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

                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 2001
                                                 ---------------

                                       OR

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

             For the transition period from__________ to__________ .


<TABLE>
<CAPTION>
 Commission           Exact name of registrants as specified in their charters, state of           I.R.S. Employer
 File Number      incorporation, address of principal executive offices, and telephone number   Identification Number

<S>                                                 <C>                                                <C>
   1-15929                                   Progress Energy, Inc.                                   56-2155481
                                          410 South Wilmington Street
                                      Raleigh, North Carolina 27601-1748
                                           Telephone: (919) 546-6111
                                    State of Incorporation: North Carolina



   1-3382                               Carolina Power & Light Company                               56-0165465
                                          410 South Wilmington Street
                                      Raleigh, North Carolina 27601-1748
                                           Telephone: (919) 546-6111
                                    State of Incorporation: North Carolina
</TABLE>


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

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


This combined Form 10-Q is filed separately by two registrants: Progress Energy,
Inc. (Progress Energy) and Carolina Power & Light Company (CP&L). Information
contained herein relating to either 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 registrant.


                       APPLICABLE ONLY TO CORPORATE ISSUERS:

     Indicate the number of shares outstanding of each of the issuer's classes
     of common stock, as of the latest practicable date. As of April 30, 2001,
     each registrant had the following shares of common stock outstanding


<TABLE>
<CAPTION>
       Registrant                                    Description                                   Shares
       ----------                                    -----------                                   ------
<S>                                                     <C>                                          <C>
 Progress Energy, Inc.                    Common Stock (Without Par Value)                       206,082,949
 Carolina Power & Light Company           Common Stock (Without Par Value)              159,608,055 (all of which were
                                                                                        held by Progress Energy, Inc.)
</TABLE>
<PAGE>

            PROGRESS ENERGY, INC. AND CAROLINA POWER & LIGHT COMPANY
                FORM 10-Q - For the Quarter Ended March 31, 2001



   Glossary of Terms

   Safe Harbor For Forward-Looking Statements

   PART I. FINANCIAL INFORMATION

   Item 1.  Financial Statements

            Consolidated Interim Financial Statements:

                  Progress Energy, Inc.
                  -----------------------------
                  Consolidated Statements of Income
                  Consolidated Balance Sheets
                  Consolidated Statements of Cash Flows
                  Supplemental Data Schedule
                  Notes to Consolidated Interim Financial Statements

                  Carolina Power & Light Company
                  --------------------------------
                  Consolidated Statements of Income
                  Consolidated Balance Sheets
                  Consolidated Statements of Cash Flows
                  Notes to Consolidated Interim Financial Statements

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

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk

   PART II. OTHER INFORMATION

   Item 1.  Legal Proceedings

   Item 2.  Changes in Securities and Use of Proceeds

   Item 6.  Exhibits and Reports on Form 8-K

   Signatures

                                       2
<PAGE>

                                GLOSSARY OF TERMS

The following abbreviations or acronyms used in the text of this combined Form
10-Q are defined below:

<TABLE>
<CAPTION>

     TERM                           DEFINITION
<S>                                     <C>
APEC                           Albemarle-Pamlico Economic Development Corporation
Code                           Internal Revenue Service Code
CP&L                           Carolina Power & Light Company
CP&L Energy                    CP&L Energy, Inc., now known as Progress Energy, Inc.
CR3                            Florida Power's nuclear generating plant, Crystal River Unit No. 3
CVO                            Contingent value obligation
DEP                            Florida Department of Environment and Protection
DOE                            Department of Energy
Dt                             Dekatherm
DWM                            North Carolina Department of Environment and Natural Resources, Division
                               of Waste Management
Electric Fuels                 Electric Fuels Corporation
EasternNC                      Eastern North Carolina Natural Gas Company
Energy Ventures                Progress Energy Ventures, Inc. (formerly known as CPL Energy Ventures,
                               Inc.)
EPA                            United States Environmental Protection Agency
FASB                           Financial Accounting Standards Board
FERC                           Federal Energy Regulatory Commission
Florida Power                  Florida Power Corporation
FPC                            Florida Progress Corporation
FPSC                           Florida Public Service Commission
Generally accepted             Accounting principles generally accepted in the United States of America
accounting principles
IRS                            Internal Revenue Service
kWh                            kilowatt-hour
MGP                            Manufactured Gas Plant
Monroe Power                   Monroe Power Company
MW                             Megawatt
NCNG                           North Carolina Natural Gas Corporation
NCUC                           North Carolina Utilities Commission
NOx SIP Call                   EPA rule which requires 22 states including North and South Carolina to
                               further reduce nitrogen oxide emissions.
NRC                            United States Nuclear Regulatory Commission
NSP                            Northern States Power
PLRs                           Private Letter Rulings
Progress Energy                Progress Energy, Inc.
Progress Telecom               Progress Telecommunications Corporation
PUHCA                          Public Utility Holding Company Act of 1935, as amended
RTO                            Regional Transmission Organization
SCPSC                          Public Service Commission of South Carolina
SEC                            United States Securities and Exchange Commission
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
SRS                            Strategic Resource Solutions Corp.
the Company                    Progress Energy, Inc. and subsidiaries
</TABLE>

                                       3
<PAGE>

         SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
         ------------------------------------------

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

     In addition, forward-looking statements are discussed in "Management's
     Discussion and Analysis of Financial Condition and Results of Operations"
     including, but not limited to, statements under the sub-heading "Other
     Matters" concerning synthetic fuel tax credits and regulatory developments.

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

     Examples of factors that you should consider with respect to any
     forward-looking statements made throughout this document include, but are
     not limited to, the following: governmental policies and regulatory actions
     (including those of the Federal Energy Regulatory Commission, the
     Environmental Protection Agency, the Nuclear Regulatory Commission, the
     Department of Energy, the North Carolina Utilities Commission, the Public
     Service Commission of South Carolina and the Florida Public Service
     Commission), particularly legislative and regulatory initiatives that may
     impact the speed and degree of the restructuring of the electricity
     industry and the results of negotiations related to the expiration of
     Florida Power's rate stipulation; the outcome of legal and administrative
     proceedings before our principal regulators; risks associated with
     operating nuclear power facilities, availability of nuclear waste storage
     facilities, and nuclear decommissioning costs; changes in the economy of
     areas served by CP&L, Florida Power or NCNG; the extent to which we are
     able to obtain adequate and timely rate recovery of costs, including
     potential stranded costs arising from the restructuring of the electricity
     industry; weather conditions and catastrophic weather-related damage;
     general industry trends, increased competition from energy and gas
     suppliers, and market demand for energy; inflation and capital market
     conditions; the extent to which we are able to realize the potential
     benefits of our recent acquisition of Florida Progress Corporation and
     successfully integrate it with the remainder of our business; the extent to
     which we are able to realize the potential benefits of the conversion of
     Carolina Power & Light Company to a non-regulated holding company structure
     and the success of our direct and indirect subsidiaries; the extent to
     which we are able to use tax credits associated with the operations of the
     synthetic fuel facilities; the extent to which we are able to reduce our
     capital expenditures through the utilization of the natural gas expansion
     fund established by the North Carolina Utilities Commission; and
     unanticipated changes in operating expenses and capital expenditures.

     All such factors are difficult to predict, contain uncertainties that may
     materially affect actual results, and may be beyond the control of the
     Company. New factors emerge from time to time, and it is not possible for
     management to predict all such factors, nor can it assess the effect of
     each such factor on the Company.

                                       4
<PAGE>


                          PART I. FINANCIAL INFORMATION


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

                              Progress Energy, Inc.
                    CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                   (Unaudited)
                                 March 31, 2001

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                                                       Three Months Ended
                                                                                           March 31,
(In thousands except per share amounts)                                             2001             2000
--------------------------------------------------------------------------------------------------------------
Operating Revenues
<S>                                                                          <C>               <C>
  Electric                                                                   $   1,632,048     $     779,908
  Natural gas                                                                      138,573            72,098
  Diversified businesses                                                           137,469            25,134
--------------------------------------------------------------------------------------------------------------
       Total Operating Revenues                                                  1,908,090           877,140
--------------------------------------------------------------------------------------------------------------
Operating Expenses
  Fuel used in electric generation                                                 369,856           160,387
  Purchased power                                                                  217,548            70,259
  Gas purchased for resale                                                         109,593            43,898
  Other operation and maintenance                                                  295,097           198,227
  Depreciation and amortization                                                    313,164           132,489
  Taxes other than on income                                                        99,646            37,334
  Harris Plant deferred costs, net                                                   3,625             5,281
  Diversified businesses                                                           189,706            44,155
--------------------------------------------------------------------------------------------------------------
      Total Operating Expenses                                                   1,598,235           692,030
--------------------------------------------------------------------------------------------------------------
Operating Income                                                                   309,855           185,110
--------------------------------------------------------------------------------------------------------------
Other Income (Expense)
  Interest income                                                                    9,943             3,263
  Other, net                                                                         2,923             3,553
--------------------------------------------------------------------------------------------------------------
      Total Other Income (Expense)                                                  12,866            6,816
--------------------------------------------------------------------------------------------------------------
Interest Charges
  Long-term debt                                                                   126,443           50,072
  Other interest charges                                                            36,701            5,001
  Allowance for borrowed funds used during construction                             (3,479)          (4,606)
--------------------------------------------------------------------------------------------------------------
      Net Interest Charges                                                         159,665           50,467
--------------------------------------------------------------------------------------------------------------
Income before Income Taxes                                                         163,056          141,459
Income Taxes                                                                         9,053           56,198
--------------------------------------------------------------------------------------------------------------
Net Income                                                                   $     154,003     $     85,261
==============================================================================================================

Average Common Shares Outstanding                                                  199,799          153,054
Basic and Diluted Earnings per Common Share                                  $        0.77      $      0.56
Dividends Declared per Common Share                                          $       0.530      $     0.515

==============================================================================================================
See Notes to Progress Energy, Inc. Consolidated Interim Financial Statements.
</TABLE>

                                       5
<PAGE>
<TABLE>
<CAPTION>

Progress Energy, Inc
BALANCE SHEETS
(In thousands)                                                                  March 31,              December 31,
Assets                                                                            2001                     2000
---------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>                     <C>
Utility Plant
 Electric utility plant in service                                            $ 18,205,786            $   18,124,036
 Gas utility plant in service                                                      382,936                   378,464
 Accumulated depreciation                                                       (9,551,807)               (9,350,235)
---------------------------------------------------------------------------------------------------------------------
        Utility plant in service, net                                            9,036,915                 9,152,265
  Held for future use                                                               16,302                    16,302
  Construction work in progress                                                  1,186,617                 1,043,439
  Nuclear fuel, net of amortization                                                257,574                   224,692
---------------------------------------------------------------------------------------------------------------------
        Total Utility Plant, Net                                                10,497,408                10,436,698
---------------------------------------------------------------------------------------------------------------------
Current Assets
 Cash and cash equivalents                                                          53,573                   101,296
 Accounts receivable                                                               931,840                   925,911
 Inventory                                                                         519,914                   420,985
 Deferred fuel cost                                                                190,013                   217,806
 Prepayments                                                                        16,594                    50,040
 Assets held for sale, net                                                         782,763                   747,745
 Other current assets                                                              183,598                   192,347
---------------------------------------------------------------------------------------------------------------------
        Total Current Assets                                                     2,678,295                 2,656,130
---------------------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
 Income taxes recoverable through future rates                                     213,639                   208,997
 Deferred purchased power contract termination costs                               158,518                   226,656
 Harris Plant deferred costs                                                        41,850                    44,813
 Unamortized debt expense                                                           38,971                    38,771
 Nuclear decommissioning trust funds                                               813,072                   811,998
 Diversified business property, net                                                747,173                   729,662
 Miscellaneous other property and investments                                      602,163                   510,935
 Goodwill, net                                                                   3,605,862                 3,652,429
 Other assets and deferred debits                                                  655,101                   773,923
---------------------------------------------------------------------------------------------------------------------
        Total Deferred Debits and Other Assets                                   6,876,349                 6,998,184
---------------------------------------------------------------------------------------------------------------------
           Total Assets                                                       $ 20,052,052             $  20,091,012
=====================================================================================================================

Capitalization and Liabilities
---------------------------------------------------------------------------------------------------------------------
Capitalization
---------------------------------------------------------------------------------------------------------------------
 Common stock equity                                                          $  5,446,342             $   5,424,201
 Preferred stock of subsidiaries-not subject to mandatory redemption                92,831                    92,831
 Long-term debt, net                                                             9,201,322                 5,890,099
---------------------------------------------------------------------------------------------------------------------
        Total Capitalization                                                    14,740,495                11,407,131
---------------------------------------------------------------------------------------------------------------------
Current Liabilities
 Current portion of long-term debt                                                 202,000                   184,037
 Accounts payable                                                                  696,901                   828,568
 Taxes accrued                                                                      23,535                       932
 Interest accrued                                                                  120,276                   121,433
 Dividends declared                                                                107,825                   107,645
 Short-term obligations                                                            868,315                 3,972,674
 Other current liabilities                                                         453,191                   447,370
---------------------------------------------------------------------------------------------------------------------
        Total Current Liabilities                                                2,472,043                 5,662,659
---------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
 Accumulated deferred income taxes                                               1,698,037                 1,807,192
 Accumulated deferred investment tax credits                                       242,301                   261,255
 Other liabilities and deferred credits                                            899,176                   952,775
---------------------------------------------------------------------------------------------------------------------
        Total Deferred Credits and Other Liabilities                             2,839,514                 3,021,222
---------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 9)
---------------------------------------------------------------------------------------------------------------------
         Total Capitalization and Liabilities                                 $ 20,052,052             $  20,091,012
=====================================================================================================================
SCHEDULES OF COMMON STOCK EQUITY
(In thousands except share data)
  Common stock (without par value, authorized 500,000,000, issued and         $  3,610,146             $   3,608,902
       outstanding 206,082,949 and 206,089,047 shares, respectively)
  Unearned ESOP common stock                                                      (119,759)                 (127,211)
  Accumulated other comprehensive loss                                             (34,991)                        -
  Retained earnings                                                              1,990,946                 1,942,510
---------------------------------------------------------------------------------------------------------------------
         Total Common Stock Equity                                            $  5,446,342             $   5,424,201
=====================================================================================================================
See Notes to Progress Energy, Inc. Consolidated Interim Financial Statements.
</TABLE>

                                       6
<PAGE>
<TABLE>
<CAPTION>
Progress Energy, Inc.
STATEMENTS OF CASH FLOWS
                                                                              Three Months Ended
                                                                                   March 31,
(In thousands)                                                             2001                   2000
-----------------------------------------------------------------------------------------------------------
<S>                                                                      <C>                 <C>
Operating Activities
  Net income                                                             $   154,003         $     85,261
  Adjustments to reconcile net income to net cash provided by
  operating activities
    Depreciation and amortization                                            333,847              153,785
    Harris Plant deferred costs                                                2,963                4,547
    Deferred income taxes                                                    (19,182)             (31,040)
    Investment tax credit                                                     (6,973)              (2,599)
    Deferred fuel cost                                                        27,793                7,459
    Net decrease in accounts receivable                                       27,815               30,546
    Net (increase) decrease in inventories                                  (115,188)               2,893
    Net decrease in prepaids and other current assets                         32,273              107,349
    Net decrease in accounts payable                                         (59,630)             (22,058)
    Net increase (decrease) in other current liabilities                     (16,060)              92,069
    Other                                                                      3,344               54,336
-----------------------------------------------------------------------------------------------------------
      Net Cash Provided by Operating Activities                              365,005              482,548
-----------------------------------------------------------------------------------------------------------
Investing Activities
  Gross property additions                                                  (270,922)            (231,657)
  Nuclear fuel additions                                                     (61,161)             (25,252)
  Contributions to nuclear decommissioning trust                             (15,220)             (10,275)
  Net cash flow of company-owned life insurance program                          417                   13
  Investments in non-utility activities                                      (55,191)             (26,603)
-----------------------------------------------------------------------------------------------------------
      Net Cash Used in Investing Activities                                 (402,077)            (293,774)
-----------------------------------------------------------------------------------------------------------
Financing Activities
  Proceeds from issuance of long-term debt                                 3,176,010                    -
  Net increase (decrease) in short-term indebtedness                      (2,913,841)              11,900
  Net increase (decrease) in outstanding payments                            (89,015)              31,553
  Retirement of long-term debt                                               (31,110)            (197,365)
  Dividends paid on common stock                                            (106,163)             (78,189)
  Other                                                                      (46,532)                   -
-----------------------------------------------------------------------------------------------------------
      Net Cash Used in Financing Activities                                  (10,651)            (232,101)
-----------------------------------------------------------------------------------------------------------
Net Decrease in Cash and Cash Equivalents                                    (47,723)             (43,327)
Cash and Cash Equivalents at Beginning of the Period                         101,296               79,871
-----------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of the Period                           $    53,573         $     36,544
===========================================================================================================
Supplemental Disclosures of Cash Flow Information
Cash paid during the period - interest                                   $   159,269         $     66,733
                              income taxes                               $     8,307         $      1,389
===========================================================================================================
See Notes to Progress Energy, Inc. Consolidated Interim Financial Statements.
</TABLE>


                                       7
<PAGE>
<TABLE>
<CAPTION>
Progress Energy, Inc.
SUPPLEMENTAL  DATA SCHEDULE                                                             Three Months Ended
                                                                                             March 31,
                                                                                       2001          2000(a)
------------------------------------------------------------------------------------------------------------------
<S>                                                                               <C>             <C>
Operating Revenues (in thousands)
Electric
    Retail                                                                       $ 1,323,017      $   634,770
    Wholesale                                                                        264,433          130,396
    Unbilled                                                                         (61,878)            (808)
    Miscellaneous revenue                                                            106,476           15,550
------------------------------------------------------------------------------------------------------------------
            Total Electric                                                         1,632,048          779,908
Natural gas                                                                          138,573           72,098
Diversified businesses                                                               137,469           25,134
------------------------------------------------------------------------------------------------------------------
            Total Operating Revenues                                             $ 1,908,090      $   877,140
==================================================================================================================

Energy Sales
 Electric (millions of kWh)
  Retail
     Residential                                                                       8,722            3,928
     Commercial                                                                        5,274            2,556
     Industrial                                                                        4,194            3,400
     Other retail                                                                        962              341
------------------------------------------------------------------------------------------------------------------
            Total retail                                                              19,152           10,225
  Unbilled                                                                            (1,168)             (65)
  Wholesale                                                                            4,779            3,708
------------------------------------------------------------------------------------------------------------------
            Total Electric                                                            22,763           13,868
------------------------------------------------------------------------------------------------------------------

==================================================================================================================
Natural Gas Delivered (thousands of dt)                                               14,845           17,344
==================================================================================================================
Energy Supply (millions of kWh)
  Generated - steam                                                                   11,913            7,460
              nuclear                                                                  7,138            5,664
              hydro                                                                       53              176
              combustion turbines                                                      1,137               34
  Purchased                                                                            3,674            1,032
------------------------------------------------------------------------------------------------------------------
            Total Energy Supply (Company Share)                                       23,915           14,366
==================================================================================================================

Detail of Income Taxes (in thousands)
    Income tax expense (credit) - current                                         $   35,208      $    89,837
                                  deferred                                           (19,182)         (31,040)
                                  investment tax credit                               (6,973)          (2,599)
------------------------------------------------------------------------------------------------------------------
            Total Income Tax Expense                                              $    9,053      $    56,198
==================================================================================================================
(a) Supplemental data does not include information related to Florida Progress
    for the three months ended March 31, 2000.
</TABLE>

                                       8
<PAGE>
Progress Energy, Inc.
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

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

         A.    Organization. Progress Energy, Inc. (the Company) is a registered
               holding company under the Public Utility Holding Company Act
               (PUHCA) of 1935. Both the Company and its subsidiaries are
               subject to the regulatory provisions of the PUHCA. The Company
               was formed as a result of the reorganization of Carolina Power &
               Light Company (CP&L) into a holding company structure on June 19,
               2000. All shares of common stock of CP&L were exchanged for an
               equal number of shares of the Company. On December 4, 2000, the
               Company changed its name from CP&L Energy, Inc. to Progress
               Energy, Inc. Through its wholly-owned regulated subsidiaries,
               CP&L, Florida Power Corporation (Florida Power) and North
               Carolina Natural Gas Corporation (NCNG), the Company is primarily
               engaged in the generation, transmission, distribution and sale of
               electricity in portions of North Carolina, South Carolina and
               Florida and the transport, distribution and sale of natural gas
               in portions of North Carolina. The Company also engages in
               non-regulated business areas such as telecommunications, coal and
               synthetic fuel operations, energy management and related services
               and merchant energy generation.

         B.    Basis of Presentation. These financial statements have been
               prepared in accordance with accounting principles generally
               accepted in the United States of America (generally accepted
               accounting principles) for interim financial information and with
               the instructions to Form 10-Q and Regulation S-X. Accordingly,
               they do not include all of the information and footnotes required
               by generally accepted accounting principles for complete
               financial statements. Because the accompanying consolidated
               interim financial statements do not include all of the
               information and footnotes required by generally accepted
               accounting principles, they should be read in conjunction with
               the audited financial statements for the period ended December
               31, 2000 and notes thereto included in Progress Energy's Form
               10-K for the year ended December 31, 2000.

               The amounts included in the consolidated interim financial
               statements are unaudited but, in the opinion of management,
               reflect all adjustments necessary to fairly present the Company's
               financial position and results of operations for the interim
               periods. Due to seasonal weather variations and the timing of
               outages of electric generating units, especially nuclear-fueled
               units, the results of operations for interim periods are not
               necessarily indicative of amounts expected for the entire year.
               Certain amounts for 2000 have been reclassified to conform to the
               2001 presentation.

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

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

         On November 30, 2000, the Company completed its acquisition of Florida
         Progress Corporation (FPC) for an aggregate purchase price of
         approximately $5.4 billion. The Company paid cash consideration of
         approximately $3.5 billion and issued 46.5 million common shares valued
         at approximately $1.9 billion. In addition, the Company issued 98.6
         million contingent value obligations (CVO) valued at approximately
         $49.3 million. The purchase price includes $18.6 million in direct
         transaction costs.

         The acquisition has been accounted for using the purchase method of
         accounting and, accordingly, the results of operations for FPC have
         been included in the Company's consolidated financial statements since
         the date of acquisition. There were no significant purchase price
         adjustments for the three months ended March 31, 2001. The excess of
         the purchase price over the estimated fair value of the net
         identifiable assets and liabilities acquired has been recorded as
         goodwill. The goodwill, of approximately $3.4 billion, is being
         amortized on a straight-line basis over a period of primarily 40 years.

         The fair values of FPC's rate-regulated net assets acquired were
         considered to be equivalent to book value since book value represents
         the amount that will be recoverable through regulated rates. The
         allocation of the purchase

                                       9
<PAGE>

         price included estimated amounts expected to be realized from the sale
         of FPC's Rail Services and Inland Marine Transportation business
         segments which are classified as net assets held for sale (See Note 3).
         The SEC order approving the merger requires the Company to divest of
         certain other immaterial non-regulated investments of FPC.

         The Company began the implementation of a plan to combine operations of
         the companies resulting in a non-executive involuntary termination cost
         accrual of approximately $52.2 million. Approximately $41.8 million is
         attributable to Florida Power employees and has been reflected as part
         of the purchase price allocation, while approximately $10.4 million
         attributable to acquiring company employees was charged to operating
         results in 2000. The Company expects to complete the implementation
         phase of the plan by the end of June 2001 and finalize the plan by the
         end of 2001. The majority of the related severance payments are
         expected to occur in 2001 with the remaining payments occurring through
         2003. The Company expects additional termination effects related to
         pension and postretirement benefit plan curtailments in 2001.

         The first quarter activity for the termination costs is detailed in the
         table below:

                                                             Non-Executive
              (In millions)                                Termination Costs
                                                           -----------------
              Balance at December 31, 2000                     $ 52.1
              Payments                                          (13.5)
              Adjustments                                           -
                                                      --------------------------
              Balance at March 31, 2001                        $ 38.6
                                                      ==========================

         The final purchase price allocation and estimated life of goodwill are
         subject to adjustment for changes in the Company's preliminary
         assumptions and analyses, pending additional information concerning
         asset and liability valuations and the evaluation of certain
         pre-acquisition contingent liabilities, including but not limited to:

         o  final actuarial valuations of pension and other postretirement
            benefit plan obligations
         o  proceeds realized from the disposition of assets held for sale
         o  valuations of non-regulated businesses and individual assets and
            liabilities

         The following unaudited pro forma combined results of operations for
         the three months ended March 31, 2000, has been prepared assuming the
         acquisition of FPC had occurred on January 1, 2000. The pro forma
         results are provided for information purposes only. The results are not
         necessarily indicative of the actual results that would have been
         realized had the acquisition occurred on the indicated date, nor are
         they necessarily indicative of future results of operations of the
         combined companies.

         (in thousands, except per share data)
                                                              Three Months Ended
                                                                 March 31, 2000
                                                              ------------------
         Revenues                                                  $  1,555,465
         Net income                                                $    106,484
         Basic and diluted earnings per share                      $       0.53
         Average shares                                                 199,546

3.       NET ASSETS HELD FOR SALE
         -------------------------

         FPC's Rail Services and Inland Marine Transportation business segments
         are included in the Company's net assets held for sale. Rail Services'
         operations include railcar repair, rail parts reconditioning and sales,
         scrap metal recycling and other rail related services. Inland Marine
         Transportation provides transportation of coal, agriculture and other
         dry-bulk commodities as well as fleet management services. The Company
         intends to sell these business lines during 2001 in order to focus on
         growing core businesses.

         The Company's results of operations for the three months ended March
         31, 2001, exclude a $1.7 million net loss from the FPC's Rail Services
         and Inland Marine Transportation businesses and allocated interest
         expense, net of tax, totaling approximately $2.8 million. Both the
         expected earnings from these businesses and allocated interest expense,
         net of tax, during the holding period on the incremental debt incurred
         to finance the purchase of these business segments has been included in
         the determination of net assets held for sale.

                                       10
<PAGE>

         The table below reflects the adjustments to the carrying value of the
         net assets held for sale for the three months ended March 31, 2001:

         (in thousands)
         ---------------------------------------------------------------------
         Carrying value at December 31, 2000                        $ 747,745
            Interest allocated, net of tax                              2,823
            Cash flows funded by parent                                32,195
         ---------------------------------------------------------------------
         Carrying value at March 31, 2001                           $ 782,763

4.       FINANCIAL INFORMATION BY BUSINESS SEGMENT
         ----------------------------------------------

         Effective with the acquisition of FPC on November 30, 2000, the Company
         changed the basis of segment reporting and measurement of segment
         profitability beginning with the fourth quarter of 2000. Prior periods
         have been restated to reflect this change. The Company currently
         provides services through the following business segments: CP&L
         electric, Florida Power electric, natural gas, energy and related
         services and other.

         FPC's operations consist mainly of the Florida Power electric segment
         and certain other subsidiaries involved in coal and synthetic fuel
         operations and telecommunication services. The operating results of
         Electric Fuels subsidiaries involved in coal and synthetic fuel
         operations are included in the energy and related services segment and
         the operating results of Progress Telecommunications Corporation
         (Progress Telecom) are included in the other segment. FPC operations
         are not included in the Company's results of operations prior to the
         acquisition date of November 30, 2000.

         The electric segments (CP&L and Florida Power) generate, transmit,
         distribute and sell electric energy in portions of North Carolina,
         South Carolina and Florida. Electric operations are subject to the
         rules and regulations of FERC, the NCUC, the SCPSC and the FPSC.

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

         The energy and related services segment is primarily made up of
         merchant energy generation, coal and synthetic fuel operations.

         The other segment is primarily made up of other diversified businesses
         and holding company operations. The other segment includes
         telecommunication services, energy management services and
         miscellaneous non-regulated activities and elimination entries.

         For reportable segments presented in the accompanying table, segment
         income includes intersegment revenues accounted for at prices
         representative of unaffiliated party transactions.
<TABLE>
<CAPTION>
                                                                                       Energy and
(in thousands)                                      Florida Power                        Related                       Segment
                                   CP&L Electric       Electric         Natural Gas      Services        Other        Totals
=================================================================================================================================
<S>                                    <C>               <C>             <C>              <C>            <C>         <C>
Three Months Ended 3/31/01
Revenues
     Unaffiliated                      $821,574          $810,474        $138,042         $111,220       $26,249     $1,907,559
     Intersegment                             -                 -             531           76,465      (76,465)            531
                                  --------------- ----------------- --------------- ---------------- ------------- --------------
          Total Revenues               $821,574          $810,474        $138,573         $187,685     $(50,216)     $1,908,090
Segment Income (Loss)                  $118,794           $71,606          $7,533          $41,717     $(85,647)       $154,003
Total Segment Assets                 $8,713,177        $4,829,168        $738,209         $701,024    $5,070,474    $20,052,052
=================================================================================================================================
=================================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                                                         Energy and
                                                   Florida Power                          Related                     Segment
                                  CP&L Electric      Electric          Natural Gas        Services        Other        Totals
=================================================================================================================================
<S>                                    <C>               <C>             <C>              <C>            <C>         <C>
Three Months Ended 3/31/00
Revenues
     Unaffiliated                    $  779,908                 -        $ 71,968          $ 1,369     $  23,765     $  877,010
     Intersegment                             -                 -             130                -             -            130
                                  --------------- ----------------- --------------- ---------------- ------------- --------------
          Total Revenues             $  779,908                 -        $ 72,098          $ 1,369       $23,765     $  877,140
Segment Income (Loss)                   $89,961                 -          $8,800             $232     $ (13,732)    $   85,261
Total Segment Assets                 $8,356,381                 -        $542,992          $96,676     $ 383,696     $9,379,745
=================================================================================================================================
=================================================================================================================================
</TABLE>

                                       11
<PAGE>

5.       IMPACT OF NEW ACCOUNTING STANDARD
         ---------------------------------

         Effective January 1, 2001, the Company adopted Statement of Financial
         Accounting Standards (SFAS) No. 133, "Accounting for Derivative
         Instruments and Hedging Activities", as amended by SFAS No. 138. SFAS
         No. 133, as amended, establishes accounting and reporting standards for
         derivative instruments, including certain derivative instruments
         embedded in other contracts, and for hedging activities. SFAS No. 133
         requires that an entity recognize all derivatives as assets or
         liabilities in the consolidated balance sheet and measure those
         instruments at fair value.

         As a result of the adoption of SFAS No. 133, the Company recorded a
         transition adjustment as a cumulative effect of a change in accounting
         principle of $23.6 million, net of tax, which increased accumulated
         other comprehensive loss as of January 1, 2001. This amount relates to
         several derivatives used to hedge cash flows related to interest on
         long-term debt. The net derivative losses will be reclassified into
         earnings consistent with hedge designations, primarily over the life of
         the related debt instruments, which principally range from three to ten
         years. The Company estimates that approximately $6.8 million of the
         $23.6 million net losses will be reclassified into earnings during the
         twelve months ended December 31, 2001. There was no transition
         adjustment affecting the consolidated statement of income as a result
         of the adoption of SFAS No. 133.

         The application of the new rules is still evolving and further guidance
         from the Financial Accounting Standards Board (FASB) is expected, which
         could additionally impact the Company's financial statements.

6.       COMPREHENSIVE INCOME
         --------------------

         Comprehensive income for the three months ended March 31, 2001, was
         $119.0 million. For the three months ended March 31, 2000,
         comprehensive income was $85.3 million. Prior to the adoption of SFAS
         No. 133 (see Note 5) the Company had no other comprehensive income
         items and therefore comprehensive income for the three months ended
         March 31, 2000 is equal to net income for that period.


7.       FINANCING ACTIVITIES
         --------------------

         On February 22, 2001, the Company issued $3.2 billion of senior
         unsecured notes with maturities ranging from three to thirty years.
         Proceeds from this issuance were primarily used to retire short-term
         obligations issued in connection with the FPC acquisition.
         Additionally, as part of this transaction, the Company terminated the
         $1.125 billion notional amount of interest rate forward contracts that
         were issued in anticipation of the debt issuance. The Company
         recognized a $45.3 million loss on these contracts, designated as cash
         flow hedges, that is being deferred through accumulated comprehensive
         loss and amortized over the life of the associated debt instruments.

         On April 9, 2001, CP&L issued $300 million of 6.65% Medium-Term Notes,
         Series D due April 1, 2008. Proceeds from the issuance were primarily
         used to retire commercial paper.

8.       FPC-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES (QUIPS) OF
         --------------------------------------------------------------------
         SUBSIDIARY HOLDING SOLELY FPC GUARANTEED NOTE
         ---------------------------------------------

         In April 1999, FPC Capital I (the Trust), an indirect wholly-owned
         subsidiary of FPC, issued 12 million shares of $25 par cumulative
         FPC-obligated mandatorily redeemable preferred securities (Preferred
         Securities) due 2039, with an aggregate liquidation value of $300
         million and a quarterly distribution rate of 7.10%. Currently, all 12
         million shares of the Preferred Securities that were issued are
         outstanding. Concurrent with the issuance of the Preferred Securities,
         the Trust issued to Florida Progress Funding Corporation (Funding
         Corp.) all of the common securities of the Trust (371,135 shares) for
         $9.3 million. Funding Corp. is a direct wholly-owned subsidiary of FPC.

         The existence of the Trust is for the sole purpose of issuing the
         Preferred Securities and the common securities and using the proceeds
         thereof to purchase from Funding Corp. its 7.10% Junior Subordinated
         Deferrable Interest Notes (subordinated notes) due 2039, for a
         principal amount of $309.3 million. The subordinated notes and the
         Notes Guarantee (as discussed below) are the sole assets of the Trust.
         Funding Corp.'s proceeds from the sale of the subordinated notes were
         advanced to Progress Capital and used for general corporate purposes
         including the repayment of a portion of certain outstanding short-term
         bank loans and commercial paper.

                                       12
<PAGE>

         FPC has fully and unconditionally guaranteed the obligations of Funding
         Corp. under the subordinated notes (the Notes Guarantee). In addition,
         FPC has guaranteed the payment of all distributions required to be made
         by the Trust, but only to the extent that the Trust has funds available
         for such distributions (Preferred Securities Guarantee). The Preferred
         Securities Guarantee, considered together with the Notes Guarantee,
         constitutes a full and unconditional guarantee by FPC of the Trust's
         obligations under the Preferred Securities.

         The subordinated notes may be redeemed at the option of Funding Corp.
         beginning in 2004 at par value plus accrued interest through the
         redemption date. The proceeds of any redemption of the subordinated
         notes will be used by the Trust to redeem proportional amounts of the
         Preferred Securities and common securities in accordance with their
         terms. Upon liquidation or dissolution of Funding Corp., holders of the
         Preferred Securities would be entitled to the liquidation preference of
         $25 per share plus all accrued and unpaid dividends thereon to the date
         of payment.

9.       COMMITMENTS AND CONTINGENCIES
         -----------------------------

         Contingencies existing as of the date of these statements are described
         below. No significant changes have occurred since December 31, 2000,
         with respect to the commitments discussed in Note 19 of the financial
         statements included in the Company's 2000 Annual Report on Form 10-K.


         Contingencies


             1)   Insurance. The Company is a member of Nuclear Electric
                  Insurance Limited (NEIL), which provides primary and excess
                  insurance coverage against property damage to members' nuclear
                  generating facilities. Under the primary program, the Company
                  is insured for $500 million at each of its nuclear plants. In
                  addition to primary coverage, NEIL also provides
                  decontamination, premature decommissioning and excess property
                  insurance with limits of $1.0 billion on the Brunswick Plant,
                  $1.0 billion on the Harris Plant, $800 million on the Robinson
                  Plant, and $1.1 billion on Crystal River Unit No. 3 (CR3). An
                  additional shared limit policy of $1 billion in excess of $1
                  billion is also provided through NEIL on the Brunswick and
                  Harris Plants for decontamination, premature decommissioning
                  and excess property.

                  Insurance coverage against incremental costs of replacement
                  power resulting from prolonged accidental outages at nuclear
                  generating units is also provided through membership in NEIL.
                  The Company is insured thereunder, following a twelve week
                  deductible period, for 52 weeks in weekly amounts of $2.25
                  million at Brunswick Unit No. 1, $2.25 million at Brunswick
                  Unit No. 2, $2.4 million at the Harris Plant, $1.96 million at
                  Robinson Unit No. 2 and $2.1 million at CR3. An additional 104
                  weeks of coverage is provided at 80% of the above weekly
                  amounts. For the current policy period, the Company is subject
                  to retrospective premium assessments of up to approximately
                  $13.5 million with respect to the primary coverage, $15.4
                  million with respect to the decontamination, decommissioning
                  and excess property coverage, $2.6 million with respect to the
                  shared limit excess coverage and $7.1 million for the
                  incremental replacement power costs coverage, in the event
                  covered expenses at insured facilities exceed premiums,
                  reserves, reinsurance and other NEIL resources. Pursuant to
                  regulations of the NRC, the Company's property damage
                  insurance policies provide that all proceeds from such
                  insurance be applied, first, to place the plant in a safe and
                  stable condition after an accident and, second, to
                  decontamination costs, before any proceeds can be used for
                  decommissioning, plant repair or restoration. The Company is
                  responsible to the extent losses may exceed limits of the
                  coverage described above.

                  Under the provisions of the Price Anderson Act, which limits
                  liability for accidents at nuclear power plants, the Company,
                  as an owner of nuclear plants, can be assessed for a portion
                  of any third-party liability claims arising from an accident
                  at any commercial nuclear power plant in the United States.
                  The Company is insured against public liability for a nuclear
                  incident up to $9.54 billion per occurrence. In the event that
                  public liability claims from an insured nuclear incident
                  exceed $200 million, CP&L and Florida Power would be subject
                  to a pro rata assessment of up to $83.9 million and $88.1
                  million, respectively, for each reactor owned per occurrence.
                  Payment of such assessment would be made over time as
                  necessary to limit the payment in any one year to no more than
                  $10 million per reactor owned.

                                       13
<PAGE>

                  Florida Power self-insures its transmission and distribution
                  lines against loss due to storm damage and other natural
                  disasters. Pursuant to a regulatory order, Florida Power is
                  accruing $6 million annually to a storm damage reserve and may
                  defer any losses in excess of the reserve.



                                       14
<PAGE>

              2)  Claims and Uncertainties.



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

                  Various organic materials associated with the production of
                  manufactured gas, generally referred to as coal tar, are
                  regulated under federal and state laws. The lead or sole
                  regulatory agency that is responsible for a particular former
                  coal tar site depends largely upon the state in which the site
                  is located. There are several manufactured gas plant (MGP)
                  sites to which both electric utilities and the gas utility
                  have some connection. In this regard, both electric utilities
                  and the gas utility, with other potentially responsible
                  parties, are participating in investigating and, if necessary,
                  remediating former coal tar sites with several regulatory
                  agencies, including, but not limited to, the U.S.
                  Environmental Protection Agency (EPA), the Florida Department
                  of Environment and Protection (DEP) and the North Carolina
                  Department of Environment and Natural Resources, Division of
                  Waste Management (DWM). Although the Company may incur costs
                  at these sites about which it has been notified, based upon
                  current status of these sites, the Company does not expect
                  those costs to be material to its consolidated financial
                  position or results of operations.

                  Both electric utilities, the gas utility and Electric Fuels
                  are periodically notified by regulators such as the EPA and
                  various state agencies of their involvement or potential
                  involvement in sites, other than MGP sites, that may require
                  investigation and/or remediation. Although the Company's
                  subsidiaries may incur costs at the sites about which they
                  have been notified, based upon the current status of these
                  sites, the Company does not expect those costs to be material
                  to the consolidated financial position or results of
                  operations of the Company.

                  The EPA has been conducting an enforcement initiative related
                  to a number of coal-fired utility power plants in an effort to
                  determine whether modifications at those facilities were
                  subject to New Source Review requirements or New Source
                  Performance Standards under the Clean Air Act. Both CP&L and
                  Florida Power have recently been asked to provide information
                  to the EPA as part of this initiative and have cooperated in
                  providing the requested information. The EPA has initiated
                  enforcement actions against other unaffiliated utilities as
                  part of this initiative, some of which have resulted in
                  settlement agreements calling for expenditures, ranging from
                  $1.0 billion to $1.4 billion. These settlement agreements have
                  generally called for expenditures to be made over extended
                  time periods, and some of the companies may seek recovery of
                  the related cost through rate adjustments. The Company cannot
                  predict the outcome of this matter.

                  In 1998, the EPA published a final rule addressing the issue
                  of regional transport of ozone. This rule is commonly known as
                  the NOx SIP Call. The EPA's rule requires 23 jurisdictions,
                  including North and South Carolina, but not Florida, to
                  further reduce nitrogen oxide emissions in order to attain a
                  pre-set state NOx emission level by May 31, 2004. CP&L is
                  evaluating necessary measures to comply with the rule and
                  estimates its related capital expenditures could be
                  approximately $370 million, which has not been adjusted for
                  inflation. Increased operation and maintenance costs relating
                  to the NOx SIP Call are not expected to be material to the
                  Company's results of operations. Further controls are
                  anticipated as electricity demand increases. The Company
                  cannot predict the outcome of this matter.

                  In July 1997, the EPA issued final regulations establishing a
                  new eight-hour ozone standard. In October 1999, the District
                  of Columbia Circuit Court of Appeals ruled against the EPA
                  with regard to the federal eight-hour ozone standard. The U.S.
                  Supreme Court has upheld, in part, the District of Columbia
                  Circuit Court of Appeals decision. Further litigation and
                  rulemaking are anticipated. North Carolina adopted the federal
                  eight-hour ozone standard and is proceeding with the
                  implementation process. North Carolina has promulgated final
                  regulations, which will require CP&L to install nitrogen oxide
                  controls under the State's eight-hour standard. The cost of
                  those controls are included in the cost estimate of $370
                  million set forth above.

                  The EPA published a final rule approving petitions under
                  section 126 of the Clean Air Act, which requires certain
                  sources to make reductions in nitrogen oxide emissions by
                  2003. The final rule also includes a set


                                       15
<PAGE>

                  of regulations that affect nitrogen oxide emissions from
                  sources included in the petitions. The North Carolina
                  fossil-fueled electric generating plants are included in these
                  petitions. Acceptable state plans under the NOx SIP call can
                  be approved in lieu of the final rules the EPA approved as
                  part of the 126 petitions. CP&L, other utilities, trade
                  organizations and other states are participating in litigation
                  challenging the EPA's action. The Company cannot predict the
                  outcome of this matter.

                  Both electric utilities and the gas utility have filed claims
                  with the Company's general liability insurance carriers to
                  recover costs arising out of actual or potential environmental
                  liabilities. Some claims have settled and others are still
                  pending. While management cannot predict the outcome of these
                  matters, the outcome is not expected to have a material effect
                  on the consolidated financial position or results of
                  operations.

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

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

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

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

                  Subsequently, a number of utilities each filed an action for
                  damages in the Court of Claims. In a recent decision, the U.S.
                  Circuit Court of Appeals (Federal Circuit) ruled that
                  utilities may sue the DOE for damages in the Federal Court of
                  Claims instead of having to file an administrative claim with
                  DOE. CP&L and Florida Power are in the process of evaluating
                  whether they should each file a similar action for damages.

                  CP&L and Florida Power also continue to monitor legislation
                  that has been introduced in Congress which might provide some
                  limited relief. CP&L and Florida Power cannot predict the
                  outcome of this matter.

                  With certain modifications and additional approval by the NRC,
                  CP&L's spent nuclear fuel storage facilities will be
                  sufficient to provide storage space for spent fuel generated
                  on CP&L's system through the expiration of the current
                  operating licenses for all of CP&L's nuclear generating units.
                  Subsequent to the expiration of these licenses, dry storage
                  may be necessary. CP&L obtained NRC approval to use additional
                  storage space at the Harris Plant in December 2000. Florida
                  Power currently is storing spent nuclear fuel onsite in spent
                  fuel pools. If Florida Power does not seek renewal of the CR3
                  operating license, with certain modifications to its storage
                  pools currently underway, CR3 will have sufficient storage
                  capacity in place for fuel consumed through the end of the
                  expiration of the license in 2016. If Florida Power extends
                  the CR3 operating license, dry storage may be necessary.

                  c) The Company and its subsidiaries are involved in various
                  litigation matters in the ordinary course of business, some of
                  which involve substantial amounts. Where appropriate, accruals
                  have been made in

                                       16
<PAGE>

                  accordance with SFAS No. 5, "Accounting for Contingencies," to
                  provide for such matters. In the opinion of management, the
                  final disposition of pending litigation would not have a
                  material adverse effect on the Company's consolidated results
                  of operations or financial position.




                                       17
<PAGE>
<TABLE>
<CAPTION>
                                       CAROLINA POWER & LIGHT COMPANY
                                  CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                                 (Unaudited)
                                               March 31, 2001

STATEMENTS OF INCOME
                                                                                       Three Months Ended
                                                                                             March 31,
(In thousands)                                                                         2001           2000
--------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>             <C>
Operating Revenues
  Electric                                                                      $    821,574    $    779,908
  Natural gas                                                                              -          72,098
  Diversified businesses                                                               5,029          25,134
--------------------------------------------------------------------------------------------------------------
       Total Operating Revenues                                                      826,603         877,140
--------------------------------------------------------------------------------------------------------------
Operating Expenses
  Fuel used in electric generation                                                   153,470         160,387
  Purchased power                                                                     91,929          70,259
  Gas purchased for resale                                                                 -          43,898
  Other operation and maintenance                                                    168,654         198,227
  Depreciation and amortization                                                      134,335         132,489
  Taxes other than on income                                                          38,436          37,334
  Harris Plant deferred costs, net                                                     3,625           5,281
  Diversified businesses                                                               4,513          44,155
--------------------------------------------------------------------------------------------------------------
      Total Operating Expenses                                                       594,962         692,030
--------------------------------------------------------------------------------------------------------------
Operating Income                                                                     231,641         185,110
--------------------------------------------------------------------------------------------------------------
Other Income (Expense)
  Interest income                                                                      4,685           3,263
  Other, net                                                                           9,357           4,295
--------------------------------------------------------------------------------------------------------------
      Total Other Income (Expense)                                                    14,042           7,558
--------------------------------------------------------------------------------------------------------------
Interest Charges
  Long-term debt                                                                      62,569          50,072
  Other interest charges                                                               2,285           5,001
  Allowance for borrowed funds used during construction                               (2,772)         (4,606)
--------------------------------------------------------------------------------------------------------------
      Net Interest Charges                                                            62,082          50,467
--------------------------------------------------------------------------------------------------------------
Income before Income Taxes                                                           183,601         142,201
Income Taxes                                                                          62,756          56,198
--------------------------------------------------------------------------------------------------------------
Net Income                                                                           120,845          86,003
Preferred Stock Dividend Requirements                                                   (741)           (742)
--------------------------------------------------------------------------------------------------------------
Earnings for Common Stock                                                        $   120,104    $     85,261
==============================================================================================================
See Notes to Carolina Power & Light Company Consolidated Interim Financial Statements.
</TABLE>


                                       18
<PAGE>

<TABLE>
<CAPTION>
Carolina Power & Light Company
CONSOLIDATED BALANCE SHEETS
(In thousands)                                                                  March 31,        December 31,
Assets                                                                             2001              2000
--------------------------------------------------------------------------------------------------------------
<S>                                                                         <C>                <C>
Utility Plant
  Electric utility plant in service                                         $    11,198,432    $  11,125,901
  Accumulated depreciation                                                       (5,629,129)      (5,505,731)
--------------------------------------------------------------------------------------------------------------
        Utility plant in service, net                                             5,569,303        5,620,170
  Held for future use                                                                 7,105            7,105
  Construction work in progress                                                     905,690          815,246
  Nuclear fuel, net of amortization                                                 187,366          184,813
--------------------------------------------------------------------------------------------------------------
        Total Utility Plant, Net                                                  6,669,464        6,627,334
--------------------------------------------------------------------------------------------------------------
Current Assets
  Cash and cash equivalents                                                          14,806           30,070
  Accounts receivable                                                               391,634          466,774
  Receivables from affiliated companies                                             352,715          362,834
  Taxes receivable                                                                        -           15,412
  Inventory                                                                         271,112          233,369
  Deferred fuel cost                                                                123,691          119,853
  Prepayments                                                                        18,618           24,284
  Other current assets                                                               75,191           75,451
--------------------------------------------------------------------------------------------------------------
        Total Current Assets                                                      1,247,767        1,328,047
--------------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
  Income taxes recoverable through future rates                                     215,214          210,571
  Harris Plant deferred costs                                                        41,850           44,813
  Unamortized debt expense                                                           15,445           15,716
  Nuclear decommissioning trust funds                                               414,193          411,279
  Diversified business property, net                                                105,342          102,294
  Miscellaneous other property and investments                                      358,626          395,995
  Other assets and deferred debits                                                  119,723          124,339
--------------------------------------------------------------------------------------------------------------
        Total Deferred Debits and Other Assets                                    1,270,393        1,305,007
--------------------------------------------------------------------------------------------------------------
           Total Assets                                                     $     9,187,624    $   9,260,388
==============================================================================================================

Capitalization and Liabilities
--------------------------------------------------------------------------------------------------------------
Capitalization
--------------------------------------------------------------------------------------------------------------
  Common stock                                                              $     1,639,720    $   1,625,894
  Retained earnings                                                               1,257,282        1,226,144
  Accumulated other comprehensive loss                                               (4,561)               -
  Preferred stock - not subject to mandatory redemption                              59,334           59,334
  Long-term debt, net                                                             3,804,305        3,619,984
--------------------------------------------------------------------------------------------------------------
        Total Capitalization                                                      6,756,080        6,531,356
--------------------------------------------------------------------------------------------------------------
Current Liabilities
  Accounts payable                                                                  194,614          281,026
  Payables to affiliated companies                                                   15,617          275,976
  Taxes accrued                                                                      91,901                -
  Interest accrued                                                                   47,772           56,259
  Dividends declared                                                                  1,482            1,482
  Other current liabilities                                                         178,813          146,191
--------------------------------------------------------------------------------------------------------------
        Total Current Liabilities                                                   530,199          760,934
--------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
  Accumulated deferred income taxes                                               1,432,723        1,491,660
  Accumulated deferred investment tax credits                                       180,245          197,207
  Other liabilities and deferred credits                                            288,377          279,231
--------------------------------------------------------------------------------------------------------------
        Total Deferred Credits and Other Liabilities                              1,901,345        1,968,098
--------------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 6)
--------------------------------------------------------------------------------------------------------------
         Total Capitalization and Liabilities                               $     9,187,624   $    9,260,388
==============================================================================================================
See Notes to Carolina Power & Light Company Consolidated Interim Financial Statements.
</TABLE>

                                       19
<PAGE>
<TABLE>
<CAPTION>
Carolina Power & Light Company
STATEMENTS OF CASH FLOWS                                                            Three Months Ended
                                                                                        March 31,
(In thousands)                                                                       2001         2000
--------------------------------------------------------------------------------------------------------------

<S>                                                                         <C>                <C>
Operating Activities
  Net income                                                                $       120,845    $      86,003
  Adjustments to reconcile net income to net cash provided by
  operating activities
      Depreciation and amortization                                                 156,915          153,785
      Harris Plant deferred costs                                                     2,963            4,547
      Deferred income taxes                                                         (31,051)         (31,040)
      Investment tax credit                                                          (4,984)          (2,599)
      Deferred fuel cost (credit)                                                    (3,838)           7,459
      Net decrease in accounts receivable                                           132,480           30,546
      Net (increase) decrease in inventories                                        (37,743)           2,893
      Net decrease in prepaids and other current assets                               5,926          107,349
      Net decrease in accounts payable                                             (317,332)         (22,058)
      Net increase in other current liabilities                                      78,610           92,069
      Other                                                                           4,759           55,078
--------------------------------------------------------------------------------------------------------------
        Net Cash Provided by Operating Activities                                   107,550          484,032
--------------------------------------------------------------------------------------------------------------

Investing Activities
  Gross property additions                                                         (204,266)        (231,657)
  Nuclear fuel additions                                                            (25,142)         (25,252)
  Contributions to nuclear decommissioning trust                                    (10,228)         (10,275)
  Net cash flow of company-owned life insurance program                                 417               13
  Investments in non-utility activities                                              (4,631)         (26,603)
--------------------------------------------------------------------------------------------------------------
        Net Cash Used in Investing Activities                                      (243,850)        (293,774)
--------------------------------------------------------------------------------------------------------------

Financing Activities
  Proceeds from issuance of long-term debt                                              185                -
  Net increase in short-term indebtedness                                           191,555           11,900
  Net increase in outstanding payments                                                    -           31,553
  Retirement of long-term debt                                                         (109)        (197,365)
  Dividends paid on common stock                                                    (69,854)         (78,931)
  Dividends paid on preferred stock                                                    (741)            (742)
--------------------------------------------------------------------------------------------------------------
        Net Cash Provide by (Used in) Financing Activities                          121,036         (233,585)
--------------------------------------------------------------------------------------------------------------
Net Decrease in Cash and Cash Equivalents                                           (15,264)         (43,327)
Cash and Cash Equivalents at Beginning of the Period                                 30,070           79,871
--------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of the Period                              $        14,806    $      36,544
==============================================================================================================
Supplemental Disclosures of Cash Flow Information
Cash paid (received) during the period - interest                           $        69,016    $      66,733
                                         income taxes                       $        (6,382)   $       1,389
==============================================================================================================
See Notes to Carolina Power & Light Company Consolidated Interim Financial Statements.
</TABLE>

                                       20
<PAGE>
Carolina Power & Light Company
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS


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

         A.       Organization. Carolina Power & Light Company (CP&L) is a
                  public service corporation primarily engaged in the
                  generation, transmission, distribution and sale of electricity
                  in portions of North Carolina and South Carolina. CP&L is a
                  wholly-owned subsidiary of Progress Energy, Inc. (Progress
                  Energy or the Company), which was formed as a result of the
                  reorganization of CP&L into a holding company structure on
                  June 19, 2000. All shares of common stock of CP&L were
                  exchanged for an equal number of shares of the Company. On
                  December 4, 2000, the Company changed its name from CP&L
                  Energy, Inc. to Progress Energy, Inc. The Company is a
                  registered holding company under the Public Utility Holding
                  Company Act (PUCHA) of 1935. Both the Company and its
                  subsidiaries are subject to the regulatory provisions of the
                  PUCHA.

                  On July 1, 2000, CP&L distributed its ownership interest in
                  the stock of North Carolina Natural Gas (NCNG), Strategic
                  Resource Solutions Corporation (SRS), Monroe Power Company
                  (Monroe Power) and Progress Energy Ventures, Inc. (Energy
                  Ventures) to the Company. As a result, those companies are
                  direct subsidiaries of the Progress Energy, Inc. and are not
                  included in CP&L's results of operations and financial
                  position since that date.

         B.       Basis of Presentation. These financial statements have been
                  prepared in accordance with accounting principles generally
                  accepted in the United States of America (generally accepted
                  accounting principles) for interim financial information and
                  with the instructions to Form 10-Q and Regulation S-X.
                  Accordingly, they do not include all of the information and
                  footnotes required by generally accepted accounting principles
                  for complete financial statements. Because the accompanying
                  consolidated interim financial statements do not include all
                  of the information and footnotes required by generally
                  accepted accounting principles, they should be read in
                  conjunction with the audited financial statements for the
                  period ended December 31, 2000 and notes thereto included in
                  CP&L's Form 10-K for the year ended December 31, 2000.

                  The amounts included in the consolidated interim financial
                  statements are unaudited but, in the opinion of management,
                  reflect all adjustments necessary to fairly present the
                  Company's financial position and results of operations for the
                  interim periods. Due to seasonal weather variations and the
                  timing of outages of electric generating units, especially
                  nuclear-fueled units, the results of operations for interim
                  periods are not necessarily indicative of amounts expected for
                  the entire year. Certain amounts for 2000 have been
                  reclassified to conform to the 2001 presentation, with no
                  effect on previously reported net income or common stock
                  equity.

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


2.       FINANCIAL INFORMATION BY BUSINESS SEGMENT
         -----------------------------------------

         As described in Note 1A, on July 1, 2000, CP&L distributed its
         ownership interest in the stock of NCNG, SRS, Monroe Power and Energy
         Ventures to Progress Energy. As a result, those companies are direct
         subsidiaries of Progress Energy and are not included in CP&L's results
         of operations and financial position since that date.

         Through June 30, 2000, the business segments, operations and assets of
         Progress Energy and CP&L were substantially the same. Subsequent to
         July 1, 2000, CP&L's operations consist primarily of the CP&L Electric
         segment with no other material segments.


                                       21
<PAGE>


         The financial information by business segment for CP&L-Electric for the
         three months ended March 31, 2001 and 2000 is as follows:

<TABLE>
<CAPTION>


         (In thousands)                               March 31, 2001            March 31, 2000
         ==========================================================================================
         <S>                                                   <C>                       <C>
         Revenues
              Unaffiliated                                     $821,574                  $779,908
              Intersegment                                            -                         -
                                                   -----------------------------------------------
                   Total Revenues                              $821,574                  $779,908
         Segment Income                                        $118,794                   $89,961
         Total Segment Assets                                $8,713,177                $8,356,381

         ==========================================================================================
         ==========================================================================================
</TABLE>

         The primary differences between the CP&L Electric and CP&L consolidated
         financial information relate to other non-electric operations and
         elimination entries.

3.       IMPACT OF NEW ACCOUNTING STANDARD
         ---------------------------------

         Effective January 1, 2001, CP&L adopted Statement of Financial
         Accounting Standards (SFAS) No. 133, "Accounting for Derivative
         Instruments and Hedging Activities", as amended by SFAS No. 138. SFAS
         No. 133, as amended, establishes accounting and reporting standards for
         derivative instruments, including certain derivative instruments
         embedded in other contracts, and for hedging activities. SFAS No. 133
         requires that an entity recognize all derivatives as assets or
         liabilities in the consolidated balance sheet and measure those
         instruments at fair value.

         The adoption of SFAS No. 133 did not result in a significant transition
         adjustment affecting accumulated other comprehensive loss.
         Additionally, there was no transition adjustment affecting the
         consolidated statement of income as a result of the adoption of SFAS
         No. 133.

         The application of the new rules is still evolving and further guidance
         from the Financial Accounting Standards Board (FASB) is expected, which
         could additionally impact CP&L's financial statements.

4.       COMPREHENSIVE INCOME
         ---------------------

         Comprehensive income for the three months ended March 31, 2001, was
         $116.3 million. For the three months ended March 31, 2000,
         comprehensive income was $86.0 million. Prior to the adoption of SFAS
         No. 133 (See Note 3) CP&L had no other comprehensive income items and
         therefore comprehensive income for the three months ended March 31,
         2000 is equal to net income for that period.

5.       FINANCING ACTIVITIES
         --------------------

         On April 9, 2001, CP&L issued $300 million of Medium-Term Notes, 6.65%
         Series D due April 1, 2008. Proceeds from the issuance were primarily
         used to retire commercial paper.

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

         Contingencies existing as of the date of these statements are described
         below. No significant changes have occurred since December 31, 2000,
         with respect to the commitments discussed in Note 16 of the financial
         statements included in CP&L's 2000 Annual Report on Form 10-K.

         Contingencies

            1)    Insurance. CP&L is a member of Nuclear Electric Insurance
                  Limited (NEIL), which provides primary and excess insurance
                  coverage against property damage to members' nuclear
                  generating facilities. Under the primary program, CP&L is
                  insured for $500 million at each of its nuclear plants. In
                  addition to primary coverage, NEIL also provides
                  decontamination, premature decommissioning and excess property
                  insurance with limits of $1.0 billion on the Brunswick Plant,
                  $1.0 billion on the Harris Plant and $800 million on the
                  Robinson Plant. An additional shared limit policy of $1
                  billion in excess of $1 billion is also provided

                                       22
<PAGE>

                  through NEIL on the Brunswick and Harris Plants for
                  decontamination, premature decommissioning and excess
                  property.

                  Insurance coverage against incremental costs of replacement
                  power resulting from prolonged accidental outages at nuclear
                  generating units is also provided through membership in NEIL.
                  CP&L is insured thereunder, following a twelve week deductible
                  period, for 52 weeks in weekly amounts of $2.25 million at
                  Brunswick Unit No. 1, $2.25 million at Brunswick Unit No. 2,
                  $2.4 million at the Harris Plant and $1.96 million at Robinson
                  Unit No. 2. An additional 104 weeks of coverage is provided at
                  80% of the above weekly amounts. For the current policy
                  period, CP&L is subject to retrospective premium assessments
                  of up to approximately $13.5 million with respect to the
                  primary coverage, $15.4 million with respect to the
                  decontamination, decommissioning and excess property coverage,
                  $2.6 million with respect to the shared limit excess coverage
                  and $7.1 million for the incremental replacement power costs
                  coverage, in the event covered expenses at insured facilities
                  exceed premiums, reserves, reinsurance and other NEIL
                  resources. Pursuant to regulations of the Nuclear Regulatory
                  Commission, CP&L's property damage insurance policies provide
                  that all proceeds from such insurance be applied, first, to
                  place the plant in a safe and stable condition after an
                  accident and, second, to decontamination costs, before any
                  proceeds can be used for decommissioning, plant repair or
                  restoration. CP&L is responsible to the extent losses may
                  exceed limits of the coverage described above.

                  Under the provisions of the Price Anderson Act, which limits
                  liability for accidents at nuclear power plants, CP&L, as an
                  owner of a nuclear plant, can be assessed for a portion of any
                  third-party liability claims arising from an accident at any
                  commercial nuclear power plant in the United States. CP&L is
                  insured against public liability for a nuclear incident up to
                  $9.54 billion per occurrence. In the event that public
                  liability claims from an insured nuclear incident exceed $200
                  million, CP&L would be subject to a pro rata assessment of up
                  to $83.9 million for each reactor owned per occurrence.
                  Payment of such assessment would be made over time as
                  necessary to limit the payment in any one year to no more than
                  $10 million per reactor owned.

            2)    Claims and Uncertainties.

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

                  Various organic materials associated with the production of
                  manufactured gas, generally referred to as coal tar, are
                  regulated under federal and state laws. The lead or sole
                  regulatory agency that is responsible for a particular former
                  coal tar site depends largely upon the state in which the site
                  is located. There are several manufactured gas plant (MGP)
                  sites to which CP&L has some connection. In this regard, CP&L,
                  with other potentially responsible parties, are participating
                  in investigating and, if necessary, remediating former coal
                  tar sites with several regulatory agencies, including, but not
                  limited to, the U.S. Environmental Protection Agency (EPA) and
                  the North Carolina Department of Environment and Natural
                  Resources, Division of Waste Management (DWM). Although CP&L
                  may incur costs at these sites about which it has been
                  notified, based upon current status of these sites, CP&L does
                  not expect those costs to be material to its consolidated
                  financial position or results of operations.

                  CP&L is periodically notified by regulators such as the EPA
                  and various state agencies of their involvement or potential
                  involvement in sites, other than MGP sites, that may require
                  investigation and/or remediation. Although CP&L may incur
                  costs at the sites about which they have been notified, based
                  upon the current status of these sites, CP&L does not expect
                  those costs to be material to its consolidated financial
                  position or results of operations.

                  The EPA has been conducting an enforcement initiative related
                  to a number of coal-fired utility power plants in an effort to
                  determine whether modifications at those facilities were
                  subject to New Source Review requirements or New Source
                  Performance Standards under the Clean Air Act. CP&L has
                  recently been asked to provide information to the EPA as part
                  of this initiative and has cooperated in providing the

                                       23
<PAGE>


                  requested information. The EPA has initiated enforcement
                  actions against other unaffiliated utilities as part of this
                  initiative, some of which have resulted in settlement
                  agreements calling for expenditures, ranging from $1.0 billion
                  to $1.4 billion. These settlement agreements have generally
                  called for expenditures to be made over extended time periods,
                  and some of the companies may seek recovery of the related
                  cost through rate adjustments. CP&L cannot predict the outcome
                  of this matter.

                  In 1998, the EPA published a final rule addressing the issue
                  of regional transport of ozone. This rule is commonly known as
                  the NOx SIP Call. The EPA's rule requires 23 jurisdictions,
                  including North and South Carolina, to further reduce nitrogen
                  oxide emissions in order to attain a pre-set state NOx
                  emission level by May 31, 2004. CP&L is evaluating necessary
                  measures to comply with the rule and estimates its related
                  capital expenditures could be approximately $370 million,
                  which has not been adjusted for inflation. Increased operation
                  and maintenance costs relating to the NOx SIP Call are not
                  expected to be material to CP&L's results of operations.
                  Further controls are anticipated as electricity demand
                  increases. CP&L cannot predict the outcome of this matter.

                  In July 1997, the EPA issued final regulations establishing a
                  new eight-hour ozone standard. In October 1999, the District
                  of Columbia Circuit Court of Appeals ruled against the EPA
                  with regard to the federal eight-hour ozone standard. The U.S.
                  Supreme Court has upheld, in part, the District of Columbia
                  Circuit Court of Appeals decision. Further litigation and
                  rulemaking are anticipated. North Carolina adopted the federal
                  eight-hour ozone standard and is proceeding with the
                  implementation process. North Carolina has promulgated final
                  regulations, which will require CP&L to install nitrogen oxide
                  controls under the State's eight-hour standard. The cost of
                  those controls are included in the cost estimate of $370
                  million set forth above.

                  The EPA published a final rule approving petitions under
                  section 126 of the Clean Air Act, which requires certain
                  sources to make reductions in nitrogen oxide emissions by
                  2003. The final rule also includes a set of regulations that
                  affect nitrogen oxide emissions from sources included in the
                  petitions. The North Carolina fossil-fueled electric
                  generating plants are included in these petitions. Acceptable
                  state plans under the NOx SIP Call can be approved in lieu of
                  the final rules the EPA approved as part of the 126 petitions.
                  CP&L, other utilities, trade organizations and other states
                  are participating in litigation challenging the EPA's action.
                  CP&L cannot predict the outcome of this matter.

                  CP&L has filed claims with its general liability insurance
                  carriers to recover costs arising out of actual or potential
                  environmental liabilities. Some claims have settled and others
                  are still pending. While management cannot predict the outcome
                  of these matters, the outcome is not expected to have a
                  material effect on the consolidated financial position or
                  results of operations.

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

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

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

                                       24
<PAGE>

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

                  Subsequently, a number of utilities each filed an action for
                  damages in the Court of Claims. In a recent decision, the U.S.
                  Circuit Court of Appeals (Federal Circuit) ruled that
                  utilities may sue the DOE for damages in the Federal Court of
                  Claims instead of having to file an administrative claim with
                  DOE. CP&L is in the process of evaluating whether they should
                  file a similar action for damages.

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

                  With certain modifications and additional approval by the NRC,
                  CP&L's spent nuclear fuel storage facilities will be
                  sufficient to provide storage space for spent fuel generated
                  on its system through the expiration of the current operating
                  licenses for all of its nuclear generating units. Subsequent
                  to the expiration of these licenses, dry storage may be
                  necessary. CP&L obtained NRC approval to use additional
                  storage space at the Harris Plant in December 2000.

                  c) CP&L is involved in various litigation matters in the
                  ordinary course of business, some of which involve substantial
                  amounts. Where appropriate, accruals have been made in
                  accordance with SFAS No. 5, "Accounting for Contingencies," to
                  provide for such matters. In the opinion of management, the
                  final disposition of pending litigation would not have a
                  material adverse effect on CP&L's consolidated results of
                  operations or financial position.


                                       25
<PAGE>

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

         RESULTS OF OPERATIONS
         ---------------------

         For the three months ended March 31, 2001, as compared to the
         corresponding period in the prior year

         Progress Energy, Inc.

         Operating Results
         -----------------

         Progress Energy's consolidated earnings for the three month period
         ended March 31, 2001, were $154.0 million, or $0.77 per share, compared
         to earnings of $85.3 million, or $0.56 per share, for the same period
         in 2000. The increase in the Company's earnings is primarily related to
         Florida Progress being included in Progress Energy's results of
         operations since the acquisition date of November 30, 2000. Operating
         results for the three months ended March 31, 2001 were also favorably
         impacted by expanded operations in the Energy and Related Services
         segment and earnings from the CP&L Electric segment.


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


         CP&L Electric
         -------------

         CP&L Electric contributed net income of $118.8 million and $90.0
         million for the three months ended March 31, 2001 and 2000,
         respectively.

         The fluctuations in electric operating revenues for the three months
         ended March 31, 2001, as compared to last year, were affected by the
         following factors (in millions):
<TABLE>
<CAPTION>

<S>                                                                                       <C>
                            Customer growth/changes in usage patterns*                    $     31.2
                            Industrial sales                                                   (15.6)
                            Weather                                                                -
                            Sales to Power Agency                                                3.9
                            Sales to other utilities                                            17.7
                            Miscellaneous                                                        4.5
                                                                                                 ---
                               Total                                                      $     41.7
                                                                                                ====
                           *Customer growth/changes in usage patterns excludes industrial customers.
</TABLE>


         The increase in customer growth/changes in usage patterns component of
         revenues reflects continued growth in the number of customers served by
         the Company and increased sales to residential and commercial customer
         classes. Industrial sales experienced an overall decrease primarily
         related to the textile and chemical industries, which continue to be
         negatively affected by a slow down in demand in these industries. The
         weather component of revenues remained flat in the current period
         compared to the corresponding prior period. The increase in revenue
         related to sales to Power Agency is due to increases in kilowatt-hour
         (KwH) usage, and the increase in revenue related to sales to other
         utilities is due to favorable pricing.

         The decrease in fuel used for electric generation was primarily due to
         deferred fuel write-off in March 2000 and a decrease in generation.
         This decrease was partially offset by price increases in coal, oil, and
         gas.

         Purchased power increased primarily due to increases in price and
         volume, offset by decreases in purchases from cogenerators. The
         decrease in cogenerator purchases was due to the termination of two
         contracts in the fourth quarter of 2000.

         Other operation and maintenance expense decreased during the three
         months ended March 31, 2001, due to the absence of restoration costs
         associated with the severe winter storm and record breaking snowfall in
         January 2000. Also, general and administrative expenses decreased due
         to the establishment of the service company in June 2000, which
         allocates its costs among all Progress Energy entities.

         Interest on long-term debt increased during the three months ended
         March 31, 2001, primarily due to an increase in long-term debt
         outstanding.


                                       26
<PAGE>

         Florida Power Electric
         ----------------------

         Florida Power contributed net income of $71.6 million for the three
         months ended March 31, 2001. The results of the Florida Power electric
         segment are not comparable to the prior year as the operating results
         of Florida Power have only been included in Progress Energy's results
         of operations since the date of acquisition on November 30, 2000.

         Florida Power's operating revenues increased $185.2 million for the
         three months ended March 31, 2001 when compared to the prior year.
         Florida Power's total kilowatt-hour sales increased 3.4 percent during
         the first quarter of 2001, compared with 2000. The improvement was
         primarily due to strong customer growth, and colder temperatures in
         January of 2001. Retail sales were up 5 percent as Florida Power
         provided electric service to approximately 38,400 new customers during
         the first quarter of 2001 compared with the same period last year.
         Weather, a key factor influencing usage among residential customers,
         favorably influenced retail sales for the quarter. Usage among
         residential customers was nearly 12 percent higher during the quarter
         when compared with last year. Wholesale sales decreased slightly
         compared to 2000, which is attributable to lower sales to Seminole
         Electric Cooperative, Florida Power's largest wholesale customer.

         Fuel used in generation and purchased power increased $78.2 million and
         $22.5 million, respectively, for the first quarter of 2001 when
         compared to the same period last year. The increase is due mainly to
         the increased price of coal, oil and gas when compared to the prior
         year and increased usage. Fuel and purchased power expenses are
         recovered primarily through cost recovery clauses and, as such, have no
         material impact on operating results. Operations and maintenance
         expense decreased slightly during the quarter. The decrease is due
         primarily to lower employee-related costs resulting from the
         reorganization after the acquisition by Progress Energy.


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


         Natural Gas operations contributed net income of $7.5 million and $8.8
         million for the three months ended March 31, 2001 and 2000,
         respectively. The decrease is mainly due to reduced sales to certain
         large industrial customers with fuel switching capabilities. Natural
         gas revenues increased for the three months ended March 31, 2001, when
         compared to the same period in the prior year, primarily due to
         increases in the market price of natural gas, which is passed on to
         customers. Operation and maintenance expenses increased slightly for
         the three months ended March 31, 2001 when compared to the same period
         in the prior year due to increases in shared service allocations.

         During March 2001, North Carolina Natural Gas (NCNG) completed
         construction of the 84-mile Sandhills pipeline project that will
         transport natural gas from Iredell County to Progress Energy's Richmond
         generating site.

         The Eastern North Carolina Natural Gas Co. (EasternNC) is a corporation
         formed equally between the Albemarle Pamlico Economic Development
         Corporation (APEC) and Progress Energy to build an 850-mile natural gas
         pipeline system to serve 14 eastern North Carolina counties. EasternNC
         has begun surveying, designing, engineering and environmental
         permitting for the first phase of the project. The initial phase
         consists of about 140 miles of transmission (6- to 12-inch diameter)
         pipeline and about 75 miles of distribution (2- to 6-inch diameter)
         pipe. Construction of the first phase is scheduled to begin in late
         2001, and is scheduled to be completed by mid-summer 2002. The entire
         project should be completed by the end of 2004.

         Progress Energy has agreed to fund a portion of the project,
         currently estimated to be approximately $22 million. EasternNC plans to
         obtain additional capital through bond funding. On March
         20, 2001 EasternNC filed its amended application for approval of the
         route design for Phases 2-7 of the project and additional gas bond
         funds of $149.6 million to construct this system. An Order on this
         application may be received by the end of May.

         Energy and Related Services
         ---------------------------

         Energy and Related Services contributed net income of $41.7 million and
         $0.2 million for the three months ended March 31, 2001 and 2000,
         respectively. The Energy and Related Services operations include fuel
         extraction, manufacturing and delivery, synthetic fuels and merchant
         generation. The increase in earnings for this segment is primarily due
         to the tax credits generated by the Company's synthetic fuel operations
         (see "Other Matters" below). The Energy and Related Services segment
         sold 2.8 million tons of synthetic fuel for the three months ended
         March 31, 2001. Due to the creation of Progress Energy Ventures (Energy
         Ventures) in 2000 and the acquisition of

                                       27
<PAGE>

         Electric Fuels subsidiaries through the FPC acquisition, the result of
         operations for the Energy and Related Services segment are not
         comparable to the prior year.



                                       28
<PAGE>

         Other
         -----

         The other segment contributed a net loss of $85.6 million and $13.7
         million for the three months ended March 31, 2001 and 2000,
         respectively. The other segment primarily includes the operations of
         Strategic Resource Solutions Corp. (SRS), Progress Telecommunications
         Corporation (Progress Telecom), Caronet, Inc. and certain holding
         company results. The operations of SRS, Progress Telecom and Caronet
         did not have a material impact on the Company's results for the three
         months ended March 31, 2001. The decrease in earnings for this segment
         is primarily due to the increase in interest expense for holding
         company debt and goodwill amortization resulting from the acquisition
         of Florida Progress.

         Additionally, the other segment results also include the effect of an
         intra-period tax allocation adjustment. Generally accepted accounting
         principles require companies to apply a levelized effective tax rate to
         interim periods that is consistent with the estimated annual rate.
         Income tax expense was increased by $20 million for the first quarter
         of 2001 to maintain an effective tax rate consistent with the estimated
         annual rate. The tax credits associated with the Company's synthetic
         fuel operations lower the overall effective tax rate. These credits,
         along with seasonal earnings variations, can also cause large swings in
         the effective tax rate for interim periods. Therefore, this adjustment
         will vary each quarter, but have no effect on net income for the year.

         The Financial Accounting Standards Board (FASB) is proceeding with its
         project related to business combinations and accounting for goodwill.
         This project, as proposed, would eliminate the amortization of goodwill
         and, instead, would require goodwill to be reviewed periodically for
         impairment. The FASB plans to issue a final statement in June 2001.



         LIQUIDITY AND CAPITAL RESOURCES
         ---------------------------------------------------


         Progress Energy, Inc.

         Progress Energy's capital expenditures are expected to be funded
         primarily from internally generated funds and external debt. During the
         first three months of 2001, $270.9 million was spent on its utility
         subsidiaries construction program and $55.2 million was spent in
         diversified operations.

         In February 2001, Progress Energy issued $3.2 billion of senior
         unsecured notes with maturities ranging from three to thirty years.
         These notes were issued with a weighted average coupon of 7.06%.
         Proceeds from this issuance were primarily used to retire commercial
         paper and other short-term indebtedness issued in connection with the
         FPC acquisition. As a result of the issuance of $3.2 billion of senior
         notes, Progress Energy's available lines of credit, used to support its
         commercial paper borrowings, was reduced to $550 million.

         During the first quarter of 2001, Progress Capital Holdings retired a
         total of $31 million in Medium-Term Notes. The $6 million of
         medium-term notes that were retired in January had a 9.95% coupon rate
         and the $25 million of medium-term notes that were retired in February
         had a 6.13% coupon rate. Progress Capital Holdings issued commercial
         paper to fund the maturing medium-term notes.

         On April 9, 2001, CP&L issued $300 million of Medium-Term Notes, 6.65%
         Series D due April 1, 2008. Proceeds from the issuance were primarily
         used to retire commercial paper.

         In April 2001, CP&L filed a $1 billion shelf registration statement
         with the SEC under which first mortgage bonds, senior notes and other
         debt securities are available for issuance.

         The Company and its subsidiaries participate in two internal money
         pools, operated by Progress Energy, to more effectively utilize cash
         resources and to reduce outside short-term borrowings. Short-term
         borrowing needs are met first by available funds of the money pool
         participants. Borrowing companies pay interest at a rate designed to
         approximate the cost of outside short-term borrowings. Subsidiaries,
         which invest in the money pool, earn interest on a basis proportionate
         to their average monthly investment. The interest rate used to
         calculate earnings approximates external interest rates. Funds may be
         withdrawn from or repaid to the pool at any time without prior notice.


                                       29
<PAGE>


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

         Regional Transmission Organization
         ----------------------------------

         In October 2000, Florida Power, along with Florida Power & Light
         Company and Tampa Electric Company, filed with the Federal Energy
         Regulatory Commission (FERC) an application for approval of a Regional
         Transmission Organization (RTO) for peninsular Florida, currently named
         GridFlorida. On March 28, 2001, FERC gave preliminary approval for the
         formation of GridFlorida to manage the power market for peninsular
         Florida. In conjunction with the preliminary approval, FERC has
         requested that a new approach on market design issues be submitted
         within 60 days in addition to a better congestion management plan. See
         "Regulatory Developments" below for additional GridFlorida
         developments.


         Company Activities
         ------------------


         In March 2001, CP&L formed Richmond County Power, LLC and Rowan County
         Power, LLC. CP&L filed for approval with the North Carolina Utilities
         Commission (NCUC) to transfer Certificates of Public Convenience and
         Necessity granted for eleven generating units in Richmond and Rowan
         counties, N.C., to subsidiaries of Energy Ventures. These natural
         gas-fired units will have a combined summer generating capability of
         approximately 1,760 MW. Seven of these generating units are scheduled
         to be in operation this June.

         Synthetic Fuels Tax Credits
         ---------------------------

         On April 20, 2001 and May 4, 2001, the Internal Revenue Service (IRS)
         released Revenue Procedure 2001-30 and Revenue Procedure 2001-34,
         respectively, that outline the conditions that must be met to receive a
         Private Letter Ruling (PLR) for Section 29 tax credits from the IRS.
         PLRs represent advance rulings from the IRS applying its interpretation
         of the tax law to an entities' facts for Section 29 credits. The
         Company continues to pursue PLRs for its four majority-owned facilities
         that have not received PLRs. In management's opinion, the Company is
         complying with all the necessary requirements to be allowed such
         credits under Section 29, although it cannot provide certainty that it
         will receive PLRs or prevail on any credits taken.



         Regulatory Developments
         -----------------------

         On May 3, 2001, the FPSC staff recommended to the FPSC that it require
         Florida Power to submit minimum filing requirements, based on a 2002
         projected calendar year, by September 15, 2001 to initiate a base rate
         proceeding regarding Florida Power's future base rates. The FPSC staff
         also recommended that pending completion of the Florida Power rate
         case, annual revenues of $114 million should be held subject to refund
         to Florida Power's customers. The FPSC staff has asked the FPSC to
         consider its recommendations on May 15, 2001. Florida Power's current
         rate agreement expires on June 30, 2001. On May 14, 2001, Florida Power
         filed a proposed rate reduction with the FPSC that includes plans to
         increase generating capacity, improve reliability and enhance customer
         service. The Company will continue to work with the FPSC staff and
         other interested parties to resolve the outstanding issues. The Company
         cannot predict the outcome of this matter.

         In its May 3, 2001 recommendation, the FPSC staff expressed concerns
         related to Florida Power's plans to participate in the creation of the
         GridFlorida RTO along with Florida Power & Light Company and Tampa
         Electric Company. The FPSC staff raised questions about the prudence of
         establishing the new system and costs associated with the process. The
         Company is continuing to evaluate the concerns the FPSC staff has
         raised about GridFlorida and the impact those concerns might have on
         the implementation of the GridFlorida RTO plan this year. The Company
         cannot predict the outcome of this matter.

         Nuclear
         -------

         On May 10, 2001, the Nuclear Regulatory Commission (NRC) rejected
         Orange County's request for stay and petition for review of the
         issuance of a license amendment to expand spent fuel storage capacity
         at CP&L's Shearon Harris Nuclear Plant. Counsel for the Board of
         Commissioners of Orange County, North Carolina has announced that
         Orange County intends to appeal the decision to the District of
         Columbia Circuit Court of Appeals. The Company cannot predict the
         outcome of this matter.


         Carolina Power & Light Company

         The information required by this item is incorporated herein by
         reference to the following portions of Progress Energy's Management's
         Discussion and Analysis of Financial Condition and Results of
         Operations, insofar as they relate to CP&L: RESULTS OF OPERATIONS;
         LIQUIDITY AND CAPITAL RESOURCES and OTHER MATTERS.


                                       30
<PAGE>


         RESULTS OF OPERATIONS
         ---------------------

         On July 1, 2000, CP&L distributed its ownership interest in the stock
         of NCNG, SRS, Monroe Power and Energy Ventures to Progress Energy.
         Prior to that date, the consolidated operations of CP&L and Progress
         Energy were substantially the same. Subsequent to that date, the
         operations of these subsidiaries are no longer included in CP&L's
         results of operations and financial position.

         Additionally, the results of operations for the CP&L Electric segment
         are identical between CP&L and Progress Energy. The results of
         operations for CP&L's non-utility subsidiaries are not material to
         CP&L's consolidated financial statements.

         LIQUIDITY AND CAPITAL RESOURCES
         -------------------------------

         The statement of cash flows for CP&L does not include amounts related
         to NCNG, SRS, Monroe Power and Energy Ventures after July 1, 2000.
         Additionally, the CP&L statement of cash flows for the three months
         ended March 31, 2001 does not reflect any amounts related to the
         acquisition of FPC, issuance of long-term debt as part of the
         transaction, and capital expenditures made for other Progress Energy
         subsidiaries.



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

         Progress Energy, Inc.

         Market risk represents the potential loss arising from adverse changes
         in market rates and prices. Certain market risks are inherent in the
         Company's financial instruments, which arise from transactions entered
         into in the normal course of business. The Company's primary exposures
         are changes in interest rates with respect to long-term debt and
         commercial paper and fluctuations in the return on marketable
         securities with respect to its nuclear decommissioning trust funds. The
         Company manages its market risk in accordance with its established risk
         management policies, which may include entering into various derivative
         transactions.

         The Company's exposure to return on marketable securities for the
         decommissioning trust funds has not changed materially since December
         31, 2000. The Company's exposure to market value risk with respect to
         the CVO's has also not changed materially since December 31, 2000.

         In February 2001, Progress Energy issued $3.2 billion of fixed-rate
         senior unsecured notes with maturities ranging from three to thirty
         years. The proceeds from this issuance were primarily used to retire
         commercial paper and other short-term indebtedness issued in connection
         with the FPC acquisition. Additionally, as part of this transaction,
         the Company terminated the $1.125 billion notional amount of interest
         rate forward contracts that were issued in anticipation of the debt
         issuance. The Company recognized a $45.3 million loss on these
         contracts that is being deferred through accumulated comprehensive loss
         and amortized over the life of the associated debt instruments.

         As a result of the $3.2 billion senior note issuance, the exposure to
         changes in interest rates from the Company's long-term debt at March
         31, 2001, has changed from December 31, 2000. The total fixed rate
         long-term debt at March 31, 2001, was $6.9 billion, with an average
         interest rate of 7.02% and fair market value of $6.9 billion.

         The exposure to changes in interest rates from the Company's variable
         rate long-term debt, commercial paper, extendible notes and FPC
         mandatorily redeemable securities of trust at March 31, 2001, was not
         materially different than at December 31, 2000. The total variable rate
         long-term debt and commercial paper outstanding at March 31, 2001, was
         $620 million, with an average interest rate of 3.50%, and $1.2 billion,
         with an average interest rate of 5.77%, respectively. The total
         extendible notes and FPC mandatorily redeemable securities of trust
         outstanding at March 31, 2001, was $500 million, with an average
         interest rate of 6.12%, and $300 million, with an average interest rate
         of 7.10%, respectively.

         The Company's exposure on the $500 million notional amount of interest
         rate swap agreements used to hedge its exposure on variable rate debt
         positions was not materially different than at December 31, 2000. The
         fair value of the swaps was a $15.1 million liability position at March
         31, 2001.


                                       31
<PAGE>


         Carolina Power & Light Company

         CP&L has certain market risks inherent in its financial instruments,
         which arise from transactions entered into in the normal course of
         business. CP&L's primary exposures are changes in interest rates with
         respect to long-term debt and commercial paper, and fluctuations in the
         return on marketable securities with respect to its nuclear
         decommissioning trust funds. CP&L's exposure to return on marketable
         securities for the decommission trust funds has not changed materially
         since December 31, 2000. The exposure to changes in interest rates from
         the Company's long-term debt and commercial paper at March 31, 2001,
         was not materially different than at December 31, 2000. The total fixed
         rate debt at March 31, 2001, was $2.0 billion, with an average interest
         rate of 7.14%. The total variable rate debt and commercial paper
         outstanding at March 31, 2001, was $1.1 billion, with an average
         interest rate of 4.67%, and $678 million, with an average interest rate
         of 5.7%, respectively.



                           PART II. OTHER INFORMATION

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


         Legal aspects of certain matters are set forth in Part I, Item 1. See
         Note 9 to the Progress Energy, Inc. Consolidated Interim Financial
         Statements and Note 6 to the CP&L Consolidated Interim Financial
         Statements.


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

         RESTRICTED STOCK AWARDS:


         (a) Securities Delivered. On January 2, 2001, January 29, 2001 and
         March 22, 2001, 88,095, 6,800 and 67,700 restricted shares,
         respectively of the Company's Common Shares were granted to certain
         key employees pursuant to the terms of the Company's 1997 Equity
         Incentive Plan (Plan), which was approved by the Company's shareholders
         on May 7, 1997. (Sponsorship of the Plan was transferred from CP&L to
         the Company effective August 1, 2000.) Section 9 of the Plan provides
         for the granting of Restricted Stock by the Personnel, Executive
         Development and Compensation Committee (currently the Committee on
         Organization and Compensation), (the Committee) to key employees of the
         Company, including its Affiliates and Subsidiaries. The Common Shares
         delivered pursuant to the Plan were acquired in market transactions
         directly for the accounts of the recipients and do not represent newly
         issued shares of the Company.

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

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

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



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


         (a) Exhibits

               None



                                       32
<PAGE>



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

                Progress Energy, Inc.
                ---------------------
<TABLE>
<CAPTION>


                                Financial
                   Item        Statements
                 Reported       Included                Date of Event               Date Filed
                 --------       --------                -------------               ----------

<S>                  <C>             <C>                     <C>                         <C>
                     9                No               January 22, 2001           January 23, 2001
                     7               Yes              November 30, 2000           January 24, 2001
                     5                No              February 14, 2001           February 27, 2001
                     9                No                March 15, 2001             March 16, 2001
</TABLE>


                Carolina Power & Light Company
                ------------------------------
<TABLE>
<CAPTION>

                                   Financial
                    Item          Statements
                  Reported         Included             Date of Event                Date Filed
                  --------         --------             -------------                ----------
<S>                  <C>            <C>                       <C>                        <C>
                     5                No                April 4, 2001              April 16, 2001

</TABLE>

                                       33
<PAGE>


                                   SIGNATURES
                                   ----------


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


                                                PROGRESS ENERGY, INC.
                                                ---------------------
                                                CAROLINA POWER & LIGHT COMPANY
                                                ------------------------------
         Date: May 15, 2001                     (Registrants)

                                                By:  /s/ Peter M. Scott III
                                                   ------------------------
                                                Executive Vice President and
                                                Chief Financial Officer


                                                By:  /s/ Robert H. Bazemore, Jr.
                                                   -----------------------------
                                                Vice President and Controller
                                                Chief Accounting Officer

                                       34