B Y - L A W S

                                       of

                         CAROLINA POWER & LIGHT COMPANY

                             Raleigh, North Carolina


                         (As Amended September 18, 1996)

                            Meetings of Stockholders
                            ------------------------


         Section 1. The annual meeting of the  stockholders of the Company shall
be held at the principal  office of the Company,  on the second Wednesday of May
in each year, if not a legal holiday,  and if a legal holiday,  then on the next
day not a legal holiday, at ten o'clock A.M., or at such other date, or hour, or
at such other place  within or without the State of North  Carolina as stated in
the notice of the meeting as the Board of Directors may determine.

         Section 2. Special  meetings of the  stockholders of the Company may be
held  upon call by a  majority  of the Board of  Directors  or of the  Executive
Committee,  or by the Chairman of the Board, or by the President of the Company,
at the principal  office of the Company or at such other place within or without
the State of North Carolina,  and at such time, as may be stated in the call and
notice.

         Section  3.  Written  notice of the time and place of every  meeting of
stockholders  may be given,  and shall be  deemed  to have been duly  given,  by
mailing  the same at least  ten,  but not more  than  sixty,  days  prior to the
meeting,  to each stockholder of record,  entitled to vote at such meeting,  and
addressed  to him at his  address as it appears on the  records of the  Company,
with  postage  thereon  prepaid.  Notice  may also be given by any other  lawful
means.

         Section 4. In accordance with Section  55-7-20 of the General  Statutes
of North  Carolina,  the Company,  or an officer  having charge of the record of
stockholders of the Company, shall prepare a list of stockholders which shall be
available for inspection by stockholders, or their agents or attorneys.

         Section 5. The holders of a majority of the stock of the Company having
voting powers must be present in person or  represented by proxy at each meeting
of the stockholders to constitute a quorum;  absent such quorum, the meeting may
be  adjourned  by a majority of shares  voting on a motion to  adjourn.  If such
adjournment is for less than thirty days,  notice other than announcement at the
meeting need not be given.  At any adjourned  meeting at which a quorum shall be
present or  represented,  any business may be  transacted  which might have been
transacted at the original meeting.


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         Section  6. When a quorum is present  at any  meeting,  the vote of the
holders of a majority of the  outstanding  stock having  voting power present in
person or  represented  by proxy shall decide any question  brought  before such
meeting,  unless the  question  is one upon which by  express  provision  of any
applicable statute or of the Charter a different vote is required, in which case
such express provision shall govern and control the decision of such question.

         Section  7.  The  Board of  Directors  in  advance  of any  meeting  of
stockholders  may appoint two voting  inspectors  to act at any such  meeting or
adjournment  thereof.  If they  fail  to  make  such  appointment,  or if  their
appointees  or any of them fail to appear at the  meeting of  stockholders,  the
chairman of the meeting may appoint such  inspectors  or any inspector to act at
that meeting.

         Section 8. Meetings of the  stockholders  shall be presided over by the
Chairman of the Board of Directors, or, if he is not present, the President, or,
if the  President  is not  present,  a Vice  President,  or if  neither  of said
officers is present,  by a chairman  pro tem to be elected at the  meeting.  The
Secretary of the Company  shall act as secretary of such  meetings,  if present,
but if not present,  some person shall be appointed by the presiding  officer to
act during the meeting.

         Section 9. Each holder of Preferred  Stock and/or Common Stock shall at
every meeting of the  stockholders be entitled to one vote in person or by proxy
for each share of such stock held by such stockholder. Except where the transfer
books of the Company  have been closed or a date has been fixed as a record date
for the  determination of its  stockholders  entitled to vote, no share of stock
shall be voted at any election for directors  which has been  transferred on the
books of the  Company  within  twenty  days  next  preceding  such  election  of
directors.


                       Directors and Meetings of Directors
                       -----------------------------------

         Section 10. (a) The number of  directors  of the  Company  shall not be
less than eleven  (11) nor more than  fifteen  (15).  The  authorized  number of
directors,  within  the  limits  above  specified,  shall be  determined  by the
affirmative  vote of a  majority  of the whole  board  given at any  regular  or
special  meeting  of the  Board of  Directors,  provided  that,  the  number  of
directors  shall not be  reduced to a number  less than the number of  directors
then in office unless such  reduction  shall become  effective only at and after
the next ensuing meeting of the shareholders for the election of directors. This
subsection (a) was adopted by the stockholders of the Company.

          (b) The  directors  shall  appoint from among their number a Chairman,
who shall serve at the pleasure of the Board.  Members of the Board of Directors
of the Company who are full-time  employees of the Company shall retire from the
Board upon attaining the age of 65 years;  provided,  however, that the Chairman
of the Board of the  Company  shall be  eligible  to continue as a member of the
Board after  attaining the age of 65 years and will be considered a Director who
is not employed  full-time by the  Company.  Those  persons who are not employed
full-time by the Company shall not be eligible for election as a Director in any
calendar year (or subsequent  year) in which he or she has reached or will reach
the age of 71 years.  Any  Director  who  reaches the age of 71 during a term of
office  shall  resign  as of the  first  day of the  month so  following  unless
otherwise determined by the Board.



<PAGE>



         (c) The  election of directors  shall be held at the annual  meeting of
stockholders.  The  directors,  other  than  those  who  may  be  elected  under
circumstances specified in the Company's Restated Charter, as it may be amended,
by the holders of any class of stock having a  preference  over the Common Stock
as to dividends or in liquidation,  shall be classified  into three classes,  as
nearly equal in number as possible. The initial terms of directors first elected
or re-elected by the  stockholders  on the date this amendment to the By-Laws is
adopted shall be for the following terms of office:


                             Class I:    One year
                             Class II:   Two years
                             Class III:  Three years

and  until  their  successors  shall be  elected  and  shall  qualify.  Upon the
expiration  of the initial  term  specified  for each class of  directors  their
successors  shall be elected  for  three-year  terms or until such time as their
successors  shall be elected  and  qualified.  In the event of any  increase  or
decrease in the number of directors, the additional or eliminated directorships,
shall be classified  or chosen so that all classes of directors  shall remain or
become equal in number,  as nearly as possible.  This subsection (c) was adopted
by the stockholders of the Company.

         Section 11. In case of any vacancy in the number of  directors  through
death,  resignation,  disqualification,  increase in the number of  directors or
other cause, the remaining directors present at the meeting, by affirmative vote
of a majority thereof,  though less than a quorum, may elect a successor to hold
office until the next  shareholders'  meeting at which directors are elected and
until the election of his successor.

         Section 12. Regular meetings of the Board of Directors shall be held at
times fixed by  resolution of the Board,  and special  meetings may be held upon
the written call of the Executive Committee, or by the Chairman of the Board, or
by the  President  or by  any  two  directors;  and  the  Secretary  or  officer
performing his duties shall give reasonable notice of all meetings of directors;
provided, that a meeting may be held without notice immediately after the annual
election,  and notice need not be given of regular  meetings held at times fixed
by resolution of the Board.  Meetings may be held at any time without  notice if
all the  directors  are present,  or if those not present  waive  notice  either
before or after the meeting.  All regular and special  meetings shall be held at
the  principal  offices of the Company,  provided  that the Board,  from time to
time, may order that any meeting be held  elsewhere  within or without the State
of North Carolina. A majority of the whole Board of Directors shall constitute a
quorum, and the act of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the Board of Directors, unless a greater
proportion is required by the Charter.



<PAGE>



         Section 13. The business and affairs of the Company shall be managed by
its Board of Directors, which may exercise all such powers of the Company and do
all such lawful acts and things which are not by law or by the Charter  directed
or required to be exercised or done by the stockholders; provided, however, that
the  officers  of the  Company  shall,  without  prior  action  of the  Board of
Directors,  perform  all acts and things  incidental  to the usual and  ordinary
course of the business in which the Company is engaged as  hereinafter  provided
by the By-Laws or as may  hereafter be delegated  by the Board of  Directors.  A
majority of the Board of Directors may create one or more Committees and appoint
other members of the Board of Directors to serve on such  Committees.  Each such
Committee shall have two or more members, who serve at the pleasure of the Board
of Directors.  Any such Committee may exercise authority over any matters except
those matters  described in Section  55-8-25(e) of the General Statutes of North
Carolina.


         Section 14. A majority of the whole Board of Directors,  present at any
meeting  held after  their  election  in each  year,  may  appoint an  Executive
Committee, to consist of three or more directors, which Committee shall have and
may exercise,  during the intervals between meetings of the Board, by a majority
vote of those present at a meeting,  all the powers vested in the Board,  except
the  following  matters as more fully  described  in Section  55-8-25(e)  of the
General Statutes of North Carolina:

  -   Authorize distributions;
  -   Approve or propose to  shareholders  action that is by law  required to be
      approved by the shareholders;
  -   Fill vacancies on the Board of Directors or on any of its Committees;
  -   Amend  the  Company's  Articles  of  Incorporation  pursuant  to  N.C.G.S.
      '55-10-102;
  -   Adopt, amend or repeal the Company's By-Laws;
  -   Approve a plan of merger not requiring shareholder approval;
  -   Authorize  or approve  reacquisition  of  shares,  except  according  to a
      formula or method prescribed by the Board of Directors; or
  -   Authorize  or approve the  issuance or sale or contract for
      sale of shares,  or determine the  designation and relative
      rights,  preferences,  and limitations of a class or series
      of shares.

A majority of the whole Board of Directors present at any meeting shall have the
power  at any  time to  change  the  membership  of such  Committee  and to fill
vacancies in it. The  Executive  Committee may make rules for the conduct of its
business. A majority of the members of said Committee shall constitute a quorum.
The  Chairman of the  Executive  Committee  shall be  appointed  by the Board of
Directors from the membership of the Executive Committee.

                                     Notices
                                     -------

         Section 15.  Notices to directors or  stockholders  shall be in writing
and given personally or by mail to the directors and by mail to the stockholders
at their  addresses  appearing on the books of the Company;  provided,  however,
that no notice  need be given any  stockholder  or  director  whose  address  is
outside of the United States.  Notice by mail shall be deemed to be given at the
time  when the same  shall be  mailed.  Notice  to  directors  may also be given
verbally,  or by telegram,  or cable,  and any such notice shall be deemed to be
given  when  delivered  to and  accepted  for  transmittal  by an  office of the
transmitting company.

         Section  16.  Whenever  any notice is  required  to be given  under the
provisions  of  applicable  statutes  or of the Charter or of these  By-Laws,  a
waiver  thereof in  writing,  signed by the person or persons  entitled  to said
notice,  whether  before  or after  the time  stated  therein,  shall be  deemed
equivalent to the giving of such notice in apt time.

              Officers, Their Authority, and Their Terms of Office
              ----------------------------------------------------

         Section  17. The Board of  Directors  shall  elect the  officers of the
Company,  who shall consist of a President,  one or more Senior  Executive  Vice
Presidents and Executive Vice  Presidents,  two or more Senior Vice  Presidents,
three or more Vice Presidents,  a Secretary,  a Treasurer, a Controller and such
other officers or assistant officers and agents as may be appointed by the Board
of  Directors.  From time to time the Board of  Directors  may also elect a Vice
Chairman who shall have such duties as described  herein and as may from time to
time be directed. Any two offices may be held by the same person, but no officer
may act in more  than one  capacity  where  action  of two or more  officers  is
required.  The Vice Chairman,  if any, of the Board of Directors shall be chosen
from among the  Directors,  but the other  officers need not be Directors of the
Company.  The Officers shall be chosen annually by the Board of Directors at its
first  meeting  held  after  the  Annual  Meeting  of  Stockholders,  or as soon
thereafter  as may be  practical,  and shall serve for the period  specified  or
until a successor is chosen.

         Section 18. The Board of Directors  shall  appoint the Chief  Executive
Officer who shall be either the Chairman,  the Vice Chairman or the President of
the Company. In the event the Chief Executive Officer is unavailable at the time
for needed action, or in other  circumstances as directed by the Chief Executive
Officer, then the Chairman, the Vice Chairman, if any, or the President if there
is no Vice Chairman,  who is not then serving as Chief Executive Officer,  shall
be the  next  officer  in line of  authority  to  perform  the  duties  of Chief
Executive Officer.  If the Chairman,  the Vice Chairman and the President should
be  unavailable  at the time for needed  action,  or in other  circumstances  as
directed  by the  Chief  Executive  Officer,  then the next  officer  in line of
authority to perform the duties of the Chief Executive Officer shall be a Senior
Executive  Vice President or Executive Vice President as designated by the Chief
Executive Officer.

         Section 19. Any officer may be reassigned duties by appropriate members
of Senior  Management at any time. Any officer may be removed from office at any
time by the Board of Directors,  without  prejudice to the rights of the officer
removed under an employment  agreement in writing  previously duly authorized by
the Board of Directors or an Executive Committee of the Board of Directors.  Any
officer  may  resign  at any  time by  giving  written  notice  to the  Board of
Directors,  the President or any other officer of the Company.  Such resignation
shall take effect at the time specified therein, and, unless otherwise specified
therein,  the acceptance of such  resignation  shall not be necessary to make it
effective.  The Board of  Directors  or an  Executive  Committee of the Board of
Directors  may fill  any  vacancy  in any  office  occurring  by  virtue  of the
incumbent's  death,  resignation,  removal  or  otherwise  at any duly  convened
meeting of the Board.

         Section 20. The Board of  Directors or the Chief  Executive  Officer of
the Company may require the Treasurer and any other  officer,  employee or agent
of the  Company to give bond,  in such sum and with such  surety or  sureties as
either shall determine, for the faithful discharge of their duties.

         Section 21. Unless  otherwise  provided by the Board of Directors,  the
Company's Chief Executive Officer is vested with full power, authority,  and the
duty,  to perform in person,  and by  delegation  of  authority  to  subordinate
officers and  employees of the Company,  all acts and things deemed by him to be
reasonably necessary or desirable to direct,  handle, and manage, and in general
carry on the  Company's  business  transactions  authorized  by its Charter,  in
respect  to all  matters  except  those  which by law must be  performed  by the
Directors,  including but not limited to the  following:  (a)  constructing  and
contracting  for  the  construction  of  generating  plants  authorized  by  the
Directors;  (b)  operating and  maintaining  generating  plants and  appurtenant
works; (c) constructing,  maintaining, and operating substations,  lines and all
other facilities, appurtenant to the transmission,  distribution and delivery of
electricity;   (d)  acquiring  by  direct  purchase,   gift,  exchange,   or  by
condemnation, all rights of way, easements, lands, and estates in lands, flowage
and water rights; (e) acquiring,  maintaining and disposing of tools, machinery,
appliances,   materials,   vehicles,  and  other  appurtenant  facilities;   (f)
employing,  and fixing  compensation  of,  Company  personnel  (except  that the
compensation of the Chief Executive  Officer and the other Company employees who
are members of the Board shall be fixed by the Board of Directors) in compliance
with any procedures  established by the Board;  (g) borrowing money from time to
time for terms not exceeding three years, and in connection  therewith  pledging
the credit of the Company and executing  unsecured loan  agreements,  promissory
notes, and other desirable instruments evidencing obligations to the lender; (h)
fixing the rates and conditions of service and dealing with regulatory bodies in
respect  thereto,  and  promoting  the use of  electricity  by  means  of  sales
representatives,  advertising and otherwise; (i) collecting and keeping accounts
of all monies due the Company and making and preserving records of the Company's
properties and accounts and fiscal affairs; and (j) possessing,  preserving, and
protecting all property,  assets,  and interests of the Company and instituting,
prosecuting,  intervening in, and defending actions and proceedings in any court
or  before  any  administrative  agency  or  tribunal  affecting  the  Company's
interests and welfare.

                              Certificates of Stock
                              ---------------------

         Section 22. Every  holder of stock in the Company  shall be entitled to
have a certificate  or  certificates  certifying the number of fully paid shares
owned by him in the Company which shall be in form  consistent with law and with
the Charter of the  Company and as shall be approved by the Board of  Directors.
The stock  certificates  shall be signed by: 1) either the Chairman of the Board
of Directors or the  President,  and 2) either the Secretary or Treasurer.  Such
signatures may be facsimile or other similar method.

         Section 23. All  transfers  of stock of the Company  shall be made upon
its  books  by   authority  of  the  holder  of  the  shares  or  of  his  legal
representative, and before a new certificate is issued the old certificate shall
be surrendered for cancellation,  provided that in case any certificate is lost,
stolen or destroyed,  a new  certificate  therefor may be issued pursuant to the
provisions of Section 24 hereof.

         Section 24. No  certificate  of shares of stock of the Company shall be
issued  in place of any  certificate  alleged  to have  been  lost or  stolen or
destroyed,  except upon the approval of the Board of  Directors  who may require
delivery  to the  Company of a bond in such sum as it may direct and  subject to
its approval as indemnity against any claim in respect to such lost or stolen or
destroyed certificate;  provided that the Board of Directors may delegate to the
Company's  Transfer  Agent  and  Registrar  authority  to  issue  and  register,
respectively,  from time to time without further action or approval of the Board
of Directors,  new certificates of stock to replace certificates  reported lost,
stolen or  destroyed  upon receipt of an affidavit of loss and bond of indemnity
in form  and  amount  and with  corporate  surety  satisfactory  to them in each
instance  protecting  the Company and them against loss.  Such legal evidence of
such loss or theft or  destruction  shall be furnished to the Board of Directors
as may be required by them.

         Section 25. The Board of  Directors  shall have power and  authority to
make all such rules and  regulations  as it may deem  expedient  concerning  the
issue,  transfer,  conversion and registration of certificates for shares of the
capital stock of the Company,  not inconsistent with the laws of North Carolina,
the  Charter  of the  Company  and  these  By-Laws.  The Board of  Directors  is
authorized to appoint one or more transfer agents and registrars for the capital
stock of the Company.

         Section 26. The Board of Directors  shall have power to close the stock
transfer books or in lieu thereof to fix record dates as authorized by law.

                                     General
                                     -------

         Section 27. Subject to the  provisions of the  applicable  statutes and
the Charter of the Company,  dividends,  either cash or stock,  upon the capital
stock of the Company may be  declared by the Board of  Directors  at any meeting
thereof.

         Section 28. Deeds, bonds, notes, mortgages and contracts of the Company
may be executed on behalf of the Company by the President,  or a Vice President,
or any one of such other persons as shall from time to time be authorized by the
Board of  Directors,  and when  necessary  or  appropriate  may be  attested  or
countersigned by the Secretary or an Assistant Secretary, or the Treasurer or an
Assistant Treasurer.  The corporate seal of the Company may be affixed to deeds,
bonds,  notes,  mortgages,  contracts or stock  certificates  by an  appropriate
officer of the Company by  impression  thereon,  or, by order of an  appropriate
officer of the  Company,  a  facsimile  of said seal may be  affixed  thereto by
engraving, printing, lithograph or other method.

         Section 29. The monies of the Company shall be deposited in the name of
the  Company in such bank or banks or trust  company or trust  companies  as the
Treasurer, with approval of the Chief Executive Officer, shall from time to time
select,  and shall be drawn out only by checks or other orders signed by persons
designated by resolution by the Board of Directors.

         Section 30. As and when used in any of the foregoing  By-Laws the words
"stockholder" and "stockholders"  shall be deemed and held to be synonymous with
the words "shareholder" and "shareholders", and the word "stock" shall be deemed
and held to be synonymous with the words "share" or "shares",  respectively,  as
used in Chapter 55 of the General Statutes of North Carolina.

                              Amendment of By-Laws
                              --------------------

         Section 31. The Board of  Directors  shall have power from time to time
to  adopt,  amend,  alter,  add  to,  and  repeal  By-Laws  for the  Company  by
affirmative  vote of a majority of the directors then holding office,  provided,
however,  that the  By-Laws  may not be  amended  by the Board of  Directors  to
require  more  than  a  majority  of  the  voting  shares  for  a  quorum  at  a
stockholder's  meeting,  or more than a majority  vote at such  meeting,  except
where  higher  percentages  are  required  by law.  Any  By-Laws  so made or any
provisions  thereof  may be  altered  or  repealed  by vote of the  holders of a
majority  of  the  total  number  of  shares  of the  Company  then  issued  and
outstanding  and entitled to vote thereon at any annual  stockholders'  meeting.
Additionally,  any By-Law adopted,  amended or repealed by the  stockholders may
not be  readopted,  amended or  repealed  by the Board of  Directors  unless the
Charter  or a  By-Law  adopted  by the  stockholders  authorizes  the  Board  of
Directors  to  adopt,  amend or repeal  that  particular  By-Law or the  By-Laws
generally.

                       Indemnity of Officers and Directors
                       -----------------------------------

         Section 32. (a) The Company  shall  reimburse  or  indemnify  any past,
present or future  officer or  director  of the  Company  for and  against  such
liabilities  and expenses as are  authorized by (1) a resolution  adopted by the
Company's  stockholders at a special meeting held on December 31, 1943, which is
made a part hereof as though  incorporated  herein,  or (2) by Sections 55-8-54,
55-8-55, 55-8-56 and 55-8-57 of the General Statutes of North Carolina.  Persons
serving as officers or directors of the Company or serving in any such  capacity
at the  request of the  Company  in any other  corporation,  partnership,  joint
venture,   trust  or  other  enterprise  shall  be  provided  reimbursement  and
indemnification  by the Company to the maximum extent allowed hereunder or under
applicable law, including without limitation Sections 55-8-54,  55-8-55, 55-8-56
and 55-8-57 of the General Statutes of North Carolina.

         (b) In addition to the reimbursement and indemnification provisions set
forth  above,  any person who at any time serves or has served (1) as an officer
or director of the  Company,  or (2) at the request of the Company as an officer
of director (or in any position of similar  authority,  by whatever title known)
of any other corporation, partnership, joint venture, trust or other enterprise,
or (3) as an  individual  trustee or  administrator  under any employee  benefit
plan,  shall have a right to be indemnified by the Company to the fullest extent
permitted by law against (i) all reasonable expenses, including attorney's fees,
actually  and  necessarily  incurred  by him in  connection  with  any  pending,
threatened or completed  action,  suit or proceeding,  whether civil,  criminal,
administrative or investigative, and whether or not brought by the Company or on
behalf of the  Company  in a  derivative  action,  seeking to hold him liable by
reason of or arising out of his status as such or his  activities  in any of the
foregoing  capacities,  and (ii)  payments  made by him in  satisfaction  of any
judgement,  money  decree,  fine,  penalty or  settlement  for which he may have
become liable in any such action, suit or proceeding;  provided,  however,  that
the Company  shall not  indemnify  any person  against  liability or  litigation
expense he may incur on account of his  activities  which were at the time taken
known or believed by him to be clearly in conflict  with the best  interests  of
the Company.

         (c) The Board of Directors shall take all action as may be necessary or
appropriate  to authorize  the Company to pay all amounts  required  under these
Sections 32(a),(b) and (c) of the By-Laws  including,  without limitation and to
the extent deemed to be appropriate,  necessary, or required by law (1) making a
good faith  evaluation of the manner in which the claimant for  indemnity  acted
and of the  reasonable  amount of indemnity due such  individual,  or (2) making
advances of costs and expenses,  or (3) giving notice to, or obtaining  approval
by, the shareholders of the Company.

         (d)  Any  person  who  serves  or has  served  in any of the  aforesaid
capacities  for or on  behalf of the  Company  shall be deemed to be doing or to
have  done  so in  reliance  upon,  and as  consideration  for,  the  rights  of
reimbursement  and   indemnification   provided  for  herein.   Such  rights  of
reimbursement  and  indemnification  shall  inure to the  benefit  of the  legal
representatives  of such  individuals,  shall include amounts paid in settlement
and shall not be exclusive of any other rights to which such  individuals  shall
be entitled apart from the provisions of this Section.

         (e) The  Company  may,  in its sole  discretion,  wholly  or  partially
indemnify  and advance  expenses to any  employee or agent of the Company to the
same extent as provided herein for officers and directors.