**FORM        10-Q**

**        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)**

**OF        THE SECURITIES EXCHANGE ACT OF 1934**

**        TRANSITION REPORT PURSUANT TO SECTION 13 OR**

**15(d)        OF THE SECURITIES EXCHANGE ACT OF 1934**

| Commission                  File Number | Exact                  name of registrants as specified in their charters,                  states of incorporation, addresses                  of principal executive offices, and telephone                  numbers                                                                                            | I.R.S.                  Employer Identification Number |
|-----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|
|                                    |                                                                                                                                                                                                                                                                                                         |                                                   |
|                                    |                                                                                                                                                                                                                                                                                                              |                                                   |
| 1-15929                                 | **Progress                  Energy, Inc.**410                  South Wilmington StreetRaleigh,                  North Carolina 27601-1748Telephone:                  (919) 546-6111State                  of Incorporation: North Carolina                                                                        | 56-2155481                                             |
|                                    |                                                                                                                                                                                                                                                                                                              |                                                   |
| 1-3382                                  | **Carolina                  Power & Light Company****d/b/a                  Progress Energy Carolinas, Inc.**410                  South Wilmington StreetRaleigh,                  North Carolina 27601-1748Telephone:                  (919) 546-6111State                  of Incorporation: North Carolina | 56-0165465                                             |
|                                    |                                                                                                                                                                                                                                                                                                              |                                                   |
| 1-3274                                  | **Florida                  Power Corporation****d/b/a                  Progress Energy Florida, Inc.**100                  Central AvenueSt.                  Petersburg, Florida 33701Telephone                  (727) 820-5151State                  of Incorporation: Florida                                  | 59-0247770                                             |

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| Progress                  Energy, Inc. (Progress Energy)  | Large                  accelerated filer | x | Accelerated                  filer | o | Non-accelerated                  filer | o |
|-----------------------------------------------------------|------------------------------------------|---|------------------------------------|---|----------------------------------------|---|
| Carolina                  Power & Light Company (PEC) | Large                  accelerated filer | o | Accelerated                  filer | o | Non-accelerated                  filer | x |
| Florida                  Power Corporation (PEF)          | Large                  accelerated filer | o | Accelerated                  filer | o | Non-accelerated                  filer | x |

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

| **Registrant**                   | **Description**                                   | **Shares**                                                                                               |
|----------------------------------|---------------------------------------------------|----------------------------------------------------------------------------------------------------------|
| Progress                  Energy | Common                  Stock (Without Par Value) | 252,970,295                                                                                              |
|                             |                                              |                                                                                                     |
| PEC                              | Common                  Stock (Without Par Value) | 159,608,055                  (all of which were held directly by Progress                  Energy, Inc.) |
|                             |                                              |                                                                                                     |
| PEF                              | Common                  Stock (Without par value) | 100                  (all of which were held indirectly by Progress Energy,                  Inc.)       |

**This        combined Form 10-Q is filed separately by three        registrants: Progress Energy, PEC and PEF (collectively, the Progress        Registrants). Information contained herein relating to any individual registrant        is filed by such registrant solely on its own behalf. Each registrant makes        no        representation as to information relating exclusively to the other        registrants.**** **

**PEF        meets the conditions set forth in General Instruction        H(1)(a) and (b) of Form 10-Q and is therefore filing this form with the reduced        disclosure format. **

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**PROGRESS        ENERGY, INC., PROGRESS ENERGY CAROLINAS,        INC.**

**AND        PROGRESS ENERGY FLORIDA, INC.**

**FORM        10-Q - For the Quarter Ended March 31,        2006**

Glossary        of Terms

Safe        Harbor for Forward-Looking Statements

| PART                  I. | FINANCIAL                  INFORMATION |
|--------------------------|----------------------------------------|

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

| Unaudited                  Interim Financial Statements:                          |
|-----------------------------------------------------------------------------------|
|                                                                              |
| Progress                  Energy, Inc. (Progress Energy)                          |
| Unaudited                  Consolidated Statements of                  Income     |
| Unaudited                  Consolidated Balance                  Sheets           |
| Unaudited                  Consolidated Statements of                  Cash Flows |
|                                                                              |
| Carolina                  Power & Light Company                               |
| d/b/a                  Progress Energy Carolinas, Inc. (PEC)                      |
| Unaudited                  Consolidated Statements of                  Income     |
| Unaudited                  Consolidated Balance                  Sheets           |
| Unaudited                  Consolidated Statements of Cash                  Flows |
|                                                                              |
| Florida                  Power Corporation                                        |
| d/b/a                  Progress Energy Florida, Inc. (PEF)                        |
| Unaudited                  Statements of                  Income                  |
| Unaudited                  Balance Sheets                                         |
| Unaudited                  Statements of Cash                  Flows              |

Combined        Notes to Unaudited Interim Financial        Statements for Progress Energy, Inc., Carolina Power & Light Company d/b/a        Progress Energy Carolinas, Inc. and Florida Power Corporation d/b/a Progress        Energy Florida, Inc.

| Item                  2. | Management's                  Discussion and Analysis of Financial                  Condition and Results of Operations |
|--------------------------|-------------------------------------------------------------------------------------------------------------------------|

| Item                  3. | Quantitative                  and Qualitative Disclosures about                  Market Risk |
|--------------------------|----------------------------------------------------------------------------------------------|

| Item                  4. | Controls                  and                  Procedures |
|--------------------------|-----------------------------------------------------------|

| PART                  II. | OTHER                  INFORMATION |
|---------------------------|------------------------------------|

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

| Item                  1A. | Risk                  Factors |
|---------------------------|-------------------------------|

| Item                  2. | Unregistered                  Sales of Equity Securities and                  Use of Proceeds |
|--------------------------|-----------------------------------------------------------------------------------------------|

| Item                  6. | Exhibits |
|--------------------------|----------|

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GLOSSARY

| **TERM**                                 | **DEFINITION**                                                                                                                                                                                                                                                                              |
|------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                     |                                                                                                                                                                                                                                                                                        |
| 2005                  Form 10-K          | Progress                  Registrants’ annual report on Form 10-K for the fiscal                  year ended December 31, 2005                                                                                                                                                        |
| 401(k)                                   | Progress                  Energy 401(k) Savings and Stock Ownership                  Plan                                                                                                                                                                                                   |
| AFUDC                                    | Allowance                  for funds used during construction                                                                                                                                                                                                                               |
| AHI                                      | Affordable                  housing investment                                                                                                                                                                                                                                              |
| APB                                      | Accounting                  Principles Board                                                                                                                                                                                                                                                |
| APB                  No. 25              | Accounting                  Principles Board Opinion No. 25, “Accounting for                  Stock Issued to Employees”                                                                                                                                                        |
| APB                  No. 28              | Accounting                  Principles Board Opinion No. 28, “Interim Financial                  Reporting”                                                                                                                                                                     |
| ARO                                      | Asset                  retirement obligation                                                                                                                                                                                                                                                |
| Annual                  Average Price    | Average                  wellhead price per barrel for unregulated domestic                  crude oil for the year                                                                                                                                                                         |
| BART                                     | Best                  Available Retrofit Technology                                                                                                                                                                                                                                         |
| Base                  Rate Settlement    | Settlement                  reached with the FPSC on September 7, 2005 on PEF’s                  base rate proceeding                                                                                                                                                                 |
| Bcf                                      | Billion                  cubic feet                                                                                                                                                                                                                                                         |
| Broad                  River             | Broad                  River LLC’s Broad River Facility                                                                                                                                                                                                                               |
| Brunswick                                | Brunswick                  Nuclear Plant                                                                                                                                                                                                                                                    |
| Btu                                      | British                  thermal unit                                                                                                                                                                                                                                                       |
| CAIR                                     | Clean                  Air Interstate Rule                                                                                                                                                                                                                                                  |
| CAMR                                     | Clean                  Air Mercury Rule                                                                                                                                                                                                                                                     |
| CAVR                                     | Clean                  Air Visibility Rule                                                                                                                                                                                                                                                  |
| CERCLA                  or Superfund     | Comprehensive                  Environmental Response, Compensation and                  Liability Act of 1980, as amended                                                                                                                                                                  |
| Clean                  Smokestacks Act   | North                  Carolina Clean Smokestacks Act, enacted in June                  2002                                                                                                                                                                                                |
| Coal                                     | Coal                  terminals and marketing operations that blend and                  transload coal as part of the transportation network for coal                  delivery                                                                                                            |
| Coal                  and Synthetic Fuel | Business                  segment primarily engaged in synthetic fuel production                  and sales operations, the operation of synthetic fuel facilities                  for third                  parties and coal terminal services                                           |
| the                  Code                | Internal                  Revenue Code                                                                                                                                                                                                                                                      |
| CO2                                      | Carbon                  dioxide                                                                                                                                                                                                                                                             |
| COL                                      | Combined                  license                                                                                                                                                                                                                                                           |
| Colona                                   | Colona                  Synfuel Limited Partnership, LLLP                                                                                                                                                                                                                                   |
| Corporate                                | Collectively,                  the Parent, PESC and consolidation                  entities                                                                                                                                                                                                 |
| Corporate                  and Other     | Corporate                  and Other segment includes Corporate as well as other                  nonregulated business areas                                                                                                                                                               |
| CR3                                      | Crystal                  River Unit No. 3 Nuclear Plant                                                                                                                                                                                                                                     |
| CVO                                      | Contingent                  value obligation                                                                                                                                                                                                                                                |
| DeSoto                                   | DeSoto                  County Generating Co., LLC                                                                                                                                                                                                                                          |
| DIG                  Issue C20           | FASB                  Derivatives Implementation Group Issue C20,                  “Interpretation of the Meaning of Not Clearly and Closely Related                  in                  Paragraph 10(b) regarding Contracts with a Price Adjustment                  Feature” |
| Dixie                  Fuels             | Dixie                  Fuels Limited                                                                                                                                                                                                                                                        |
| DOE                                      | United                  States Department of Energy                                                                                                                                                                                                                                         |
| Earthco                                  | Four                  wholly owned coal-based solid synthetic fuel limited                  liability companies                                                                                                                                                                             |
| ECRC                                     | Environmental                  Cost Recovery                  Clause                                                                                                                                                                                                                        |

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| EIA                                      | Energy                  Information Agency                                                                                                                                                                                                                                                                        |
|------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| EIP                                      | Progress                  Energy 2002 Equity Incentive Plan                                                                                                                                                                                                                                                       |
| EITF                                     | Emerging                  Issues Task Force                                                                                                                                                                                                                                                                       |
| EITF                  03-1               | Emerging                  Issues Task Force No. 03-1, “The Meaning of                  Other-Than-Temporary Impairments and Its Application to Certain                  Investments”                                                                                                                  |
| EITF                  03-4               | Emerging                  Issues Task Force No. 03-4, “Determining the                  Classification and Benefit Attribution Method for a ‘Cash Balance’ Pension                  Plan”                                                                                                 |
| EITF                  04-5               | Emerging                  Issues Task Force No. 04-5, “Determining Whether a                  General Partner, or the General Partners as a Group, Controls a                  Limited                  Partnership or Similar Entity When the Limited Partners Have Certain                  Rights” |
| EMCs                                     | Electric                  Membership Cooperatives                                                                                                                                                                                                                                                                 |
| Energy                  Delivery         | Distribution                  operations of the Utilities                                                                                                                                                                                                                                                         |
| EPA                                      | Environmental                  Protection Agency                                                                                                                                                                                                                                                                  |
| EPACT                                    | Energy                  Policy Act of 2005                                                                                                                                                                                                                                                                        |
| ESOP                                     | Employee                  Stock Ownership Plan                                                                                                                                                                                                                                                                    |
| FASB                                     | Financial                  Accounting Standards Board                                                                                                                                                                                                                                                             |
| FDEP                                     | Florida                  Department of Environmental Protection                                                                                                                                                                                                                                                   |
| FERC                                     | Federal                  Energy Regulatory Commission                                                                                                                                                                                                                                                             |
| FGT                                      | Florida                  Gas Transmission Company                                                                                                                                                                                                                                                                 |
| FIN                  45                  | FASB                  Interpretation No. 45, “Guarantor’s Accounting and                  Disclosure Requirements for Guarantees, Including Indirect Guarantees                  of                  Indebtedness of Others”                                                                    |
| FIN                  46R                 | FASB                  Interpretation No. 46R, “Consolidation of Variable                  Interest Entities - an Interpretation of ARB No. 51”                                                                                                                                                        |
| FIN                  47                  | FASB                  Interpretation No. 47, “Accounting for Conditional Asset                  Retirement Obligations - an Interpretation of FASB Statement No.                  143”                                                                                                                |
| Florida                  Global Case     | U.S.                  Global LLC v. Progress Energy, Inc. et al                                                                                                                                                                                                                                                   |
| Florida                  Progress or FPC | Florida                  Progress Corporation, one of our wholly owned                  subsidiaries                                                                                                                                                                                                              |
| FPSC                                     | Florida                  Public Service Commission                                                                                                                                                                                                                                                                |
| Funding                  Corp.           | Florida                  Progress Funding Corporation, a wholly owned subsidiary                  of Florida Progress                                                                                                                                                                                             |
| GAAP                                     | Accounting                  principles generally accepted in the United States                  of America                                                                                                                                                                                                        |
| Georgia                  Power           | Georgia                  Power Company, a subsidiary of Southern                  Company                                                                                                                                                                                                                         |
| Georgia                  Region          | Reporting                  unit consisting of our Effingham, Monroe, Walton and                  Washington nonregulated generation plants in service                                                                                                                                                             |
| GITS                                     | Georgia                  Integrated Transmission System                                                                                                                                                                                                                                                           |
| Global                                   | U.S.                  Global LLC                                                                                                                                                                                                                                                                                  |
| Gulfstream                               | Gulfstream                  Gas System, L.L.C.                                                                                                                                                                                                                                                                    |
| Harris                                   | Shearon                  Harris Nuclear Plant                                                                                                                                                                                                                                                                     |
| IBEW                                     | International                  Brotherhood of Electrical Workers                                                                                                                                                                                                                                                  |
| IRS                                      | Internal                  Revenue Service                                                                                                                                                                                                                                                                         |
| Jackson                                  | Jackson                  Electric Membership Corporation                                                                                                                                                                                                                                                          |
| kV                                       | Kilovolt                                                                                                                                                                                                                                                                                                          |
| kVA                                      | Kilovolt-ampere                                                                                                                                                                                                                                                                                                   |
| kW                                       | Kilowatt                                                                                                                                                                                                                                                                                                          |
| kWh                                      | Kilowatt-hour                                                                                                                                                                                                                                                                                                     |
| Level                  3                 | Level                  3 Communications, Inc.                                                                                                                                                                                                                                                                     |
| LIBOR                                    | London                  Inter Bank Offering Rate                                                                                                                                                                                                                                                                  |
| MACT                                     | Maximum                  Achievable Control Technology                                                                                                                                                                                                                                                            |
| MDC                                      | Maximum                  Dependable Capability                                                                                                                                                                                                                                                                    |
| Medicare                  Act            | Medicare                  Prescription Drug, Improvement and Modernization Act                  of 2003                                                                                                                                                                                                           |
| MGP                                      | Manufactured                  gas plant                                                                                                                                                                                                                                                                           |
| MW                                       | Megawatt                                                                                                                                                                                                                                                                                                          |
| MWh                                      | Megawatt-hour                                                                                                                                                                                                                                                                                                     |
| Moody’s                            | Moody’s                  Investors Service, Inc.                                                                                                                                                                                                                                                            |
| NAAQS                                    | National                  Ambient Air Quality Standards                                                                                                                                                                                                                                                           |
| NCNG                                     | North                  Carolina Natural Gas                  Corporation                                                                                                                                                                                                                                          |

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| NSR                                             | New                  Source Review requirement by EPA                                                                                                                                                         |
|-------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| NCUC                                            | North                  Carolina Utilities Commission                                                                                                                                                          |
| NEIL                                            | Nuclear                  Electric Insurance Limited                                                                                                                                                           |
| North                  Carolina Global Case     | Progress                  Synfuel Holdings, Inc. et al. v. U.S. Global,                  LLC                                                                                                                  |
| the                  Notes Guarantee            | Florida                  Progress’ full and unconditional guarantee of the                  Subordinated Notes                                                                                          |
| NOx                                             | Nitrogen                  Oxide                                                                                                                                                                               |
| NOx                  SIP Call                   | EPA                  rule which requires 22 states including North and South                  Carolina (but excluding Florida) to further reduce nitrogen oxide                  emissions.                   |
| NRC                                             | United                  States Nuclear Regulatory Commission                                                                                                                                                  |
| Nuclear                  Waste Act              | Nuclear                  Waste Policy Act of 1982                                                                                                                                                             |
| NYMEX                                           | New                  York Mercantile Exchange                                                                                                                                                                 |
| OCI                                             | Other                  comprehensive income as defined by GAAP                                                                                                                                                |
| O&M                                         | Operation                  and maintenance expense                                                                                                                                                            |
| OPEB                                            | Postretirement                  benefits other than pensions                                                                                                                                                  |
| P11                                             | Intercession                  City Unit P11                                                                                                                                                                   |
| the                  Parent                     | Progress                  Energy, Inc. holding company on an unconsolidated                  basis                                                                                                            |
| PEC                                             | Progress                  Energy Carolinas, Inc., formerly referred to as                  Carolina Power & Light Company                                                                                 |
| PEF                                             | Progress                  Energy Florida, Inc., formerly referred to as Florida                  Power Corporation                                                                                            |
| PESC                                            | Progress                  Energy Service Company, LLC                                                                                                                                                         |
| the                  Phase-out Price            | Price                  per barrel of unregulated domestic crude oil at which                  Section 29/45K tax credits are fully eliminated                                                                 |
| Power                  Agency                   | North                  Carolina Eastern Municipal Power Agency                                                                                                                                                |
| Preferred                  Securities           | 7.10%                  Cumulative Quarterly Income Preferred Securities due                  2039, Series A issued by the Trust                                                                               |
| Preferred                  Securities Guarantee | Florida                  Progress’ guarantee of all distributions related to the                  Preferred Securities                                                                                  |
| Progress                  Energy                | Progress                  Energy, Inc. and subsidiaries on a consolidated                  basis                                                                                                              |
| Progress                  Registrants           | The                  individual reporting registrants within the Progress Energy                  consolidated group. Collectively, Progress Energy, Inc., PEC and                  PEF                       |
| Progress                  Fuels                 | Progress                  Fuels Corporation, formerly Electric Fuels                  Corporation                                                                                                             |
| Progress                  Rail                  | Progress                  Rail Services Corporation                                                                                                                                                           |
| Progress                  Ventures              | Business                  segment primarily engaged in nonregulated energy                  generation, energy marketing activities and natural gas drilling                  and                  production |
| PRP                                             | Potentially                  responsible party, as defined in CERCLA                                                                                                                                          |
| PSSP                                            | Performance                  Share Sub-Plan                                                                                                                                                                   |
| PTC                                             | Progress                  Telecommunications Corporation                                                                                                                                                      |
| PT                  LLC                         | Progress                  Telecom, LLC                                                                                                                                                                        |
| PUHCA                                           | Public                  Utility Holding Company Act of 1935, as                  amended                                                                                                                      |
| PURPA                                           | Public                  Utilities Regulatory Policies Act of 1978                                                                                                                                             |
| PVI                                             | Progress                  Energy Ventures, Inc. (formerly referred to as                  Progress Ventures, Inc.)                                                                                            |
| PWC                                             | Public                  Works Commission of the City of Fayetteville, North                  Carolina                                                                                                         |
| PWR                                             | Pressurized                  water reactor                                                                                                                                                                    |
| QF                                              | Qualifying                  facility                                                                                                                                                                          |
| RCA                                             | Revolving                  credit agreement                                                                                                                                                                   |
| Rockport                                        | Indiana                  Michigan Power Company’s Rockport Unit No.                  2                                                                                                                  |
| Robinson                                        | Robinson                  Nuclear Plant                                                                                                                                                                       |
| ROE                                             | Return                  on equity                                                                                                                                                                             |
| Rowan                                           | Rowan                  County Power, Inc., LLC                                                                                                                                                                |
| RSA                                             | Restricted                  stock awards program                                                                                                                                                              |
| RTO                                             | Regional                  transmission organization                                                                                                                                                           |
| SCPSC                                           | Public                  Service Commission of South Carolina                                                                                                                                                  |
| Scrubber                                        | A                  device that neutralizes sulfur compounds formed during coal                  combustion                                                                                                    |
| SEC                                             | United                  States Securities and Exchange                  Commission                                                                                                                            |

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| Section                  29                   | Section                  29 of the Internal Revenue Service Code                                                                                                                                                                                    |
|-----------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Section                  29/45K               | General                  business tax credits earned after December 31, 2005 for                  synthetic fuel production activities in accordance with Section                  29                                                               |
| Section                  45K                  | General                  business tax credit                                                                                                                                                                                                        |
| (See                  Note/s “#”) | For                  all sections, this is a cross-reference to the Combined                  Notes to the Unaudited Interim Financial Statements contained in                  PART I,                  Item 1                                     |
| S&P                                       | Standard&Poor’s                  Rating Services                                                                                                                                                                                          |
| SFAS                                          | Statement                  of Financial Accounting Standards                                                                                                                                                                                        |
| SFAS                  No. 5                   | Statement                  of Financial Accounting Standards No. 5, “Accounting                  for Contingencies”                                                                                                                     |
| SFAS                  No. 71                  | Statement                  of Financial Accounting Standards No. 71, “Accounting                  for the Effects of Certain Types of Regulation”                                                                                       |
| SFAS                  No. 87                  | Statement                  of Financial Accounting Standards No. 87, “Employers’                  Accounting for Pensions”                                                                                                        |
| SFAS                  No. 109                 | Statement                  of Financial Accounting Standards No. 109,                  “Accounting for Income Taxes”                                                                                                                    |
| SFAS                  No. 115                 | Statement                  of Financial Accounting Standards No. 115,                  “Accounting for Certain Investments in Debt and Equity                  Securities”                                                              |
| SFAS                  No. 123                 | Statement                  of Financial Accounting Standards No. 123,                  “Accounting for Stock-Based Compensation”                                                                                                        |
| SFAS                  No. 123R                | Statement                  of Financial Accounting Standards No. 123R,                  “Share-Based Payment”                                                                                                                           |
| SFAS                  No. 131                 | Statement                  of Financial Accounting Standards No. 131,                  “Disclosures about Segments of an Enterprise and Related                  Information”                                                           |
| SFAS                  No. 133                 | Statement                  of Financial Accounting Standards No. 133,                  “Accounting for Derivative and Hedging Activities”                                                                                               |
| SFAS                  No. 138                 | Statement                  of Financial Accounting Standards No. 138,                  “Accounting for Certain Derivative Instruments and Certain Hedging                  Activities - An Amendment of FASB Statement No. 133”         |
| SFAS                  No. 142                 | Statement                  of Financial Accounting Standards No. 142, “Goodwill                  and Other Intangible Assets”                                                                                                           |
| SFAS                  No. 143                 | Statement                  of Financial Accounting Standards No. 143,                  “Accounting for Asset Retirement Obligations”                                                                                                    |
| SFAS                  No. 144                 | Statement                  of Financial Accounting Standards No. 144,                  “Accounting for the Impairment or Disposal of Long-Lived                  Assets”                                                                |
| SFAS                  No. 148                 | Statement                  of Financial Accounting Standards No. 148,                  “Accounting for Stock-Based Compensation - Transition and Disclosure                  - An                  Amendment of FASB Statement No. 123” |
| SFAS                  No. 149                 | Statement                  of Financial Accounting Standards No. 149, “Amendment                  of Statement 133 on Derivative Instruments and Hedging                  Activities”                                                   |
| SFAS                  No. 150                 | Statement                  of Financial Accounting Standards No. 150,                  “Accounting for Certain Financial Instruments with Characteristics                  of Both                  Liabilities and Equity”             |
| SNG                                           | Southern                  Natural Gas Company                                                                                                                                                                                                       |
| SO2                                           | Sulfur                  dioxide                                                                                                                                                                                                                     |
| SPC                                           | Southern                  Power Company, a subsidiary of Southern                  Company                                                                                                                                                          |
| SRS                                           | Strategic                  Resource Solutions Corp.                                                                                                                                                                                                 |
| Subordinated                  Notes           | 7.10%                  Junior Subordinated Deferrable Interest Notes due 2039                  issued by Funding Corp.                                                                                                                              |
| Tax                  Agreement                | Intercompany                  Income Tax Allocation Agreement                                                                                                                                                                                       |
| the                  Threshold Price          | Price                  per barrel of unregulated domestic crude oil at which                  Section 29/45K tax credits begin to be reduced                                                                                                        |
| the                  Trust                    | FPC                  Capital I, a wholly owned subsidiary of Florida                  Progress                                                                                                                                                      |
| the                  Utilities                | Collectively,                  PEC and PEF                                                                                                                                                                                                          |
| Winchester                  Production        | Winchester                  Production Company, Ltd., an indirectly owned                  subsidiary of Progress Fuels                  Corporation                                                                                                |

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**SAFE        HARBOR FOR FORWARD-LOOKING        STATEMENTS**

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**PROGRESS        ENERGY, INC.**

**CONSOLIDATED        INTERIM FINANCIAL        STATEMENTS**

**March        31, 2006**

| **UNAUDITED                  CONSOLIDATED STATEMENTS of                  INCOME**                               |   |     |      |
|-----------------------------------------------------------------------------------------------------------------|--------|----------|-----------|
| (in                  millions except per share data)                                                            |   |     |      |
| Three                  Months Ended March 31                                                                    |   | **2006** |      | 2005 |   |
| **Operating                  revenues**                                                                         |   |     |      |   |   |   |   |
| Electric                                                                                                        |   | **$**    | **1,985** |   | $ | 1,783 |   |
| Diversified                  business                                                                           |   |     | **448**   |   |   | 370 |   |
| Total                  operating revenues                                                                       |   |     | **2,433** |   |   | 2,153 |   |
| **Operating                  expenses**                                                                         |   |     |      |   |   |   |   |
| Utility                                                                                                         |   |     |      |   |   |   |   |
| Fuel                  used in electric generation                                                               |   |     | **690**   |   |   | 550 |   |
| Purchased                  power                                                                                |   |     | **229**   |   |   | 198 |   |
| Operation                  and maintenance                                                                      |   |     | **416**   |   |   | 406 |   |
| Depreciation                  and amortization                                                                  |   |     | **228**   |   |   | 208 |   |
| Taxes                  other than on income                                                                     |   |     | **119**   |   |   | 117 |   |
| Other                                                                                                           |   |     | **(2**    | **)** |   | - |   |
| Diversified                  business                                                                           |   |     |      |   |   |   |   |
| Cost                  of sales                                                                                  |   |     | **405**   |   |   | 365 |   |
| Depreciation                  and amortization                                                                  |   |     | **36**    |   |   | 32 |   |
| Impairment                  of goodwill                                                                         |   |     | **64**    |   |   | - |   |
| Gain                  on the sale of assets                                                                     |   |     | **(7**    | **)** |   | (4 | ) |
| Other                                                                                                           |   |     | **23**    |   |   | 29 |   |
| Total                  operating expenses                                                                       |   |     | **2,201** |   |   | 1,901 |   |
| **Operating                  income**                                                                           |   |     | **232**   |   |   | 252 |   |
| **Other                  income (expense)**                                                                     |   |     |      |   |   |   |   |
| Interest                  income                                                                                |   |     | **17**    |   |   | 4 |   |
| Other,                  net                                                                                     |   |     | **(2**    | **)** |   | 1 |   |
| Total                  other income                                                                             |   |     | **15**    |   |   | 5 |   |
| **Interest                  charges**                                                                           |   |     |      |   |   |   |   |
| Net                  interest charges                                                                           |   |     | **182**   |   |   | 165 |   |
| Allowance                  for borrowed funds used during construction                                          |   |     | **(2**    | **)** |   | (3 | ) |
| Total                  interest charges, net                                                                    |   |     | **180**   |   |   | 162 |   |
| **Income                  from continuing operations before income tax and                  minority interest** |   |     | **67**    |   |   | 95 |   |
| **Income                  tax expense (benefit)**                                                               |   |     | **13**    |   |   | (1 | ) |
| **Income                  from continuing operations before minority                  interest**                |   |     | **54**    |   |   | 96 |   |
| **Minority                  interest in subsidiaries’ (income) loss, net                  of tax**        |   |     | **(7**    | **)** |   | 8 |   |
| **Income                  from continuing operations**                                                          |   |     | **47**    |   |   | 104 |   |
| **Discontinued                  operations, net of tax**                                                        |   |     | **(2**    | **)** |   | (11 | ) |
| **Net                  income**                                                                                 |   | **$**    | **45**    |   | $ | 93 |   |
| **Average                  common shares outstanding -                  basic**                                 |   |     | **249**   |   |   | 244 |   |
| **Basic                  earnings per common share**                                                            |   |     |      |   |   |   |   |
| Income                  from continuing operations                                                              |   | **$**    | **0.19**  |   | $ | 0.43 |   |
| Discontinued                  operations, net of tax                                                            |   |     | **(0.01** | **)** |   | (0.05 | ) |
| Net                  income                                                                                     |   | **$**    | **0.18**  |   | $ | 0.38 |   |
| **Diluted                  earnings per common share**                                                          |   |     |      |   |   |   |   |
| Income                  from continuing operations                                                              |   | **$**    | **0.19**  |   | $ | 0.43 |   |
| Discontinued                  operations, net of tax                                                            |   |     | **(0.01** | **)** |   | (0.05 | ) |
| Net                  income                                                                                     |   | **$**    | **0.18**  |   | $ | 0.38 |   |
| **Dividends                  declared per common share**                                                        |   | **$**    | **0.605** |   | $ | 0.590 |   |

----

| **UNAUDITED                  CONSOLIDATED BALANCE                  SHEETS**                                                                                      |   |                                |       |                               |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|------------|------------------------------------|--------|
| (in                  millions)                                                                                                                                   |   | **March                  31, 2006** |       | December                  31, 2005 |   |
| **ASSETS**                                                                                                                                                       |   |                                |       |                               |   |
| **Utility                  plant**                                                                                                                               |   |                                |       |                               |   |
| Utility                  plant in service                                                                                                                        |   | **$**                               | **23,035** |                               | $      | 22,940 |   |
| Accumulated                  depreciation                                                                                                                        |   |                                | **(9,713** | **)**                              |   | (9,602 | ) |
| Utility                  plant in service, net                                                                                                                   |   |                                | **13,322** |                               |   | 13,338 |   |
| Held                  for future use                                                                                                                             |   |                                | **12**     |                               |   | 12 |   |
| Construction                  work in progress                                                                                                                   |   |                                | **964**    |                               |   | 813 |   |
| Nuclear                  fuel, net of amortization                                                                                                               |   |                                | **272**    |                               |   | 279 |   |
| **Total                  utility plant, net**                                                                                                                    |   |                                | **14,570** |                               |   | 14,442 |   |
| **Current                  assets**                                                                                                                              |   |                                |       |                               |   |   |   |
| Cash                  and cash equivalents                                                                                                                       |   |                                | **263**    |                               |   | 606 |   |
| Short-term                  investments                                                                                                                          |   |                                | **217**    |                               |   | 191 |   |
| Receivables,                  net                                                                                                                                |   |                                | **1,014**  |                               |   | 1,099 |   |
| Inventory                                                                                                                                                        |   |                                | **908**    |                               |   | 859 |   |
| Deferred                  fuel cost                                                                                                                              |   |                                | **474**    |                               |   | 602 |   |
| Deferred                  income taxes                                                                                                                           |   |                                | **2**      |                               |   | 50 |   |
| Assets                  of discontinued operations                                                                                                               |   |                                | **86**     |                               |   | 225 |   |
| Prepayments                  and other current assets                                                                                                            |   |                                | **242**    |                               |   | 209 |   |
| **Total                  current assets**                                                                                                                        |   |                                | **3,206**  |                               |   | 3,841 |   |
| **Deferred                  debits and other assets**                                                                                                            |   |                                |       |                               |   |   |   |
| Regulatory                  assets                                                                                                                               |   |                                | **852**    |                               |   | 854 |   |
| Nuclear                  decommissioning trust funds                                                                                                             |   |                                | **1,175**  |                               |   | 1,133 |   |
| Diversified                  business property, net                                                                                                              |   |                                | **1,792**  |                               |   | 1,798 |   |
| Miscellaneous                  other property and investments                                                                                                    |   |                                | **482**    |                               |   | 476 |   |
| Goodwill                                                                                                                                                         |   |                                | **3,655**  |                               |   | 3,719 |   |
| Intangibles,                  net                                                                                                                                |   |                                | **295**    |                               |   | 302 |   |
| Other                  assets and deferred debits                                                                                                                |   |                                | **461**    |                               |   | 477 |   |
| **Total                  deferred debits and other                  assets**                                                                                     |   |                                | **8,712**  |                               |   | 8,759 |   |
| **Total                  assets**                                                                                                                                |   | **$**                               | **26,488** |                               | $      | 27,042 |   |
| **CAPITALIZATION                  AND LIABILITIES**                                                                                                              |   |                                |       |                               |   |   |   |
| **Common                  stock equity**                                                                                                                         |   |                                |       |                               |   |   |   |
| Common                  stock without par value, 500 million shares authorized,                  253 and 252 million shares issued and outstanding, respectively |   | **$**                               | **5,614**  |                               | $      | 5,571 |   |
| Unearned                  ESOP shares (2 million and 3 million shares,                  respectively)                                                            |   |                                | **(54**    | **)**                              |   | (63 | ) |
| Accumulated                  other comprehensive loss                                                                                                            |   |                                | **(90**    | **)**                              |   | (104 | ) |
| Retained                  earnings                                                                                                                               |   |                                | **2,527**  |                               |   | 2,634 |   |
| **Total                  common stock equity**                                                                                                                   |   |                                | **7,997**  |                               |   | 8,038 |   |
| **Preferred                  stock of subsidiaries - not subject to                  mandatory redemption**                                                      |   |                                | **93**     |                               |   | 93 |   |
| **Minority                  interest**                                                                                                                           |   |                                | **58**     |                               |   | 43 |   |
| **Long-term                  debt, affiliate**                                                                                                                   |   |                                | **270**    |                               |   | 270 |   |
| **Long-term                  debt, net**                                                                                                                         |   |                                | **10,178** |                               |   | 10,176 |   |
| **Total                  capitalization**                                                                                                                        |   |                                | **18,596** |                               |   | 18,620 |   |
| **Current                  liabilities**                                                                                                                         |   |                                |       |                               |   |   |   |
| Current                  portion of long-term debt                                                                                                               |   |                                | **109**    |                               |   | 513 |   |
| Accounts                  payable                                                                                                                                |   |                                | **542**    |                               |   | 676 |   |
| Interest                  accrued                                                                                                                                |   |                                | **164**    |                               |   | 208 |   |
| Dividends                  declared                                                                                                                              |   |                                | **153**    |                               |   | 152 |   |
| Short-term                  obligations                                                                                                                          |   |                                | **254**    |                               |   | 175 |   |
| Customer                  deposits                                                                                                                               |   |                                | **207**    |                               |   | 200 |   |
| Liabilities                  of discontinued operations                                                                                                          |   |                                | **33**     |                               |   | 87 |   |
| Other                  current liabilities                                                                                                                       |   |                                | **743**    |                               |   | 871 |   |
| **Total                  current liabilities**                                                                                                                   |   |                                | **2,205**  |                               |   | 2,882 |   |
| **Deferred                  credits and other                  liabilities**                                                                                     |   |                                |       |                               |   |   |   |
| Noncurrent                  income tax liabilities                                                                                                               |   |                                | **265**    |                               |   | 296 |   |
| Accumulated                  deferred investment tax credits                                                                                                     |   |                                | **160**    |                               |   | 163 |   |
| Regulatory                  liabilities                                                                                                                          |   |                                | **2,568**  |                               |   | 2,527 |   |
| Asset                  retirement obligations                                                                                                                    |   |                                | **1,261**  |                               |   | 1,249 |   |
| Accrued                  pension and other benefits                                                                                                              |   |                                | **893**    |                               |   | 870 |   |
| Other                  liabilities and deferred credits                                                                                                          |   |                                | **540**    |                               |   | 435 |   |
| **Total                  deferred credits and other                  liabilities**                                                                               |   |                                | **5,687**  |                               |   | 5,540 |   |
| **Commitments                  and contingencies (Note                  13)**                                                                                    |   |                                |       |                               |   |   |   |
| **Total                  capitalization and liabilities**                                                                                                        |   | **$**                               | **26,488** |                               | $      | 27,042 |   |

----

| **UNAUDITED                  CONSOLIDATED STATEMENTS                  of CASH FLOWS**                                   |   |     |     |   |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|----------|----------|--------|--------|
| (in                  millions)                                                                                          |   |     |     |   |   |
| Three                  Months Ended March 31                                                                            |   | **2006** |     | 2005   |   |
| **Operating                  activities**                                                                               |   |     |     |   |   |
| Net                  income                                                                                             |   | **$**    | **45**   |   | $      | 93 |   |
| Adjustments                  to reconcile net income to net cash provided by                  operating activities      |   |     |     |   |   |   |   |
| Discontinued                  operations, net of tax                                                                    |   |     | **2**    |   |   | 11 |   |
| Impairment                  of goodwill                                                                                 |   |     | **64**   |   |   | - |   |
| Depreciation                  and amortization                                                                          |   |     | **294**  |   |   | 268 |   |
| Deferred                  income taxes                                                                                  |   |     | **35**   |   |   | 13 |   |
| Investment                  tax credit                                                                                  |   |     | **(3**   | **)**  |   | (3 | ) |
| Tax                  levelization                                                                                       |   |     | **16**   |   |   | 3 |   |
| Deferred                  fuel cost                                                                                     |   |     | **134**  |   |   | 19 |   |
| Other                  adjustments to net income                                                                        |   |     | **72**   |   |   | 50 |   |
| Cash                  provided (used) by changes in operating assets and                  liabilities:                  |   |     |     |   |   |   |   |
| Receivables                                                                                                             |   |     | **154**  |   |   | - |   |
| Inventories                                                                                                             |   |     | **(58**  | **)**  |   | (45 | ) |
| Prepayments                  and other current assets                                                                   |   |     | **(5**   | **)**  |   | 13 |   |
| Accounts                  payable                                                                                       |   |     | **(109** | **)**  |   | 46 |   |
| Other                  current liabilities                                                                              |   |     | **(180** | **)**  |   | (156 | ) |
| Regulatory                  assets and liabilities                                                                      |   |     | **(2**   | **)**  |   | (57 | ) |
| Other                  operating activities                                                                             |   |     | **41**   |   |   | (23 | ) |
| **Net                  cash provided by operating                  activities**                                         |   |     | **500**  |   |   | 232 |   |
| **Investing                  activities**                                                                               |   |     |     |   |   |   |   |
| Gross                  utility property additions                                                                       |   |     | **(304** | **)**  |   | (267 | ) |
| Diversified                  business property additions                                                                |   |     | **(47**  | **)**  |   | (40 | ) |
| Nuclear                  fuel additions                                                                                 |   |     | **(52**  | **)**  |   | (64 | ) |
| Proceeds                  from sales of discontinued operations and other                  assets, net of cash divested |   |     | **103**  |   |   | 398 |   |
| Purchases                  of available-for-sale securities and other                  investments                      |   |     | **(538** | **)**  |   | (2,012 | ) |
| Proceeds                  from sales of available-for-sale securities and other                  investments            |   |     | **522**  |   |   | 1,853 |   |
| Other                  investing activities                                                                             |   |     | **(11**  | **)**  |   | (12 | ) |
| **Net                  cash used in investing activities**                                                              |   |     | **(327** | **)**  |   | (144 | ) |
| **Financing                  activities**                                                                               |   |     |     |   |   |   |   |
| Issuance                  of common stock                                                                               |   |     | **28**   |   |   | 60 |   |
| Proceeds                  from issuance of long-term debt, net                                                          |   |     | **397**  |   |   | 495 |   |
| Net                  increase in short-term indebtedness                                                                |   |     | **79**   |   |   | 7 |   |
| Retirement                  of long-term debt                                                                           |   |     | **(801** | **)**  |   | (216 | ) |
| Dividends                  paid on common stock                                                                         |   |     | **(151** | **)**  |   | (145 | ) |
| Other                  financing activities                                                                             |   |     | **(60**  | **)**  |   | (38 | ) |
| **Net                  cash (used in) provided by financing                  activities**                               |   |     | **(508** | **)**  |   | 163 |   |
| **Cash                  used by discontinued operations**                                                               |   |     |     |   |   |   |   |
| Operating                  activities                                                                                   |   |     | **(5**   | **)**  |   | (18 | ) |
| Investing                  activities                                                                                   |   |     | **(3**   | **)**  |   | (9 | ) |
| Financing                  activities                                                                                   |   |     | -        |   |   | - |   |
| **Net                  (decrease) increase in cash and cash                  equivalents**                              |   |     | **(343** | **)**  |   | 224 |   |
| **Cash                  and cash equivalents at beginning of                  period**                                  |   |     | **606**  |   |   | 56 |   |
| **Cash                  and cash equivalents at end of                  period**                                        |   | **$**    | **263**  |   | $      | 280 |   |

----

**CAROLINA        POWER & LIGHT        COMPANY**

**d/b/a        PROGRESS ENERGY CAROLINAS, INC.**

**CONSOLIDATED        INTERIM FINANCIAL STATEMENTS**

**March        31, 2006**

| **UNAUDITED                  CONSOLIDATED STATEMENTS of                  INCOME** |   |     |    |
|-----------------------------------------------------------------------------------|--------|----------|---------|
| (in                  millions)                                                    |   |     |    |
| Three                  Months Ended March 31                                      |   | **2006** |    | 2005 |   |
| **Operating                  revenues**                                           |   | **$**    | **978** |   | $ | 935 |   |
| **Operating                  expenses**                                           |   |     |    |   |   |   |   |
| Fuel                  used in electric generation                                 |   |     | **296** |   |   | 248 |   |
| Purchased                  power                                                  |   |     | **64**  |   |   | 67 |   |
| Operation                  and maintenance                                        |   |     | **256** |   |   | 224 |   |
| Depreciation                  and amortization                                    |   |     | **126** |   |   | 129 |   |
| Taxes                  other than on income                                       |   |     | **46**  |   |   | 46 |   |
| Other                                                                             |   |     | **1**   |   |   | - |   |
| Total                  operating expenses                                         |   |     | **789** |   |   | 714 |   |
| **Operating                  income**                                             |   |     | **189** |   |   | 221 |   |
| **Other                  income (expense)**                                       |   |     |    |   |   |   |   |
| Interest                  income                                                  |   |     | **7**   |   |   | 2 |   |
| Other,                  net                                                       |   |     | **(1**  | **)** |   | 1 |   |
| Total                  other income                                               |   |     | **6**   |   |   | 3 |   |
| **Interest                  charges**                                             |   |     |    |   |   |   |   |
| Interest                  charges                                                 |   |     | **57**  |   |   | 52 |   |
| Allowance                  for borrowed funds used during construction            |   |     | **(1**  | **)** |   | (1 | ) |
| Total                  interest charges, net                                      |   |     | **56**  |   |   | 51 |   |
| **Income                  before income tax**                                     |   |     | **139** |   |   | 173 |   |
| **Income                  tax expense**                                           |   |     | **53**  |   |   | 57 |   |
| **Net                  income**                                                   |   |     | **86**  |   |   | 116 |   |
| **Preferred                  stock dividend requirement**                         |   |     | **1**   |   |   | 1 |   |
| **Earnings                  for common stock**                                    |   | **$**    | **85**  |   | $ | 115 |   |

----

| **UNAUDITED                  CONSOLIDATED BALANCE                  SHEETS**                 |   |                                |       |                               |   |
|---------------------------------------------------------------------------------------------|--------|-------------------------------------|------------|------------------------------------|--------|
| (in                  millions)                                                              |   | **March                  31, 2006** |       | December                  31, 2005 |   |
| **ASSETS**                                                                                  |   |                                |       |                               |   |
| **Utility                  plant**                                                          |   |                                |       |                               |   |
| Utility                  plant in service                                                   |   | **$**                               | **14,041** |                               | $      | 13,994 |   |
| Accumulated                  depreciation                                                   |   |                                | **(6,182** | **)**                              |   | (6,120 | ) |
| Utility                  plant in service, net                                              |   |                                | **7,859**  |                               |   | 7,874 |   |
| Held                  for future use                                                        |   |                                | **3**      |                               |   | 3 |   |
| Construction                  work in progress                                              |   |                                | **483**    |                               |   | 399 |   |
| Nuclear                  fuel, net of amortization                                          |   |                                | **201**    |                               |   | 203 |   |
| **Total                  utility plant, net**                                               |   |                                | **8,546**  |                               |   | 8,479 |   |
| **Current                  assets**                                                         |   |                                |       |                               |   |   |   |
| Cash                  and cash equivalents                                                  |   |                                | **105**    |                               |   | 125 |   |
| Short-term                  investments                                                     |   |                                | **136**    |                               |   | 191 |   |
| Receivables,                  net                                                           |   |                                | **440**    |                               |   | 518 |   |
| Receivables                  from affiliated companies                                      |   |                                | **19**     |                               |   | 24 |   |
| Inventory                                                                                   |   |                                | **458**    |                               |   | 451 |   |
| Deferred                  fuel cost                                                         |   |                                | **243**    |                               |   | 261 |   |
| Prepayments                  and other current assets                                       |   |                                | **25**     |                               |   | 20 |   |
| **Total                  current assets**                                                   |   |                                | **1,426**  |                               |   | 1,590 |   |
| **Deferred                  debits and other assets**                                       |   |                                |       |                               |   |   |   |
| Regulatory                  assets                                                          |   |                                | **410**    |                               |   | 421 |   |
| Nuclear                  decommissioning trust funds                                        |   |                                | **664**    |                               |   | 640 |   |
| Miscellaneous                  other property and investments                               |   |                                | **193**    |                               |   | 188 |   |
| Other                  assets and deferred debits                                           |   |                                | **179**    |                               |   | 184 |   |
| **Total                  deferred debits and other                  assets**                |   |                                | **1,446**  |                               |   | 1,433 |   |
| **Total                  assets**                                                           |   | **$**                               | **11,418** |                               | $      | 11,502 |   |
| **CAPITALIZATION                  AND LIABILITIES**                                         |   |                                |       |                               |   |   |   |
| **Common                  stock equity**                                                    |   |                                |       |                               |   |   |   |
| Common                  stock without par value                                             |   | **$**                               | **1,996**  |                               | $      | 1,981 |   |
| Unearned                  ESOP common stock                                                 |   |                                | **(54**    | **)**                              |   | (63 | ) |
| Accumulated                  other comprehensive loss                                       |   |                                | **(119**   | **)**                              |   | (120 | ) |
| Retained                  earnings                                                          |   |                                | **1,320**  |                               |   | 1,320 |   |
| **Total                  common stock equity**                                              |   |                                | **3,143**  |                               |   | 3,118 |   |
| **Preferred                  stock - not subject to mandatory                  redemption** |   |                                | **59**     |                               |   | 59 |   |
| **Long-term                  debt, net**                                                    |   |                                | **3,667**  |                               |   | 3,667 |   |
| **Total                  capitalization**                                                   |   |                                | **6,869**  |                               |   | 6,844 |   |
| **Current                  liabilities**                                                    |   |                                |       |                               |   |   |   |
| Accounts                  payable                                                           |   |                                | **212**    |                               |   | 247 |   |
| Payables                  to affiliated companies                                           |   |                                | **62**     |                               |   | 73 |   |
| Notes                  payable to affiliated companies                                      |   |                                | **10**     |                               |   | 11 |   |
| Interest                  accrued                                                           |   |                                | **62**     |                               |   | 73 |   |
| Short-term                  obligations                                                     |   |                                | **52**     |                               |   | 73 |   |
| Customer                  deposits                                                          |   |                                | **54**     |                               |   | 52 |   |
| Taxes                  accrued                                                              |   |                                | **8**      |                               |   | 100 |   |
| Other                  current liabilities                                                  |   |                                | **256**    |                               |   | 255 |   |
| **Total                  current liabilities**                                              |   |                                | **716**    |                               |   | 884 |   |
| **Deferred                  credits and other                  liabilities**                |   |                                |       |                               |   |   |   |
| Noncurrent                  income tax liabilities                                          |   |                                | **803**    |                               |   | 814 |   |
| Accumulated                  deferred investment tax credits                                |   |                                | **131**    |                               |   | 133 |   |
| Regulatory                  liabilities                                                     |   |                                | **1,241**  |                               |   | 1,196 |   |
| Asset                  retirement obligations                                               |   |                                | **964**    |                               |   | 949 |   |
| Accrued                  pension and other benefits                                         |   |                                | **526**    |                               |   | 511 |   |
| Other                  liabilities and deferred credits                                     |   |                                | **168**    |                               |   | 171 |   |
| **Total                  deferred credits and other                  liabilities**          |   |                                | **3,833**  |                               |   | 3,774 |   |
| **Commitments                  and contingencies (Note                  13)**               |   |                                |       |                               |   |   |   |
| **Total                  capitalization and liabilities**                                   |   | **$**                               | **11,418** |                               | $      | 11,502 |   |

----

| **UNAUDITED                  CONSOLIDATED STATEMENTS of                  CASH FLOWS**                              |   |     |     |   |   |
|--------------------------------------------------------------------------------------------------------------------|--------|----------|----------|--------|--------|
| (in                  millions)                                                                                     |   |     |     |   |   |
| Three                  Months Ended March 31                                                                       |   | **2006** |     | 2005   |   |
| **Operating****activities**                                                                                        |   |     |     |   |   |
| Net                  income                                                                                        |   | **$**    | **86**   |   | $      | 116 |   |
| Adjustments                  to reconcile net income to net cash provided by                  operating activities |   |     |     |   |   |   |   |
| Depreciation                  and amortization                                                                     |   |     | **147**  |   |   | 149 |   |
| Deferred                  income taxes                                                                             |   |     | **26**   |   |   | 30 |   |
| Investment                  tax credit                                                                             |   |     | **(2**   | **)**  |   | (2 | ) |
| Deferred                  fuel cost (credit)                                                                       |   |     | **24**   |   |   | (17 | ) |
| Other                  adjustments to net income                                                                   |   |     | **44**   |   |   | 21 |   |
| Cash                  provided (used) by changes in operating assets and                  liabilities              |   |     |     |   |   |   |   |
| Receivables                                                                                                        |   |     | **79**   |   |   | (1 | ) |
| Receivables                  from affiliated companies                                                             |   |     | **12**   |   |   | (7 | ) |
| Inventories                                                                                                        |   |     | **(15**  | **)**  |   | (22 | ) |
| Prepayments                  and other current assets                                                              |   |     | **2**    |   |   | 5 |   |
| Accounts                  payable                                                                                  |   |     | **(6**   | **)**  |   | 27 |   |
| Payables                  to affiliated companies                                                                  |   |     | **(13**  | **)**  |   | (23 | ) |
| Other                  current liabilities                                                                         |   |     | **(136** | **)**  |   | 2 |   |
| Other                  operating activities                                                                        |   |     | **(11**  | **)**  |   | (16 | ) |
| **Net                  cash provided by operating                  activities**                                    |   |     | **237**  |   |   | 262 |   |
| **Investing****activities**                                                                                        |   |     |     |   |   |   |   |
| Gross                  utility property additions                                                                  |   |     | **(151** | **)**  |   | (142 | ) |
| Nuclear                  fuel additions                                                                            |   |     | **(46**  | **)**  |   | (30 | ) |
| Purchases                  of available-for-sale securities and other                  investments                 |   |     | **(238** | **)**  |   | (861 | ) |
| Proceeds                  from sales of available-for-sale securities and other                  investments       |   |     | **285**  |   |   | 798 |   |
| Other                  investing activities                                                                        |   |     | **-**    |   |   | (4 | ) |
| **Net                  cash used in investing activities**                                                         |   |     | **(150** | **)**  |   | (239 | ) |
| **Financing****activities**                                                                                        |   |     |     |   |   |   |   |
| Proceeds                  from issuance of long-term debt, net                                                     |   |     | **-**    |   |   | 495 |   |
| Net                  decrease in short-term indebtedness                                                           |   |     | **(21**  | **)**  |   | (113 | ) |
| Changes                  in advances from affiliates                                                               |   |     | **(1**   | **)**  |   | (93 | ) |
| Dividends                  paid to parent                                                                          |   |     | **(85**  | **)**  |   | (146 | ) |
| Dividends                  paid on preferred stock                                                                 |   |     | **(1**   | **)**  |   | (1 | ) |
| Other                  financing activities                                                                        |   |     | **1**    |   |   | - |   |
| **Net                  cash (used in) provided by financing                  activities**                          |   |     | **(107** | **)**  |   | 142 |   |
| **Net****(decrease)                  increase in cash and                  cash equivalents**                      |   |     | **(20**  | **)**  |   | 165 |   |
| **Cash                  and cash equivalents at beginning of                  period**                             |   |     | **125**  |   |   | 18 |   |
| **Cash                  and cash equivalents at end of                  period**                                   |   | **$**    | **105**  |   | $      | 183 |   |

----

**FLORIDA        POWER CORPORATION**

**d/b/a****PROGRESS        ENERGY FLORIDA,        INC.**

**INTERIM        FINANCIAL STATEMENTS**

**March        31, 2006**

| **UNAUDITED                  STATEMENTS of                  INCOME**   |   |     |      |   |   |
|------------------------------------------------------------------------|--------|----------|-----------|--------|--------|
| (in                  millions)                                         |   |     |      |   |   |
| Three                  Months Ended March 31                           |   | **2006** |      | 2005   |   |
| **Operating                  revenues**                                |   | **$**    | **1,007** |   | $      | 848 |   |
| **Operating                  expenses**                                |   |     |      |   |   |   |   |
| Fuel                  used in electric generation                      |   |     | **394**   |   |   | 302 |   |
| Purchased                  power                                       |   |     | **165**   |   |   | 131 |   |
| Operation                  and maintenance                             |   |     | **166**   |   |   | 189 |   |
| Depreciation                  and amortization                         |   |     | **95**    |   |   | 70 |   |
| Taxes                  other than on income                            |   |     | **73**    |   |   | 67 |   |
| Other                                                                  |   |     | **(3**    | **)**  |   | - |   |
| Total                  operating expenses                              |   |     | **890**   |   |   | 759 |   |
| **Operating                  income**                                  |   |     | **117**   |   |   | 89 |   |
| **Other                  income (expense)**                            |   |     |      |   |   |   |   |
| Interest                  income                                       |   |     | **5**     |   |   | - |   |
| Other,                  net                                            |   |     | **(1**    | **)**  |   | 3 |   |
| Total                  other income                                    |   |     | **4**     |   |   | 3 |   |
| **Interest                  charges**                                  |   |     |      |   |   |   |   |
| Interest                  charges                                      |   |     | **40**    |   |   | 34 |   |
| Allowance                  for borrowed funds used during construction |   |     | **(1**    | **)**  |   | (2 | ) |
| Total                  interest charges, net                           |   |     | **39**    |   |   | 32 |   |
| **Income                  before income taxes**                        |   |     | **82**    |   |   | 60 |   |
| **Income                  tax expense**                                |   |     | **29**    |   |   | 16 |   |
| **Net                  income**                                        |   |     | **53**    |   |   | 44 |   |
| **Preferred                  stock dividend requirement**              |   |     | **1**     |   |   | 1 |   |
| **Earnings                  for common stock**                         |   | **$**    | **52**    |   | $      | 43 |   |

----

| **UNAUDITED                  BALANCE                  SHEETS**                              |   |                                |       |                               |   |
|---------------------------------------------------------------------------------------------|--------|-------------------------------------|------------|------------------------------------|--------|
| (in                  millions)                                                              |   | **March                  31, 2006** |       | December                  31, 2005 |   |
| **ASSETS**                                                                                  |   |                                |       |                               |   |
| **Utility                  plant**                                                          |   |                                |       |                               |   |
| Utility                  plant in service                                                   |   | **$**                               | **8,810**  |                               | $      | 8,756 |   |
| Accumulated                  depreciation                                                   |   |                                | **(3,482** | **)**                              |   | (3,434 | ) |
| Utility                  plant in service, net                                              |   |                                | **5,328**  |                               |   | 5,322 |   |
| Held                  for future use                                                        |   |                                | **9**      |                               |   | 9 |   |
| Construction                  work in progress                                              |   |                                | **481**    |                               |   | 414 |   |
| Nuclear                  fuel, net of amortization                                          |   |                                | **71**     |                               |   | 76 |   |
| **Total                  utility plant, net**                                               |   |                                | **5,889**  |                               |   | 5,821 |   |
| **Current                  assets**                                                         |   |                                |       |                               |   |   |   |
| Cash                  and cash equivalents                                                  |   |                                | **133**    |                               |   | 218 |   |
| Short-term                  investments                                                     |   |                                | **55**     |                               |   | - |   |
| Receivables,                  net                                                           |   |                                | **288**    |                               |   | 331 |   |
| Receivables                  from affiliated companies                                      |   |                                | **11**     |                               |   | 11 |   |
| Deferred                  income taxes                                                      |   |                                | **-**      |                               |   | 12 |   |
| Inventory                                                                                   |   |                                | **376**    |                               |   | 311 |   |
| Deferred                  fuel cost                                                         |   |                                | **231**    |                               |   | 341 |   |
| Prepayments                  and other current assets                                       |   |                                | **109**    |                               |   | 100 |   |
| **Total                  current assets**                                                   |   |                                | **1,203**  |                               |   | 1,324 |   |
| **Deferred                  debits and other assets**                                       |   |                                |       |                               |   |   |   |
| Regulatory                  assets                                                          |   |                                | **358**    |                               |   | 351 |   |
| Debt                  issuance costs                                                        |   |                                | **22**     |                               |   | 22 |   |
| Nuclear                  decommissioning trust funds                                        |   |                                | **511**    |                               |   | 493 |   |
| Miscellaneous                  other property and investments                               |   |                                | **46**     |                               |   | 47 |   |
| Prepaid                  pension costs                                                      |   |                                | **204**    |                               |   | 200 |   |
| Other                  assets and deferred debits                                           |   |                                | **62**     |                               |   | 60 |   |
| **Total                  deferred debits and other                  assets**                |   |                                | **1,203**  |                               |   | 1,173 |   |
| **Total                  assets**                                                           |   | **$**                               | **8,295**  |                               | $      | 8,318 |   |
| **CAPITALIZATION                  AND LIABILITIES**                                         |   |                                |       |                               |   |   |   |
| **Common                  stock equity**                                                    |   |                                |       |                               |   |   |   |
| Common                  stock without par value                                             |   | **$**                               | **1,098**  |                               | $      | 1,097 |   |
| Retained                  earnings                                                          |   |                                | **1,492**  |                               |   | 1,498 |   |
| **Total                  common stock equity**                                              |   |                                | **2,590**  |                               |   | 2,595 |   |
| **Preferred                  stock - not subject to mandatory                  redemption** |   |                                | **34**     |                               |   | 34 |   |
| **Long-term                  debt, net**                                                    |   |                                | **2,555**  |                               |   | 2,554 |   |
| **Total                  capitalization**                                                   |   |                                | **5,179**  |                               |   | 5,183 |   |
| **Current                  liabilities**                                                    |   |                                |       |                               |   |   |   |
| Current                  portion of long-term debt                                          |   |                                | **48**     |                               |   | 48 |   |
| Accounts                  payable                                                           |   |                                | **207**    |                               |   | 237 |   |
| Payables                  to affiliated companies                                           |   |                                | **73**     |                               |   | 101 |   |
| Notes                  payable to affiliated companies                                      |   |                                | **-**      |                               |   | 13 |   |
| Short-term                  obligations                                                     |   |                                | **102**    |                               |   | 102 |   |
| Customer                  deposits                                                          |   |                                | **153**    |                               |   | 148 |   |
| Interest                  accrued                                                           |   |                                | **31**     |                               |   | 42 |   |
| Other                  current liabilities                                                  |   |                                | **118**    |                               |   | 101 |   |
| **Total                  current liabilities**                                              |   |                                | **732**    |                               |   | 792 |   |
| **Deferred                  credits and other                  liabilities**                |   |                                |       |                               |   |   |   |
| Noncurrent                  income tax liabilities                                          |   |                                | **424**    |                               |   | 433 |   |
| Accumulated                  deferred investment tax credits                                |   |                                | **28**     |                               |   | 30 |   |
| Regulatory                  liabilities                                                     |   |                                | **1,192**  |                               |   | 1,189 |   |
| Asset                  retirement obligations                                               |   |                                | **287**    |                               |   | 290 |   |
| Accrued                  pension and other benefits                                         |   |                                | **261**    |                               |   | 257 |   |
| Other                  liabilities and deferred credits                                     |   |                                | **192**    |                               |   | 144 |   |
| **Total                  deferred credits and other                  liabilities**          |   |                                | **2,384**  |                               |   | 2,343 |   |
| **Commitments                  and contingencies (Note                  13)**               |   |                                |       |                               |   |   |   |
| **Total                  capitalization and liabilities**                                   |   | **$**                               | **8,295**  |                               | $      | 8,318 |   |

----

| **UNAUDITED                  STATEMENTS of CASH                  FLOWS**                                            |   |     |     |   |   |
|---------------------------------------------------------------------------------------------------------------------|--------|----------|----------|--------|--------|
| (in                  millions)                                                                                      |   |     |     |   |   |
| Three                  Months Ended March 31                                                                        |   | **2006** |     | 2005   |   |
| **Operating                  activities**                                                                           |   |     |     |   |   |
| Net                  income                                                                                         |   | **$**    | **53**   |   | $      | 44 |   |
| Adjustments                  to reconcile net income to net cash provided by                  operating activities: |   |     |     |   |   |   |   |
| Depreciation                  and amortization                                                                      |   |     | **101**  |   |   | 79 |   |
| Deferred                  income taxes and investment tax credits, net                                              |   |     | **19**   |   |   | 13 |   |
| Deferred                  fuel cost                                                                                 |   |     | **110**  |   |   | 36 |   |
| Other                  adjustments to net income                                                                    |   |     | **10**   |   |   | 22 |   |
| Cash                  provided (used) by changes in operating assets and                  liabilities:              |   |     |     |   |   |   |   |
| Receivables                                                                                                         |   |     | **40**   |   |   | 22 |   |
| Receivables                  from affiliated companies                                                              |   |     | **4**    |   |   | 10 |   |
| Inventories                                                                                                         |   |     | **(66**  | **)**  |   | (22 | ) |
| Prepayments                  and other current assets                                                               |   |     | **4**    |   |   | - |   |
| Accounts                  payable                                                                                   |   |     | **(29**  | **)**  |   | (1 | ) |
| Payables                  to affiliated companies                                                                   |   |     | **(28**  | **)**  |   | 5 |   |
| Other                  current liabilities                                                                          |   |     | **(19**  | **)**  |   | (79 | ) |
| Regulatory                  assets and liabilities                                                                  |   |     | **(2**   | **)**  |   | (57 | ) |
| Other                  operating activities                                                                         |   |     | **16**   |   |   | (3 | ) |
| **Net                  cash provided by operating                  activities**                                     |   |     | **213**  |   |   | 69 |   |
| **Investing                  activities**                                                                           |   |     |     |   |   |   |   |
| Gross                  utility property additions                                                                   |   |     | **(162** | **)**  |   | (132 | ) |
| Nuclear                  fuel additions                                                                             |   |     | **(6**   | **)**  |   | (34 | ) |
| Purchases                  of available-for-sale securities and other                  investments                  |   |     | **(126** | **)**  |   | (68 | ) |
| Proceeds                  from sales of available-for-sale securities and other                  investments        |   |     | **71**   |   |   | 68 |   |
| Other                  investing activities                                                                         |   |     | **(3**   | **)**  |   | (1 | ) |
| **Net                  cash used in investing activities**                                                          |   |     | **(226** | **)**  |   | (167 | ) |
| **Financing                  activities**                                                                           |   |     |     |   |   |   |   |
| Net                  decrease in short-term indebtedness                                                            |   |     | **-**    |   |   | (140 | ) |
| Retirement                  of long-term debt                                                                       |   |     | **-**    |   |   | (55 | ) |
| Changes                  in advances from affiliates                                                                |   |     | **(13**  | **)**  |   | 301 |   |
| Dividends                  paid to parent                                                                           |   |     | **(58**  | **)**  |   | - |   |
| Dividends                  paid on preferred stock                                                                  |   |     | **(1**   | **)**  |   | (1 | ) |
| Other                  financing activities                                                                         |   |     | **-**    |   |   | (1 | ) |
| **Net                  cash (used in) provided by financing                  activities**                           |   |     | **(72**  | **)**  |   | 104 |   |
| **Net                  (decrease) increase in cash and cash                  equivalents**                          |   |     | **(85**  | **)**  |   | 6 |   |
| **Cash                  and cash equivalents at beginning of                  period**                              |   |     | **218**  |   |   | 12 |   |
| **Cash                  and cash equivalents at end of                  period**                                    |   | **$**    | **133**  |   | $      | 18 |   |

----

**COMBINED** **NOTES        TO        INTERIM FINANCIAL STATEMENTS**

**INDEX        TO APPLICABLE NOTES TO FINANCIAL STATEMENTS BY        REGISTRANT **

| **Registrant** | **Applicable                  Notes**                                  |
|----------------|------------------------------------------------------------------------|
|           |                                                                   |
| PEC            | 1,                  2, 4 through 9, and 11 through 13                  |
|           |                                                                   |
| PEF            | 1,                  2, 4 through 9, and 11 through                  13 |

----

**COMBINED        NOTES TO INTERIM FINANCIAL        STATEMENTS**

----

|                             |   |                                          |   |
|----------------------------------|--------|-----------------------------------------------|--------|
|                             |   | Three                  Months Ended March 31, |   |
| (in                  millions)   |   | **2006**                                      |   | 2005 |   |
| Progress                  Energy |   | **$**                                         | **16** |   | $ | 3 |   |
| PEC                              |   |                                          | **2**  |   |   | - |   |
| PEF                              |   |                                          | **-**  |   |   | - |   |

|                             |   |                                          |   |
|----------------------------------|--------|-----------------------------------------------|--------|
|                             |   | Three                  Months Ended March 31, |   |
| (in                  millions)   |   | **2006**                                      |   | 2005 |   |
| Progress                  Energy |   | **$**                                         | **65** |   | $ | 57 |   |
| PEC                              |   |                                          | **22** |   |   | 22 |   |
| PEF                              |   |                                          | **43** |   |   | 35 |   |

*FASB        EXPOSURE DRAFT ON ACCOUNTING FOR UNCERTAIN TAX POSITIONS,        AN INTERPRETATION OF SFAS NO. 109, “ACCOUNTING FOR INCOME TAXES”*

|                                                                                                                                                      |   |     |   |   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|--------|--------|--------|
| (in                  millions)                                                                                                                            |   | **2006** |   | 2005   |   |
| Revenues                                                                                                                                                  |   | **$**    | **18** |   | $      | 18 |   |
| Earnings                  before income taxes and minority interest                                                                                       |   |     | **1**  |   |   | - |   |
| Income                  tax expense                                                                                                                       |   |     | **4**  |   |   | - |   |
| Minority                  interest                                                                                                                        |   |     | **3**  |   |   | - |   |
| Net                  loss from discontinued operations                                                                                                    |   |     | **(6** | **)**  |   | - |   |
| Estimated                  gain on disposal of discontinued operations,                  including income tax expense of $13 and minority interest of $36 |   |     | **24** |   |   |  - |   |
| Earnings                  from discontinued operations                                                                                                    |   | **$**    | **18** |   | $      | - |   |

|                                                                                                               |   |   |   |
|--------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| (in                  millions)                                                                                     |   |   |   |
| Revenues                                                                                                           |   | $      | 358    |   |
| Earnings                  before income taxes                                                                      |   |   | 8      |   |
| Income                  tax expense                                                                                |   |   | 3      |   |
| Net                  earnings from discontinued operations                                                         |   |   | 5      |   |
| Loss                  on disposal of discontinued operations, including income                  tax benefit of $14 |   |   | (17    | ) |
| Loss                  from discontinued operations                                                                 |   | $      | (12    | ) |

----

|                                                                                                                        |   |     |    |   |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|----------|---------|--------|--------|
| (in                  millions)                                                                                              |   | **2006** |    | 2005   |   |
| Revenues                                                                                                                    |   | **$**    | **35**  |   | $      | 50 |   |
| (Loss)                  earnings before income taxes                                                                        |   |     | **(7**  | **)**  |   | 1 |   |
| Income                  tax benefit                                                                                         |   |     | **2**   |   |   | - |   |
| Net                  (loss) earnings from discontinued operations                                                           |   |     | **(5**  | **)**  |   | 1 |   |
| Estimated                  loss on disposal of discontinued operations,                  including income tax benefit of $9 |   |     | **(15** | **)**  |   |  - |   |
| (Loss)                  earnings from discontinued operations                                                               |   | **$**    | **(20** | **)**  | $      | 1 |   |

|                                                      |   |                                |   |                               |   |
|-----------------------------------------------------------|--------|-------------------------------------|--------|------------------------------------|--------|
| (in                  millions)                            |   | **March                  31, 2006** |   | December                  31, 2005 |   |
| Accounts                  receivable                      |   | **$**                               | **6**  |                               | $      | 18 |   |
| Inventory                                                 |   |                                | **6**  |                               |   | 13 |   |
| Other                  current assets                     |   |                                | **2**  |                               |   | 5 |   |
| Total                  property, plant and equipment, net |   |                                | **51** |                               |   | 155 |   |
| Total                  other assets                       |   |                                | **21** |                               |   | 34 |   |
| Assets                  of discontinued operations        |   | **$**                               | **86** |                               | $      | 225 |   |
| Accounts                  payable                         |   | **$**                               | **2**  |                               | $      | 12 |   |
| Accrued                  expenses                         |   |                                | **8**  |                               |   | 20 |   |
| Long-term                  liabilities                    |   |                                | **23** |                               |   | 55 |   |
| Liabilities                  of discontinued operations   |   | **$**                               | **33** |                               | $      | 87 |   |

*FUEL        COST RECOVERY*

----

*STORM        COST RECOVERY*

*REGIONAL        TRANSMISSION ORGANIZATION*

|                                                      |   |                                          |    |
|-----------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                      |   | Three                  Months Ended March 31, |    |
| (in                  millions)                            |   | **2006**                                      |    | 2005 |   |
| Weighted-average                  common shares - basic   |   |                                          | **249** |   |   | 244 |   |
| Restricted                  stock awards                  |   |                                          | **-**   |   |   | 1 |   |
| Weighted-average                  shares - fully dilutive |   |                                          | **249** |   |   | 245 |   |

----

|                                                                                                                                  |   |                                          |        |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|-------------|
|                                                                                                                                  |   | Three                  Months Ended March 31, |        |
| (in                  millions)                                                                                                        |   | **2006**                                      |        | 2005 |   |
| Net                  income                                                                                                           |   | **$**                                         | **45**      |   | $ | 93 |   |
| Other                  comprehensive (loss) income                                                                                    |   |                                          |        |   |   |   |   |
| Reclassification                  adjustments included in net income                                                                  |   |                                          |        |   |   |   |   |
| Change                  in cash flow hedges (net of tax (benefit) expense of                  ($2) and $1, respectively)              |   |                                          | **(4**      | **)** |   | 2 |   |
| Foreign                  currency translation adjustments included in                  discontinued operations                        |   |                                          | **−** |   |   | (6 | ) |
| Minimum                  pension liability adjustment included in discontinued                  operations (net of tax expense of $1) |   |                                          | **−** |   |   | 1 |   |
| Changes                  in net unrealized gains on cash flow hedges (net of tax                  expense of $7 and $5, respectively) |   |                                          | **13**      |   |   | 6 |   |
| Other                  (net of tax expense of $2 and $−, respectively)                                                          |   |                                          | **5**       |   |   | 2 |   |
| Other                  comprehensive income                                                                                           |   |                                          | **14**      |   |   | 5 |   |
| Comprehensive                  income                                                                                                 |   | **$**                                         | **59**      |   | $ | 98 |   |

|                                                                                                             |   |                                          |   |
|------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                                                             |   | Three                  Months Ended March 31, |   |
| (in                  millions)                                                                                   |   | **2006**                                      |   | 2005 |   |
| Net                  income                                                                                      |   | **$**                                         | **86** |   | $ | 116 |   |
| Other                  comprehensive income:                                                                     |   |                                          |   |   |   |   |   |
| Changes                  in net unrealized gains on cash flow hedges (net of tax                  expense of $1) |   |                                          | -      |   |   | 2 |   |
| Other                                                                                                            |   |                                          | **1**  |   |   | - |   |
| Other                  comprehensive income                                                                      |   |                                          | **1**  |   |   | 2 |   |
| Comprehensive                  income                                                                            |   | **$**                                         | **87** |   | $ | 118 |   |

----

|                                                                                                                                               |   |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| (in                  millions except per share data)                                                                                               |   |   |   |
| Net                  income, as reported                                                                                                           |   | $      | 93     |   |
| Deduct:                  Total stock option expense determined under fair value                  method for all awards, net of related tax effects |   |   | 1      |   |
| Pro                  forma net income                                                                                                              |   | $      | 92     |   |
| Earnings                  per share                                                                                                                |   |   |   |   |
| Basic                  - as reported                                                                                                               |   | $      | 0.38   |   |
| Basic                  - pro forma                                                                                                                 |   | $      | 0.38   |   |
| Diluted                  - as reported                                                                                                             |   | $      | 0.38   |   |
| Diluted                  - pro forma                                                                                                               |   | $      | 0.38   |   |

|                                                                                                                                               |   |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| (in                  millions except per share data)                                                                                               |   |   |   |
| Net                  income, as reported                                                                                                           |   | $      | 116    |   |
| Deduct:                  Total stock option expense determined under fair value                  method for all awards, net of related tax effects |   |   | 1      |   |
| Pro                  forma net income                                                                                                              |   | $      | 115    |   |

|                                                                                                                                               |   |   |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| (in                  millions except per share data)                                                                                               |   |   |   |
| Net                  income, as reported                                                                                                           |   | $      | 44     |   |
| Deduct:                  Total stock option expense determined under fair value                  method for all awards, net of related tax effects |   |   | -      |   |
| Pro                  forma net income                                                                                                              |   | $      | 44     |   |

----

|                                           |   |   |      |   |   |                               |   |   |   |
|------------------------------------------------|--------|--------|-----------|--------|--------|------------------------------------|--------|--------|--------|
| (in                  millions)                 |   | PEC    |      | PEF    |   | Progress                  Ventures |   | Total  |   |
| Balance                  at January 1, 2005    |   | $      | 1,922     |   | $      | 1,733                              |   | $      | 64     |   | $ | 3,719 |   |
| Balance                  at December 31, 2005  |   |   | 1,922     |   |   | 1,733                              |   |   | 64     |   |   | 3,719 |   |
| Impairment                                     |   |   | -         |   |   | -                                  |   |   | (64    | ) |   | (64 | ) |
| **Balance                  at March 31, 2006** |   | **$**  | **1,922** |   | **$**  | **1,733**                          |   | **$**  | **-**  |   | **$** | **3,655** |   |

----

|                                                                                |   |                              |    |                                           |   |
|-------------------------------------------------------------------------------------|--------|-----------------------------------|---------|------------------------------------------------|--------|
|                                                                                |   | Pension                  Benefits |    | Other                  Postretirement Benefits |   |
| (in                  millions)                                                      |   | **2006**                          |    | 2005                                           |   | **2006** |   | 2005 |   |
| Service                  cost                                                       |   | **$**                             | **12**  |                                           | $      | 15 |   | **$** | **2** |   | $ | 3 |   |
| Interest                  cost                                                      |   |                              | **29**  |                                           |   | 29 |   |   | **9** |   |   | 8 |   |
| Expected                  return on plan assets                                     |   |                              | **(36** | **)**                                          |   | (37 | ) |   | **(1** | **)** |   | (1 | ) |
| Amortization                  of actuarial loss                                     |   |                              | **9**   |                                           |   | 6 |   |   | **2** |   |   | 1 |   |
| Other                  amortization, net                                            |   |                              | **-**   |                                           |   | 1 |   |   | **-** |   |   | **-** |   |
| Net                  periodic cost                                                  |   |                              | **14**  |                                           |   | 14 |   |   | **12** |   |   | 11 |   |
| Additional                  cost / (benefit) recognition                  (a)  |   |                              | **(3**  | **)**                                          |   | (4 | ) |   | **1** |   |   | 1 |   |
| Net                  periodic cost recognized                                       |   | **$**                             | **11**  |                                           | **$**  | 10 |   | **$** | **13** |   | $ | 12 |   |

|                                            |   |                              |    |                                           |   |
|-------------------------------------------------|--------|-----------------------------------|---------|------------------------------------------------|--------|
|                                            |   | Pension                  Benefits |    | Other                  Postretirement Benefits |   |
| (in                  millions)                  |   | **2006**                          |    | 2005                                           |   | **2006** |   | 2005 |   |
| Service                  cost                   |   | **$**                             | **6**   |                                           | $      | 7 |   | **$** | **1** |   | $ | 2 |   |
| Interest                  cost                  |   |                              | **13**  |                                           |   | 13 |   |   | **5** |   |   | 4 |   |
| Expected                  return on plan assets |   |                              | **(15** | **)**                                          |   | (16 | ) |   | **(1** | **)** |   | (1 | ) |
| Amortization                  of actuarial loss |   |                              | **3**   |                                           |   | 1 |   |   | **1** |   |   | **-** |   |
| Other                  amortization, net        |   |                              | **-**   |                                           |   | 1 |   |   | **-** |   |   | **-** |   |
| Net                  periodic cost              |   | **$**                             | **7**   |                                           | $      | 6 |   | **$** | **6** |   | $ | 5 |   |

----

|                                            |   |                              |    |                                           |   |
|-------------------------------------------------|--------|-----------------------------------|---------|------------------------------------------------|--------|
|                                            |   | Pension                  Benefits |    | Other                  Postretirement Benefits |   |
| (in                  millions)                  |   | **2006**                          |    | 2005                                           |   | **2006** |   | 2005 |   |
| Service                  cost                   |   | **$**                             | **4**   |                                           | $      | 6 |   | **$** | **1** |   | $ | 1 |   |
| Interest                  cost                  |   |                              | **12**  |                                           |   | 11 |   |   | **3** |   |   | 3 |   |
| Expected                  return on plan assets |   |                              | **(19** | **)**                                          |   | (18 | ) |   | **-** |   |   | **-** |   |
| Amortization                  of actuarial loss |   |                              | **2**   |                                           |   | **-** |   |   | **-** |   |   | **-** |   |
| Other                  amortization, net        |   |                              | **-**   |                                           |   | **-** |   |   | **1** |   |   | 1 |   |
| Net                  periodic cost (benefit)    |   | **$**                             | **(1**  | **)**                                          | $      | (1 | ) | **$** | **5** |   | $ | 5 |   |

*GENERAL*

*ECONOMIC        DERIVATIVES*

----

*CASH        FLOW HEDGES*

|                                       |   |                                 |     |                               |   |
|--------------------------------------------|--------|--------------------------------------|----------|------------------------------------|--------|
|                                       |   | **March                  31, 2006**  |     | December                  31, 2005 |   |
| (in                  millions)             |   | **Progress                  Energy** |     | **PEC**                            |   | **PEF** |   | Progress                  Energy |   | PEC |   | PEF |   |
| Fair                  value of assets      |   | **$**                                | **144**  |                               | **$**  | **3** |   | **$** | **-** |   | $ | 170 |   | $ | 7 |   | $ | - |   |
| Fair                  value of liabilities |   |                                 | **(21)** |                               |   | **-** |   |   | **-** |   |   | (58) |   |   | (4) |   |   | - |   |
| Fair                  value, net           |   | **$**                                | **123**  |                               | **$**  | **3** |   | **$** | **-** |   | $ | 112 |   | $ | 3 |   | $ | - |   |

|                                                  |   |                             |   |                                                                                           |   |                                                                                                           |   |
|-------------------------------------------------------|--------|----------------------------------|--------|------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------|--------|
|                                                  |   | Maximum                  Term(a) |   | Accumulated                  Other Comprehensive Income/(Loss), net                  of tax(b) |   | Portion                  Expected to be Reclassified to Earnings during the                  Next 12 Months(c) |   |
| (term                  in years/ millions of dollars) |   | Progress                  Energy |   | PEC                                                                                            |   | PEF                                                                                                            |   | Progress                  Energy |   | PEC |   | PEF |   | Progress                  Energy |   | PEC |   | PEF |   |
| Commodity                  cash flow hedges           |   |                             | 9      |                                                                                           |   | Less                  than 1                                                                                   |   |   | - |   | $ | 77 |   | $ | 2 |   | $ | - |   | $ | (3) |   | $ | 2 |   | $ | - |   |

| (a) | The                  majority of hedges in fair value asset positions are                  currently classified as long-term. |
|-----|-------------------------------------------------------------------------------------------------------------------------------|

| (b) | Includes                  amounts related to de-designated                  hedges. |
|-----|-------------------------------------------------------------------------------------|

| (c) | Due                  to the volatility of the commodities markets, the value                  in accumulated other comprehensive income/(loss) (OCI) is subject                  to                  change prior to its reclassification into                  earnings. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                             |   |                                 |    |                               |   |
|--------------------------------------------------|--------|--------------------------------------|---------|------------------------------------|--------|
|                                             |   | **March                  31, 2006**  |    | December                  31, 2005 |   |
| (in                  millions)                   |   | **Progress                  Energy** |    | **PEC**                            |   | **PEF** |   | Progress                  Energy |   | PEC |   | PEF |   |
| Interest                  rate cash flow hedges  |   | **$**                                | **-**   |                               | **$**  | **-** |   | **$** | **-** |   | $ | 1 |   | **$** | **-** |   | **$** | **-** |   |
| Interest                  rate fair value hedges |   | **$**                                | **(4)** |                               | **$**  | **-** |   | **$** | **-** |   | $ | (2) |   | **$** | **-** |   | **$** | **-** |   |

*CASH        FLOW HEDGES*

*FAIR        VALUE HEDGES*

----

|                                            |   |         |      |         |   |                             |   |                                 |      |
|-------------------------------------------------|--------|--------------|-----------|--------------|--------|----------------------------------|--------|--------------------------------------|-----------|
|                                            |   |         |      |         |   | Income                    (loss) |   |                                 |      |
|                                            |   | Revenues     |      |         |   | from                             |   |                                 |      |
| (in                    millions)                |   | Unaffiliated |      | Intersegment |   | Total                            |   | Severance                    Charges |      | Continuing                    Operations |   | Assets |   |
| **2006**                                        |   |         |      |         |   |                             |   |                                 |      |   |   |   |   |
| **PEC**                                         |   | **$**        | **978**   |         | **$**  | **-**                            |   | **$**                                | **978**   |   | **$** | **-** |   | **$** | **85** |   | **$** | **11,418** |   |
| **PEF**                                         |   |         | **1,007** |         |   | **-**                            |   |                                 | **1,007** |   |   | **-** |   |   | **52** |   |   | **8,295** |   |
| **Progress                    Ventures**        |   |         | **226**   |         |   | **-**                            |   |                                 | **226**   |   |   | **-** |   |   | **(35** | **)** |   | **2,235** |   |
| **Coal                    and Synthetic Fuels** |   |         | **222**   |         |   | **75**                           |   |                                 | **297**   |   |   | **-** |   |   | **14** |   |   | **453** |   |
| **Corporate                    and Other**      |   |         | **-**     |         |   | **89**                           |   |                                 | **89**    |   |   | **-** |   |   | **(69** | **)** |   | **17,738** |   |
| **Eliminations**                                |   |         | **-**     |         |   | **(164**                         | **)**  |                                 | **(164**  | **)** |   | **-** |   |   | **-** |   |   | **(13,737** | **)** |
| **Totals**                                      |   | **$**        | **2,433** |         | **$**  | **-**                            |   | **$**                                | **2,433** |   | **$** | **-** |   | **$** | **47** |   | **$** | **26,402** |   |
|                                            |   |         |      |         |   |                             |   |                                 |      |   |   |   |   |   |   |   |   |   |   |
| 2005                                            |   |         |      |         |   |                             |   |                                 |      |   |   |   |   |   |   |   |   |   |   |
| PEC                                             |   | $            | 935       |         | $      | -                                |   | $                                    | 935       |   | $ | 14 |   | $ | 115 |   |   |   |   |
| PEF                                             |   |         | 848       |         |   | -                                |   |                                 | 848       |   |   | 14 |   |   | 43 |   |   |   |   |
| Progress                    Ventures            |   |         | 97        |         |   | -                                |   |                                 | 97        |   |   | 1 |   |   | 7 |   |   |   |   |
| Coal                    and Synthetic Fuels     |   |         | 273       |         |   | 84                               |   |                                 | 357       |   |   | 2 |   |   | (4 | ) |   |   |   |
| Corporate                    and Other          |   |         | -         |         |   | 100                              |   |                                 | 100       |   |   | **-** |   |   | (57 | ) |   |   |   |
| Eliminations                                    |   |         | -         |         |   | (184                             | )      |                                 | (184      | ) |   | **-** |   |   | - |   |   |   |   |
| Totals                                          |   | $            | 2,153     |         | $      | -                                |   | $                                    | 2,153     |   | $ | 31 |   | $ | 104 |   |   |   |   |

----

|                                                                |   |                                          |   |
|---------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                |   | Three                  Months Ended March 31, |   |
| (in                  millions)                                      |   | **2006**                                      |   | 2005 |   |
| Other                  income                                       |   |                                          |   |   |   |   |   |
| Nonregulated                  energy and delivery services income   |   | **$**                                         | **8**  |   | $ | 6 |   |
| DIG                  Issue C20 amortization (see Note 9)            |   |                                          | **1**  |   |   | 1 |   |
| Gain                  on sale of Level 3 stock (a)                  |   |                                          | **25** |   |   | - |   |
| Investment                  gains                                   |   |                                          | **2**  |   |   | 2 |   |
| Income                  from equity investments                     |   |                                          | **-**  |   |   | 2 |   |
| AFUDC                  equity                                       |   |                                          | **3**  |   |   | 3 |   |
| Other                                                               |   |                                          | **5**  |   |   | 6 |   |
| Total                  other income                                 |   | **$**                                         | **44** |   | $ | 20 |   |
|                                                                |   |                                          |   |   |   |   |   |
| Other                  expense                                      |   |                                          |   |   |   |   |   |
| Nonregulated                  energy and delivery services expenses |   | **$**                                         | **6**  |   | $ | 5 |   |
| Donations                                                           |   |                                          | **7**  |   |   | 5 |   |
| Loss                  from equity investments                       |   |                                          | **2**  |   |   | 5 |   |
| CVOs                  unrealized loss                               |   |                                          | **25** |   |   | - |   |
| Other                                                               |   |                                          | **6**  |   |   | 4 |   |
| Total                  other expense                                |   | **$**                                         | **46** |   | $ | 19 |   |
|                                                                |   |                                          |   |   |   |   |   |
| Other,                  net - Progress Energy                       |   | **$**                                         | **(2** | **)** | $ | 1 |   |

| (a)   | Other                income includes a $25 million gain from the sale of                approximately 15 million shares of Level 3 stock received as part                of the                sale of our interest in PT LLC (See Note 3A). This gain is prior                to the                consideration of minority interest. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                |   |                                          |   |
|---------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                |   | Three                  Months Ended March 31, |   |
| (in                  millions)                                      |   | **2006**                                      |   | 2005 |   |
| Other                  income                                       |   |                                          |   |   |   |
| Nonregulated                  energy and delivery services income   |   | **$**                                         | **2**  |   | $ | 2 |   |
| DIG                  Issue C20 amortization (see Note 9)            |   |                                          | **1**  |   |   | 1 |   |
| AFUDC                  equity                                       |   |                                          | **1**  |   |   | - |   |
| Other                                                               |   |                                          | **3**  |   |   | 3 |   |
| Total                  other income                                 |   | **$**                                         | **7**  |   | $ | 6 |   |
|                                                                |   |                                          |   |   |   |   |   |
| Other                  expense                                      |   |                                          |   |   |   |   |   |
| Nonregulated                  energy and delivery services expenses |   | **$**                                         | **1**  |   | $ | 2 |   |
| Donations                                                           |   |                                          | **3**  |   |   | 2 |   |
| Other                                                               |   |                                          | **4**  |   |   | 1 |   |
| Total                  other expense                                |   | **$**                                         | **8**  |   | $ | 5 |   |
|                                                                |   |                                          |   |   |   |   |   |
| Other,                  net - PEC                                   |   | **$**                                         | **(1** | **)** | $ | 1 |   |

----

|                                                                |   |                                          |   |
|---------------------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                                |   | Three                  Months Ended March 31, |   |
| (in                  millions)                                      |   | **2006**                                      |   | 2005 |   |
| Other                  income                                       |   |                                          |   |   |   |
| Nonregulated                  energy and delivery services income   |   | **$**                                         | **6**  |   | $ | 4 |   |
| Investment                  gains                                   |   |                                          | **1**  |   |   | 1 |   |
| AFUDC                  equity                                       |   |                                          | **2**  |   |   | 3 |   |
| Other                                                               |   |                                          | -      |   |   | 1 |   |
| Total                  other income                                 |   | **$**                                         | **9**  |   | $ | 9 |   |
|                                                                |   |                                          |   |   |   |   |   |
| Other                  expense                                      |   |                                          |   |   |   |   |   |
| Nonregulated                  energy and delivery services expenses |   | **$**                                         | **5**  |   | $ | 3 |   |
| Donations                                                           |   |                                          | **3**  |   |   | 3 |   |
| Other                                                               |   |                                          | **2**  |   |   | - |   |
| Total                  other expense                                |   | **$**                                         | **10** |   | $ | 6 |   |
|                                                                |   |                                          |   |   |   |   |   |
| Other,                  net - PEF                                   |   | **$**                                         | **(1** | **)** | $ | 3 |   |

----

----

|                                                                                      |   |                                |   |                               |   |
|-------------------------------------------------------------------------------------------|--------|-------------------------------------|--------|------------------------------------|--------|
| (in                  millions)                                                            |   | **March                  31, 2006** |   | December                  31, 2005 |   |
| Remediation                  of distribution and substation                  transformers |   | **$**                               | **57** |                               | $      | 20 |   |
| MGP                  and other sites                                                      |   |                                | **18** |                               |   | 18 |   |
| Total                  accrual for environmental sites                                    |   | **$**                               | **75** |                               | $      | 38 |   |

*NEW        SOURCE REVIEW (NSR)*

----

*NOX        SIP CALL RULE UNDER SECTION 110 OF THE CLEAN AIR ACT (NOX        SIP CALL)*

*CLEAN        SMOKESTACKS ACT*

----

*CLEAN        AIR INTERSTATE RULE, MERCURY RULE AND CLEAN AIR        VISIBILITY RULE*

----

*NORTH        CAROLINA ATTORNEY GENERAL PETITION UNDER SECTION 126 OF        THE CLEAN AIR ACT*

*NATIONAL        AMBIENT AIR QUALITY STANDARDS (NAAQS)*

----

*GLOBAL        CLIMATE CHANGE*

----

----

----

----

| Condensed                  Consolidating Statement of IncomeThree                  Months Ended March 31, 2006         |   |
|------------------------------------------------------------------------------------------------------------------------|--------|
| (in                  millions)                                                                                         |   | **Parent** |   | **Subsidiary                  Guarantor** |   | **Other** |   | **Progress****Energy,                  Inc.** |   |
| **Operating                  revenues**                                                                                |   |   |   |   |   |   |   |   |   |
| Electric                                                                                                               |   | $ | **−** |   | $ | 1,007 |   | $ | 978 |   | $ | 1,985 |   |
| Diversified                  business                                                                                  |   |   | **−** |   |   | 282 |   |   | 166 |   |   | 448 |   |
| **Total                  operating revenues**                                                                          |   |   | **−** |   |   | 1,289 |   |   | 1,144 |   |   | 2,433 |   |
| **Operating                  expenses**                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Utility                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel                  used in electric generation                                                                      |   |   | **−** |   |   | 394 |   |   | 296 |   |   | 690 |   |
| Purchased                  power                                                                                       |   |   | **−** |   |   | 165 |   |   | 64 |   |   | 229 |   |
| Operation                  and maintenance                                                                             |   |   | 4 |   |   | 166 |   |   | 246 |   |   | 416 |   |
| Depreciation                  and amortization                                                                         |   |   | **−** |   |   | 95 |   |   | 133 |   |   | 228 |   |
| Taxes                  other than on income                                                                            |   |   | **−** |   |   | 73 |   |   | 46 |   |   | 119 |   |
| Other                                                                                                                  |   |   | **−** |   |   | (3 | ) |   | 1 |   |   | (2 | ) |
| Diversified                  business                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                  of sales                                                                                         |   |   | **−** |   |   | 256 |   |   | 149 |   |   | 405 |   |
| Depreciation                  and amortization                                                                         |   |   | **−** |   |   | 18 |   |   | 18 |   |   | 36 |   |
| Impairment                  of goodwill                                                                                |   |   | **−** |   |   | **−** |   |   | 64 |   |   | 64 |   |
| Other                                                                                                                  |   |   | **−** |   |   | 7 |   |   | 9 |   |   | 16 |   |
| **Total                  operating expenses**                                                                          |   |   | 4 |   |   | 1,171 |   |   | 1,026 |   |   | 2,201 |   |
| Other                  (expense) income, net                                                                           |   |   | (10 | ) |   | 29 |   |   | (4 | ) |   | 15 |   |
| Interest                  charges, net                                                                                 |   |   | 77 |   |   | 52 |   |   | 51 |   |   | 180 |   |
| **(Loss)                  income from continuing operations before income                  tax and minority interest** |   |   | (91 | ) |   | 95 |   |   | 63 |   |   | 67 |   |
| **Income                  tax (benefit) expense**                                                                      |   |   | (33 | ) |   | 27 |   |   | 19 |   |   | 13 |   |
| **Equity                  in earnings of consolidated                  subsidiaries**                                  |   |   | 103 |   |   | **−** |   |   | (103 | ) |   | **−** |   |
| **Minority                  interest in subsidiaries’ income, net of                  tax**                      |   |   | **−** |   |   | (7 | ) |   | **−** |   |   | (7 | ) |
| **Income                  (loss) from continuing                  operations**                                         |   |   | 45 |   |   | 61 |   |   | (59 | ) |   | 47 |   |
| **Discontinued                  operations, net of tax**                                                               |   |   | **−** |   |   | (1 | ) |   | (1 | ) |   | (2 | ) |
| **Net                  income (loss)**                                                                                 |   | $ | 45 |   | $ | 60 |   | $ | (60 | ) | $ | 45 |   |

| Condensed                  Consolidating Statement of IncomeThree                  Months Ended March 31, 2005         |   |
|------------------------------------------------------------------------------------------------------------------------|--------|
| (in                  millions)                                                                                         |   | **Parent** |   | **Subsidiary                  Guarantor** |   | **Other** |   | **Progress****Energy,                  Inc.** |   |
| **Operating                  revenues**                                                                                |   |   |   |   |   |   |   |   |   |
| Electric                                                                                                               |   | **$** | **−** |   | $ | 848 |   | $ | 935 |   | $ | 1,783 |   |
| Diversified                  business                                                                                  |   |   | **−** |   |   | 299 |   |   | 71 |   |   | 370 |   |
| **Total                  operating revenues**                                                                          |   |   | **−** |   |   | 1,147 |   |   | 1,006 |   |   | 2,153 |   |
| **Operating                  expenses**                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Utility                                                                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fuel                  used in electric generation                                                                      |   |   | **−** |   |   | 302 |   |   | 248 |   |   | 550 |   |
| Purchased                  power                                                                                       |   |   | **−** |   |   | 131 |   |   | 67 |   |   | 198 |   |
| Operation                  and maintenance                                                                             |   |   | 4 |   |   | 189 |   |   | 213 |   |   | 406 |   |
| Depreciation                  and amortization                                                                         |   |   | **−** |   |   | 70 |   |   | 138 |   |   | 208 |   |
| Taxes                  other than on income                                                                            |   |   | 4 |   |   | 67 |   |   | 46 |   |   | 117 |   |
| Diversified                  business                                                                                  |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost                  of sales                                                                                         |   |   | **−** |   |   | 281 |   |   | 84 |   |   | 365 |   |
| Depreciation                  and amortization                                                                         |   |   | **−** |   |   | 16 |   |   | 16 |   |   | 32 |   |
| Other                                                                                                                  |   |   | **−** |   |   | 16 |   |   | 9 |   |   | 25 |   |
| **Total                  operating expenses**                                                                          |   |   | 8 |   |   | 1,072 |   |   | 821 |   |   | 1,901 |   |
| Other                  income (expense), net                                                                           |   |   | 18 |   |   | (1 | ) |   | (12 | ) |   | 5 |   |
| Interest                  charges, net                                                                                 |   |   | 79 |   |   | 44 |   |   | 39 |   |   | 162 |   |
| **(Loss)                  income from continuing operations before income                  tax and minority interest** |   |   | (69 | ) |   | 30 |   |   | 134 |   |   | 95 |   |
| **Income                  tax (benefit) expense**                                                                      |   |   | (19 | ) |   | (6 | ) |   | 24 |   |   | (1 | ) |
| **Equity                  in earnings of consolidated                  subsidiaries**                                  |   |   | 143 |   |   | − |   |   | (143 | ) |   | − |   |
| **Minority                  interest in subsidiaries’ loss, net of                  tax**                        |   |   | **−** |   |   | 8 |   |   | **−** |   |   | 8 |   |
| **Income                  (loss) from continuing                  operations**                                         |   |   | 93 |   |   | 44 |   |   | (33 | ) |   | 104 |   |
| **Discontinued                  operations, net of tax**                                                               |   |   | **−** |   |   | (26 | ) |   | 15 |   |   | (11 | ) |
| **Net                  income (loss)**                                                                                 |   | $ | 93 |   | $ | 18 |   | $ | (18 | ) | $ | 93 |   |

----

| Condensed                  Consolidating Balance SheetMarch                  31, 2006                   |   |
|---------------------------------------------------------------------------------------------------------|--------|
| (in                  millions)                                                                          |   | **Parent** |   | **Subsidiary                  Guarantor** |   | **Other** |   | **Progress****Energy,                  Inc.** |   |
| **Utility                  plant, net**                                                                 |   | $ | − |   | $ | 5,889 |   | $ | 8,681 |   | $ | 14,570 |   |
| **Current                  assets**                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                              |   |   | 4 |   |   | 152 |   |   | 107 |   |   | 263 |   |
| Short-term                  investments                                                                 |   |   | − |   |   | 81 |   |   | 136 |   |   | 217 |   |
| Notes                  receivables from affiliated companies                                            |   |   | 332 |   |   | 60 |   |   | (392 | ) |   | − |   |
| Deferred                  fuel cost                                                                     |   |   | − |   |   | 231 |   |   | 243 |   |   | 474 |   |
| Assets                  of discontinued operations                                                      |   |   | − |   |   | 85 |   |   | 1 |   |   | 86 |   |
| Other                  current assets                                                                   |   |   | 59 |   |   | 1,098 |   |   | 1,009 |   |   | 2,166 |   |
| **Total                  current assets**                                                               |   |   | 395 |   |   | 1,707 |   |   | 1,104 |   |   | 3,206 |   |
| **Deferred                  debits and other assets**                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                  in consolidated subsidiaries                                                |   |   | 11,596 |   |   | − |   |   | (11,596 | ) |   | − |   |
| Goodwill                                                                                                |   |   | − |   |   | 2 |   |   | 3,653 |   |   | 3,655 |   |
| Other                  assets and deferred debits                                                       |   |   | 260 |   |   | 2,063 |   |   | 2,734 |   |   | 5,057 |   |
| **Total                  deferred debits and other                  assets**                            |   |   | 11,856 |   |   | 2,065 |   |   | (5,209 | ) |   | 8,712 |   |
| **Total                  assets**                                                                       |   | $ | 12,251 |   | $ | 9,661 |   | $ | 4,576 |   | $ | 26,488 |   |
| **Capitalization**                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock equity                                                                    |   | $ | 7,997 |   | $ | 3,076 |   | $ | (3,076 | ) | $ | 7,997 |   |
| Preferred                  stock of subsidiaries - not subject to mandatory                  redemption |   |   | − |   |   | 34 |   |   | 59 |   |   | 93 |   |
| Minority                  interest                                                                      |   |   | − |   |   | 53 |   |   | 5 |   |   | 58 |   |
| Long-term                  debt, affiliate                                                              |   |   | − |   |   | 440 |   |   | (170 | ) |   | 270 |   |
| Long-term                  debt, net                                                                    |   |   | 3,874 |   |   | 2,636 |   |   | 3,668 |   |   | 10,178 |   |
| **Total                  capitalization**                                                               |   |   | 11,871 |   |   | 6,239 |   |   | 486 |   |   | 18,596 |   |
| **Current                  liabilities**                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                  portion of long-term debt                                                      |   |   | − |   |   | 109 |   |   | − |   |   | 109 |   |
| Notes                  payable to affiliated companies                                                  |   |   | − |   |   | 188 |   |   | (188 | ) |   | − |   |
| Short-term                  obligations                                                                 |   |   | 100 |   |   | 102 |   |   | 52 |   |   | 254 |   |
| Liabilities                  of discontinued operations                                                 |   |   | − |   |   | 33 |   |   | − |   |   | 33 |   |
| Other                  current liabilities                                                              |   |   | 231 |   |   | 844 |   |   | 734 |   |   | 1,809 |   |
| **Total                  current liabilities**                                                          |   |   | 331 |   |   | 1,276 |   |   | 598 |   |   | 2,205 |   |
| **Deferred                  credits and other                  liabilities**                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncurrent                  income tax liabilities                                                      |   |   | − |   |   | 9 |   |   | 256 |   |   | 265 |   |
| Regulatory                  liabilities                                                                 |   |   | − |   |   | 1,192 |   |   | 1,376 |   |   | 2,568 |   |
| Accrued                  pension and other benefits                                                     |   |   | 12 |   |   | 311 |   |   | 570 |   |   | 893 |   |
| Other                  liabilities and deferred credits                                                 |   |   | 37 |   |   | 634 |   |   | 1,290 |   |   | 1,961 |   |
| **Total                  deferred credits and other                  liabilities**                      |   |   | 49 |   |   | 2,146 |   |   | 3,492 |   |   | 5,687 |   |
| **Total                  capitalization and liabilities**                                               |   | $ | 12,251 |   | $ | 9,661 |   | $ | 4,576 |   | $ | 26,488 |   |

----

| Condensed                  Consolidating Balance SheetDecember                  31, 2005                |   |
|---------------------------------------------------------------------------------------------------------|--------|
| (in                  millions)                                                                          |   | **Parent** |   | **Subsidiary                  Guarantor** |   | **Other**** ** |   | **Progress****Energy,                  Inc.** |   |
| **Utility                  plant, net**                                                                 |   | **$** | **−** |   | $ | 5,821 |   | $ | 8,621 |   | $ | 14,442 |   |
| **Current                  assets**                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                              |   |   | 239 |   |   | 241 |   |   | 126 |   |   | 606 |   |
| Short-term                  investments                                                                 |   |   | **−** |   |   | **−** |   |   | 191 |   |   | 191 |   |
| Notes                  receivables from affiliated companies                                            |   |   | 467 |   |   | **−** |   |   | (467 | ) |   | **−** |   |
| Deferred                  fuel cost                                                                     |   |   | **−** |   |   | 341 |   |   | 261 |   |   | 602 |   |
| Assets                  of discontinued operations                                                      |   |   | **−** |   |   | 223 |   |   | 2 |   |   | 225 |   |
| Other                  current assets                                                                   |   |   | 22 |   |   | 1,057 |   |   | 1,138 |   |   | 2,217 |   |
| **Total                  current assets**                                                               |   |   | 728 |   |   | 1,862 |   |   | 1,251 |   |   | 3,841 |   |
| **Deferred                  debits and other assets**                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                  in consolidated subsidiaries                                                |   |   | 11,594 |   |   | − |   |   | (11,594 | ) |   | − |   |
| Goodwill                                                                                                |   |   | **−** |   |   | 2 |   |   | 3,717 |   |   | 3,719 |   |
| Other                  assets and deferred debits                                                       |   |   | 259 |   |   | 2,072 |   |   | 2,709 |   |   | 5,040 |   |
| **Total                  deferred debits and other                  assets**                            |   |   | 11,853 |   |   | 2,074 |   |   | (5,168 | ) |   | 8,759 |   |
| **Total                  assets**                                                                       |   | $ | 12,581 |   | $ | 9,757 |   | $ | 4,704 |   | $ | 27,042 |   |
| **Capitalization**                                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  stock equity                                                                    |   | $ | 8,038 |   | $ | 3,039 |   | $ | (3,039 | ) | $ | 8,038 |   |
| Preferred                  stock of subsidiaries - not subject to mandatory                  redemption |   |   | **−** |   |   | 34 |   |   | 59 |   |   | 93 |   |
| Minority                  interest                                                                      |   |   | **−** |   |   | 38 |   |   | 5 |   |   | 43 |   |
| Long-term                  debt, affiliate                                                              |   |   | **−** |   |   | 440 |   |   | (170 | ) |   | 270 |   |
| Long-term                  debt, net                                                                    |   |   | 3,873 |   |   | 2,636 |   |   | 3,667 |   |   | 10,176 |   |
| **Total                  capitalization**                                                               |   |   | 11,911 |   |   | 6,187 |   |   | 522 |   |   | 18,620 |   |
| **Current                  liabilities**                                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                  portion of long-term debt                                                      |   |   | 404 |   |   | 109 |   |   | **−** |   |   | 513 |   |
| Notes                  payable to affiliated companies                                                  |   |   | **−** |   |   | 315 |   |   | (315 | ) |   | **−** |   |
| Short-term                  obligations                                                                 |   |   | **−** |   |   | 102 |   |   | 73 |   |   | 175 |   |
| Liabilities                  of discontinued operations                                                 |   |   | **−** |   |   | 87 |   |   | **−** |   |   | 87 |   |
| Other                  current liabilities                                                              |   |   | 245 |   |   | 843 |   |   | 1,019 |   |   | 2,107 |   |
| **Total                  current liabilities**                                                          |   |   | 649 |   |   | 1,456 |   |   | 777 |   |   | 2,882 |   |
| **Deferred                  credits and other                  liabilities**                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noncurrent                  income tax liabilities                                                      |   |   | **−** |   |   | 62 |   |   | 234 |   |   | 296 |   |
| Regulatory                  liabilities                                                                 |   |   | **−** |   |   | 1,189 |   |   | 1,338 |   |   | 2,527 |   |
| Accrued                  pension and other benefits                                                     |   |   | 12 |   |   | 307 |   |   | 551 |   |   | 870 |   |
| Other                  liabilities and deferred credits                                                 |   |   | 9 |   |   | 556 |   |   | 1,282 |   |   | 1,847 |   |
| **Total                  deferred credits and other                  liabilities**                      |   |   | 21 |   |   | 2,114 |   |   | 3,405 |   |   | 5,540 |   |
| **Total                  capitalization and liabilities**                                               |   | $ | 12,581 |   | $ | 9,757 |   | $ | 4,704 |   | $ | 27,042 |   |

----

| Condensed                  Consolidating Statement of Cash FlowsThree                  Months Ended March 31, 2006      |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|
| (in                  millions)                                                                                          |   | **Parent** |   | **Subsidiary                  Guarantor** |   | **Other** |   | **Progress****E****nergy,                  Inc.** |   |
| **Net                  cash provided by operating                  activities**                                         |   | $ | 64 |   | $ | 362 |   | $ | 74 |   | $ | 500 |   |
| **Investing                  activities**                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  utility property additions                                                                       |   |   | **−** |   |   | (153 | ) |   | (151 | ) |   | (304 | ) |
| Diversified                  business property additions                                                                |   |   | **−** |   |   | (47 | ) |   | **−** |   |   | (47 | ) |
| Nuclear                  fuel additions                                                                                 |   |   | **−** |   |   | (6 | ) |   | (46 | ) |   | (52 | ) |
| Proceeds                  from sales of discontinued operations and other                  assets, net of cash divested |   |   | **−** |   |   | 98 |   |   | 5 |   |   | 103 |   |
| Purchases                  of available-for-sale securities and other                  investments                      |   |   | (163 | ) |   | (126 | ) |   | (249 | ) |   | (538 | ) |
| Proceeds                  from sales of available-for-sale securities and other                  investments            |   |   | 163 |   |   | 71 |   |   | 288 |   |   | 522 |   |
| Changes                  in advances to affiliates                                                                      |   |   | 135 |   |   | (66 | ) |   | (69 | ) |   | **−** |   |
| Other                  investing activities                                                                             |   |   | (3 | ) |   | (3 | ) |   | (5 | ) |   | (11 | ) |
| **Net                  cash provided by (used in) investing                  activities**                               |   |   | 132 |   |   | (232 | ) |   | (227 | ) |   | (327 | ) |
| **Financing                  activities**                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of common stock                                                                               |   |   | 28 |   |   | **−** |   |   | **−** |   |   | 28 |   |
| Proceeds                  from issuance of long-term debt                                                               |   |   | 397 |   |   | **−** |   |   | **−** |   |   | 397 |   |
| Net                  increase (decrease) in short-term indebtedness                                                     |   |   | 100 |   |   | **−** |   |   | (21 | ) |   | 79 |   |
| Retirement                  of long-term debt                                                                           |   |   | (800 | ) |   | (1 | ) |   | **−** |   |   | (801 | ) |
| Dividends                  paid on common stock                                                                         |   |   | (151 | ) |   | **−** |   |   | **−** |   |   | (151 | ) |
| Dividends                  paid to parent                                                                               |   |   | **−** |   |   | (59 | ) |   | 59 |   |   | **−** |   |
| Changes                  in advances from affiliates                                                                    |   |   | **−** |   |   | (127 | ) |   | 127 |   |   | **−** |   |
| Other                  financing activities                                                                             |   |   | (5 | ) |   | (24 | ) |   | (31 | ) |   | (60 | ) |
| **Net                  cash (used in) provided by financing                  activities**                               |   |   | (431 | ) |   | (211 | ) |   | 134 |   |   | (508 | ) |
| **Cash                  used by discontinued operations**                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  activities                                                                                   |   |   | **−** |   |   | (5 | ) |   | **−** |   |   | (5 | ) |
| Investing                  activities                                                                                   |   |   | **−** |   |   | (3 | ) |   | **−** |   |   | (3 | ) |
| Financing                  activities                                                                                   |   |   | **−** |   |   | **−** |   |   | **−** |   |   | **−** |   |
| Net                  decrease in cash and cash equivalents                                                              |   |   | (235 | ) |   | (89 | ) |   | (19 | ) |   | (343 | ) |
| **Cash                  and cash equivalents at beginning of                  period**                                  |   |   | 239 |   |   | 241 |   |   | 126 |   |   | 606 |   |
| **Cash                  and cash equivalents at end of                  period**                                        |   | $ | 4 |   | $ | 152 |   | $ | 107 |   | $ | 263 |   |

----

| Condensed                  Consolidating Statement of Cash FlowsThree                  Months Ended March 31, 2005      |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|
| (in                  millions)                                                                                          |   | **Parent** |   | **Subsidiary                  Guarantor** |   | **Other** |   | **Progress****Energy,                  Inc.** |   |
| **Net                  cash provided by operating                  activities**                                         |   | $ | 62 |   | $ | 41 |   | $ | 129 |   | $ | 232 |   |
| **Investing                  activities**                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross                  utility property additions                                                                       |   |   | **−** |   |   | (132 | ) |   | (135 | ) |   | (267 | ) |
| Diversified                  business property additions                                                                |   |   | **−** |   |   | (24 | ) |   | (16 | ) |   | (40 | ) |
| Nuclear                  fuel additions                                                                                 |   |   | **−** |   |   | (34 | ) |   | (30 | ) |   | (64 | ) |
| Proceeds                  from sales of discontinued operations and other                  assets, net of cash divested |   |   | **−** |   |   | 397 |   |   | 1 |   |   | 398 |   |
| Purchases                  of available-for-sale securities and other                  investments                      |   |   | (1,075 | ) |   | (68 | ) |   | (869 | ) |   | (2,012 | ) |
| Proceeds                  from sales of available-for-sale securities and other                  investments            |   |   | 981 |   |   | 68 |   |   | 804 |   |   | 1,853 |   |
| Changes                  in advances to affiliates                                                                      |   |   | (281 | ) |   | 5 |   |   | 276 |   |   | **−** |   |
| Proceeds                  from repayment of long-term affiliate debt                                                    |   |   | 369 |   |   | **−** |   |   | (369 | ) |   | **−** |   |
| Other                  investing activities                                                                             |   |   | (7 | ) |   | (4 | ) |   | (1 | ) |   | (12 | ) |
| **Net                  cash (used in) provided by investing                  activities**                               |   |   | (13 | ) |   | 208 |   |   | (339 | ) |   | (144 | ) |
| **Financing                  activities**                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issuance                  of common stock                                                                               |   |   | 60 |   |   | **−** |   |   | **−** |   |   | 60 |   |
| Proceeds                  from issuance of long-term debt                                                               |   |   | **−** |   |   | **−** |   |   | 495 |   |   | 495 |   |
| Net                  increase (decrease) in short-term indebtedness                                                     |   |   | 260 |   |   | (140 | ) |   | (113 | ) |   | 7 |   |
| Retirement                  of long-term debt                                                                           |   |   | (160 | ) |   | (56 | ) |   | **−** |   |   | (216 | ) |
| Retirement                  of long-term affiliate debt                                                                 |   |   | **−** |   |   | (369 | ) |   | 369 |   |   | **−** |   |
| Dividends                  paid on common stock                                                                         |   |   | (145 | ) |   | **−** |   |   | **−** |   |   | (145 | ) |
| Changes                  in advances from affiliates                                                                    |   |   | **−** |   |   | 330 |   |   | (330 | ) |   | **−** |   |
| Other                  financing activities                                                                             |   |   | (4 | ) |   | 17 |   |   | (51 | ) |   | (38 | ) |
| **Net                  cash provided by (used in) financing                  activities**                               |   |   | 11 |   |   | (218 | ) |   | 370 |   |   | 163 |   |
| **Cash                  used by discontinued operations**                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating                  activities                                                                                   |   |   | **−** |   |   | (18 | ) |   | **−** |   |   | (18 | ) |
| Investing                  activities                                                                                   |   |   | **−** |   |   | (9 | ) |   | **−** |   |   | (9 | ) |
| Financing                  activities                                                                                   |   |   | **−** |   |   | **−** |   |   | **−** |   |   | **−** |   |
| Net                  increase in cash and cash equivalents                                                              |   |   | 60 |   |   | 4 |   |   | 160 |   |   | 224 |   |
| **Cash                  and cash equivalents at beginning of                  period**                                  |   |   | 5 |   |   | 24 |   |   | 27 |   |   | 56 |   |
| **Cash                  and cash equivalents at end of                  period**                                        |   | $ | 65 |   | $ | 28 |   | $ | 187 |   | $ | 280 |   |

----

|                                                        |   |                                  |    |                                 |   |
|-------------------------------------------------------------|--------|---------------------------------------|---------|--------------------------------------|--------|
| (in                    millions)                            |   | **March                    31, 2006** |    | December                    31, 2006 |   |
| Total                    current assets                     |   | **$**                                 | **13**  |                                 | $      | 13 |   |
| Total                    property, plant and equipment, net |   |                                  | **477** |                                 |   | 480 |   |
| Total                    other assets                       |   |                                  | **25**  |                                 |   | 25 |   |
| Total                    current liabilities                |   |                                  | **1**   |                                 |   | 1 |   |
| Total                    long-term liabilities              |   |                                  | **20**  |                                 |   | 19 |   |
| Total                    capitalization                     |   |                                  | **494** |                                 |   | 498 |   |

----

Item        2. Management’s Discussion and        Analysis of Financial Condition and Results of Operations

**RESULTS        OF OPERATIONS**
| ·                   | PEC                - primarily engaged in the generation, transmission,                distribution and sale of electricity in portions of North Carolina                and                South Carolina; |
|----------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·                   | PEF                - primarily engaged in the generation, transmission,                distribution and sale of electricity in portions of Florida; |
|----------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
| ·                   | Progress                Ventures - primarily engaged in nonregulated                electric generation operations and energy marketing activities mainly                in                Georgia, North Carolina and Florida, as well as natural gas drilling                and                production in Texas and Louisiana; and |
|----------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·                   | Coal                and Synthetic Fuels - primarily engaged in the                production and sale of coal-based solid synthetic fuels, the operation                of                synthetic fuel facilities for third parties in Kentucky and West                Virginia,                and coal terminal services. |
|----------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**OVERVIEW**

----

| ·   | Impairment                of goodwill related to our nonregulated plants in                Georgia. |
|--------------------|-----------------------------------------------------------------------------------------------------|
| ·   | Unrealized                losses recorded on contingent value                obligations. |
|--------------------|-------------------------------------------------------------------------------------------|
| ·   | Additional                outage expenses at PEC. |
|--------------------|---------------------------------------------------|
| ·   | Additional                estimated environmental remediation expenses at                PEC. |
|--------------------|-----------------------------------------------------------------------------------------------|
| ·   | Unfavorable                retail sales at PEC, primarily due to                weather. |
|--------------------|------------------------------------------------------------------------------------------|
| ·   | The                impact of tax levelization. |
|--------------------|------------------------------------------------|
| ·   | Lower                tax credits due to lower synthetic fuel production and                higher oil prices. |
|--------------------|---------------------------------------------------------------------------------------------------------------|
| ·   | Increased                interest expense. |
|--------------------|--------------------------------------------|
|   |   |
|--------|--------|
|  ·   | Prior year severance expenses related to the 2005 cost-managment              initiative. |
|--------------------------|-------------------------------------------------------------------------------------------|
| ·   | Gain                on sale of Level 3 stock acquired as part of the                divestiture of PT LLC. |
|--------------------|------------------------------------------------------------------------------------------------------------|
| ·   | Increased                wholesale excess generation margin at                PEC. |
|--------------------|------------------------------------------------------------------------------------|
| ·   | The                impact of restructuring a long-term coal supply                contract. |
|--------------------|---------------------------------------------------------------------------------------------|

|                                                 |   |                                          |    |
|------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                 |   | Three                  Months Ended March 31, |    |
| (in                  millions)                       |   | **2006**                                      |    | 2005 |   |
| Business                  Segment                    |   |                                          |    |   |   |
| PEC                                                  |   | **$**                                         | **85**  |   | $ | 115 |   |
| PEF                                                  |   |                                          | **52**  |   |   | 43 |   |
| Progress                  Ventures                   |   |                                          | **(35** | **)** |   | 7 |   |
| Coal                  and synthetic fuels            |   |                                          | **14**  |   |   | (4 | ) |
| Total                  segment profit                |   |                                          | **116** |   |   | 161 |   |
| Corporate                  and Other                 |   |                                          | **(69** | **)** |   | (57 | ) |
| Income                  from continuing operations   |   |                                          | **47**  |   |   | 104 |   |
| Discontinued                  operations, net of tax |   |                                          | **(2**  | **)** |   | (11 | ) |
| Net                  income                          |   | **$**                                         | **45**  |   | $ | 93 |   |

**PROGRESS        ENERGY CAROLINAS **

----

**Revenues**

|                                     |   |                                          |     |
|------------------------------------------|--------|-----------------------------------------------|----------|
| (in                  millions)           |   | Three                  Months Ended March 31, |     |
| Customer                  Class          |   | **2006**                                      |     | Change |   | %                  Change |   | 2005 |   |
| Residential                              |   | **$**                                         | **376**  |   | $ | 2 |   |   | 0.5 |   | $ | 374 |   |
| Commercial                               |   |                                          | **226**  |   |   | 11 |   |   | 5.1 |   |   | 215 |   |
| Industrial                               |   |                                          | **163**  |   |   | 14 |   |   | 9.4 |   |   | 149 |   |
| Governmental                             |   |                                          | **20**   |   |   | 1 |   |   | 5.3 |   |   | 19 |   |
| Total                  retail revenues   |   |                                          | **785**  |   |   | 28 |   |   | 3.7 |   |   | 757 |   |
| Wholesale                                |   |                                          | **192**  |   |   | 18 |   |   | 10.3 |   |   | 174 |   |
| Unbilled                                 |   |                                          | **(27**  | **)** |   | (8 | ) |   |   |   |   | (19 | ) |
| Miscellaneous                            |   |                                          | **28**   |   |   | 5 |   |   | 21.7 |   |   | 23 |   |
| Total                  electric revenues |   |                                          | **978**  |   |   | 43 |   |   | 4.6 |   |   | 935 |   |
| Less:                  Fuel revenues     |   |                                          | **(317** | **)** |   | (46 | ) |   |   |   |   | (271 | ) |
| Revenues                  excluding fuel |   | **$**                                         | **661**  |   | $ | (3 | ) |   | (0.5 | ) | $ | 664 |   |

|                                       |   |                                          |       |
|--------------------------------------------|--------|-----------------------------------------------|------------|
| (in                  millions of kWh)      |   | Three                  Months Ended March 31, |       |
| Customer                  Class            |   | **2006**                                      |       | Change |   | %                  Change |   | 2005 |   |
| Residential                                |   |                                          | **4,417**  |   |   | (255 | ) |   | (5.5 | ) |   | 4,672 |   |
| Commercial                                 |   |                                          | **3,052**  |   |   | (28 | ) |   | (0.9 | ) |   | 3,080 |   |
| Industrial                                 |   |                                          | **2,933**  |   |   | 2 |   |   | 0.1 |   |   | 2,931 |   |
| Governmental                               |   |                                          | **320**    |   |   | (7 | ) |   | (2.1 | ) |   | 327 |   |
| Total                  retail energy sales |   |                                          | **10,722** |   |   | (288 | ) |   | (2.6 | ) |   | 11,010 |   |
| Wholesale                                  |   |                                          | **3,958**  |   |   | 20 |   |   | 0.5 |   |   | 3,938 |   |
| Unbilled                                   |   |                                          | **(378**   | **)** |   | (75 | ) |   |   |   |   | (303 | ) |
| Total                  kWh sales           |   |                                          | **14,302** |   |   | (343 | ) |   | (2.3 | ) |   | 14,645 |   |

**Expenses**

*Fuel        and Purchased Power*

*Operation        and Maintenance*

*Depreciation        and Amortization*

*Total        Other Income*

*Total        Interest Charges, net*

*Income        Tax Expense*

**PROGRESS        ENERGY FLORIDA**

**Revenues**

|                                                               |   |                                          |      |
|--------------------------------------------------------------------|--------|-----------------------------------------------|-----------|
| (in                  millions)                                     |   | Three                  Months Ended March 31, |      |
| Customer                  Class                                    |   | **2006**                                      |      | Change |   | %                  Change |   | 2005 |   |
| Residential                                                        |   | **$**                                         | **506**   |   | $ | 75 |   |   | 17.4 |   | $ | 431 |   |
| Commercial                                                         |   |                                          | **245**   |   |   | 44 |   |   | 21.9 |   |   | 201 |   |
| Industrial                                                         |   |                                          | **83**    |   |   | 20 |   |   | 31.7 |   |   | 63 |   |
| Governmental                                                       |   |                                          | **66**    |   |   | 13 |   |   | 24.5 |   |   | 53 |   |
| Retail                  revenue sharing                            |   |                                          | **1**     |   |   | 3 |   |   |   |   |   | (2 | ) |
| Total                  retail revenues                             |   |                                          | **901**   |   |   | 155 |   |   | 20.8 |   |   | 746 |   |
| Wholesale                                                          |   |                                          | **69**    |   |   | (4 | ) |   | (5.5 | ) |   | 73 |   |
| Unbilled                                                           |   |                                          | **1**     |   |   | 6 |   |   |   |   |   | (5 | ) |
| Miscellaneous                                                      |   |                                          | **36**    |   |   | 2 |   |   | 5.9 |   |   | 34 |   |
| Total                  electric revenues                           |   |                                          | **1,007** |   |   | 159 |   |   | 18.8 |   |   | 848 |   |
| Less:                  Fuel and other pass-through revenues        |   |                                          | **(654**  | **)** |   | (153 | ) |   |   |   |   | (501 | ) |
| Revenues                  excluding fuel and pass-through revenues |   | **$**                                         | **353**   |   | $ | 6 |   |   | 1.7 |   | $ | 347 |   |

|                                       |   |                                          |      |
|--------------------------------------------|--------|-----------------------------------------------|-----------|
| (in                  millions of kWh)      |   | Three                  Months Ended March 31, |      |
| Customer                  Class            |   | **2006**                                      |      | Change |   | %                  Change |   | 2005 |   |
| Residential                                |   |                                          | **4,311** |   |   | (36 | ) |   | (0.8 | ) |   | 4,347 |   |
| Commercial                                 |   |                                          | **2,550** |   |   | (21 | ) |   | (0.8 | ) |   | 2,571 |   |
| Industrial                                 |   |                                          | **1,006** |   |   | 66 |   |   | 7.0 |   |   | 940 |   |
| Governmental                               |   |                                          | **721**   |   |   | 12 |   |   | 1.7 |   |   | 709 |   |
| Total                  retail energy sales |   |                                          | **8,588** |   |   | 21 |   |   | 0.2 |   |   | 8,567 |   |
| Wholesale                                  |   |                                          | **1,007** |   |   | (331 | ) |   | (24.7 | ) |   | 1,338 |   |
| Unbilled                                   |   |                                          | **(150**  | **)** |   | (47 | ) |   |   |   |   | (103 | ) |
| Total                  kWh sales           |   |                                          | **9,445** |   |   | (357 | ) |   | (3.6 | ) |   | 9,802 |   |

**Expenses**

*Fuel        and Purchased Power*

----

*Operation        and Maintenance*

*Depreciation        and Amortization*

*Taxes        other than on Income*

*Total        Interest Charges, net*

*Income        Tax Expense*

**DIVERSIFIED        BUSINESSES**

----

**PROGRESS        VENTURES**

|                                              |   |                                          |    |
|---------------------------------------------------|--------|-----------------------------------------------|---------|
|                                              |   | Three                  Months Ended March 31, |    |
| ($                  in millions)                  |   | **2006**                                      |    | 2005 |   |
| Gas                  production in Bcf equivalent |   |                                          | **7**   |   |   | 5 |   |
|                                              |   |                                          |    |   |   |   |   |
| Electric                  revenues                |   | **$**                                         | **157** |   | $ | 65 |   |
| Gas                  revenues                     |   |                                          | **69**  |   |   | 33 |   |
| Total                  revenues                   |   | **$**                                         | **226** |   | $ | 98 |   |
|                                              |   |                                          |    |   |   |   |   |
| Gross                  margin                     |   |                                          |    |   |   |   |   |
| In                  millions of $                 |   | **$**                                         | **63**  |   | $ | 48 |   |
| As                  a % of revenues               |   |                                          | **28**  | **%** |   | 49 | % |
|                                              |   |                                          |    |   |   |   |   |
| Segment                  profits (losses)         |   | **$**                                         | **(35** | **)** | $ | 7 |   |

*RECENT DEVELOPMENTS*

----

**COAL        AND SYNTHETIC FUELS**

|                                                     |   |                                          |   |
|----------------------------------------------------------|--------|-----------------------------------------------|--------|
|                                                     |   | Three                  Months Ended March 31, |   |
| (in                  millions)                           |   | **2006**                                      |   | 2005 |   |
| Synthetic                  fuel operations               |   | **$**                                         | **3**  |   | $ | (1 | ) |
| Coal                  terminals and marketing            |   |                                          | **18** |   |   | 8 |   |
| Corporate                  overhead and other operations |   |                                          | **(7** | **)** |   | (11 | ) |
| Segment                  profits (losses)                |   | **$**                                         | **14** |   | $ | (4 | ) |

----

*SYNTHETIC        FUEL OPERATIONS*

|                                                             |   |     |    |
|------------------------------------------------------------------|--------|----------|---------|
| (in                  millions)                                   |   | **2006** |    | 2005 |   |
| Tons                  sold                                       |   |     | **1.2** |   |   | 2.0 |   |
| After-tax                  losses, excluding tax credits         |   | **$**    | **(26** | **)** | $ | (38 | ) |
| Tax                  credits generated                      |   |     | **35**  |   |   | 54 |   |
| Tax                  credit inflation adjustment                 |   |     | **10**  |   |   | - |   |
| Tax                  credits reserved due to potential phase-out |   |     | **(16** | **)** |   | - |   |
| Tax                  credits reversed                            |   |     | -       |   |   | (17 | ) |
| Net                  profit (loss)                               |   | **$**    | **3**   |   | $ | (1 | ) |

*COAL        TERMINALS AND MARKETING*

----

*CORPORATE        OVERHEAD AND OTHER OPERATIONS*

**CORPORATE        AND OTHER**

|                                                   |   |                                          |    |
|--------------------------------------------------------|--------|-----------------------------------------------|---------|
|                                                   |   | Three                  Months Ended March 31, |    |
| (in                  millions)                         |   | **2006**                                      |    | 2005 |   |
| Other                  interest expense                |   | **$**                                         | **(76** | **)** | $ | (71 | ) |
| Contingent                  value obligations          |   |                                          | **(25** | **)** |   | - |   |
| Tax                  levelization                      |   |                                          | **(14** | **)** |   | (3 | ) |
| Tax                  reallocation                      |   |                                          | **-**   |   |   | (9 | ) |
| Other                  income tax benefit              |   |                                          | **30**  |   |   | 29 |   |
| Other                                                  |   |                                          | **16**  |   |   | (3 | ) |
| Corporate                  and Other after-tax expense |   | **$**                                         | **(69** | **)** | $ | (57 | ) |

----

**DISCONTINUED        OPERATIONS**

*PROGRESS        TELECOM LLC*

*COAL        MINING OPERATIONS*

*PROGRESS        RAIL*

**LIQUIDITY        AND CAPITAL RESOURCES**

**OVERVIEW**

----

*CASH        FLOWS FROM OPERATIONS*

*INVESTING        ACTIVITIES*

----

*FINANCING        ACTIVITIES*

----

**FUTURE        LIQUIDITY AND CAPITAL RESOURCES**

**OFF-BALANCE        SHEET ARRANGEMENTS AND CONTRACTUAL        OBLIGATIONS**

**GUARANTEES**

----

**MARKET        RISK AND DERIVATIVES**

**CONTRACTUAL        OBLIGATIONS**

**OTHER        MATTERS**

**SYNTHETIC        FUELS TAX CREDITS**

*IMPACT        OF CRUDE OIL PRICES*

----

----

*PERMANENT        SUBCOMMITTEE*

*SALE        OF PARTNERSHIP INTEREST*

**REGULATORY        ENVIRONMENT**

----

**APPLICATIONS        FOR NUCLEAR POWER PLANT        LICENSES**

**ENVIRONMENTAL        MATTERS**

**NEW        ACCOUNTING STANDARDS**

----

***PEC***

**LIQUIDITY        AND CAPITAL RESOURCES**

**OFF-BALANCE        SHEET ARRANGEMENTS AND CONTRACTUAL        OBLIGATIONS**

**MARKET        RISK AND DERIVATIVES**

**CONTRACTUAL        OBLIGATIONS**

----

***PEF***

**LIQUIDITY        AND CAPITAL RESOURCES**

----

Item        3. Quantitative and Qualitative        Disclosures about Market Risk 

***PROGRESS        ENERGY, INC.***

**INTEREST        RATE RISK**

----

**CASH        FLOW HEDGES**

|                                                    |                             |   |                           |                        |        |
|---------------------------------------------------------|----------------------------------|--------|--------------------------------|-----------------------------|-------------|
| Cash                  Flow Hedges (dollars in millions) |                             |   |                           |                        |        |
| Progress                  Energy, Inc.                  | Notional                  Amount | Pay    | Receive(a)                     | Fair                  Value | Exposure(b) |
| **Risk                  hedged at March 31, 2006:**     | **None**                         |   |                           |                        |        |
|                                                    |                             |   |                           |                        |        |
| Risk                  hedged at December 31, 2005:      |                             |   |                           |                        |        |
| Anticipated                  10-year debt issue(c)      | $100                             | 4.87%  | 3-month                  LIBOR | $1                          | $(2)        |
|                                                    |                             |   |                           |                        |        |

| (a) |  3-month                  LIBOR rate was 4.54% as of December 31,                  2005. |
|-----|-----------------------------------------------------------------------------------------------|

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

| (c)  |  Anticipated                  10-year debt issue hedges terminated on March                  1, 2006 with required mandatory cash                  settlement. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**FAIR        VALUE HEDGES**

|                                                     |                             |             |                               |                        |        |
|----------------------------------------------------------|----------------------------------|------------------|------------------------------------|-----------------------------|-------------|
| Fair                  Value Hedges (dollars in millions) |                             |             |                               |                        |        |
| Progress                  Energy, Inc.                   | Notional                  Amount | Receive          | Pay(b)                             | Fair                  Value | Exposure(c) |
| **Risk                  hedged at March 31, 2006**       |                             |             |                               |                        |        |
| 5.85%                  Notes due 10/30/2008              | **$100**                         | **4.10%**        | **3-month                  LIBOR** | **$(3)**                    | **$(1)**    |
| 7.10%                  Notes due 3/1/2011                | **50**                           | **4.65%**        | **3-month                  LIBOR** | **(1)**                     | **-**       |
| Total                                                    | **$150**                         | **4.28%****(a)** |                               | **$(4)**                    | **$(1)**    |
|                                                     |                             |             |                               |                        |        |
| Risk                  hedged at December 31, 2005        |                             |             |                               |                        |        |
| 5.85%                  Notes due 10/30/2008              | $100                             | 4.10%            | 3-month                  LIBOR     | $(2)                        | $(1)        |
| 7.10%                  Notes due 3/1/2011                | 50                               | 4.65%            | 3-month                  LIBOR     | **-**                       | **-**       |
| Total                                                    | $150                             | 4.28%(a)         |                               | $(2)                        | $(1)        |

| (a) | Weighted                  average interest rate. |
|-----|--------------------------------------------------|

| (b) | 3-month                  LIBOR rate was 5.00% at March 31, 2006 and 4.54% as of                  December 31, 2005. |
|-----|---------------------------------------------------------------------------------------------------------------------|

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

**MARKETABLE        SECURITIES PRICE RISK**

----

**CONTINGENT        VALUE OBLIGATIONS MARKET VALUE        RISK**

**COMMODITY        PRICE RISK**

**GENERAL**

**ECONOMIC        DERIVATIVES**

----

**CASH        FLOW HEDGES**

|                                       |   |                                 |    |
|--------------------------------------------|--------|--------------------------------------|---------|
|                                       |   | March                  31, 2006      |    | December                  31, 2005 |   |
| (in                  millions)             |   | **Progress                  Energy** |    | **PEC** |   | Progress                  Energy |   | PEC |   |
| Fair                  value of assets      |   | **$**                                | **144** |   | **$** | **3** |   | $ | 170 |   | $ | 7 |   |
| Fair                  value of liabilities |   |                                 | **(21** | **)** |   | **-** |   |   | (58 | ) |   | (4 | ) |
| Fair                  value, net           |   | **$**                                | **123** |   | **$** | **3** |   | $ | 112 |   | $ | 3 |   |

***PEC***

***PEF***

----

Item        4: Controls and        Procedures

----

| PART                  II. | OTHER                  INFORMATION |
|---------------------------|------------------------------------|

Item        1. Legal        Proceedings

Item        1A. Risk Factors

Item        2. Unregistered Sale of Equity        Securities and Use of Proceeds
| (a)   | Securities                Delivered. On January 3, 2006 and March                14, 2006, 6,500 and 100,100 restricted shares, respectively, of our                common                stock were granted to certain key employees pursuant to the terms                of the                Progress Energy 2002 Equity Incentive Plan (EIP), which was approved                by                the Progress Energy’s shareholders on May 8, 2002. Section 9 of the EIP                provides for the granting of Restricted Stock by the Organization                and                Compensation Committee of the Board of Directors, (the Committee)                to key                employees, including our Affiliates or any successor, and to our                outside                directors. The shares of common stock delivered pursuant to the EIP                were                acquired in market transactions directly for the accounts of the                recipients and do not represent newly issued shares of Progress Energy. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (b)   | Underwriters                and Other Purchasers. No underwriters                were used in connection with the delivery of our common stock described                above. The shares were delivered to certain key employees. The EIP                defines                "key employee" as an officer or other employee of Progress Energy                who is                selected for participation in the EIP. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (c)   | Consideration.                The shares of our common stock were                delivered to provide an incentive to the employee recipients to exert                their utmost efforts on Progress Energy’s behalf and thus enhance our                performance while aligning the employee's interest with those of                our                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 shares of our common stock required no investment decision on                the part                of the recipients. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **Period**                               | **(a)****Total                  Number of Shares****(or                  Units) Purchased (1)** | **(b)****Average                  Price Paid Per Share (or                  Unit)** | **(c)****Total                  Number of****Shares                  (or Units)****Purchased                  as Part of****Publicly                  Announced****Plans                  or Programs (1)** | **(d)****Maximum                  Number (or****Approximate                  Dollar****Value)                  of Shares (or****Units)                  that May Yet Be****Purchased                  Under the****Plans                  or Programs (1)** |
|------------------------------------------|-------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| January                  1 - January 31  | 42,000                  (2)                                                                     | $43.03                                                                              | N/A                                                                                                                                                                                                         | N/A                                                                                                                                                                                                                                                         |
| February                  1- February 28 | -                                                                                               | N/A                                                                                 | N/A                                                                                                                                                                                                         | N/A                                                                                                                                                                                                                                                         |
| March                  1 - March 31      | 100,100                  (3)                                                                    | $44.56                                                                              | N/A                                                                                                                                                                                                         | N/A                                                                                                                                                                                                                                                         |
| Total                                    | 142,100                                                                                         | $44.11                                                                              | N/A                                                                                                                                                                                                         | N/A                                                                                                                                                                                                                                                         |

| (1) | As                  of March 31, 2006, Progress Energy does not have any                  publicly announced plans or programs to purchase shares of its                  common                  stock. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | The                  plan administrator purchased 35,500 shares of our common                  stock at an average price of $43.07 in open-market transactions                  to meet                  share delivery obligations under the 401(k). Open-market transactions                  were                  executed to purchase 6,500 shares of our common stock at an average                  price                  of $42.79 in connection with restricted stock awards that were                  granted to                  certain key employees pursuant to the terms of the                  EIP. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

Exhibits

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

| ExhibitNumber |  Description                                                                                                                                                                                                                                           | ProgressEnergy | PEC    | PEF     |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|--------|---------|
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 10(a)         | Amended                  Management Incentive Compensation Plan of Progress                  Energy, Inc., as amended January 1, 2006                                                                                                                       | X              | X      | X       |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 10(b)         | Progress                  Energy, Inc., Amended and Restated Management                  Deferred Compensation Plan, adopted as of January 1, 2000 (As Revised                  and                  Restated effective April 1, 2005)                      | X         | X      |  X |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 10(c)         | $1,130,000,000                  5-Year Credit Agreement, dated as of May 3,                  2006, among Progress Energy, Inc., Certain Lenders, Citibank, N.A.                  as                  Administrative Agent and SunTrust Bank as Issuing Bank | X              |   |    |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 10(d)         | Amendment                  dated May 3, 2006 to 5-1/4-Year $450,000,000 Credit                  Agreement, dated March 28, 2005, among PEC, Certain Lenders and                  Wachovia                  Bank, N.A. as Administrative Agent               |           | X      |    |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 10(e)         | Amendment                  dated May 3, 2006 to 5-Year $450,000,000 Credit                  Agreement, dated March 28, 2005, between PEF, Certain Lenders and                  Bank of                  America, N.A. as Administrative Agent               |           |   | X       |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 10(f)         | Benefits                  Agreement, dated May 12, 2006, between PEC and Don K.                  Davis                                                                                                                                                      |           | X      |    |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 31(a)         | 302                  Certifications of Chief Executive Officer                                                                                                                                                                                              | X              |   |    |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 31(b)         | 302                  Certifications of Chief Financial Officer                                                                                                                                                                                              | X              |   |    |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 31(c)         | 302                  Certifications of Chief Executive Officer                                                                                                                                                                                              |           | X      |    |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 31(d)         | 302                  Certifications of Chief Financial Officer                                                                                                                                                                                              |           | X      |    |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 31(e)         | 302                  Certifications of Chief Executive Officer                                                                                                                                                                                              |           |   | X       |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 31(f)         | 302                  Certifications of Chief Financial Officer                                                                                                                                                                                              |           |   | X       |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 32(a)         | 906                  Certifications of Chief Executive Officer                                                                                                                                                                                              | X              |   |    |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 32(b)         | 906                  Certifications of Chief Financial Officer                                                                                                                                                                                              | X              |   |    |
|          |                                                                                                                                                                                                                                                        |           |   |    |
| 32(c)         | 906                  Certifications of Chief Executive Officer                                                                                                                                                                                              |           | X      |    |

----

|   |                                                           |   |   |   |
|--------|----------------------------------------------------------------|--------|--------|--------|
| 32(d)  | 906                  Certifications of Chief Financial Officer |   | X      |   |
|   |                                                           |   |   |   |
| 32(e)  | 906                  Certifications of Chief Executive Officer |   |   | X      |
|   |                                                           |   |   |   |
| 32(f)  | 906                  Certifications of Chief Financial Officer |   |   | X      |

----

|                               | PROGRESS                  ENERGY, INC.                                |
|------------------------------------|-----------------------------------------------------------------------|
|                               | CAROLINA                  POWER & LIGHT COMPANY                   |
|                               | FLORIDA                  POWER CORPORATION                            |
| Date:                  May 9, 2006 | (Registrants)                                                         |
|                               |                                                                  |
|                               | By:/s/                  Peter M. Scott III                            |
|                               | Peter                  M. Scott III                                   |
|                               | Executive                  Vice President and Chief Financial Officer |
|                               |                                                                  |
|                               | By:/s/                  Jeffrey M. Stone                              |
|                               | Jeffrey                  M. Stone                                     |
|                               | Chief                  Accounting Officer and Controller              |
|                               | Progress                  Energy, Inc.                                |
|                               | Chief                  Accounting Officer                             |
|                               | Carolina                  Power & Light Company                   |
|                               | Florida                  Power Corporation                            |