - |   |   |   | 59 |   |   |   | 16 |   |   |   | - |   |   |   | 75 |   |
| Other, net                                                                                                                           |   |   | 8 |   |   |   | 6 |   |   |   | (2 | ) |   |   | - |   |   |   | 12 |   |
| Total other income (expense), net                                                                                                    |   |   | 14 |   |   |   | 67 |   |   |   | 18 |   |   |   | (6 | ) |   |   | 93 |   |
| Interest charges                                                                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest charges                                                                                                                     |   |   | 110 |   |   |   | 143 |   |   |   | 113 |   |   |   | (6 | ) |   |   | 360 |   |
| Allowance for borrowed funds used during  construction                                                                     |   |   | - |   |   |   | (18 | ) |   |   | (6 | ) |   |   | - |   |   |   | (24 | ) |
| Total interest charges, net                                                                                                          |   |   | 110 |   |   |   | 125 |   |   |   | 107 |   |   |   | (6 | ) |   |   | 336 |   |
| (Loss) income from continuing operations before  income tax and equity in earnings of consolidated  subsidiaries |   |   | (99 | ) |   |   | 278 |   |   |   | 351 |   |   |   | (1 | ) |   |   | 529 |   |
| Income tax (benefit) expense                                                                                                         |   |   | (39 | ) |   |   | 76 |   |   |   | 129 |   |   |   | 5 |   |   |   | 171 |   |
| Equity in earnings of consolidated subsidiaries                                                                                      |   |   | 415 |   |   |   | - |   |   |   | - |   |   |   | (415 | ) |   |   | - |   |
| Income (loss) from continuing operations                                                                                             |   |   | 355 |   |   |   | 202 |   |   |   | 222 |   |   |   | (421 | ) |   |   | 358 |   |
| Discontinued operations, net of tax                                                                                                  |   |   | 1 |   |   |   | (1 | ) |   |   | (1 | ) |   |   | - |   |   |   | (1 | ) |
| Net income (loss)                                                                                                                    |   |   | 356 |   |   |   | 201 |   |   |   | 221 |   |   |   | (421 | ) |   |   | 357 |   |
| Net (income) loss attributable to noncontrolling  interests, net of tax                                                    |   |   | - |   |   |   | (1 | ) |   |   | 1 |   |   |   | (1 | ) |   |   | (1 | ) |
| Net income (loss) attributable to controlling interests                                                                              |   | $ | 356 |   |   | $ | 200 |   |   | $ | 222 |   |   | $ | (422 | ) |   | $ | 356 |   |
|                                                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| Condensed Consolidating Balance Sheet        |   |
|----------------------------------------------|--------|
| June 30, 2010                                |   |
|                                         |   | Parent |   |   | SubsidiaryGuarantor |   |   | Non-GuarantorSubsidiaries |   |   | Other |   |   | ProgressEnergy,Inc. |   |
| (in millions)                                |
| ASSETS                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Utility plant, net                           |   | $ | - |   |   | $ | 9,977 |   |   | $ | 10,424 |   |   | $ | 111 |   |   | $ | 20,512 |   |
| Current assets                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                    |   |   | 366 |   |   |   | 116 |   |   |   | 208 |   |   |   | - |   |   |   | 690 |   |
| Notes receivable from affiliated companies   |   |   | 133 |   |   |   | 51 |   |   |   | 9 |   |   |   | (193 | ) |   |   | - |   |
| Regulatory assets                            |   |   | - |   |   |   | 223 |   |   |   | 101 |   |   |   | - |   |   |   | 324 |   |
| Derivative collateral posted                 |   |   | - |   |   |   | 174 |   |   |   | 20 |   |   |   | - |   |   |   | 194 |   |
| Income taxes receivable                      |   |   | 15 |   |   |   | 6 |   |   |   | 33 |   |   |   | (33 | ) |   |   | 21 |   |
| Prepayments and other current assets         |   |   | 19 |   |   |   | 1,248 |   |   |   | 1,334 |   |   |   | (170 | ) |   |   | 2,431 |   |
| Total current assets                         |   |   | 533 |   |   |   | 1,818 |   |   |   | 1,705 |   |   |   | (396 | ) |   |   | 3,660 |   |
| Deferred debits and other assets             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment in consolidated subsidiaries      |   |   | 13,669 |   |   |   | - |   |   |   | - |   |   |   | (13,669 | ) |   |   | - |   |
| Regulatory assets                            |   |   | - |   |   |   | 1,317 |   |   |   | 894 |   |   |   | - |   |   |   | 2,211 |   |
| Goodwill                                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,655 |   |   |   | 3,655 |   |
| Nuclear decommissioning trust funds          |   |   | - |   |   |   | 482 |   |   |   | 859 |   |   |   | - |   |   |   | 1,341 |   |
| Other assets and deferred debits             |   |   | 165 |   |   |   | 225 |   |   |   | 918 |   |   |   | (550 | ) |   |   | 758 |   |
| Total deferred debits and other assets       |   |   | 13,834 |   |   |   | 2,024 |   |   |   | 2,671 |   |   |   | (10,564 | ) |   |   | 7,965 |   |
| Total assets                                 |   | $ | 14,367 |   |   | $ | 13,819 |   |   | $ | 14,800 |   |   | $ | (10,849 | ) |   | $ | 32,137 |   |
| CAPITALIZATION AND LIABILITIES               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock equity                          |   | $ | 9,857 |   |   | $ | 4,727 |   |   | $ | 5,270 |   |   | $ | (9,997 | ) |   | $ | 9,857 |   |
| Noncontrolling interests                     |   |   | - |   |   |   | 2 |   |   |   | - |   |   |   | - |   |   |   | 2 |   |
| Total equity                                 |   |   | 9,857 |   |   |   | 4,729 |   |   |   | 5,270 |   |   |   | (9,997 | ) |   |   | 9,859 |   |
| Preferred stock of subsidiaries              |   |   | - |   |   |   | 34 |   |   |   | 59 |   |   |   | - |   |   |   | 93 |   |
| Long-term debt, affiliate                    |   |   | - |   |   |   | 309 |   |   |   | 115 |   |   |   | (152 | ) |   |   | 272 |   |
| Long-term debt, net                          |   |   | 3,494 |   |   |   | 4,481 |   |   |   | 3,688 |   |   |   | 1 |   |   |   | 11,664 |   |
| Total capitalization                         |   |   | 13,351 |   |   |   | 9,553 |   |   |   | 9,132 |   |   |   | (10,148 | ) |   |   | 21,888 |   |
| Current liabilities                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current portion of long-term debt            |   |   | 700 |   |   |   | - |   |   |   | 6 |   |   |   | (1 | ) |   |   | 705 |   |
| Notes payable to affiliated companies        |   |   | - |   |   |   | 166 |   |   |   | 27 |   |   |   | (193 | ) |   |   | - |   |
| Derivative liabilities                       |   |   | 23 |   |   |   | 179 |   |   |   | 48 |   |   |   | - |   |   |   | 250 |   |
| Other current liabilities                    |   |   | 259 |   |   |   | 1,147 |   |   |   | 943 |   |   |   | (201 | ) |   |   | 2,148 |   |
| Total current liabilities                    |   |   | 982 |   |   |   | 1,492 |   |   |   | 1,024 |   |   |   | (395 | ) |   |   | 3,103 |   |
| Deferred credits and other liabilities       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncurrent income tax liabilities            |   |   | - |   |   |   | 371 |   |   |   | 1,327 |   |   |   | (410 | ) |   |   | 1,288 |   |
| Regulatory liabilities                       |   |   | - |   |   |   | 1,060 |   |   |   | 1,307 |   |   |   | 112 |   |   |   | 2,479 |   |
| Other liabilities and deferred credits       |   |   | 34 |   |   |   | 1,343 |   |   |   | 2,010 |   |   |   | (8 | ) |   |   | 3,379 |   |
| Total deferred credits and other liabilities |   |   | 34 |   |   |   | 2,774 |   |   |   | 4,644 |   |   |   | (306 | ) |   |   | 7,146 |   |
| Total capitalization and liabilities         |   | $ | 14,367 |   |   | $ | 13,819 |   |   | $ | 14,800 |   |   | $ | (10,849 | ) |   | $ | 32,137 |   |

----

| Condensed Consolidating Balance Sheet        |   |
|----------------------------------------------|--------|
| December 31, 2009                            |   |
|                                         |   | Parent |   |   | SubsidiaryGuarantor |   |   | Non-GuarantorSubsidiaries |   |   | Other |   |   | ProgressEnergy,Inc. |   |
| (in millions)                                |
| ASSETS                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Utility plant, net                           |   | $ | - |   |   | $ | 9,733 |   |   | $ | 9,886 |   |   | $ | 114 |   |   | $ | 19,733 |   |
| Current assets                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                    |   |   | 606 |   |   |   | 72 |   |   |   | 47 |   |   |   | - |   |   |   | 725 |   |
| Notes receivable from affiliated companies   |   |   | 30 |   |   |   | 46 |   |   |   | 303 |   |   |   | (379 | ) |   |   | - |   |
| Regulatory assets                            |   |   | - |   |   |   | 54 |   |   |   | 88 |   |   |   | - |   |   |   | 142 |   |
| Derivative collateral posted                 |   |   | - |   |   |   | 139 |   |   |   | 7 |   |   |   | - |   |   |   | 146 |   |
| Income taxes receivable                      |   |   | 5 |   |   |   | 97 |   |   |   | 50 |   |   |   | (7 | ) |   |   | 145 |   |
| Prepayments and other current assets         |   |   | 14 |   |   |   | 1,158 |   |   |   | 1,377 |   |   |   | (176 | ) |   |   | 2,373 |   |
| Total current assets                         |   |   | 655 |   |   |   | 1,566 |   |   |   | 1,872 |   |   |   | (562 | ) |   |   | 3,531 |   |
| Deferred debits and other assets             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment in consolidated subsidiaries      |   |   | 13,348 |   |   |   | - |   |   |   | - |   |   |   | (13,348 | ) |   |   | - |   |
| Regulatory assets                            |   |   | - |   |   |   | 1,307 |   |   |   | 873 |   |   |   | (1 | ) |   |   | 2,179 |   |
| Goodwill                                     |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 3,655 |   |   |   | 3,655 |   |
| Nuclear decommissioning trust funds          |   |   | - |   |   |   | 496 |   |   |   | 871 |   |   |   | - |   |   |   | 1,367 |   |
| Other assets and deferred debits             |   |   | 166 |   |   |   | 202 |   |   |   | 923 |   |   |   | (520 | ) |   |   | 771 |   |
| Total deferred debits and other assets       |   |   | 13,514 |   |   |   | 2,005 |   |   |   | 2,667 |   |   |   | (10,214 | ) |   |   | 7,972 |   |
| Total assets                                 |   | $ | 14,169 |   |   | $ | 13,304 |   |   | $ | 14,425 |   |   | $ | (10,662 | ) |   | $ | 31,236 |   |
| CAPITALIZATION AND LIABILITIES               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equity                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common stock equity                          |   | $ | 9,449 |   |   | $ | 4,590 |   |   | $ | 5,085 |   |   | $ | (9,675 | ) |   | $ | 9,449 |   |
| Noncontrolling interests                     |   |   | - |   |   |   | 3 |   |   |   | 3 |   |   |   | - |   |   |   | 6 |   |
| Total equity                                 |   |   | 9,449 |   |   |   | 4,593 |   |   |   | 5,088 |   |   |   | (9,675 | ) |   |   | 9,455 |   |
| Preferred stock of subsidiaries              |   |   | - |   |   |   | 34 |   |   |   | 59 |   |   |   | - |   |   |   | 93 |   |
| Long-term debt, affiliate                    |   |   | - |   |   |   | 309 |   |   |   | 115 |   |   |   | (152 | ) |   |   | 272 |   |
| Long-term debt, net                          |   |   | 4,193 |   |   |   | 3,883 |   |   |   | 3,703 |   |   |   | - |   |   |   | 11,779 |   |
| Total capitalization                         |   |   | 13,642 |   |   |   | 8,819 |   |   |   | 8,965 |   |   |   | (9,827 | ) |   |   | 21,599 |   |
| Current liabilities                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current portion of long-term debt            |   |   | 100 |   |   |   | 300 |   |   |   | 6 |   |   |   | - |   |   |   | 406 |   |
| Short-term debt                              |   |   | 140 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 140 |   |
| Notes payable to affiliated companies        |   |   | - |   |   |   | 376 |   |   |   | 3 |   |   |   | (379 | ) |   |   | - |   |
| Derivative liabilities                       |   |   | - |   |   |   | 161 |   |   |   | 29 |   |   |   | - |   |   |   | 190 |   |
| Other current liabilities                    |   |   | 261 |   |   |   | 941 |   |   |   | 902 |   |   |   | (182 | ) |   |   | 1,922 |   |
| Total current liabilities                    |   |   | 501 |   |   |   | 1,778 |   |   |   | 940 |   |   |   | (561 | ) |   |   | 2,658 |   |
| Deferred credits and other liabilities       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncurrent income tax liabilities            |   |   | - |   |   |   | 320 |   |   |   | 1,258 |   |   |   | (382 | ) |   |   | 1,196 |   |
| Regulatory liabilities                       |   |   | - |   |   |   | 1,103 |   |   |   | 1,293 |   |   |   | 114 |   |   |   | 2,510 |   |
| Other liabilities and deferred credits       |   |   | 26 |   |   |   | 1,284 |   |   |   | 1,969 |   |   |   | (6 | ) |   |   | 3,273 |   |
| Total deferred credits and other liabilities |   |   | 26 |   |   |   | 2,707 |   |   |   | 4,520 |   |   |   | (274 | ) |   |   | 6,979 |   |
| Total capitalization and liabilities         |   | $ | 14,169 |   |   | $ | 13,304 |   |   | $ | 14,425 |   |   | $ | (10,662 | ) |   | $ | 31,236 |   |

----

| Condensed Consolidating Statement of Cash Flows                              |   |
|------------------------------------------------------------------------------|--------|
| Six months ended June 30, 2010                                               |   |
| (in millions)                                                                |   | Parent |   |   | SubsidiaryGuarantor |   |   | Non-GuarantorSubsidiaries |   |   | Other |   |   | ProgressEnergy,Inc. |   |
| Net cash provided (used) by operating activities                        |   | $ | 54 |   |   | $ | 582 |   |   | $ | 694 |   |   | $ | (171 | ) |   | $ | 1,159 |   |
| Investing activities                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross property additions                                                     |   |   | - |   |   |   | (543 | ) |   |   | (598 | ) |   |   | 25 |   |   |   | (1,116 | ) |
| Nuclear fuel additions                                                       |   |   | - |   |   |   | (13 | ) |   |   | (106 | ) |   |   | - |   |   |   | (119 | ) |
| Purchases of available-for-sale securities and other  investments  |   |   | - |   |   |   | (3,507 | ) |   |   | (308 | ) |   |   | - |   |   |   | (3,815 | ) |
| Proceeds from available-for-sale securities and other  investments |   |   | - |   |   |   | 3,509 |   |   |   | 283 |   |   |   | - |   |   |   | 3,792 |   |
| Changes in advances to affiliated companies                                  |   |   | (103 | ) |   |   | (5 | ) |   |   | 294 |   |   |   | (186 | ) |   |   | - |   |
| Return of investment in consolidated subsidiaries                            |   |   | 54 |   |   |   | - |   |   |   | - |   |   |   | (54 | ) |   |   | - |   |
| Contributions to consolidated subsidiaries                                   |   |   | (56 | ) |   |   | - |   |   |   | - |   |   |   | 56 |   |   |   | - |   |
| Other investing activities                                                   |   |   | - |   |   |   | 14 |   |   |   | - |   |   |   | - |   |   |   | 14 |   |
| Net cash used by investing activities                                        |   |   | (105 | ) |   |   | (545 | ) |   |   | (435 | ) |   |   | (159 | ) |   |   | (1,244 | ) |
| Financing activities                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock, net                                                |   |   | 405 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 405 |   |
| Dividends paid on common stock                                               |   |   | (354 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (354 | ) |
| Dividends paid to parent                                                     |   |   | - |   |   |   | (102 | ) |   |   | (50 | ) |   |   | 152 |   |   |   | - |   |
| Dividends paid to parent in excess of retained earnings                      |   |   | - |   |   |   | - |   |   |   | (54 | ) |   |   | 54 |   |   |   | - |   |
| Net decrease in short-term debt                                              |   |   | (140 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (140 | ) |
| Proceeds from issuance of long-term debt, net                                |   |   | - |   |   |   | 591 |   |   |   | - |   |   |   | - |   |   |   | 591 |   |
| Retirement of long-term debt                                                 |   |   | (100 | ) |   |   | (300 | ) |   |   | - |   |   |   | - |   |   |   | (400 | ) |
| Changes in advances from affiliated companies                                |   |   | - |   |   |   | (210 | ) |   |   | 24 |   |   |   | 186 |   |   |   | - |   |
| Contributions from parent                                                    |   |   | - |   |   |   | 33 |   |   |   | 37 |   |   |   | (70 | ) |   |   | - |   |
| Other financing activities                                                   |   |   | - |   |   |   | (6 | ) |   |   | (54 | ) |   |   | 8 |   |   |   | (52 | ) |
| Net cash (used) provided by financing activities                             |   |   | (189 | ) |   |   | 6 |   |   |   | (97 | ) |   |   | 330 |   |   |   | 50 |   |
| Net (decrease) increase in cash and cash equivalents                         |   |   | (240 | ) |   |   | 43 |   |   |   | 162 |   |   |   | - |   |   |   | (35 | ) |
| Cash and cash equivalents at beginning of period                             |   |   | 606 |   |   |   | 72 |   |   |   | 47 |   |   |   | - |   |   |   | 725 |   |
| Cash and cash equivalents at end of period                                   |   | $ | 366 |   |   | $ | 115 |   |   | $ | 209 |   |   | $ | - |   |   | $ | 690 |   |

----

| Condensed Consolidating Statement of Cash Flows                                      |   |
|--------------------------------------------------------------------------------------|--------|
| Six months ended June 30, 2009                                                       |   |
| (in millions)                                                                        |   | Parent |   |   | SubsidiaryGuarantor |   |   | Non-GuarantorSubsidiaries |   |   | Other |   |   | ProgressEnergy,Inc. |   |
| Net cash provided (used) by operating activities                                     |   | $ | 169 |   |   | $ | 454 |   |   | $ | 670 |   |   | $ | (198 | ) |   | $ | 1,095 |   |
| Investing activities                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross property additions                                                             |   |   | - |   |   |   | (770 | ) |   |   | (411 | ) |   |   | 9 |   |   |   | (1,172 | ) |
| Nuclear fuel additions                                                               |   |   | - |   |   |   | (18 | ) |   |   | (42 | ) |   |   | - |   |   |   | (60 | ) |
| Proceeds from sales of assets to affiliated companies                                |   |   | - |   |   |   | - |   |   |   | 7 |   |   |   | (7 | ) |   |   | - |   |
| Purchases of available-for-sale securities and other  investments          |   |   | - |   |   |   | (420 | ) |   |   | (562 | ) |   |   | - |   |   |   | (982 | ) |
| Proceeds from available-for-sale securities and other  investments         |   |   | - |   |   |   | 423 |   |   |   | 537 |   |   |   | - |   |   |   | 960 |   |
| Changes in advances to affiliated companies                                          |   |   | (329 | ) |   |   | (56 | ) |   |   | (43 | ) |   |   | 428 |   |   |   | - |   |
| Return of investment in consolidated subsidiaries                                    |   |   | 12 |   |   |   | - |   |   |   | - |   |   |   | (12 | ) |   |   | - |   |
| Contributions to consolidated subsidiaries                                           |   |   | (347 | ) |   |   | - |   |   |   | - |   |   |   | 347 |   |   |   | - |   |
| Other investing activities                                                           |   |   | - |   |   |   | (1 | ) |   |   | (1 | ) |   |   | (1) |   |   |   | (3 | ) |
| Net cash (used) provided by investing activities                                     |   |   | (664 | ) |   |   | (842 | ) |   |   | (515 | ) |   |   | 764 |   |   |   | (1,257 | ) |
| Financing activities                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance of common stock, net                                                        |   |   | 545 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 545 |   |
| Dividends paid on common stock                                                       |   |   | (347 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (347 | ) |
| Dividends paid to parent                                                             |   |   | - |   |   |   | (1 | ) |   |   | (200 | ) |   |   | 201 |   |   |   | - |   |
| Dividends paid to parent in excess of retained earnings                              |   |   | - |   |   |   | - |   |   |   | (12 | ) |   |   | 12 |   |   |   | - |   |
| Payments of short-term debt with original maturities  greater than 90 days |   |   | (129 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | (129 | ) |
| Net decrease in short-term debt                                                      |   |   | (40 | ) |   |   | (371 | ) |   |   | (110 | ) |   |   | - |   |   |   | (521 | ) |
| Proceeds from issuance of long-term debt, net                                        |   |   | 742 |   |   |   | - |   |   |   | 595 |   |   |   | - |   |   |   | 1,337 |   |
| Retirement of long-term debt                                                         |   |   | - |   |   |   | - |   |   |   | (400 | ) |   |   | - |   |   |   | (400 | ) |
| Changes in advances from affiliated companies                                        |   |   | - |   |   |   | 417 |   |   |   | 11 |   |   |   | (428 | ) |   |   | - |   |
| Contributions from parent                                                            |   |   | - |   |   |   | 343 |   |   |   | 17 |   |   |   | (360 | ) |   |   | - |   |
| Other financing activities                                                           |   |   | 1 |   |   |   | (5 | ) |   |   | (56 | ) |   |   | 9 |   |   |   | (51 | ) |
| Net cash provided (used) by financing activities                                     |   |   | 772 |   |   |   | 383 |   |   |   | (155 | ) |   |   | (566 | ) |   |   | 434 |   |
| Net increase (decrease) in cash and cash equivalents                                 |   |   | 277 |   |   |   | (5 | ) |   |   | - |   |   |   | - |   |   |   | 272 |   |
| Cash and cash equivalents at beginning of period                                     |   |   | 88 |   |   |   | 73 |   |   |   | 19 |   |   |   | - |   |   |   | 180 |   |
| Cash and cash equivalents at end of period                                           |   | $ | 365 |   |   | $ | 68 |   |   | $ | 19 |   |   | $ | - |   |   | $ | 452 |   |

----

----

|                                                                                       |   |   |   |   |   |   |   |               |   |   |   |   |   |     |   |
|--------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------------------|--------|--------|--------|--------|--------|----------|--------|
|  (in millions except per share data)                                                  |   | PEC    |   |   | PEF    |   |   | Corporateand Other |   |   | Total  |   |   | PerShare |   |
|  Three months ended June 30, 2010                                                     |   |   |   |   |   |   |   |               |   |   |   |   |   |     |   |
|  Ongoing Earnings                                                                     |   | $      | 112    |   |   | $      | 119    |               |   | $      | (50    | )      |   | $        | 181    |   |   | $ | 0.63 |   |
|  Impairment, net of tax(a)                                                            |   |   | (1     | )      |   |   | -      |               |   |   | -      |   |   |     | (1     | ) |   |   | (0.01 | ) |
|  Plant retirement adjustment, net of tax(a)                                           |   |   | 1      |   |   |   | -      |               |   |   | -      |   |   |     | 1      |   |   |   | - |   |
|  Discontinued operations attributable to  controlling interests, net of tax |   |   | -      |   |   |   | -      |               |   |   | (1     | )      |   |     | (1     | ) |   |   | - |   |
|  Net income (loss) attributable to  controlling interests                   |   | $      | 112    |   |   | $      | 119    |               |   | $      | (51    | )      |   | $        | 180    |   |   | $ | 0.62 |   |
|                                                                                       |   |   |   |   |   |   |   |               |   |   |   |   |   |     |   |   |   |   |   |   |
|  Three months ended June 30, 2009                                                     |   |   |   |   |   |   |   |               |   |   |   |   |   |     |   |   |   |   |   |   |
|  Ongoing Earnings                                                                     |   | $      | 94     |   |   | $      | 121    |               |   | $      | (34    | )      |   | $        | 181    |   |   | $ | 0.64 |   |
|  Tax levelization                                                                     |   |   | 1      |   |   |   | (2     | )                  |   |   | (4     | )      |   |     | (5     | ) |   |   | (0.02 | ) |
|  CVO mark-to-market                                                                   |   |   | -      |   |   |   | -      |               |   |   | 1      |   |   |     | 1      |   |   |   | 0.01 |   |
|  Impairment, net of tax(a)                                                            |   |   | -      |   |   |   | -      |               |   |   | (2     | )      |   |     | (2     | ) |   |   | (0.01 | ) |
|  Discontinued operations attributable to  controlling interests, net of tax |   |   | -      |   |   |   | -      |               |   |   | (1     | )      |   |     | (1     | ) |   |   | - |   |
|  Net income (loss) attributable to  controlling interests                   |   | $      | 95     |   |   | $      | 119    |               |   | $      | (40    | )      |   | $        | 174    |   |   | $ | 0.62 |   |
|                                                                                       |   |   |   |   |   |   |   |               |   |   |   |   |   |     |   |   |   |   |   |   |
|                                                                                  |   |   |   |   |   |   |   |               |   |   |   |   |   |     |   |   |   |   |   |   |
|  Six months ended June 30, 2010                                                       |   |   |   |   |   |   |   |               |   |   |   |   |   |     |   |   |   |   |   |   |
|  Ongoing Earnings                                                                     |   | $      | 260    |   |   | $      | 232    |               |   | $      | (97    | )      |   | $        | 395    |   |   | $ | 1.37 |   |
|  Tax levelization                                                                     |   |   | 2      |   |   |   | (2     | )                  |   |   | (2     | )      |   |     | (2     | ) |   |   | - |   |
|  Impairment, net of tax(a)                                                            |   |   | (2     | )      |   |   | -      |               |   |   | -      |   |   |     | (2     | ) |   |   | - |   |
|  Plant retirement adjustment, net of tax(a)                                           |   |   | 1      |   |   |   | -      |               |   |   | -      |   |   |     | 1      |   |   |   |   |   |
|  Change in the tax treatment of the  Medicare Part D subsidy                |   |   | (12    | )      |   |   | (10    | )                  |   |   | -      |   |   |     | (22    | ) |   |   | (0.08 | ) |
|  Net income (loss) attributable to  controlling interests(b)                |   | $      | 249    |   |   | $      | 220    |               |   | $      | (99    | )      |   | $        | 370    |   |   | $ | 1.29 |   |
|                                                                                       |   |   |   |   |   |   |   |               |   |   |   |   |   |     |   |   |   |   |   |   |
|  Six months ended June 30, 2009                                                       |   |   |   |   |   |   |   |               |   |   |   |   |   |     |   |   |   |   |   |   |
|  Ongoing Earnings                                                                     |   | $      | 223    |   |   | $      | 212    |               |   | $      | (72    | )      |   | $        | 363    |   |   | $ | 1.30 |   |
|  Tax levelization                                                                     |   |   | (1     | )      |   |   | (5     | )                  |   |   | (6     | )      |   |     | (12    | ) |   |   | (0.04 | ) |
|  CVO mark-to-market                                                                   |   |   | -      |   |   |   | -      |               |   |   | 8      |   |   |     | 8      |   |   |   | 0.03 |   |
|  Impairment, net of tax(a)                                                            |   |   | -      |   |   |   | -      |               |   |   | (2     | )      |   |     | (2     | ) |   |   | (0.01 | ) |
|  Discontinued operations attributable to  controlling interests, net of tax |   |   | -      |   |   |   | -      |               |   |   | (1     | )      |   |     | (1     | ) |   |   | - |   |
|  Net income (loss) attributable to  controlling interests(b)                |   | $      | 222    |   |   | $      | 207    |               |   | $      | (73    | )      |   | $        | 356    |   |   | $ | 1.28 |   |
|                                                                                       |   |   |   |   |   |   |   |               |   |   |   |   |   |     |   |   |   |   |   |   |

| (a)    | Calculated using assumed tax rate of 40 percent.                                                                                           |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------|
| (b)    | Net income attributable to controlling interests is shown net of preferred stock dividend requirement of $(1) million at both PEC and PEF. |
|   |                                                                                                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

| ·   | favorable weather at the Utilities; |
|--------------------|-------------------------------------|

| ·   | higher returns earned on nuclear cost-recovery and environmental cost recovery clause (ECRC) assets at PEF; and |
|--------------------|-----------------------------------------------------------------------------------------------------------------|

| ·   | increased retail base rates at PEF. |
|--------------------|-------------------------------------|

| ·   | unfavorable allowance for funds used during construction (AFUDC) equity at PEF; |
|--------------------|---------------------------------------------------------------------------------|

| ·   | higher operation and maintenance (O&M) expenses at the Utilities; and |
|--------------------|---------------------------------------------------------------------------|

| ·   | lower wholesale base revenues at PEF. |
|--------------------|---------------------------------------|

| ·   | favorable weather at the Utilities; |
|--------------------|-------------------------------------|

| ·   | higher returns earned on nuclear cost-recovery and ECRC assets at PEF; |
|--------------------|------------------------------------------------------------------------|

| ·   | increased retail base rates at PEF; and |
|--------------------|-----------------------------------------|

| ·   | favorable AFUDC equity at PEC. |
|--------------------|--------------------------------|

| ·   | unfavorable AFUDC equity at PEF; |
|--------------------|----------------------------------|

| ·   | higher O&M expenses at the Utilities; |
|--------------------|-------------------------------------------|

| ·   | lower wholesale base revenues at the Utilities; and |
|--------------------|-----------------------------------------------------|

| ·   | unfavorable change in the tax treatment of the Medicare Part D subsidy at the Utilities (Ongoing Earnings adjustment). |
|--------------------|------------------------------------------------------------------------------------------------------------------------|

----

|                                  |   |   |   |   |   |   |   |     |   |   |   |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|
| (in millions)                         |   |   |   |
| Customer Class                        |   | 2010   |   |   | Change |   |   | % Change |   |   | 2009   |   |
| Residential                           |   | $      | 237    |   |   | $      | 8      |     |   |   | 3.5    |   |   | $ | 229 |   |
| Commercial                            |   |   | 170    |   |   |   | 2      |     |   |   | 1.2    |   |   |   | 168 |   |
| Industrial                            |   |   | 88     |   |   |   | 3      |     |   |   | 3.5    |   |   |   | 85 |   |
| Governmental                          |   |   | 14     |   |   |   | 1      |     |   |   | 7.7    |   |   |   | 13 |   |
| Unbilled                              |   |   | 43     |   |   |   | 6      |     |   |   | -      |   |   |   | 37 |   |
| Total retail base revenues            |   |   | 552    |   |   |   | 20     |     |   |   | 3.8    |   |   |   | 532 |   |
| Wholesale base revenues               |   |   | 69     |   |   |   | (3     | )        |   |   | (4.2   | )      |   |   | 72 |   |
| Total Base Revenues                   |   |   | 621    |   |   |   | 17     |     |   |   | 2.8    |   |   |   | 604 |   |
| Clause recoverable regulatory returns |   |   | 3      |   |   |   | 1      |     |   |   | 50.0   |   |   |   | 2 |   |
| Miscellaneous                         |   |   | 30     |   |   |   | 4      |     |   |   | 15.4   |   |   |   | 26 |   |
| Fuel and other pass-through revenues  |   |   | 463    |   |   |   | 19     |     |   |   | -      |   |   |   | 444 |   |
| Total operating revenues              |   | $      | 1,117  |   |   | $      | 41     |     |   |   | 3.8    |   |   | $ | 1,076 |   |
|                                  |   |   |   |   |   |   |   |     |   |   |   |   |   |   |   |   |

----

|                   |   |   |   |   |   |   |   |     |   |   |   |   |
|------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|
| (in millions of kWh)   |   |   |   |   |   |   |   |     |   |   |   |   |
| Customer Class         |   | 2010   |   |   | Change |   |   | % Change |   |   | 2009   |   |
| Residential            |   |   | 3,707  |   |   |   | 116    |     |   |   | 3.2    |   |   |   | 3,591 |   |
| Commercial             |   |   | 3,337  |   |   |   | 47     |     |   |   | 1.4    |   |   |   | 3,290 |   |
| Industrial             |   |   | 2,674  |   |   |   | 112    |     |   |   | 4.4    |   |   |   | 2,562 |   |
| Governmental           |   |   | 369    |   |   |   | 12     |     |   |   | 3.4    |   |   |   | 357 |   |
| Unbilled               |   |   | 712    |   |   |   | 78     |     |   |   | -      |   |   |   | 634 |   |
| Total retail kWh sales |   |   | 10,799 |   |   |   | 365    |     |   |   | 3.5    |   |   |   | 10,434 |   |
| Wholesale              |   |   | 3,157  |   |   |   | (102   | )        |   |   | (3.1   | )      |   |   | 3,259 |   |
| Total kWh sales        |   |   | 13,956 |   |   |   | 263    |     |   |   | 1.9    |   |   |   | 13,693 |   |
|                   |   |   |   |   |   |   |   |     |   |   |   |   |   |   |   |   |

----

|                                  |   |   |   |   |   |   |   |     |   |   |   |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|
| (in millions)                         |   |   |   |
| Customer Class                        |   | 2010   |   |   | Change |   |   | % Change |   |   | 2009   |   |
| Residential                           |   | $      | 593    |   |   | $      | 41     |     |   |   | 7.4    |   |   | $ | 552 |   |
| Commercial                            |   |   | 343    |   |   |   | 2      |     |   |   | 0.6    |   |   |   | 341 |   |
| Industrial                            |   |   | 168    |   |   |   | 1      |     |   |   | 0.6    |   |   |   | 167 |   |
| Governmental                          |   |   | 28     |   |   |   | 1      |     |   |   | 3.7    |   |   |   | 27 |   |
| Unbilled                              |   |   | 9      |   |   |   | 9      |     |   |   | -      |   |   |   | - |   |
| Total retail base revenues            |   |   | 1,141  |   |   |   | 54     |     |   |   | 5.0    |   |   |   | 1,087 |   |
| Wholesale base revenues               |   |   | 144    |   |   |   | (14    | )        |   |   | (8.9   | )      |   |   | 158 |   |
| Total Base Revenues                   |   |   | 1,285  |   |   |   | 40     |     |   |   | 3.2    |   |   |   | 1,245 |   |
| Clause recoverable regulatory returns |   |   | 4      |   |   |   | -      |     |   |   | -      |   |   |   | 4 |   |
| Miscellaneous                         |   |   | 66     |   |   |   | 8      |     |   |   | 13.8   |   |   |   | 58 |   |
| Fuel and other pass-through revenues  |   |   | 1,025  |   |   |   | 78     |     |   |   | -      |   |   |   | 947 |   |
| Total operating revenues              |   | $      | 2,380  |   |   | $      | 126    |     |   |   | 5.6    |   |   | $ | 2,254 |   |
|                                  |   |   |   |   |   |   |   |     |   |   |   |   |   |   |   |   |

----

|                   |   |   |   |   |   |   |   |     |   |   |   |   |
|------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|
| (in millions of kWh)   |   |   |   |   |   |   |   |     |   |   |   |   |
| Customer Class         |   | 2010   |   |   | Change |   |   | % Change |   |   | 2009   |   |
| Residential            |   |   | 9,595  |   |   |   | 866    |     |   |   | 9.9    |   |   |   | 8,729 |   |
| Commercial             |   |   | 6,758  |   |   |   | 153    |     |   |   | 2.3    |   |   |   | 6,605 |   |
| Industrial             |   |   | 5,119  |   |   |   | 137    |     |   |   | 2.7    |   |   |   | 4,982 |   |
| Governmental           |   |   | 744    |   |   |   | 44     |     |   |   | 6.3    |   |   |   | 700 |   |
| Unbilled               |   |   | 82     |   |   |   | (88    | )        |   |   | -      |   |   |   | 170 |   |
| Total retail kWh sales |   |   | 22,298 |   |   |   | 1,112  |     |   |   | 5.2    |   |   |   | 21,186 |   |
| Wholesale              |   |   | 6,969  |   |   |   | 34     |     |   |   | 0.5    |   |   |   | 6,935 |   |
| Total kWh sales        |   |   | 29,267 |   |   |   | 1,146  |     |   |   | 4.1    |   |   |   | 28,121 |   |
|                   |   |   |   |   |   |   |   |     |   |   |   |   |   |   |   |   |

----

----

|                                  |   |   |   |   |   |   |   |     |   |   |   |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|
| (in millions)                         |   |   |   |
| Customer Class                        |   | 2010   |   |   | Change |   |   | % Change |   |   | 2009   |   |
| Residential                           |   | $      | 236    |   |   | $      | 26     |     |   |   | 12.4   |   |   | $ | 210 |   |
| Commercial                            |   |   | 88     |   |   |   | 7      |     |   |   | 8.6    |   |   |   | 81 |   |
| Industrial                            |   |   | 20     |   |   |   | 3      |     |   |   | 17.6   |   |   |   | 17 |   |
| Governmental                          |   |   | 23     |   |   |   | 3      |     |   |   | 15.0   |   |   |   | 20 |   |
| Unbilled                              |   |   | 28     |   |   |   | (4     | )        |   |   | -      |   |   |   | 32 |   |
| Total retail base revenues            |   |   | 395    |   |   |   | 35     |     |   |   | 9.7    |   |   |   | 360 |   |
| Wholesale base revenues               |   |   | 38     |   |   |   | (14    | )        |   |   | (26.9  | )      |   |   | 52 |   |
| Total Base Revenues                   |   |   | 433    |   |   |   | 21     |     |   |   | 5.1    |   |   |   | 412 |   |
| Clause recoverable regulatory returns |   |   | 42     |   |   |   | 29     |     |   |   | 223.1  |   |   |   | 13 |   |
| Miscellaneous                         |   |   | 53     |   |   |   | 7      |     |   |   | 15.2   |   |   |   | 46 |   |
| Fuel and other pass-through revenues  |   |   | 724    |   |   |   | (39    | )        |   |   | -      |   |   |   | 763 |   |
| Total operating revenues              |   | $      | 1,252  |   |   | $      | 18     |     |   |   | 1.5    |   |   | $ | 1,234 |   |
|                                  |   |   |   |   |   |   |   |     |   |   |   |   |   |   |   |   |

----

|                   |   |   |   |   |   |   |   |     |   |   |   |   |
|------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|
| (in millions of kWh)   |   |   |   |   |   |   |   |     |   |   |   |   |
| Customer Class         |   | 2010   |   |   | Change |   |   | % Change |   |   | 2009   |   |
| Residential            |   |   | 4,598  |   |   |   | 90     |     |   |   | 2.0    |   |   |   | 4,508 |   |
| Commercial             |   |   | 2,939  |   |   |   | (9     | )        |   |   | (0.3   | )      |   |   | 2,948 |   |
| Industrial             |   |   | 867    |   |   |   | 35     |     |   |   | 4.2    |   |   |   | 832 |   |
| Governmental           |   |   | 824    |   |   |   | 19     |     |   |   | 2.4    |   |   |   | 805 |   |
| Unbilled               |   |   | 800    |   |   |   | 97     |     |   |   | -      |   |   |   | 703 |   |
| Total retail kWh sales |   |   | 10,028 |   |   |   | 232    |     |   |   | 2.4    |   |   |   | 9,796 |   |
| Wholesale              |   |   | 1,031  |   |   |   | 71     |     |   |   | 7.4    |   |   |   | 960 |   |
| Total kWh sales        |   |   | 11,059 |   |   |   | 303    |     |   |   | 2.8    |   |   |   | 10,756 |   |
|                   |   |   |   |   |   |   |   |     |   |   |   |   |   |   |   |   |

----

----

|                                  |   |   |   |   |   |   |   |     |   |   |   |   |
|---------------------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|
| (in millions)                         |   |   |   |
| Customer Class                        |   | 2010   |   |   | Change |   |   | % Change |   |   | 2009   |   |
| Residential                           |   | $      | 497    |   |   | $      | 88     |     |   |   | 21.5   |   |   | $ | 409 |   |
| Commercial                            |   |   | 169    |   |   |   | 17     |     |   |   | 11.2   |   |   |   | 152 |   |
| Industrial                            |   |   | 38     |   |   |   | 4      |     |   |   | 11.8   |   |   |   | 34 |   |
| Governmental                          |   |   | 44     |   |   |   | 5      |     |   |   | 12.8   |   |   |   | 39 |   |
| Unbilled                              |   |   | 27     |   |   |   | (3     | )        |   |   | -      |   |   |   | 30 |   |
| Total retail base revenues            |   |   | 775    |   |   |   | 111    |     |   |   | 16.7   |   |   |   | 664 |   |
| Wholesale base revenues               |   |   | 81     |   |   |   | (32    | )        |   |   | (28.3  | )      |   |   | 113 |   |
| Total Base Revenues                   |   |   | 856    |   |   |   | 79     |     |   |   | 10.2   |   |   |   | 777 |   |
| Clause recoverable regulatory returns |   |   | 80     |   |   |   | 60     |     |   |   | 300.0  |   |   |   | 20 |   |
| Miscellaneous                         |   |   | 106    |   |   |   | 16     |     |   |   | 17.8   |   |   |   | 90 |   |
| Fuel and other pass-through revenues  |   |   | 1,480  |   |   |   | (129   | )        |   |   | -      |   |   |   | 1,609 |   |
| Total operating revenues              |   | $      | 2,522  |   |   | $      | 26     |     |   |   | 1.0    |   |   | $ | 2,496 |   |
|                                  |   |   |   |   |   |   |   |     |   |   |   |   |   |   |   |   |

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|                   |   |   |   |   |   |   |   |     |   |   |   |   |
|------------------------|--------|--------|--------|--------|--------|--------|--------|----------|--------|--------|--------|--------|
| (in millions of kWh)   |   |   |   |   |   |   |   |     |   |   |   |   |
| Customer Class         |   | 2010   |   |   | Change |   |   | % Change |   |   | 2009   |   |
| Residential            |   |   | 9,724  |   |   |   | 929    |     |   |   | 10.6   |   |   |   | 8,795 |   |
| Commercial             |   |   | 5,536  |   |   |   | 34     |     |   |   | 0.6    |   |   |   | 5,502 |   |
| Industrial             |   |   | 1,635  |   |   |   | 12     |     |   |   | 0.7    |   |   |   | 1,623 |   |
| Governmental           |   |   | 1,558  |   |   |   | 21     |     |   |   | 1.4    |   |   |   | 1,537 |   |
| Unbilled               |   |   | 730    |   |   |   | 42     |     |   |   | -      |   |   |   | 688 |   |
| Total retail kWh sales |   |   | 19,183 |   |   |   | 1,038  |     |   |   | 5.7    |   |   |   | 18,145 |   |
| Wholesale              |   |   | 2,034  |   |   |   | 22     |     |   |   | 1.1    |   |   |   | 2,012 |   |
| Total kWh sales        |   |   | 21,217 |   |   |   | 1,060  |     |   |   | 5.3    |   |   |   | 20,157 |   |
|                   |   |   |   |   |   |   |   |     |   |   |   |   |   |   |   |   |

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|                                                                                 |   |                        |   |   |                      |   |   |   |   |   |   |   |
|--------------------------------------------------------------------------------------|--------|-----------------------------|--------|--------|---------------------------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                 |   | Three months ended June 30, |   |   | Six months ended June 30, |   |
| (in millions)                                                                        |   | 2010                        |   |   | 2009                      |   |   | 2010   |   |   | 2009   |   |
| Other interest expense                                                               |   | $                           | (77    | )      |                      | $      | (64    | )      |   | $      | (153   | )      |   | $ | (119 | ) |
| Other income tax benefit                                                             |   |                        | 27     |   |                      |   | 28     |   |   |   | 51     |   |   |   | 38 |   |
| Other income                                                                         |   |                        | -      |   |                      |   | 2      |   |   |   | 5      |   |   |   | 9 |   |
| Ongoing Earnings                                                                     |   |                        | (50    | )      |                      |   | (34    | )      |   |   | (97    | )      |   |   | (72 | ) |
| Tax levelization                                                                     |   |                        | -      |   |                      |   | (4     | )      |   |   | (2     | )      |   |   | (6 | ) |
| CVO mark-to-market                                                                   |   |                        | -      |   |                      |   | 1      |   |   |   | -      |   |   |   | 8 |   |
| Impairment, net of tax                                                               |   |                        | -      |   |                      |   | (2     | )      |   |   | -      |   |   |   | (2 | ) |
| Discontinued operations attributable to  controlling interests, net of tax |   |                        | (1     | )      |                      |   | (1     | )      |   |   | -      |   |   |   | (1 | ) |
| Net loss attributable to controlling interests                                       |   | $                           | (51    | )      |                      | $      | (40    | )      |   | $      | (99    | )      |   | $ | (73 | ) |
|                                                                                 |   |                        |   |   |                      |   |   |   |   |   |   |   |   |   |   |   |

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|                                   |   |           |   |                |   |   |   |        |   |          |   |   |         |   |
|----------------------------------------|--------|----------------|--------|---------------------|--------|--------|--------|-------------|--------|---------------|--------|--------|--------------|--------|
| Cash Flow Hedges (dollars in millions) |   | NotionalAmount |   | MandatorySettlement |   | Pay    |   | Receive (a) |   | FairValue     |   |   | Exposure (b) |   |
| Parent                                 |   |           |   |                |   |   |   |        |   |          |   |   |         |   |
| Risk hedged at June 30, 2010           |   |           |   |                |   |   |   |        |   |          |   |   |         |   |
| Anticipated 10-year debt issue         |   | $              | 300    |                | 2011   |   |   | 4.15        | %      | 3-month LIBOR |   | $      | (23          | )      |   | $ | (7 | ) |
| Anticipated 10-year debt issue         |   |           | 200    |                | 2012   |   |   | 4.20        | %      | 3-month LIBOR |   |   | (8           | )      |   |   | (5 | ) |
|                                   |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |
| Risk hedged at December 31, 2009       |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |
| Anticipated 10-year debt issue         |   | $              | 150    |                | 2011   |   |   | 4.03        | %      | 3-month LIBOR |   | $      | 6            |   |   | $ | (3 | ) |
|                                   |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |
| PEC                                    |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |
| Risk hedged at June 30, 2010           |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |
| Anticipated 10-year debt issue         |   | $              | 100    |                | 2011   |   |   | 4.31        | %      | 3-month LIBOR |   | $      | (9           | )      |   | $ | (2 | ) |
| Anticipated 10-year debt issue         |   |           | 200    |                | 2012   |   |   | 4.27        | %      | 3-month LIBOR |   |   | (8           | )      |   |   | (4 | ) |
| Anticipated 10-year debt issue         |   |           | 50     |                | 2013   |   |   | 4.43        | %      | 3-month LIBOR |   |   | (2           | )      |   |   | (1 | ) |
|                                   |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |
| Risk hedged at December 31, 2009       |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |
| Anticipated 10-year debt issue         |   | $              | 100    |                | 2012   |   |   | 4.07        | %      | 3-month LIBOR |   | $      | 8            |   |   | $ | (2 | ) |
|                                   |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |
| PEF                                    |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |
| Risk hedged at June 30, 2010           |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |
| Anticipated 10-year debt issue         |   | $              | 150    |                | 2011   |   |   | 4.18        | %      | 3-month LIBOR |   | $      | (10          | )      |   | $ | (4 | ) |
| Anticipated 10-year debt issue         |   |           | 50     |                | 2013   |   |   | 4.30        | %      | 3-month LIBOR |   |   | (2           | )      |   |   | (1 | ) |
|                                   |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |
| Risk hedged at December 31, 2009       |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |
| Anticipated 10-year debt issue         |   | $              | 75     |                | 2010   |   |   | 3.48        | %      | 3-month LIBOR |   | $      | 5            |   |   | $ | (2 | ) |
|                                   |   |           |   |                |   |   |   |        |   |          |   |   |         |   |   |   |   |   |

| (a) | 3-month LIBOR rate was 0.53% at June 30, 2010, and 0.25% at December 31, 2009. |
|-----|-------------------------------------------------------------------------------------|

| (b) | Exposure indicates change in value due to 25 basis point unfavorable shift in interest rates. |
|-----|-----------------------------------------------------------------------------------------------|

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ITEM 4

ITEM 4T.

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LEGAL PROCEEDINGS

| (a)   | Securities Delivered. On May 4, 2010, June 3, 2010, June 9, 2010 and June 25, 2010, 162 shares, 1,737 shares, 419 shares and 459 shares, respectively, of our common stock were delivered to certain former employees pursuant to the terms of the Progress Energy 2002 and 2007 Equity Incentive Plans (individually and collectively, the “EIP”) which have been approved by Progress Energy’s shareholders. Additionally, on May 26, 2010 and June 22, 2010, 106 shares, and 931 shares, respectively, of our common stock were delivered to certain current employees pursuant to the terms of the EIP. The shares of common stock delivered pursuant to the EIP were newly issued shares of Progress Energy. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Underwriters and Other Purchasers. No underwriters were used in connection with the delivery of our common stock described above. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Consideration. The restricted stock unit awards were granted to provide an incentive to the former and current employees to exert their utmost efforts on Progress Energy’s behalf and thus enhance our performance while aligning the employees’ interest with those of our shareholders. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Exemption from Registration Claimed. The common shares described in this Item were delivered pursuant to a broad-based involuntary, non-contributory employee benefit plan, and thus did not involve an offer to sell or sale of securities within the meaning of Section 2(3) of the Securities Act of 1933. Receipt of the shares of our common stock required no investment decision on the part of the recipient. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | Securities Delivered. On April 23, 2010, 742 shares of our common stock were delivered to certain current and former employees pursuant to the terms of the EIP. On April 27, 2010 and May 7, 2010, 518 and 598 shares, respectively, of our common stock were delivered to a former employee pursuant to the terms of the EIP. The shares of common stock delivered pursuant to the EIP were newly issued shares of Progress Energy. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Underwriters and Other Purchasers. No underwriters were used in connection with the delivery of our common stock described above. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------|

| (c)   | Consideration. The performance share awards were granted to provide an incentive to the current and former employees to exert their utmost efforts on our behalf and thus enhance our performance while aligning the employees’ interests with those of our shareholders. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (d)   | Exemption from Registration Claimed. The common shares described in this Item were delivered pursuant to a broad-based involuntary, non-contributory employee benefit plan, and thus did not involve an offer to sell or sale of securities within the meaning of Section 2(3) of the Securities Act of 1933. Receipt of the shares of our common stock required no investment decision on the part of the recipient. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                     |   |                                                   |    |   |                                 |   |    |                                                                                              |   |   |                                                                                                                     |   |
|--------------------------|--------|--------------------------------------------------------|---------|--------|--------------------------------------|--------|---------|---------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------|--------|
| Period                   |   | (a)TotalNumber ofShares(or Units)Purchased(1)(2)(3)(4) |    |   | (b)AveragePricePaidPerShare(or Unit) |   |    | (c)Total Number ofShares (or Units)Purchased as Partof PubliclyAnnounced Plansor Programs(1) |   |   | (d)Maximum Number (orApproximate Dollar Value)of Shares (or Units)that May Yet BePurchased Under thePlans or Programs(1) |   |
| April 1 – April 30 |   |                                                   | 148,104 |   |                                 | $      | 39.1980 |                                                                                              |   |   | N/A                                                                                                                      |   |   |   | N/A |   |
| May 1 – May 31     |   |                                                   | 525,140 |   |                                 |   | 38.3875 |                                                                                              |   |   | N/A                                                                                                                      |   |   |   | N/A |   |
| June 1 – June 30   |   |                                                   | 308,825 |   |                                 |   | 39.3503 |                                                                                              |   |   | N/A                                                                                                                      |   |   |   | N/A |   |
| Total                    |   |                                                   | 982,069 |   |                                 |   | 38.8125 |                                                                                              |   |   | N/A                                                                                                                      |   |   |   | N/A |   |

| (1) | At June 30, 2010, Progress Energy does not have any publicly announced plans or programs to purchase shares of its common stock. |
|-----|----------------------------------------------------------------------------------------------------------------------------------|

| (2) | The plan administrator purchased 653,479 shares of our common stock in open-market transactions to meet share delivery obligations under the 401(k). |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The plan administrator purchased 312,051 shares of our common stock in open-market transactions to meet share delivery obligations under the Savings Plan for Employees of Florida Progress Corporation. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Progress Energy withheld 15,225 shares of our common stock during the second quarter of 2010 to pay taxes due upon the payout of certain Restricted Stock awards, Restricted Stock Unit awards and Performance Share Sub-Plan awards pursuant to the terms of the Company’s 2002 and 2007 Equity Incentive Plans. Progress Energy withheld 9,171 shares of our common stock at an average price per share of $38.9835 during the first quarter of 2010 to pay taxes due upon the vesting of certain Restricted Stock awards, which are not reflected in the table above. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (a)   | Exhibits |
|-----------------|----------|

| Exhibit Number | Description                                                                                                             | ProgressEnergy | PEC    | PEF    |
|----------------|-------------------------------------------------------------------------------------------------------------------------|----------------|--------|--------|
|           |                                                                                                                    |           |   |   |
| 10(a)          | Amended and Restated Management Incentive Compensation Plan of Progress Energy, Inc., effective as of September 1, 2010 | X              | X      | X      |
|           |                                                                                                                    |           |   |   |
| 10(b)          | Amended and Restated Management Deferred Compensation Plan of Progress Energy, Inc., effective as of September 1, 2010  | X              | X      | X      |
|           |                                                                                                                    |           |   |   |
| 31(a)          | 302 Certifications of Chief Executive Officer                                                                           | X              |   |   |
|           |                                                                                                                    |           |   |   |
| 31(b)          | 302 Certifications of Chief Financial Officer                                                                           | X              |   |   |
|           |                                                                                                                    |           |   |   |
| 31(c)          | 302 Certifications of Chief Executive Officer                                                                           |           | X      |   |
|           |                                                                                                                    |           |   |   |
| 31(d)          | 302 Certifications of Chief Financial Officer                                                                           |           | X      |   |
|           |                                                                                                                    |           |   |   |
| 31(e)          | 302 Certifications of Chief Executive Officer                                                                           |           |   | X      |
|           |                                                                                                                    |           |   |   |
| 31(f)          | 302 Certifications of Chief Financial Officer                                                                           |           |   | X      |
|           |                                                                                                                    |           |   |   |
| 32(a)          | 906 Certifications of Chief Executive Officer                                                                           | X              |   |   |
|           |                                                                                                                    |           |   |   |
| 32(b)          | 906 Certifications of Chief Financial Officer                                                                           | X              |   |   |
|           |                                                                                                                    |           |   |   |
| 32(c)          | 906 Certifications of Chief Executive Officer                                                                           |           | X      |   |
|           |                                                                                                                    |           |   |   |
| 32(d)          | 906 Certifications of Chief Financial Officer                                                                           |           | X      |   |
|           |                                                                                                                    |           |   |   |
| 32(e)          | 906 Certifications of Chief Executive Officer                                                                           |           |   | X      |
|           |                                                                                                                    |           |   |   |
| 32(f)          | 906 Certifications of Chief Financial Officer                                                                           |           |   | X      |

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|                 | PROGRESS ENERGY, INC.                                                    |
|----------------------|--------------------------------------------------------------------------|
|                 | CAROLINA POWER & LIGHT COMPANY d/b/a PROGRESS ENERGY CAROLINAS, INC. |
|                 | FLORIDA POWER CORPORATION d/b/a PROGRESS ENERGY FLORIDA, INC.            |
| Date: August 6, 2010 | (Registrants)                                                            |
|                 |                                                                     |
|                 | By: /s/ Mark F. Mulhern                                                  |
|                 | Mark F. Mulhern                                                          |
|                 | Senior Vice President and Chief Financial Officer                        |
|                 |                                                                     |
|                 | By: /s/ Jeffrey M. Stone                                                 |
|                 | Jeffrey M. Stone                                                         |
|                 | Chief Accounting Officer and Controller                                  |
|                 | Progress Energy, Inc.                                                    |
|                 | Chief Accounting Officer                                                 |
|                 | Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc. |
|                 | Florida Power Corporation d/b/a Progress Energy Florida, Inc.            |

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