UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-Q

             [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2000
                                                 --------------

                                       OR

                 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from______ to______ .

                          Commission file number 1-3382
                                                 ------

                         CAROLINA POWER & LIGHT COMPANY
                         ------------------------------
             (Exact name of registrant as specified in its charter)

            North Carolina                     56-0165465
          --------------                       ----------
  (State or other jurisdiction of   (I.R.S. Employer Identification No.)
  incorporation or organization)

      411 Fayetteville Street, Raleigh, North Carolina       27601-1748
      ------------------------------------------------       ----------
          (Address of principal executive offices)           (Zip Code)


                                  919-546-6111
                                  ------------
              (Registrant's telephone number, including area code)

                                      NONE
                                      ----
   (Former name, former address and former fiscal year, if changed since last
                                    report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No   .
                                      ---    ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Common Stock (Without Par
Value) shares outstanding at April 30, 2000: 159,636,055.

                                       1
<PAGE>
         SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
         ------------------------------------------

         The matters discussed throughout this Form 10-Q that are not historical
         facts are forward-looking and, accordingly, involve estimates,
         projections, goals, forecasts, assumptions, risks and uncertainties
         that could cause actual results or outcomes to differ materially from
         those expressed in the forward-looking statements.

         Examples of forward-looking statements discussed in this Form 10-Q,
         PART 1, ITEM 2, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS", include, but are not limited to,
         statements under the heading "Other Matters" concerning the effects of
         electric utility industry restructuring.

         Any forward-looking statement speaks only as of the date on which such
         statement is made, and the Company undertakes no obligation to update
         any forward-looking statement or statements to reflect events or
         circumstances after the date on which such statement is made.

         Examples of factors that should be considered with respect to any
         forward-looking statements made throughout this document include, but
         are not limited to, the following: Governmental policies and regulatory
         actions (including those of the Federal Energy Regulatory Commission,
         the Environmental Protection Agency, the Nuclear Regulatory Commission,
         the Department of Energy, the North Carolina Utilities Commission and
         the Public Service Commission of South Carolina); general industry
         trends; operation of nuclear power facilities; availability of nuclear
         waste storage facilities; nuclear decommissioning costs; changes in the
         economy of areas served by the Company; legislative and regulatory
         initiatives that impact the speed and degree of industry restructuring;
         ability to obtain adequate and timely rate recovery of costs, including
         potential stranded costs arising from industry restructuring;
         competition from other energy suppliers; the success of the Company's
         subsidiaries; weather conditions and catastrophic weather-related
         damage; market demand for energy; inflation; capital market conditions;
         the proposed share exchange with Florida Progress Corporation; failure
         of the potential benefits of the Company's conversion to a holding
         company structure to materialize; cash flows derived from the synthetic
         fuel plant; unanticipated changes in operating expenses and capital
         expenditures and legal and administrative proceedings. All such factors
         are difficult to predict, contain uncertainties that may materially
         affect actual results, and may be beyond the control of the Company.
         New factors emerge from time to time and it is not possible for
         management to predict all of such factors, nor can it assess the effect
         of each such factor on the Company.


                                       2
<PAGE>
                          PART I. FINANCIAL INFORMATION


Item 1.          Financial Statements
-------          --------------------

--------------------------------------------------------------------------------

                         CAROLINA POWER & LIGHT COMPANY
                  (ORGANIZED UNDER THE LAWS OF NORTH CAROLINA)

                    CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                   (Unaudited)
                                 MARCH 31, 2000

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
                                                                                       Three Months Ended
                                                                                            March 31
(In thousands except per share amounts)                                             2000             1999
--------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>               <C>
OPERATING REVENUES
Electric                                                                    $      779,908    $      738,559
Natural gas                                                                         72,098                 -
Diversified businesses                                                              25,134            24,343
--------------------------------------------------------------------------------------------------------------
       Total Operating Revenues                                                    877,140           762,902
--------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
  Fuel used in electric generation                                                 160,387           138,964
  Purchased power                                                                   70,259            85,222
  Gas purchased for resale                                                          43,898                 -
  Other operation and maintenance                                                  198,227           142,967
  Depreciation and amortization                                                    132,489           120,556
  Taxes other than on income                                                        37,334            36,001
  Harris Plant deferred costs, net                                                   5,281             1,524
  Diversified businesses                                                            44,155            38,307
--------------------------------------------------------------------------------------------------------------
      Total Operating Expenses                                                     692,030           563,541
--------------------------------------------------------------------------------------------------------------
OPERATING INCOME                                                                   185,110           199,361
--------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
  Interest income                                                                    3,263             2,293
  Other, net                                                                         4,295            (6,949)
--------------------------------------------------------------------------------------------------------------
      Total Other Income (Expense)                                                   7,558            (4,656)
--------------------------------------------------------------------------------------------------------------
INTEREST CHARGES
  Long-term debt                                                                    50,072            42,401
  Other interest charges                                                             5,001             2,761
  Allowance for borrowed funds used during construction                             (4,606)           (1,828)
--------------------------------------------------------------------------------------------------------------
      Net Interest Charges                                                          50,467            43,334
--------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES                                                         142,201           151,371
INCOME TAXES                                                                        56,198            59,159
--------------------------------------------------------------------------------------------------------------
NET INCOME                                                                          86,003            92,212
PREFERRED STOCK DIVIDEND REQUIREMENTS                                                 (742)             (742)
--------------------------------------------------------------------------------------------------------------
EARNINGS FOR COMMON STOCK                                                    $      85,261    $       91,470
==============================================================================================================
AVERAGE COMMON SHARES OUTSTANDING                                                  153,054           144,293
BASIC AND DILUTED EARNINGS PER COMMON SHARE                                  $        0.56    $         0.63
DIVIDENDS DECLARED PER COMMON SHARE                                          $       0.515    $        0.500


==============================================================================================================
See Supplemental Data and Notes to Consolidated Interim Financial Statements.
</TABLE>

                                       3
<PAGE>
Carolina Power & Light Company
BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                  March 31       December 31
(In thousands)                                                                      2000             1999
-------------------------------------------------------------------------------------------------------------
                                   ASSETS
<S>                                                                            <C>             <C>
UTILITY PLANT
  Electric utility plant in service                                            $10,701,751     $ 10,633,823
  Gas utility plant in service                                                     362,259          354,773
  Accumulated depreciation                                                      (5,109,441)      (4,975,405)
-------------------------------------------------------------------------------------------------------------
         Utility plant in service, net                                           5,954,569        6,013,191
  Held for future use                                                                7,105           11,282
  Construction work in progress                                                    667,735          536,017
  Nuclear fuel, net of amortization                                                204,641          204,323
-------------------------------------------------------------------------------------------------------------
       Total Utility Plant, Net                                                  6,834,050        6,764,813
-------------------------------------------------------------------------------------------------------------
CURRENT ASSETS
  Cash and cash equivalents                                                         36,544           79,871
  Accounts receivable                                                              415,534          446,367
  Taxes receivable                                                                       -            3,770
  Inventory                                                                        244,264          247,913
  Deferred fuel cost                                                                72,524           81,699
  Prepayments                                                                       17,997           42,631
  Other current assets                                                              97,157          177,082
-------------------------------------------------------------------------------------------------------------
         Total Current Assets                                                      884,020        1,079,333
-------------------------------------------------------------------------------------------------------------
DEFERRED DEBITS AND OTHER ASSETS
  Income taxes recoverable through future rates                                    228,814          229,008
  Abandonment costs                                                                  1,657            1,675
  Harris Plant deferred costs                                                       51,595           56,142
  Unamortized debt expense                                                          10,612           10,924
  Nuclear decommissioning trust funds                                              397,007          379,949
  Diversified business property, net                                               258,174          239,982
  Miscellaneous other property and investments                                     252,591          252,454
  Goodwill, net                                                                    285,271          288,970
  Other assets and deferred debits                                                 175,954          190,769
-------------------------------------------------------------------------------------------------------------
         Total Deferred Debits and Other Assets                                  1,661,675        1,649,873
-------------------------------------------------------------------------------------------------------------
            TOTAL ASSETS                                                       $ 9,379,745     $  9,494,019
=============================================================================================================
                       CAPITALIZATION AND LIABILITIES

CAPITALIZATION
  Common stock equity                                                          $ 3,429,833     $  3,412,647
  Preferred stock - redemption not required                                         59,376           59,376
  Long-term debt, net                                                            3,028,807        3,028,561
-------------------------------------------------------------------------------------------------------------
         Total Capitalization                                                    6,518,016        6,500,584
-------------------------------------------------------------------------------------------------------------
CURRENT LIABILITIES
  Current portion of long-term debt                                                      -          197,250
  Accounts payable                                                                 253,646          269,053
  Taxes accrued                                                                     91,597                -
  Interest accrued                                                                  28,585           47,607
  Dividends declared                                                                81,133           80,939
  Notes payable                                                                    180,140          168,240
  Other current liabilities                                                        144,578          130,036
-------------------------------------------------------------------------------------------------------------
         Total Current Liabilities                                                 779,679          893,125
-------------------------------------------------------------------------------------------------------------
DEFERRED CREDITS AND OTHER LIABILITIES
  Accumulated deferred income taxes                                              1,608,461        1,632,778
  Accumulated deferred investment tax credits                                      201,105          203,704
  Other liabilities and deferred credits                                           272,484          263,828
-------------------------------------------------------------------------------------------------------------
         Total Deferred Credits and Other Liabilities                            2,082,050        2,100,310
-------------------------------------------------------------------------------------------------------------
            TOTAL CAPITALIZATION AND LIABILITIES                               $ 9,379,745     $  9,494,019
=============================================================================================================

SCHEDULES OF COMMON STOCK EQUITY
(In thousands)
  Common stock (without par value, authorized 200,000,000, issued and
outstanding 159,623,510 and 159,599,650 shares, respectively)                  $ 1,749,022     $  1,746,249
  Unearned ESOP common stock                                                      (131,851)        (140,153)
  Capital stock issuance expense                                                      (816)            (794)
  Retained earnings                                                              1,813,478        1,807,345
-------------------------------------------------------------------------------------------------------------
         Total Common Stock Equity                                             $ 3,429,833     $  3,412,647
=============================================================================================================
See Supplemental Data and Notes to Consolidated Interim Financial Statements.
</TABLE>

                                       4
<PAGE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
STATEMENTS OF CASH FLOWS                                                         Three Months Ended
                                                                                      March 31
(In thousands)                                                                2000                 1999
-----------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                <C>
OPERATING ACTIVITIES
  Net income                                                                $ 86,003           $   92,212
  Adjustments to reconcile net income to net cash provided by
  operating activities
      Depreciation and amortization                                          153,785              143,371
      Harris Plant deferred costs                                              4,547                  614
      Deferred income taxes                                                  (31,040)             (17,398)
      Investment tax credit                                                   (2,599)              (2,550)
      Deferred fuel cost                                                       7,459                  407
      Net (increase) decrease in receivables, inventories,
       prepaid expense and other current assets                              140,788               (8,432)
      Net increase in payables and accrued expenses                           70,011               51,062
      Other                                                                   55,078               48,820
-----------------------------------------------------------------------------------------------------------
        Net Cash Provided by Operating Activities                            484,032              308,106
-----------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
  Gross property additions                                                  (231,657)            (169,066)
  Nuclear fuel additions                                                     (25,252)             (27,134)
  Contributions to nuclear decommissioning trust                             (10,275)             (10,283)
  Net cash flow of company-owned life insurance program                           13                 (121)
  Investment in non-utility activities                                       (26,603)             (64,934)
-----------------------------------------------------------------------------------------------------------
        Net Cash Used in Investing Activities                               (293,774)            (271,538)
-----------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
  Proceeds from issuance of long-term debt                                         -              400,970
  Net increase (decrease) in short-term indebtedness                          11,900             (262,250)
  Net increase (decrease) in outstanding payments                             31,553              (86,306)
  Retirement of long-term debt                                              (197,365)              (1,636)
  Dividends paid on common and preferred stock                               (79,673)             (72,955)
  Other                                                                            -                  331
-----------------------------------------------------------------------------------------------------------
        Net Cash Used in Financing Activities                               (233,585)             (21,846)
-----------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                         (43,327)              14,722
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD                          79,871               28,872
-----------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD                              $ 36,544           $   43,594
===========================================================================================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period - interest                                      $   68,061         $   53,019
                              income taxes                                  $   1,389          $    1,156
===========================================================================================================
See Supplemental Data and Notes to Consolidated Interim Financial Statements.
</TABLE>

                                       5
<PAGE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
SUPPLEMENTAL  DATA                                                                    Three Months Ended
                                                                                           March 31
                                                                                      2000          1999
------------------------------------------------------------------------------------------------------------
<S>                                                                                <C>                <C>
OPERATING REVENUES (IN THOUSANDS)
Electric
    Retail                                                                        $  634,667   $   602,263
    Wholesale                                                                        129,691       121,289
    Miscellaneous revenue                                                             15,550        15,007
------------------------------------------------------------------------------------------------------------
         Total Electric                                                              779,908       738,559
Natural gas                                                                           72,098             -
Diversified businesses                                                                25,134        24,343
------------------------------------------------------------------------------------------------------------

            Total Operating Revenues                                              $  877,140   $   762,902
============================================================================================================


ENERGY SALES
 ELECTRIC (MILLIONS OF kWh)
  Retail
     Residential                                                                       3,890         3,662
     Commercial                                                                        2,512         2,433
     Industrial                                                                        3,423         3,284
     Other retail                                                                        346           312
------------------------------------------------------------------------------------------------------------
          Total retail                                                                10,171         9,691
  Wholesale                                                                            3,707         3,270
------------------------------------------------------------------------------------------------------------
     TOTAL ELECTRIC                                                                   13,878        12,961
------------------------------------------------------------------------------------------------------------

============================================================================================================
NATURAL GAS DELIVERED (THOUSANDS OF dt)                                               17,344             -
============================================================================================================

ENERGY SUPPLY (MILLIONS OF kWh)
  Generated - coal                                                                     7,460         6,552
              nuclear                                                                  5,664         5,740
              hydro                                                                      176           210
              combustion turbines                                                         34            20
  Purchased                                                                            1,032           928
------------------------------------------------------------------------------------------------------------

            Total Energy Supply (Company Share)                                       14,366        13,450
============================================================================================================

DETAIL OF INCOME TAXES (IN THOUSANDS)
    Income tax expense (credit) - current                                         $   89,837   $    79,107
                                  deferred                                           (31,040)      (17,398)
                                  investment tax credit                               (2,599)       (2,550)
------------------------------------------------------------------------------------------------------------

               TOTAL INCOME TAX EXPENSE                                           $   56,198   $    59,159
============================================================================================================
See Notes to Consolidated Interim Financial Statements.
</TABLE>

                                       6
<PAGE>
Carolina Power & Light Company
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.       ORGANIZATION AND BASIS OF PRESENTATION
         --------------------------------------

         A.       Organization. Carolina Power & Light Company (the Company) is
                  a public service corporation primarily engaged in the
                  generation, transmission, distribution and sale of electricity
                  in portions of North and South Carolina and the transmission,
                  distribution and sale of natural gas in portions of North
                  Carolina.

         B.       Basis of Presentation. These consolidated interim financial
                  statements should be read in conjunction with the Company's
                  consolidated financial statements included in the Company's
                  1999 Annual Report on Form 10-K. The amounts are unaudited
                  but, in the opinion of management, reflect all adjustments
                  necessary to fairly present the Company's financial position
                  and results of operations for the interim periods. Due to
                  temperature variations between seasons of the year and the
                  timing of outages of electric generating units, especially
                  nuclear-fueled units, the results of operations for interim
                  periods are not necessarily indicative of amounts expected for
                  the entire year. Certain amounts for 1999 have been
                  reclassified to conform to the 2000 presentation, with no
                  effect on previously reported net income or common stock
                  equity.

                  In preparing financial statements that conform with generally
                  accepted accounting principles, management must make estimates
                  and assumptions that affect the reported amounts of assets and
                  liabilities, disclosure of contingent assets and liabilities
                  at the date of the financial statements and amounts of
                  revenues and expenses reflected during the reporting period.
                  Actual results could differ from those estimates.

                  On July 15, 1999, the Company completed the acquisition of
                  North Carolina Natural Gas Corporation (NCNG). The acquisition
                  was accounted for as a purchase and, accordingly, the
                  operating results of NCNG have been included in the Company's
                  consolidated financial statements since the date of
                  acquisition.

2.       FLORIDA PROGRESS CORPORATION
         ----------------------------

         The Company, Florida Progress Corporation (FPC), a Florida corporation,
         and CP&L Energy, Inc. (CP&L Energy), a North Carolina corporation and
         wholly owned subsidiary of the Company, formerly known as CP&L
         Holdings, Inc. entered into an Amended and Restated Agreement and Plan
         of Share Exchange dated as of August 22, 1999, amended and restated as
         of March 3, 2000 (the "Amended Agreement").

         Under the terms of the Amended Agreement, all outstanding shares of
         common stock, no par value, of FPC common stock would be acquired by
         CP&L Energy in a statutory share exchange with an approximate value of
         $5.0 billion, which is subject to change based on CP&L Energy's stock
         price and on the value of the contingent value obligations (CVO)
         discussed below. Each share of FPC common stock, at the election of the
         holder, will be exchanged for (i) $54.00 in cash and one CVO, or (ii)
         the number of shares of common stock, no par value, of CP&L Energy
         equal to the ratio determined by dividing $54.00 by the average of the
         closing sale price per share of CP&L Energy common stock (Final Stock
         Price), as reported on the New York Stock Exchange composite tape for
         the twenty consecutive trading days ending with the fifth trading day
         immediately preceding the closing date for the exchange, and one CVO,
         or (iii) a combination of cash and CP&L Energy common stock, and one
         CVO; provided, however, that shareholder elections shall be subject to
         allocation and proration to achieve a mix of the aggregate exchange
         consideration that is 65% cash and 35% common stock. The number of
         shares of CP&L Energy common stock that will be issued as stock
         consideration will vary if the Final Stock Price is within a range of
         $37.13 to $45.39, but not outside that range. Thus, the maximum number
         of shares of CP&L Energy common stock into which one share of FPC
         common stock could be exchanged would be 1.4543 and the minimum would
         be 1.1897. FPC shareholders will receive one CVO for each share of FPC
         stock owned. Each CVO will represent the right to receive contingent
         payments that may be made by CP&L Energy based on certain cash flows
         that may be derived from future operations of four synthetic fuel
         plants currently owned by FPC. In conjunction with this proposed share
         exchange, CP&L Energy plans to issue debt to fund the cash portion of
         the exchange.

         The transaction has been approved by the Boards of Directors of FPC,
         the Company and CP&L Energy. Consummation of the exchange is subject to
         the satisfaction or waiver of certain closing conditions including,
         among others, the approval by the shareholders of FPC and the approval
         of the issuance of CP&L Energy common stock in the exchange by the
         shareholders of the Company or CP&L Energy; the approval or regulatory
         review by the Federal Energy Regulatory Commission (FERC), the
         Securities and Exchange Commission (SEC), the Nuclear Regulatory
         Commission (NRC), the North Carolina Utilities Commission (NCUC), and
         certain other federal and

                                       7
<PAGE>
         state regulatory bodies; the expiration or early termination of the
         waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
         of 1976; and other customary closing conditions. In addition, FPC's
         obligation to consummate the exchange is conditioned upon the Final
         Stock Price being not less than $30.00. Both the Company and FPC have
         agreed to certain undertakings and limitations regarding the conduct of
         their respective businesses prior to the closing of the transaction.
         The transaction is expected to be completed in the fall of 2000.

         Either party may terminate the Amended Agreement under certain
         circumstances, including if the exchange has not been consummated on or
         before December 31, 2000; provided that if certain conditions have not
         been satisfied on December 31, 2000, but all other conditions have been
         satisfied or waived then such date shall be June 30, 2001. In the event
         that FPC or the Company terminate the Amended Agreement in certain
         limited circumstances, FPC would be required to pay the Company a
         termination fee of $150 million, plus the Company's reasonable
         out-of-pocket expenses which are not to exceed $25 million in the
         aggregate.

         On January 31, 2000, applications were filed with the NRC seeking
         approval of the change in control of FPC that will result from the
         share exchange. On February 3, 2000, CP&L Energy filed an application
         with the NCUC for authorization of the share exchange with FPC and the
         issuance of common stock in connection with the transaction. On
         February 3, 2000, CP&L Energy and FPC filed a joint application with
         the FERC requesting approval of the share exchange. On March 14, 2000,
         CP&L Energy and FPC filed an application with the SEC requesting
         approval of the share exchange under the Public Utility Holding Company
         Act. The Company cannot predict the outcome of these matters.

3.       FINANCIAL INFORMATION BY BUSINESS SEGMENT
         -----------------------------------------

         The Company provides services through the following business segments:
         electric, natural gas and other.

         The electric segment generates, transmits, distributes and sells
         electric energy in portions of North and South Carolina. Electric
         operations are subject to the rules and regulations of the FERC, the
         NCUC and the Public Service Commission of South Carolina (SCPSC).

         The natural gas segment transmits, distributes and sells gas in
         portions of North Carolina. Gas operations are subject to the rules and
         regulations of the NCUC.

         The other segment primarily includes telecommunication services, energy
         management services, propane and miscellaneous non-regulated
         activities.

         For reportable segments presented in the accompanying table, segment
         earnings (losses) before taxes include intersegment sales accounted for
         at prices representative of unaffiliated party transactions.


                                       8
<PAGE>
         (in thousands)
<TABLE>
<CAPTION>
                                                                   NATURAL                                     SEGMENT
                                                    ELECTRIC         GAS           OTHER       ELIMINATIONS     TOTALS
         ==================================================================================================================
<S>                                                   <C>             <C>           <C>            <C>           <C>
         THREE MONTHS ENDED 3/31/00
         Revenues
              Unaffiliated                            $779,908        $71,968       $25,134              -       $877,010
              Intersegment                                   -            130         8,401        (8,401)            130
                                                  -------------------------------------------------------------------------
                   Total Revenues                     $779,908        $72,098       $33,535       $(8,401)       $877,140

         Depreciation and Amortization                $127,804         $4,685        $5,762              -       $138,251

         Net Interest Charges                          $50,652         $1,714          $337       $(1,899)        $50,804

         Earnings(Losses) Before Taxes                $147,160        $14,386      $(19,327)         $(18)       $142,201

         Total Segment Assets                       $8,558,136       $542,992      $388,706      $(110,089)    $9,379,745

         Capital and Investment
               Expenditures                           $224,860         $9,812       $23,588              -       $258,260
         ==================================================================================================================

<CAPTION>
                                                                   NATURAL                                     SEGMENT
                                                    ELECTRIC         GAS           OTHER       ELIMINATIONS     TOTALS
         ==================================================================================================================
<S>                                                   <C>                <C>           <C>          <C>              <C>
         THREE MONTHS ENDED 3/31/99
         Revenues
              Unaffiliated                            $738,559              -       $24,343              -       $762,902
              Intersegment                                   -              -         6,561         (6,561)             -
                                                  -------------------------------------------------------------------------
                   Total Revenues                     $738,559              -       $30,904        $(6,561)      $762,902

         Depreciation and Amortization                $120,556              -        $4,101              -       $124,657

         Net Interest Charges                          $43,334              -          $404              -        $43,738

         Earnings(Losses) Before Taxes                $169,122              -      $(17,727)          $(24)      $151,371

         Total Segment Assets                       $8,216,225              -      $251,148        $(2,421)    $8,464,952

         Capital and Investment
               Expenditures                           $134,485              -       $99,516              -       $234,001
         ==================================================================================================================

<CAPTION>
         RECONCILIATION  OF FINANCIAL  INFORMATION BY BUSINESS  SEGMENT TO CONSOLIDATED  FINANCIAL
         STATEMENTS:

         DEPRECIATION AND AMORTIZATION
         (in thousands)

                                                       SEGMENT
                         PERIOD                        TOTALS          ADJUSTMENTS      CONSOLIDATED TOTALS
         ---------------------------------------------------------------------------------------------------

        <S>                                             <C>                 <C>                  <C>
         Three months ended 3/31/00                      $138,251            $(5,762)             $132,489
         Three months ended 3/31/99                      $124,657            $(4,101)             $120,556
         ---------------------------------------------------------------------------------------------------

<CAPTION>
         NET INTEREST CHARGES
         (in thousands)

                                                      SEGMENT
                         PERIOD                       TOTALS           ADJUSTMENTS      CONSOLIDATED TOTALS
         ---------------------------------------------------------------------------------------------------
        <S>                                             <C>                 <C>                  <C>
         Three months ended 3/31/00                       $50,804              $(337)              $50,467
         Three months ended 3/31/99                       $43,738              $(404)              $43,334
         ---------------------------------------------------------------------------------------------------
</TABLE>

         Adjustments to depreciation and amortization expense consist of
         expenses related to the other segments that are included in diversified
         business operating expenses on a consolidated basis. Adjustments to
         interest expense consist of expenses related to the other segments that
         are included in other, net on a consolidated basis.

                                       9
<PAGE>
4.       FINANCING ACTIVITIES
         --------------------

         During the three months ended March 31, 2000, the Company retired
         $47.25 million principal amount of non-interest bearing Promissory
         Notes, Series 1993A, which matured on January 15, 2000 and $150 million
         principal amount of First Mortgage Bonds, 6-1/8% Series, which matured
         on February 1, 2000.

         On April 11, 2000, the Company issued $300 million principal amount of
         Senior Notes, 7.50% Series Due April 1, 2005.

5.       NUCLEAR DECOMMISSIONING
         -----------------------

         In the Company's retail jurisdictions, provisions for nuclear
         decommissioning costs are approved by the NCUC and the SCPSC and are
         based on site-specific estimates that include the costs for removal of
         all radioactive and other structures at the site. In the wholesale
         jurisdiction, the provisions for nuclear decommissioning costs are
         based on amounts agreed upon in applicable rate agreements. Based on
         the site-specific estimates discussed below, and using an assumed
         after-tax earnings rate of 7.75% and an assumed cost escalation rate of
         4%, current levels of rate recovery for nuclear decommissioning costs
         are adequate to provide for decommissioning of the Company's nuclear
         facilities.

         The Company's most recent site-specific estimates of decommissioning
         costs were developed in 1998, using 1998 cost factors, and are based on
         prompt dismantlement decommissioning, which reflects the cost of
         removal of all radioactive and other structures currently at the site,
         with such removal occurring shortly after operating license expiration.
         These estimates, in 1998 dollars, are $281.5 million for Robinson Unit
         No. 2, $299.6 million for Brunswick Unit No. 1, $298.7 million for
         Brunswick Unit No. 2 and $328.1 million for the Harris Plant. The
         estimates are subject to change based on a variety of factors
         including, but not limited to, cost escalation, changes in technology
         applicable to nuclear decommissioning and changes in federal, state or
         local regulations. The cost estimates exclude the portion attributable
         to North Carolina Eastern Municipal Power Agency (Power Agency), which
         holds an undivided ownership interest in the Brunswick and Harris
         nuclear generating facilities. Operating licenses for the Company's
         nuclear units expire in the year 2010 for Robinson Unit No. 2, 2016 for
         Brunswick Unit No. 1, 2014 for Brunswick Unit No. 2 and 2026 for the
         Harris Plant.

         The Financial Accounting Standards Board is proceeding with its project
         regarding accounting practices related to obligations associated with
         the retirement of long-lived assets, and a revised exposure draft of a
         proposed accounting standard was issued during the first quarter of
         2000. It is uncertain what effects this draft may ultimately have on
         the Company's accounting for nuclear decommissioning and other
         retirement costs.

6.       COMMITMENTS AND CONTINGENCIES
         -----------------------------

         Contingencies existing as of the date of these statements are described
         below. No significant changes have occurred since December 31, 1999,
         with respect to the commitments discussed in Note 16 of the financial
         statements included in the Company's 1999 Annual Report on Form 10-K.

         Contingencies

         1)       Applicability of SFAS-71. As a regulated entity, the Company
                  is subject to the provisions of Statement of Financial
                  Accounting Standards No. 71, "Accounting for the Effects of
                  Certain Types of Regulation" (SFAS-71). Accordingly, the
                  Company records certain assets and liabilities resulting from
                  the effects of the ratemaking process, which would not be
                  recorded under generally accepted accounting principles for
                  unregulated entities. The Company's ability to continue to
                  meet the criteria for application of SFAS-71 may be affected
                  in the future by competitive forces, deregulation and
                  restructuring in the electric utility industry. In the event
                  that SFAS-71 no longer applied to a separable portion of the
                  Company's operations, related regulatory assets and
                  liabilities would be eliminated unless an appropriate
                  regulatory recovery mechanism is provided. Additionally, these
                  factors could result in an impairment of electric utility
                  plant assets as determined pursuant to Statement of Financial
                  Accounting Standards No. 121, "Accounting for the Impairment
                  of Long-Lived Assets and for Long-Lived Assets to Be Disposed
                  Of." The Company's net regulatory assets totaled $398 million
                  and $414 million as of March 31, 2000 and December 31, 1999,
                  respectively.

                                       10
<PAGE>
         2)       Claims and Uncertainties.

                  a) The Company is subject to federal, state and local
                  regulations addressing air and water quality, hazardous and
                  solid waste management and other environmental matters.

                  Various organic materials associated with the production of
                  manufactured gas, generally referred to as coal tar, are
                  regulated under various federal and state laws. There are
                  several manufactured gas plant (MGP) sites to which the
                  electric utility and gas utility have some connection. In this
                  regard, both the electric utility and gas utility, along with
                  others, are participating in a cooperative effort with the
                  North Carolina Department of Environment and Natural
                  Resources, Division of Waste Management (DWM). The DWM has
                  established a uniform framework to address MGP sites. The
                  investigation and remediation of specific MGP sites will be
                  addressed pursuant to an Administrative Orders on Consent
                  (AOC) between the DWM and the potentially responsible party or
                  parties. Both the electric utility and gas utility have signed
                  an AOC to investigate and remediate certain sites. Both the
                  electric utility and the gas utility continue to identify
                  parties connected to individual MGP sites, and to determine
                  their relative relationship to other parties at those sites
                  and the degree to which they will undertake efforts with
                  others at individual sites. The Company does not expect the
                  costs associated with these sites to be material to the
                  consolidated results of operations or financial position of
                  the Company.

                  The Company is periodically notified by regulators such as the
                  North Carolina Department of Environment and Natural
                  Resources, the South Carolina Department of Health and
                  Environmental Control, and the U.S. Environmental Protection
                  Agency (EPA) of its involvement or potential involvement in
                  sites, other than MGP sites, that may require investigation
                  and/or remediation. Although the Company may incur costs at
                  the sites about which it has been notified, based upon the
                  current status of the sites, the Company does not expect those
                  costs to be material to the consolidated results of operations
                  or financial position of the Company.

                  The EPA has been conducting an enforcement initiative related
                  to a number of coal-fired utility power plants in an effort to
                  determine whether modifications at those facilities were
                  subject to New Source Review requirements or New Source
                  Performance Standards under the Clean Air Act. The Company has
                  been asked to provide information to the EPA as part of this
                  initiative and has cooperated in providing the requested
                  information. The EPA has initiated enforcement actions, which
                  may have potentially significant penalties, against other
                  companies that have been subject to this initiative. The
                  Company cannot predict the outcome of this matter.

                  The EPA published a final rule approving petitions under
                  section 126 of the Clean Air Act which requires certain
                  sources to make reductions in nitrogen oxide emissions by
                  2003. The Company's fossil-fueled electric generating plants
                  are included in these petitions. The Company and other states
                  are participating in litigation challenging the EPA's action.
                  The Company cannot predict the outcome of this matter.

                  b) As required under the Nuclear Waste Policy Act of 1982, the
                  Company entered into a contract with the U.S. Department of
                  Energy (DOE) under which the DOE agreed to begin taking spent
                  nuclear fuel by no later than January 31, 1998. All similarly
                  situated utilities were required to sign the same standard
                  contract.

                  In April 1995, the DOE issued a final interpretation that it
                  did not have an unconditional obligation to take spent nuclear
                  fuel by January 31, 1998. In Indiana & Michigan Power v. DOE,
                  the Court of Appeals vacated the DOE's final interpretation
                  and ruled that the DOE had an unconditional obligation to
                  begin taking spent nuclear fuel. The Court did not specify a
                  remedy because the DOE was not yet in default.

                  After the DOE failed to comply with the decision in Indiana &
                  Michigan Power v. DOE, a group of utilities (including the
                  Company) petitioned the Court of Appeals in Northern States
                  Power (NSP) v. DOE, seeking an order requiring the DOE to
                  begin taking spent nuclear fuel by January 31, 1998. The DOE
                  took the position that their delay was unavoidable, and the
                  DOE was excused from performance under the terms and
                  conditions of the contract. The Court of Appeals did not order
                  the DOE to begin taking spent nuclear fuel, stating that the
                  utilities had a potentially adequate remedy by filing a claim
                  for damages under the contract.

                  After the DOE failed to begin taking spent nuclear fuel by
                  January 31, 1998, a group of utilities (including the Company)
                  filed a motion with the Court of Appeals to enforce the
                  mandate in NSP v. DOE. Specifically, the utilities asked the
                  Court to permit the utilities to escrow their waste fee
                  payments, to order the DOE not to use the waste fund to pay
                  damages to the utilities, and to order the DOE to establish a
                  schedule for disposal of spent nuclear fuel. The Court denied
                  this motion based primarily on the grounds that a review of
                  the matter was premature, and that some of the requested
                  remedies fell outside of the mandate in NSP v. DOE.

                                       11
<PAGE>
                  Subsequently, a number of utilities each filed an action for
                  damages in the Court of Claims and before the Court of
                  Appeals. The Company is in the process of evaluating whether
                  it should file a similar action for damages. In NSP v. U.S.,
                  the Court of Claims decided that NSP must pursue its
                  administrative remedies instead of filing an action in the
                  Court of Claims. NSP has filed an interlocutory appeal to the
                  Court of Appeals based on NSP's position that the Court of
                  Claims has jurisdiction to decide that matter. A group of
                  utilities (including the Company) has submitted an amicus
                  brief in support of NSP's position.

                  The Company also continues to monitor legislation that has
                  been introduced in Congress which might provide some limited
                  relief. The Company cannot predict the outcome of this matter.

                  With certain modifications and additional approval by the NRC,
                  the Company's spent fuel storage facilities will be sufficient
                  to provide storage space for spent fuel generated on the
                  Company's system through the expiration of the current
                  operating licenses for all of the Company's nuclear generating
                  units. Subsequent to the expiration of these licenses, dry
                  storage may be necessary. The Company has initiated the
                  process of obtaining the additional NRC approval.

                  c) In the opinion of management, liabilities, if any, arising
                  under other pending claims would not have a material effect on
                  the financial position and results of operations of the
                  Company.

7.       SUBSEQUENT EVENT
         ----------------

         On May 3, 2000, the Company signed a letter of intent with Bain
         Capital, Inc. (Bain), a private equity fund, to form a new company.
         Under the agreement, the Company and Bain will each invest $50 million
         of new equity, in addition to an investment by the Company of the
         Application Service Provider assets of Interpath Communications, Inc.
         Upon completion of the transaction, the Company will own 35% and Bain
         will own 65% of the newly formed company.

                                       12
<PAGE>
         Item 2. Management's Discussion and Analysis of Financial Condition and
         Results of Operations

                              RESULTS OF OPERATIONS
                   FOR THE THREE MONTHS ENDED MARCH 31, 2000,
           AS COMPARED WITH THE CORRESPONDING PERIOD ONE YEAR EARLIER
           ----------------------------------------------------------

         Business segment earnings and the factors affecting them are discussed
         below.

         Electric
         --------

         The fluctuations in electric operating revenues for the three months
         ended March 31, 2000 as compared to last year were affected by the
         following factors (in millions):

                     Customer growth/changes in usage patterns*     $    29
                     Industrial Sales                                     7
                     Weather                                              5
                     Price                                               (6)
                     Sales to Power Agency                                5
                     Sales to other utilities                             1
                                                                       ----

                        Total                                       $    41
                                                                       ====

                     * Customer growth/changes in usage patterns excludes
                     industrial customers.

         The increase in customer growth/changes in usage patterns component of
         revenues reflects continued growth in the number of customers served by
         the Company and increased sales to all customer classes. Industrial
         sales experienced an overall increase primarily related to the textile
         industry, while continuing to be negatively affected by the downturn in
         the chemical industry. The increase in the weather component of
         revenues is the result of favorable temperatures in the current period
         compared to the corresponding prior period. The price-related decrease
         is due to capacity pricing changes between the Company and the North
         Carolina Electric Membership Corporation that took effect January 1,
         2000, and the effects of real-time pricing rate participation by
         industrial customers. The increase in revenue related to sales to Power
         Agency is due to more favorable temperatures and to the decreased
         availability of generating units that are jointly owned by the Company
         and Power Agency.

         The increase in fuel used for electric generation is primarily due to
         an increase in generation and deferred fuel adjustments.

         Purchased power decreased primarily due to the expiration in mid-1999
         of the Company's long-term purchase power agreement with Duke Energy

         Other operation and maintenance expense increased during the three
         months ended March 31, 2000 due to restoration costs associated with
         the severe winter storm and record breaking snowfall in January, the
         timing of plant outages, increased general and administrative expenses
         and the effects of emission allowances which the Company began to
         expense in January 2000. These allowances were acquired to meet the
         Clear Air Act emission requirements.

         Natural Gas
         -----------

         On July 15, 1999, the Company completed the acquisition of North
         Carolina Natural Gas Corporation (NCNG), now operating as a wholly
         owned subsidiary. The acquisition was accounted for as a purchase and,
         accordingly, the operating results of NCNG have been included in the
         Company's financial results since the date of acquisition. Natural gas
         revenues totaled $72.1 million, while gas purchased for resale totaled
         $43.9 million and other operation and maintenance expenses totaled $7.5
         million. NCNG's natural gas operations contributed $15.3 million of
         operating income.

         Other
         -----

         The change in operating revenues of diversified business operations was
         due to several factors. Revenues decreased due to the sale, in
         mid-1999, of SRS's lighting division. Operating revenues related to
         SRS's continuing business increased, and revenues in the current period
         include the results of NCNG's diversified operations, primarily its
         propane business. Operating expenses increased primarily due to the
         business expansion program at Interpath and the addition of NCNG's
         diversified operations. This increase was partially offset by a decline
         in SRS's expenses due to the sale of the lighting division and improved
         operational performance.

                                       13
<PAGE>
               MATERIAL CHANGES IN LIQUIDITY AND CAPITAL RESOURCES
                    FOR THE THREE MONTHS ENDED MARCH 31, 2000
                    -----------------------------------------

         Cash Flow and Financing
         -----------------------

         ISSUANCES OF BONDS, PREFERRED STOCK AND DEBENTURES
         --------------------------------------------------

         On April 11, 2000, the Company issued $300 million principal amount of
         Senior Notes, 7.50% Series Due April 1, 2005. The net proceeds from the
         issuance were used to reduce the outstanding balance of commercial
         paper and other short-term indebtedness, and for general corporate
         purposes.

         REDEMPTIONS/RETIREMENTS OF BONDS, PREFERRED STOCK AND DEBENTURES
         ----------------------------------------------------------------

         i.    The retirement on January 15, 2000 of $47.25 million principal
               amount of non-interest bearing Promissory Notes, Series 1993A,
               which matured on that date.

         ii.   The retirement on February 1, 2000 of $150 million principal
               amount of First Mortgage Bonds, 6-1/8% Series, which matured on
               that date.

         CREDIT FACILITIES
         -----------------

         As of March 31, 2000, the Company's revolving credit facilities totaled
         $750 million, all of which are long-term agreements supporting its
         commercial paper borrowings and other short-term indebtedness. The
         Company is required to pay minimal annual commitment fees to maintain
         its credit facilities. Consistent with management's intent to maintain
         its commercial paper, pollution control revenue refunding bonds
         (pollution control bonds) and other short-term indebtedness on a
         long-term basis, and as supported by its long-term revolving credit
         facilities, the Company included in long-term debt commercial paper,
         pollution control bonds and other short-term indebtedness of $750
         million at March 31, 2000 and December 31, 1999.

         CREDIT RATINGS
         --------------

         The Company's First Mortgage Bonds are currently rated "A2" by Moody's
         Investors Service, "A" CreditWatch with negative implications by
         Standard and Poor's and "A+" Rating Watch-Down by Duff and Phelps.
         Moody's Investors Service, Standard and Poor's and Duff and Phelps have
         rated the Company's commercial paper and extendible notes "P-1", "A-1"
         and "D-1", respectively. Moody's Investors Service and Standard and
         Poor's have rated the Company's extendible commercial notes "P-1" and
         "A-1", respectively.

                                  OTHER MATTERS
                                  -------------

         Florida Progress Corporation
         ----------------------------

         The Company, Florida Progress Corporation (FPC), a Florida corporation,
         and CP&L Energy, Inc. (CP&L Energy), a North Carolina corporation and
         wholly owned subsidiary of the Company, formerly known as CP&L
         Holdings, Inc. entered into an Amended and Restated Agreement and Plan
         of Share Exchange dated as of August 22, 1999, amended and restated as
         of March 3, 2000 (the "Amended Agreement").

         Under the terms of the Amended Agreement, all outstanding shares of
         common stock, no par value, of FPC common stock would be acquired by
         CP&L Energy in a statutory share exchange with an approximate value of
         $5.0 billion, which is subject to change based on CP&L Energy's stock
         price and on the value of the contingent value obligations (CVO)
         discussed below. Each share of FPC common stock, at the election of the
         holder, will be exchanged for (i) $54.00 in cash and one CVO, or (ii)
         the number of shares of common stock, no par value, of CP&L Energy
         equal to the ratio determined by dividing $54.00 by the average of the
         closing sale price per share of CP&L Energy common stock (Final Stock
         Price), as reported on the New York Stock Exchange composite tape for
         the twenty consecutive trading days ending with the fifth trading day
         immediately preceding the closing date for the exchange, and one CVO,
         or (iii) a combination of cash and CP&L Energy common stock, and one
         CVO; provided, however, that shareholder elections shall be subject to
         allocation and proration to achieve a mix of the aggregate exchange
         consideration that is 65% cash and 35% common stock. The number of
         shares of CP&L Energy common stock that will be issued as stock
         consideration will vary if the Final Stock Price is within a range of
         $37.13 to $45.39, but not outside that range. Thus, the maximum number
         of shares of CP&L Energy common stock into which one share of FPC
         common stock could be exchanged would be 1.4543 and the minimum would
         be 1.1897.

                                       14
<PAGE>
         FPC shareholders will receive one CVO for each share of FPC stock
         owned. Each CVO will represent the right to receive contingent payments
         that may be made by CP&L Energy based on certain cash flows that may be
         derived from future operations of four synthetic fuel plants currently
         owned by FPC. In conjunction with this proposed share exchange, CP&L
         Energy plans to issue debt to fund the cash portion of the exchange.

         The transaction has been approved by the Boards of Directors of FPC,
         the Company and CP&L Energy. Consummation of the exchange is subject to
         the satisfaction or waiver of certain closing conditions including,
         among others, the approval by the shareholders of FPC and the approval
         of the issuance of CP&L Energy common stock in the exchange by the
         shareholders of the Company or CP&L Energy; the approval or regulatory
         review by the Federal Energy Regulatory Commission (FERC), the SEC, the
         Nuclear Regulatory Commission (NRC), the North Carolina Utilities
         Commission (NCUC), and certain other federal and state regulatory
         bodies; the expiration or early termination of the waiting period under
         the Hart-Scott-Rodino Antitrust Improvements Act of 1976; and other
         customary closing conditions. In addition, FPC's obligation to
         consummate the exchange is conditioned upon the Final Stock Price being
         not less than $30.00. Both the Company and FPC have agreed to certain
         undertakings and limitations regarding the conduct of their respective
         businesses prior to the closing of the transaction. The transaction is
         expected to be completed in the fall of 2000.

         Either party may terminate the Amended Agreement under certain
         circumstances, including if the exchange has not been consummated on or
         before December 31, 2000; provided that if certain conditions have not
         been satisfied on December 31, 2000, but all other conditions have been
         satisfied or waived then such date shall be June 30, 2001. In the event
         that FPC or the Company terminate the Amended Agreement in certain
         limited circumstances, FPC would be required to pay the Company a
         termination fee of $150 million, plus the Company's reasonable
         out-of-pocket expenses which are not to exceed $25 million in the
         aggregate.

         On January 31, 2000, applications were filed with the NRC seeking
         approval of the change in control of FPC that will result from the
         share exchange. On February 3, 2000, CP&L Energy filed an application
         with the NCUC for authorization of the share exchange with FPC and the
         issuance of common stock in connection with the transaction. On
         February 3, 2000, CP&L Energy and FPC filed a joint application with
         the FERC requesting approval of the share exchange. On March 14, 2000,
         CP&L Energy and FPC filed an application with the SEC requesting
         approval of the share exchange under the Public Utility Holding Company
         Act. The Company cannot predict the outcome of these matters.

         Competition
         -----------

         WHOLESALE COMPETITION
         ---------------------

         To assist in the development of wholesale competition, the FERC, in
         1996, issued standards for wholesale wheeling of electric power through
         its rules on open access transmission and stranded costs and on
         information systems and standards of conduct (Orders 888 and 889). The
         rules require all transmitting utilities to have on file an open access
         transmission tariff, which contains provisions for the recovery of
         stranded costs and numerous other provisions that could affect the sale
         of electric energy at the wholesale level. The Company filed its open
         access transmission tariff with the FERC in mid-1996. Shortly
         thereafter, Power Agency and other entities filed protests challenging
         numerous aspects of the Company's tariff and requesting that an
         evidentiary proceeding be held. The FERC set the matter for hearing and
         set a discovery and procedural schedule. In July 1997, the Company
         filed an offer of settlement in this matter. The administrative law
         judge certified the offer to the full FERC in September 1997. The offer
         is pending before the FERC. In February 2000, the FERC issued a basket
         order for several utilities including the Company to file a compliance
         filing stating whether there were any remaining undisputed issues
         surrounding the Company's open access transmission tariff. On May 1,
         2000, the Company made the compliance filing setting forth the
         remaining undisputed issues and a plan for settling those issues. The
         Company will make an additional compliance filing on June 8, 2000 to
         report the status of negotiations with the remaining intervenors. The
         Company cannot predict the outcome of this matter.

         On December 20, 1999, the FERC issued a rule on Regional Transmission
         Organizations (RTO) that sets forth four minimum characteristics and
         eight functions for transmission entities, including independent system
         operators and transmission companies, to become FERC-approved RTOs. The
         rule states that public utilities that own, operate or control
         interstate transmission facilities must file by October 15, 2000,
         either a proposal to participate in an RTO or an alternative filing
         describing efforts and plans to participate in an RTO. The Company
         plans to participate in an RTO and anticipates complying with this
         filing requirement.

                                       15
<PAGE>
         NORTH CAROLINA ACTIVITIES
         -------------------------

         On April 3, 2000, the 29-member commission established in 1997 by the
         North Carolina General Assembly to evaluate the future of electric
         service in North Carolina, unanimously approved recommendations to the
         General Assembly regarding electricity deregulation in North Carolina.
         Included among these recommendations are the following: (1) full
         competition should begin no later than January 1, 2006; (2) up to 50
         percent of each power supplier's customer load, equally proportioned
         among customer classes, should be allowed to choose an alternative
         electric supplier as of January 1, 2005; (3) the initial phase of
         stranded cost recovery, accomplished through a rate freeze at current
         rates, should last until December 31, 2004; (4) the North Carolina
         Utilities Commission (NCUC) should establish rates for the year 2005
         and establish any remaining stranded cost recovery charges; and (5) for
         any investor-owned utilities with stranded cost recovery after December
         31, 2004, the NCUC should conduct a one-time true-up of remaining
         stranded costs by July 1, 2007, at which time the NCUC may
         prospectively adjust the continuing level of stranded cost recovery, as
         appropriate. The study commission did not make any recommendation
         concerning the assets or indebtedness of the municipal power agencies
         in North Carolina. The study commission is expected to meet to approve
         its report to the General Assembly, including these recommendations, in
         May, and to submit its report during the General Assembly's 2000
         session. The study commission will recommend specific legislation to
         the 2001 General Assembly, and where necessary, the 2003 General
         Assembly, to address the above recommendations as well as other issues,
         including consumer protection, the environment and alternative energy,
         and taxation. The Company cannot predict the outcome of this matter.

         FEDERAL ACTIVITIES
         ------------------

         A draft bill regarding electric industry restructuring passed the House
         Commerce Subcommittee on October 27, 1999, and is now pending before
         the full Commerce Committee. The Senate Energy & Natural Resources
         Committee held a series of hearings in April on electric restructuring
         issues. The chairman of the committee has announced his intention to
         begin markup of a bill in May, in an effort to craft a bill from the
         various bills introduced to date. The chairman has indicated his
         intention to report a bill by the July 4 recess. The Company cannot
         predict the outcome of this matter.

         COMPANY ACTIVITIES
         -------------------

         In December 1998, the Company entered into an agreement to purchase all
         of the output of a combustion turbine project to be built, owned and
         operated by Broad River Energy, LLC (BRE), in Cherokee County, South
         Carolina. In conjunction with this agreement, the Company agreed to
         provide bridge financing to BRE under a Financing Term Sheet. In March
         2000, the Financing Term Sheet agreement was settled upon the Company's
         receipt of final payment from BRE.

         In October 1999, the Company and the Albemarle-Pamlico Economic
         Development Corporation (APEC) announced their intention to build an
         850-mile, $197.5 million, natural gas transmission and distribution
         system to 14 currently unserved counties in eastern North Carolina. The
         Company will operate both the transmission and distribution systems,
         and APEC will help ensure that the new facilities are built in the most
         advantageous locations to promote development of the economic base in
         the region. In conjunction with this proposal, the Company and APEC
         filed a joint request with the NCUC for $186 million of a $200 million
         state bond package established for natural gas infrastructure. If
         granted, these funds will be used to pay for the portion of the project
         that likely could not be recovered from future gas customers through
         rates. On April 10, 2000, the Company and APEC executed an operating
         agreement creating Eastern North Carolina Natural Gas, LLC, a limited
         liability company, which will be the local distribution natural gas
         company serving the 14 counties in question. CP&L and APEC will be the
         joint owners. The operations of Eastern North Carolina Natural Gas, LLC
         will be subject to the rules and regulations of the NCUC. On April 12,
         2000, the NCUC held hearings on the joint funding request filed by the
         Company and APEC. An order is expected in mid-2000. The Company cannot
         predict the outcome of this matter.

         On April 7, 2000, the Company announced the execution of an agreement
         to purchase 75 million cubic feet per day of firm gas transportation to
         be provided through the Williams Energy's Sundance expansion project on
         its Transcontinental Interstate Pipeline. This service will be used,
         beginning in mid-2002, to supply the 30-inch Sandhills natural gas
         pipeline, which the Company announced in December 1999 it would build
         in North Carolina from Iredell County to Richmond County. The agreement
         is contingent upon FERC approval and both parties can terminate if
         Transco fails to commence service by April 3, 2003. The Company cannot
         predict the outcome of this matter.

         In April 2000, the Company signed a 5-1/2 year agreement with Duke
         Power Co., whereby the Company will provide peaking generation
         capacity. The Company will provide 300 MW of capacity for the first 11
         months of the contract, beginning July 1, 2000, and will provide 150 MW
         for the remainder of the contract.

                                       16
<PAGE>
         Transition to Holding Company Structure
         ---------------------------------------

         The Company is in the process of converting to a holding company
         structure in which the Company would become a subsidiary of a newly
         formed holding company. This conversion will offer certain advantages
         as the Company continues to confront the rapidly changing environment
         facing electric utilities. The holding company structure would allow
         greater organizational flexibility, including a clearer separation of
         regulated businesses from each other and from unregulated businesses
         such as energy services, telecommunications and electric generation
         projects for wholesale markets. The ability to conduct financing
         activities at the holding company level without the need for state
         regulatory approvals will enable the Company to satisfy financing needs
         more quickly and efficiently.

         The Company's shareholders approved the contemplated holding company
         structure on October 20, 1999. The transaction also requires the
         approval of various regulatory authorities. Upon conversion to a
         holding company structure, each share of the Company's common stock
         will automatically be exchanged for one share of common stock of the
         new holding company.

         On September 15, 1999, the Company filed an application with the NRC
         for consent to indirectly transfer control of its nuclear plant
         operating licenses to the newly formed holding company. This
         application was approved on December 31, 1999.

         On October 15, 1999, the Company filed an application with the NCUC to
         approve the transfer of ownership of the Company, Interpath and NCNG to
         the newly formed holding company. Action is expected by the end of the
         second quarter of 2000.

         On October 18, 1999, the Company filed an application with the SEC for
         approval which allows the holding company to acquire voting securities
         resulting in control over the Company and NCNG. Action is expected by
         the end of the second quarter of 2000.

         On October 20, 1999, the Company filed an application with the SCPSC to
         approve the transfer of the Company and Interpath to the newly formed
         holding company. The SCPSC issued an order approving the application on
         March 6, 2000.

         On October 25, 1999, the Company filed an application with the FERC for
         approval of the proposed reorganization of the Company related to the
         establishment of the new holding company. This application was approved
         on December 23, 1999.

         Item 3.  Quantitative and Qualitative Disclosures About Market Risk
         -------------------------------------------------------------------

         The Company has certain market risks inherent in the Company's
         financial instruments, which arise from transactions entered into in
         the normal course of business. The Company's primary exposures are
         changes in interest rates with respect to long-term debt and commercial
         paper, and fluctuations in the return on marketable securities with
         respect to its nuclear decommissioning trust funds. The Company's
         exposure to return on marketable securities for the decommission trust
         funds has not changed materially since December 31, 1999. The exposure
         to changes in interest rates from the Company's long-term debt and
         commercial paper at March 31, 2000 was not materially different than at
         December 31, 1999. The total fixed rate debt at March 31, 2000 was
         $1.726 billion, with an average interest rate of 7.12%. The total
         commercial paper and extendible notes outstanding at March 31, 2000 was
         $375 million, with an average interest rate of 6.07%, and $500 million,
         with an average interest rate of 6.26%, respectively.


                                       17
<PAGE>
                           PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings
         --------------------------

         Legal aspects of certain matters are set forth in Part I, Item 1 Notes
         to the Consolidated Interim Financial Statements, Note 6: Commitments
         and Contingencies.

         Item 2.  Changes in Securities and Use of Proceeds
         --------------------------------------------------

         RESTRICTED STOCK AWARDS:

         (a) Securities Delivered. On January 28, 2000, March 21, 2000 and May
         8, 2000, 5,100, 40,000 and 32,700 restricted shares, respectively of
         the Company's Common Shares were delivered to certain key employees
         pursuant to the terms of the Company's 1997 Equity Incentive Plan
         (Plan), which was approved by the Company's shareholders on May 7,
         1997. Section 9 of the Plan provides for the granting of Restricted
         Stock by the Personnel, Executive Development and Compensation
         Committee (currently the Committee on Organization and Compensation),
         (the Committee) to key employees of the Company. The Common Shares
         delivered pursuant to the Plan were acquired in market transactions
         directly for the accounts of the recipients and do not represent newly
         issued shares of the Company.

         (b) Underwriters and Other Purchasers. No underwriters were used in
         connection with the delivery of Common Shares described above. The
         Common Shares were delivered to certain key employees of the Company.
         The Plan defines "key employees" as an officer or other employee of the
         Company who, in the opinion of the Committee, can contribute
         significantly to the growth and profitability of, or perform services
         of major importance to, the Company.

         (c) Consideration. The Common Shares were delivered to provide an
         incentive to the employee recipients to exert their utmost efforts on
         the Company's behalf and thus enhance the Company's performance while
         aligning the employee's interest with those of the Company's
         shareholders.

         (d) Exemption from Registration Claimed. The Common Shares described in
         this Item were delivered on the basis of an exemption from registration
         under Section 4(2) of the Securities Act of 1933. Receipt of the Common
         Shares required no investment decision on the part of the recipients.
         All award decisions were made by the Committee, which consists entirely
         of non-employee directors.

         STRATEGIC RESOURCE SOLUTIONS CORP.:

         (a) Securities Delivered. On April 17, 2000, the Company issued 12,545
         shares of its Common Stock (Common Shares) in connection with the June
         5, 1997 merger of Knowledge Builders, Inc. (KBI) into a wholly-owned
         subsidiary of the Company (CaroCapital, Inc., a North Carolina
         Enterprise Corporation since renamed Strategic Resource Solutions
         Corp.) Of these, 11,603 shares were issued as post-closing merger
         consideration to the former holders of KBI common stock for KBI shares
         that were canceled in the merger. The remaining 942 shares were issued
         as incentive compensation payments based upon the 1999 performance of
         SRS and its subsidiaries arising under incentive compensation
         agreements entered into pursuant to the merger with KBI.

         (b) Underwriters and Other Purchasers. No underwriters were used in
         connection with this issuance of Common Shares. The Common Shares were
         issued (A) as merger consideration to former holders of KBI common
         stock whose KBI shares were canceled in the merger and (B) as incentive
         compensation payments to certain SRS employees based upon the 1999
         performance of SRS.

         (c) Consideration. The consideration for 11,603 of the Common Shares
         issued was the cancellation of former shares of KBI in the merger. The
         other 942 Common Shares were issued as compensation pursuant to certain
         incentive compensation award agreements.

         (d) Exemption from Registration Claimed. The Common Shares described
         above were issued on the basis of an exemption from registration under
         Section 4(2) of the Securities Act of 1933. The Common Shares were
         issued to a limited number of persons and subjected to restrictions on
         resale appropriate for private placements, and appropriate disclosure
         was made to all persons to whom Common Shares were issued.

         ACQUISITION OF CAROLINA ENVIRONMENTAL SYSTEMS, INC. AND PALMETTO
         CONTROLS GROUP, INC.

(a)      Securities Sold. On May 3, 2000, 69,617 shares of the Company's Common
         Stock (Common Shares) that had recently been purchased in the open
         market by the Company's wholly-owned subsidiary, Strategic Resource
         Solutions Corp., a North Carolina Enterprise Corporation (SRS) were
         delivered by SRS as part of the consideration for the purchase, on
         April 14, 2000, of substantially all of the assets of Carolina
         Environmental Systems, Inc. (CES) and Palmetto Controls Group, Inc
         (Palmetto). In addition, within six months of the of the closing, SRS
         is obligated to deliver to CES and Palmetto additional Common Shares
         having a market value of $150,000, if certain financial performance
         objectives for the transition period are met. Finally, SRS is obligated
         to deliver to CES and Palmetto additional Common Shares having a market
         value of $200,000 within a year after the closing, subject to claims or
         reductions in the purchase price described in the provisions of the
         asset purchase agreement that establish a contingency reserve of
         $200,000 with which to pay such claims and reductions. These Common
         Shares delivered, or to be delivered, by SRS pursuant to the asset
         purchase agreement were or will be acquired in market transactions, and
         do not represent newly-issued shares of the Company.

(b)      Underwriters and Other Purchasers. No underwriters were used in
         connection with the transactions identified above. CES and Palmetto
         were the only recipients of the Common Shares.

(c)      Consideration. The consideration for the Common Shares was the delivery
         of certain assets of CES and Palmetto pursuant to the asset purchase
         agreement.

(d)      Exemption from Registration Claimed. The Common Shares described in
         this Item were delivered on the basis of an exemption from registration
         under Section 4(2) of the Securities Act of 1933. The Common Shares
         were received by two corporations and are subject to restrictions on
         resale typical for private placements. Appropriate disclosure was made
         to the recipients of the Common Shares.

                                       18
<PAGE>
         Item 5.  Other Information
         --------------------------

         SYNTHETIC FUEL PLANT

         On April 25, 2000, the Company purchased a 90 percent ownership
         interest in a synthetic fuel plant located at the Powell Mountain mine
         site in Virginia. The synthetic fuel plant was previously wholly owned
         by a subsidiary of Florida Progress Corporation. The Company is
         currently in negotiations to purchase a 90 percent ownership interest
         in a second plant.

         INTERPATH AGREEMENTS

         On May 3, 2000, the Company signed a letter of intent with Bain
         Capital, Inc. (Bain), a private equity fund, to form a new company.
         Under the agreement, the Company and Bain will each invest $50 million
         of new equity, in addition to an investment by the Company of the
         Application Service Provider assets of Interpath Communications, Inc.
         Upon completion of the transaction, the Company will own 35% and Bain
         will own 65% of the newly formed company.

         On May 3, 2000, the Company also entered into a capacity sharing and
         marketing agreement with Progress Telecom, a wholly owned fiber optic
         based subsidiary of Florida Progress Corporation, utilizing the fiber
         optic network assets of Interpath. Upon completion of the previously
         announced merger agreement between the Company and Florida Progress
         Corporation, the two fiber optic subsidiaries will be combined and will
         operate as Progress Telecom.

         Item 6.  Exhibits and Reports on Form 8-K
         -----------------------------------------

         (a) See EXHIBIT INDEX

         (b) Reports on Form 8-K filed during or with respect to the quarter:

                  The Company filed a Current Report on Form 8-K on April 20,
                  2000, detailing the April 11, 2000 issuance of $300 million
                  principal amount of Senior Notes, 7.50% Series Due April 1,
                  2005 under Item 5 of the Report. Exhibits related to the
                  issuance were listed under Item 7 of the Report.


                                       19
<PAGE>
                                   SIGNATURES
                                   ----------


         Pursuant to requirements of the Securities Exchange Act of 1934, the
         registrant has duly caused this report to be signed on its behalf by
         the undersigned thereunto duly authorized.


                                              CAROLINA POWER & LIGHT COMPANY
                                        ------------------------------------
                                                       (Registrant)


                                        By      /s/     Peter M. Scott III
                                           -------------------------------------

                                                      Peter M. Scott III
                                                  Executive Vice President and
                                                     Chief Financial Officer


                                        By      /s/     Robert H. Bazemore, Jr.
                                           -------------------------------------

                                                    Robert H. Bazemore, Jr.
                                                  Vice President and Controller
                                                    (Chief Accounting Officer)






Date:     May 12, 2000


                                       20
<PAGE>
                                  EXHIBIT INDEX

         EXHIBIT NUMBER           DESCRIPTION

              27             Financial Data Schedule

                                       21