Exhibit 10(iii)

                              AMENDED AND RESTATED



                  SUPPLEMENTAL SENIOR EXECUTIVE RETIREMENT PLAN



                                       OF



                              PROGRESS ENERGY, INC.



                            Effective January 1, 1984



                    (As last amended effective July 10, 2002)





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                                TABLE OF CONTENTS


                                                                           Page
                                    ARTICLE I

STATEMENT OF PURPOSE.........................................................1


                                   ARTICLE II

DEFINITIONS..................................................................1
   2.01       Terms..........................................................1
   2.02       Affiliated Company.............................................1
   2.03       Assumed Deferred Vested Pension Benefit........................2
   2.04       Assumed Early Retirement Pension Benefit.......................2
   2.05       Assumed Normal Retirement Pension Benefit......................2
   2.06       Board..........................................................3
   2.07       Change in Control..............................................3
   2.08       Committee......................................................5
   2.09       Company........................................................5
   2.10       Continuing Director............................................5
   2.11       Designated Beneficiary.........................................5
   2.12       Early Retirement Date..........................................5
   2.13       Eligible Spouse................................................6
   2.14       Final Average Salary...........................................6
   2.15       Normal Retirement Date.........................................7
   2.16       Participant....................................................7
   2.17       Pension........................................................7
   2.18       Plan...........................................................7
   2.19       Retirement Plan................................................7
   2.20       Salary.........................................................7
   2.21       Service........................................................8
   2.22       Severance Date.................................................8
   2.23       Social Security Benefit........................................8
   2.24       Spouse's Pension..............................................10
   2.25       Target Early Retirement Benefit...............................10
   2.26       Target Normal Retirement Benefit..............................10
   2.27       Target Pre-Retirement Death Benefit...........................10
   2.28       Target Severance Benefit......................................10


                                   ARTICLE III

ELIGIBILITY AND PARTICIPATION...............................................10
   3.01       Eligibility...................................................10
   3.02       Date of Participation.........................................11
   3.03       Duration of Participation.....................................11

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                                   ARTICLE IV

RETIREMENT BENEFITS.........................................................11
   4.01       Normal Retirement Benefit.....................................11
   4.02       Early Retirement Benefit......................................12
   4.03       Commencement and Duration.....................................13
   4.04       Surviving Spouse Benefit......................................14
   4.05       Re-employment of Retired Participant..........................14


                                    ARTICLE V

RETIREMENT DEATH BENEFITS...................................................14
   5.01       Eligibility...................................................14
   5.02       Amount........................................................14
   5.03       Alternative Benefit...........................................14
   5.04       Commencement and Duration.....................................15


                                   ARTICLE VI

SEVERANCE BENEFITS..........................................................15
   6.01       Eligibility...................................................15
   6.02       Amount........................................................15
   6.03       Commencement and Duration.....................................16
   6.04       Surviving Spouse Benefit......................................16


                                   ARTICLE VII

ADMINISTRATION..............................................................17
   7.01       Committee.....................................................17
   7.02       Voting........................................................17
   7.03       Records.......................................................17
   7.04       Liability.....................................................17
   7.05       Expenses......................................................18


                                  ARTICLE VIII

AMENDMENT AND TERMINATION...................................................18


                                   ARTICLE IX

MISCELLANEOUS...............................................................18
   9.01       Non-Alienation of Benefits....................................18
   9.02       No Trust, Created.............................................19
   9.03       No Employment Agreement.......................................19

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   9.04       Binding Effect................................................20
   9.05       Suicide.......................................................20
   9.06       Claims for Benefits...........................................20
   9.07       Entire Plan...................................................21
   9.08       Change in Control.............................................21


                                    ARTICLE X

CONSTRUCTION................................................................21
   10.01      Governing Law.................................................21
   10.02      Gender........................................................21
   10.03      Headings, etc.................................................21
   10.04      Action........................................................21





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                                   ARTICLE I

                              STATEMENT OF PURPOSE

     This Plan is designed  and  implemented  for the purpose of  enhancing  the
earnings and growth of Progress Energy, Inc. (the "Sponsor") by providing to the
limited  group of  senior  management  employees  largely  responsible  for such
earnings and long-term growth deferred  compensation in the form of supplemental
retirement income benefits,  thereby increasing the incentive of such key senior
management  employees  to make the Sponsor  and its  Affiliated  Companies  more
profitable. The benefits are normally payable to Participants upon retirement or
death. The terms of the benefits  operate in conjunction with the  Participant's
benefits  payable  under the  Progress  Energy  Pension Plan and are designed to
supplement  such  pension  plan  benefits  and  provide  the  Participant   with
additional financial security upon retirement or death.

     The Plan is intended to constitute an unfunded retirement plan for a select
group of management or highly compensated  employees within the meaning of Title
I of the Employee Retirement Income Security Act of 1974, as amended.

     The Sponsor hereby restates and amends the Plan effective July 10, 2002.

                                   ARTICLE II

                                   DEFINITIONS

2.01 Terms.  Unless otherwise  clearly  required by the context,  the terms used
     herein shall have the  following  meaning.  Capitalized  terms that are not
     defined  below  shall have the meaning  ascribed to them in the  Retirement
     Plan.

2.02 Affiliated  Company.  Shall mean any  corporation  or other  entity that is
     required to be aggregated with the Sponsor pursuant to Section 414(b), (c),
     (m), or (o) of the Internal  Revenue Code of 1996, as amended (the "Code"),
     but only to the extent required.

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2.03 Assumed Deferred Vested Pension Benefit.  Shall mean the monthly benefit of
     the  deferred  vested  Pension to  commence on his Normal  Retirement  Date
     payable in the form of an annuity to which a separated Participant would be
     entitled  under  the  Retirement   Plan,   calculated  with  the  following
     assumptions based on such Participant's marital status at the time benefits
     hereunder commence:

     (a)  In the case of a Participant with an Eligible Spouse, in the form of a
          50% Qualified Joint and Survivor Annuity as provided in the Retirement
          Plan.

     (b)  In the case of a Participant  without an Eligible Spouse,  in the form
          of a Single Life Annuity as provided in the Retirement Plan.

     (c)  Without  regard  to  any  other  benefit   payment  option  under  the
          Retirement Plan.

2.04 Assumed Early Retirement Pension Benefit. Shall mean the monthly benefit of
     the normal retirement  Pension payable in the form of an annuity to which a
     Participant  would be  entitled  under the  Retirement  Plan at his  Normal
     Retirement  Date,  based upon his projected  years of Service at his Normal
     Retirement  Date and calculated with the following  assumptions  based upon
     his marital status at the time benefits hereunder commence:

     (a)  In the case of a Participant with an Eligible Spouse, in the form of a
          50% Qualified Joint and Survivor Annuity as provided in the Retirement
          Plan.

     (b)  In the case of a Participant  without an Eligible Spouse,  in the form
          of a Single Life Annuity as provided in the Retirement Plan.

     (c)  Without  regard  to  any  other  benefit   payment  option  under  the
          Retirement Plan.

2.05 Assumed Normal Retirement  Pension Benefit.  Shall mean the monthly benefit
     of the normal retirement Pension payable in the form of an annuity to which

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     a Participant  would be entitled under the Retirement Plan if he retired at
     his Normal Retirement Date, calculated with the following assumptions based
     on his marital status at the time benefits hereunder commence:

     (a)  In the case of a Participant with an Eligible Spouse, in the form of a
          50% Qualified Joint and Survivor Annuity as provided in the Retirement
          Plan.

     (b)  In the case of a Participant  without an Eligible Spouse,  in the form
          of a Single Life Annuity as provided in the Retirement Plan.

     (c)  Without  regard  to  any  other  benefit   payment  option  under  the
          Retirement  Plan.

2.06 Board. Shall mean the Board of Directors of Sponsor.

2.07 Change in Control. Shall occur on the earliest of the following dates:

     (a)  the date any person or group of persons (within the meaning of Section
          13(d) or 14(d) of the  Securities  Exchange  Act of  1934),  excluding
          employee   benefit  plans  of  the  Sponsor,   becomes,   directly  or
          indirectly,   the  "beneficial   owner"  (as  defined  in  Rule  13d-3
          promulgated  under the  Securities  Act of 1934) of  securities of the
          Sponsor representing twenty-five percent (25%) or more of the combined
          voting power of the Sponsor's then outstanding  securities  (excluding
          the  acquisition  of  securities  of the Sponsor by an entity at least
          eighty  percent (80%) of the  outstanding  voting  securities of which
          are, directly or indirectly, beneficially owned by the Sponsor); or

     (b)  the date of  consummation  of a tender offer for the ownership of more
          than fifty  percent  (50%) of the Sponsor's  then  outstanding  voting
          securities; or

     (c)  the date of consummation of a merger,  share exchange or consolidation
          of the Sponsor  with any other  corporation  or entity  regardless  of

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          which entity is the survivor,  other than a merger,  share exchange or
          consolidation  which  would  result in the  voting  securities  of the
          Sponsor outstanding  immediately prior thereto continuing to represent
          (either  by  remaining  outstanding  or being  converted  into  voting
          securities  of the  surviving  or  acquiring  entity)  more than sixty
          percent (60%) of the combined voting power of the voting securities of
          the  Sponsor  or  such  surviving  or  acquiring  entity   outstanding
          immediately after such merger or consolidation; or

     (d)  the date, when as a result of a tender offer or exchange offer for the
          purchase of securities of the Sponsor (other than such an offer by the
          Sponsor for its own  securities),  or as a result of a proxy  contest,
          merger,  share  exchange,  consolidation  or sale of  assets,  or as a
          result  of any  combination  of the  foregoing,  individuals  who  are
          Continuing  Directors  cease  for any  reason to  constitute  at least
          two-thirds (2/3) of the members of the Board; or

     (e)  the date the  shareholders  of the Sponsor  approve a plan of complete
          liquidation  or winding-up of the Sponsor or an agreement for the sale
          or  disposition  by the  Sponsor  of all or  substantially  all of the
          Sponsor's assets; or

     (f)  the date of any event which the Board determines  should  constitute a
          Change in Control.

     A Change in Control shall not be deemed to have  occurred  until a majority
     of  the  members  of the  Board  receive  written  certification  from  the
     Committee  that such event has  occurred.  Any  determination  that such an
     event has occurred shall, if made in good faith on the basis of information

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     available at that time, be  conclusive  and binding on the  Committee,  the
     Sponsor,  the Company,  the  Participants and their  beneficiaries  for all
     purposes of the Plan.

2.08 Committee. Shall mean the Committee on Organization and Compensation of the
     Board.

2.09 Company.  Shall mean  Progress  Energy,  Inc. or any successor to it in the
     ownership of substantially all of its assets,  and each Affiliated  Company
     that,  with the  consent of the Board  adopts the Plan and is  included  in
     Appendix A, as in effect from time to time.  Appendix A shall set forth any
     limitations  imposed on employees of  Affiliated  Companies  that adopt the
     Plan, including limitations on "Service,"  notwithstanding any provision of
     the Plan to the contrary.

2.10 Continuing  Director.  Shall  mean the  members of the Board as of July 10,
     2002; provided,  however, that any person becoming a Director subsequent to
     such date whose  election or  nomination  for  election  was  supported  by
     seventy-five  percent  (75%) or more of the  Directors  who then  comprised
     Continuing Directors shall be considered to be a Continuing Director.

2.11 Designated Beneficiary.  Shall mean one or more beneficiaries as designated
     by a Participant  in writing  delivered to the  Committee.  In the event no
     such written  designation is made by a Participant  or if such  beneficiary
     shall not be living or in existence at the time for commencement of payment
     to any  Designated  Beneficiary  under the Plan, the  Participant  shall be
     deemed to have designated his estate as such beneficiary.

2.12 Early  Retirement  Date.  Shall  mean the date on which a  Participant  who
     qualifies for the early  retirement  benefit of Section 4.02 hereof retires
     from the employ of the Company and its affiliated entities.

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2.13 Eligible Spouse. Shall mean the spouse of a Participant who, under the laws
     of the State where the marriage was  contracted,  is deemed married to that
     Participant  on the date on which the payments  from this Plan are to begin
     to the  Participant,  except that for purposes of Articles V and VI hereof,
     Eligible  Spouse shall mean a person who is married to a Participant  for a
     period of at least one year prior to his death.

2.14 Final Average Salary. Shall mean a Participant's average monthly Salary (as
     defined in Section 2.18 hereof) during the 36 completed  calendar months of
     highest compensation within the 120-month period immediately  preceding the
     earliest  to  occur  of the  Participant's  death,  Severance  Date,  Early
     Retirement  Date,  or Normal  Retirement  Date,  whichever  is  applicable.
     Provided, however, if a Participant becomes entitled to a benefit hereunder
     while under a period of  long-term  disability  under the  Sponsor's  Group
     Insurance  Plan,  Final  Average  Salary  shall  be  determined  for the 12
     calendar months  immediately  preceding the  commencement of such period of
     long-term  disability.  Provided,  further,  in determining average monthly
     Salary (i) annual  incentives  and other similar  payments  shall be deemed
     received  in  twelve  (12)  equal  payments  beginning  with  the  eleventh
     preceding  month and ending with the month in which actual payment is made,
     and (ii) amounts of compensation  deferred under any deferred  compensation
     plan or  arrangement  shall be deemed  received in the months such payments
     would have been received  assuming no deferral had  occurred.  For years of
     Service  granted  under  the  terms of a written  employment  agreement  as
     provided under Section 2.21,  Salary during each such month is deemed to be
     zero dollars ($0.00) for purposes of calculating Final Average Salary.

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2.15 Normal  Retirement  Date.  Shall mean the first day of the  calendar  month
     coinciding with or next following the Participant's 65th birthday.

2.16 Participant.  Shall mean an employee of the Company who is eligible  and is
     participating in this Plan in accordance with Article III hereof.

2.17 Pension.  Shall mean a level  monthly  annuity  which is payable  under the
     Retirement  Plan as of the  Benefit  Commencement  Date if the  Participant
     elected an annuity form of benefit.

2.18 Plan.  Shall mean the  "Supplemental  Senior  Executive  Retirement Plan of
     Progress  Energy,  Inc." as contained  herein and as it may be amended from
     time to time hereafter.

2.19 Retirement  Plan. Shall mean the "Progress Energy Pension Plan" (as amended
     effective  January  1,  2002)  as it may  be  amended  from  time  to  time
     hereafter.

2.20 Salary. Shall mean the sum of

     (1)  The annual base compensation paid by the Company to a Participant, and

     (2)  annual  cash  awards  made  under  incentive   compensation   programs
          excluding,  however,  any payment made under the  Sponsor's  Long-Term
          Compensation  Program or the Sponsor's 1997 and 2002 Equity  Incentive
          Plans, and

     (3)  amounts   of  annual   compensation   deferred   under  any   deferred
          compensation plan or arrangement (including,  without limitation,  the
          "Executive  Deferred  Compensation  Plan," the "Deferred  Compensation
          Plan for Key  Management  Employees  of  Progress  Energy,  Inc.," the
          "Progress Energy, Inc. Management Deferred  Compensation Plan" and the
          "Progress  Energy 401(k) Savings and Stock Ownership Plan") and which,
          but for the deferral,  would have been  reflected in Internal  Revenue
          Service Form W-2.

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2.21 Service.  Shall have the same meaning as "Eligibility  Service," determined
     as provided  in Sections  2.02 and 3.01 of the  Retirement  Plan,  plus any
     additional  years of  service  that may be granted  to the  Participant  in
     connection with this Plan under the terms of a written employment agreement
     (or any  amendment  thereto)  entered  into  between  the  Company  and the
     Participant.

2.22 Severance Date. Shall mean the earlier of:

     (a)  The date a  Participant  leaves  the  employ  of the  Company  and all
          affiliated  entities  other than on account of his death,  a period of
          long-term  disability  under the Company's  Group  Insurance  Plan, or
          retirement  at either his Early  Retirement  Date or upon or after his
          Normal Retirement Date, or

     (b)  The  first  anniversary  of the date on which a  Participant  is first
          absent from the service of the Sponsor and all  Affiliated  Companies,
          with or without pay,  other than on account of his death,  a period of
          long-term  disability under the Company's Group Insurance Plan, or his
          retirement  at either his Early  Retirement  Date or upon or after his
          Normal Retirement Date. If a Participant shall leave the employ of the
          Company and all Affiliated Companies under circumstances  described in
          (b) and shall during such absence (and before the first anniversary of
          commencement  of said  absence) quit or be  discharged,  his Severance
          Date shall be the date he quits or is discharged.

2.23 Social  Security  Benefit.  Means the  monthly  amount of  benefit  which a
     Participant  is or would be  entitled  to  receive  at age 65 as a  primary
     insurance amount under the federal Social Security Act, as amended, whether
     or not he applies for such benefit, and even though he may lose part or all

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     of such benefit  through  delay in applying  for it, by making  application
     prior to age 65 for a reduced benefit, by entering into covered employment,
     or for any other  reason.  The amount of such  Social  Security  Benefit to
     which the  Participant  is or would be entitled  shall be  estimated by the
     Committee  for the purposes of this Plan as of the January 1 of the year in
     which his Severance Date or retirement occurs on the following basis:

     (a)  For a  Participant  entitled to a normal  retirement  benefit,  on the
          basis of the federal Social Security Act as in effect on the January 1
          coincident   with  or  next  preceding  his  Normal   Retirement  Date
          (regardless of any  retroactive  changes made by  legislation  enacted
          after said January 1);

     (b)  For a  Participant  entitled to an early  retirement  benefit,  on the
          basis of the federal Social Security Act as in effect on the January 1
          coincident   with  or  next  preceding  his  Early   Retirement   Date
          (regardless  of any  retroactive  change made by  legislation  enacted
          after said January 1),  assuming  that his  employment,  and Salary in
          effect at his Early Retirement Date, continued to age 65; or

     (c)  For a Participant entitled to a severance benefit, on the basis of the
          federal  Social  Security Act as in effect on the January 1 coincident
          with  or  next  preceding  his  Severance  Date   (regardless  of  any
          retroactive change made by legislation  enacted after said January 1),
          assuming  that his  employment,  and Salary in effect at his Severance
          Date,  continued to age 65.

          For purposes of the calculations required under paragraphs (a) and (b)
          above,  if a  Participant  is  disabled  under a period  of  long-term
          disability  under the  Company's  Group  Insurance  Plan,  said Social

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          Security Benefit shall be calculated as if his Salary in effect at the
          commencement of such period of long-term  disability  continued to age
          65.

2.24 Spouse's  Pension.  Shall mean the  actual  monthly  benefit  payable to an
     Eligible  Spouse under the Retirement  Plan,  assuming the Eligible  Spouse
     elected a 50% Joint and Survivor Annuity form of benefit.

2.25 Target  Early  Retirement  Benefit.   Shall  mean  an  amount  equal  to  a
     Participant's  Final Average Salary determined at his Early Retirement Date
     multiplied by four percent (4%) for each  projected  year of Service at his
     Normal Retirement Date up to a maximum of sixty-two percent (62%).

2.26 Target  Normal  Retirement  Benefit.  Shall  mean  an  amount  equal  to  a
     Participant's Final Average Salary determined at his Normal Retirement Date
     multiplied by four percent (4%) for each  projected  year of Service at his
     Normal Retirement Date up to a maximum of sixty-two percent (62%).

2.27 Target  Pre-Retirement  Death  Benefit.  Shall  mean an  amount  equal to a
     deceased  Participant's  Final  Average  Salary  determined  at  his  death
     multiplied by four percent (4%) for each year of Service at his death up to
     a maximum of sixty-two percent (62%).

2.28 Target  Severance  Benefit.  Shall mean an amount equal to a  Participant's
     Final Average Salary  determined at his Severance  Date  multiplied by four
     percent (4%) for each year of Service at his Severance Date up to a maximum
     of sixty-two percent (62%).

                                  ARTICLE III

                          ELIGIBILITY AND PARTICIPATION

3.01 Eligibility.  Any  executive  employee  of a Company  who has served on the
     Senior  Management  Committee of the Sponsor and who has been a Senior Vice

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     President  or above for a minimum  period of three (3) years and who has at
     least ten (10) years of Service  shall be eligible to  participate  in this
     Plan.

3.02 Date  of  Participation.  Each  executive  who  is  eligible  to  become  a
     Participant  under Section 3.01 shall become a Participant on the first day
     of the  month  following  the  month  in  which  he is  first  eligible  to
     participate.

3.03 Duration of  Participation.  Each executive who becomes a Participant shall
     continue to be a Participant  until the  termination of his employment with
     the  Company  or, if later,  the date he is no longer  entitled to benefits
     under this Plan.

                                   ARTICLE IV

                               RETIREMENT BENEFITS

4.01 Normal Retirement Benefit.

     (a)  Eligibility.   A  Participant   whose   employment  with  the  Company
          terminates  on or after his Normal  Retirement  Date shall be eligible
          for the normal retirement benefit described in this Section 4.01.

     (b)  Amount and Form. The monthly payment hereunder shall be in the form of
          a Single Life Annuity if the Participant has no Eligible Spouse and in
          the  form  of a 50%  Qualified  Joint  and  Survivor  Annuity  if  the
          Participant has an Eligible Spouse. The eligible  Participant's normal
          retirement  benefit  shall be a  monthly  amount  equal to his  Target
          Normal Retirement Benefit reduced by the sum of (1) his Assumed Normal
          Retirement Pension Benefit and (2) his Social Security Benefit.

     (c)  Commencement and Duration.  Monthly normal retirement benefit payments
          shall commence at the same time as the eligible  Participant's  normal
          retirement Pension payable from the Retirement Plan and shall continue

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          in monthly installments thereafter ending with a payment for the month
          in which such eligible  Participant's death occurs, unless the benefit
          is being paid in the form of a Qualified  Joint and Survivor  Annuity,
          in  which  case the  survivor  benefit  shall be paid to the  Eligible
          Spouse, if living, for his or her life. If at the time of commencement
          of payment such eligible  Participant does not have an Eligible Spouse
          the  monthly  benefit  payments  shall be  guaranteed  for one hundred
          twenty  (120)  monthly  payments  with  any such  guaranteed  payments
          remaining  at  such  Participant's  death  payable  to his  Designated
          Beneficiary.

4.02 Early Retirement Benefit.

     (a)  Eligibility. Upon recommendation of the Chief Executive Officer of the
          Company and approval of the Committee,  a Participant whose employment
          with the  Company  terminates  upon or  after  his  attainment  of age
          fifty-five  (55) with at least  fifteen (15) years of Service  (except
          for  purposes  of  calculating   benefits  payable  under  Article  V.
          PRE-RETIREMENT  DEATH BENEFITS and Article VI. SEVERANCE BENEFITS,  as
          applicable) but prior to his Normal Retirement Date, shall be eligible
          for the early retirement benefit described in this Section 4.02.

     (b)  Amount and Form. The monthly payment hereunder shall be in the form of
          a Single Life Annuity if the Participant has no Eligible Spouse and in
          the  form  of a 50%  Qualified  Joint  and  Survivor  Annuity  if  the
          Participant has an Eligible Spouse. The eligible  Participant's  early
          retirement benefit shall be a monthly amount equal to his Target Early

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          Retirement  Benefit  reduced  by  the  sum of (1)  his  Assumed  Early
          Retirement  Pension  Benefit  and (2)  his  Social  Security  Benefit;
          provided,  however, such benefit will be reduced, where applicable, by
          the following:

          (i)  The amount of,  2.5% for each year that such  benefit is received
               prior to his Normal Retirement Date, and

          (ii) If such eligible Participant's  projected years of Service at his
               Normal  Retirement  Date are less than fifteen  (15),  his Target
               Early Retirement Benefit and his Assumed Early Retirement Pension
               Benefit  shall  be  calculated  based  upon his  actual  years of
               Service  at his  Early  Retirement  Date  rather  than  upon  his
               projected years of Service at his Normal Retirement Date.

4.03 Commencement and Duration.  Monthly early retirement benefit payments shall
     commence  on the  first  day  of  the  month  following  the  Participant's
     attainment  of  age  65,  provided,   such  Participant  may  make  written
     application to the Committee to have payments  commence on the first day of
     any month  following  his Early  Retirement  Date and the  decision  of the
     Committee, based upon its sole and absolute discretion, to allow such early
     commencement of payment shall be final. After commencement of payment, said
     early retirement  benefit  payments shall continue in monthly  installments
     thereafter  ending  with a  payment  for the month in which  such  eligible
     Participant's death occurs, unless the benefit is being paid in the form of
     a Qualified Joint and Survivor Annuity,  in which case the survivor benefit
     shall be paid to the Eligible Spouse, if living, for his or her life. If at

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     the time of commencement of payment such eligible Participant does not have
     an Eligible  Spouse,  the monthly benefit  payments shall be guaranteed for
     one hundred twenty (120) monthly payments with any such guaranteed payments
     remaining  at  such   Participant's   death   payable  to  his   Designated
     Beneficiary.

4.04 Surviving  Spouse Benefit.  The surviving  Eligible Spouse of a Participant
     who is  receiving  a  Qualified  Joint  and  Survivor  Benefit  as a normal
     retirement  benefit or as an early retirement benefit shall be eligible for
     the  surviving  spouse  benefit upon the death of the  Participant  for the
     duration of the Eligible Spouse's life.

4.05 Re-employment of Retired  Participant.  A retired Participant  receiving or
     eligible to receive the retirement  benefits described in Sections 4.01 and
     4.02 hereof who is  reemployed  by the Company shall be ineligible to again
     participate in this Plan.

                                   ARTICLE V

                            RETIREMENT DEATH BENEFITS

5.01 Eligibility.  A Participant's  surviving  Eligible Spouse shall be eligible
     for the pre-  retirement  death  benefit as  described in this Article V if
     such  Participant  dies while in the employ of the Company  with 10 or more
     years of Service.

5.02 Amount.  Such  surviving  Eligible  Spouse  shall be  entitled to a monthly
     pre-retirement death benefit payable in the form of an annuity in an amount
     equal to the  difference,  if any,  between (a) forty  percent (40%) of the
     Target Pre-Retirement Death Benefit and (b) the Spouse's Pension.

5.03 Alternative  Benefit.  If greater than the monthly  benefit of Section 5.02
     hereof,  the surviving  Eligible  Spouse of a Participant who dies while in
     the employ of the Company after  attaining age fifty-five (55) with fifteen
     (15) years of Service shall be entitled to a monthly  pre-retirement  death
     benefit equal to fifty percent  (50%) of the early  retirement  benefit the

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<PAGE>

     Participant  would have been  entitled to receive under Section 4.02 hereof
     (calculated  using  both  reductions,   where  applicable,  in  subsections
     4.02(b)(i) and 4.02(b)(ii)) as if he had retired  immediately  prior to his
     death with the  recommendation  of the Chief Executive Officer and approval
     of the Committee.

5.04 Commencement  and  Duration.   The  surviving   Eligible  Spouse's  monthly
     pre-retirement death benefit payments shall commence in the month following
     the  Participant's  death  and  shall  be  paid  in  monthly   installments
     thereafter  ending  with a payment  for the month in which  such  surviving
     Eligible Spouse's death occurs.

                                   ARTICLE VI

                               SEVERANCE BENEFITS

6.01 Eligibility.  Upon his  termination  of employment  with the Company at his
     Severance  Date, a Participant  who has completed ten (10) or more years of
     Service  shall be eligible for one of the severance  benefits  described in
     this Article VI.

6.02 Amount.

     (a)  If at his Severance Date such eligible  Participant is not entitled to
          a deferred  vested Pension  pursuant to Section 5.03 of the Retirement
          Plan or an early  retirement  Pension  pursuant to Section 5.02 of the
          Retirement Plan, his severance benefit shall be a monthly amount equal
          to  his  Target  Severance  Benefit  reduced  by his  Social  Security
          Benefit.

     (b)  If at his Severance  Date such eligible  Participant  is entitled to a
          deferred  vested  Pension  pursuant to Section 5.03 of the  Retirement
          Plan,  his severance  benefit  shall be a monthly  amount equal to his

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<PAGE>

          Target  Severance  Benefit  reduced  by the  sum of  (1)  his  Assumed
          Deferred Vested Pension Benefit and (2) his Social Security Benefit.

     (c)  If at his Severance  Date such eligible  Participant is entitled to an
          early  retirement  Pension  pursuant to Section 5.02 of the Retirement
          Plan,  his severance  benefit  shall be a monthly  amount equal to his
          Target  Severance  Benefit reduced by the sum of (1) his Assumed Early
          Retirement  Pension  Benefit  and (2)  his  Social  Security  Benefit;
          provided, however, such Assumed Early Retirement Pension Benefit shall
          be calculated  based upon his actual years of Service at his Severance
          Date  rather  than upon his  projected  years of Service at his Normal
          Retirement Date.

6.03 Commencement  and  Duration.   Monthly  severance  benefit  payments  shall
     commence on the eligible  Participant's  Normal  Retirement  Date and shall
     continue in monthly  installments  thereafter ending with a payment for the
     month in which such eligible Participant's death occurs.

6.04 Surviving Spouse Benefit.

     (a)  Eligibility.  The surviving  Eligible  Spouse of a Participant  who is
          receiving or who dies after  attaining age fifty-five (55) entitled to
          receive  a  severance  benefit  hereunder  shall be  eligible  for the
          surviving spouse benefit described in this Section 6.04.

     (b)  Such  surviving  Eligible  Spouse  shall  be  entitled  to  a  monthly
          surviving  spouse benefit in an amount equal to fifty percent (50%) of
          the severance benefit which the deceased  Participant was receiving or

                                       16
<PAGE>

          entitled to receive at his Normal Retirement Date under either Section
          6.02(a) or 6.02(b) hereof on the day before his death.

     (c)  Commencement  and  Duration.  The  monthly  surviving  spouse  benefit
          payment shall commence in the month following the Participant's  death
          and shall be paid in monthly  installments  thereafter  ending  with a
          payment for the month in which such surviving  Eligible Spouse's death
          occurs.

                                  ARTICLE VII

                                 ADMINISTRATION

7.01 Committee.  This Plan shall be administered by the Committee. The Committee
     shall have all powers necessary to enable it to carry out its duties in the
     administration  of the Plan. Not in  limitation,  but in application of the
     foregoing,  the  Committee  shall have the duty and power to determine  all
     questions  that  may  arise  hereunder  as to  the  status  and  rights  of
     Participants in the Plan.

7.02 Voting.  The  Committee  shall  act  by  a  majority  of  the  number  then
     constituting the Committee,  and such action may be taken either by vote at
     a meeting or in writing , without a meeting.

7.03 Records.  The Committee shall keep a complete record of all its proceedings
     and all data  relating to the  administration  of the Plan.  The  Committee
     shall select one of its members as a Chairman.  The Committee shall appoint
     a Secretary to keep minutes of its  meetings and the  Secretary  may or may
     not be a member of the Committee.  The Committee  shall make such rules and
     regulations for the conduct of its business as it shall deem advisable.

7.04 Liability. To the extent permitted by law, no member of the Committee shall
     be liable to any person for any action taken or omitted in connection  with
     the interpretation  and administration of this Plan unless  attributable to

                                       17
<PAGE>

     his own gross negligence or willful misconduct. The Sponsor shall indemnify
     the members of the Committee against any and all claims,  losses,  damages,
     expenses,  including  counsel fees,  incurred by them,  and any  liability,
     including any amounts paid in settlement with their approval,  arising from
     their  action  or  failure  to act,  except  when  the  same is  judicially
     determined  to  be  attributable  to  their  gross  negligence  or  willful
     misconduct.

7.05 Expenses.  The  cost  of  payments  from  this  Plan  and the  expenses  of
     administering  the Plan shall borne by each Company with respect to its own
     employees.

                                  ARTICLE VIII

                            AMENDMENT AND TERMINATION

     The Sponsor reserves the right, at any time or from time to time, by action
of its Board,  to modify or amend in whole or in part any or all  provisions  of
the Plan. In addition,  the Sponsor reserves the right by action of its Board to
terminate  the  Plan  in  whole  or  in  part.   Provided,   however,  any  such
modification, amendment or termination shall not reduce benefits accrued at such
time nor increase vesting  requirements  with respect to such accrued  benefits.
ARTICLE IX

                                  MISCELLANEOUS

9.01 Non-Alienation  of  Benefits.  No right or benefit  under the Plan shall be
     subject to anticipation, alienation, sale, assignment, pledge, encumbrance,
     or charge, and any attempt to anticipate,  alienate,  sell, assign, pledge,
     encumber,  or charge any right or benefit  under the Plan shall be void. No
     right or benefit  hereunder shall in any manner be liable for or subject to
     the debts,  contracts,  liabilities or torts of the person entitled to such

                                       18
<PAGE>

     benefits.  If the Participant or Eligible Spouse shall become bankrupt,  or
     attempt to anticipate,  alienate, sell, assign, pledge, encumber, or charge
     any right hereunder, then such right or benefit shall, in the discretion of
     the Committee,  cease and terminate,  and in such event,  the Committee may
     hold or  apply  the  same  or any  part  thereof  for  the  benefit  of the
     Participant or his spouse,  children, or other dependents,  or any of them,
     in such manner and in such amounts and  proportions  as the  Committee  may
     deem proper.

9.02 No Trust,  Created. The obligations of the Sponsor and each Company to make
     payments  hereunder  shall  constitute  a liability of the Sponsor and each
     Company, as the case may be, to a Participant.  Such payments shall be made
     from the general  funds of the  Sponsor or a Company,  and the Sponsor or a
     Company  shall not be required  to  establish  or  maintain  any special or
     separate  fund,  or purchase or acquire life  insurance on a  Participant's
     life, or otherwise to segregate assets to assure that such payment shall be
     made, and neither a Participant nor Eligible Spouse shall have any interest
     in any  particular  asset of the  Sponsor  or a  Company  by  reason of its
     obligations  hereunder.  Nothing  contained  in the Plan shall create or be
     construed  as  creating  a  trust  of  any  kind  or  any  other  fiduciary
     relationship  between the Sponsor, a Company and a Participant or any other
     person.

9.03 No Employment Agreement.  Neither the execution of this Plan nor any action
     taken by the  Sponsor or a Company  pursuant  to this Plan shall be held or
     construed to confer on a Participant  any legal right to be continued as an
     employee  of the  Sponsor or a Company in an  executive  position or in any
     other  capacity  whatsoever.  This Plan shall not be deemed to constitute a
     contract of employment  between the Sponsor or a Company and a Participant,
     nor shall any provision  herein  restrict the right of any  Participant  to
     terminate his employment with the Sponsor or a Company.

                                       19
<PAGE>

9.04 Binding Effect.  Obligations  incurred by the Sponsor or a Company pursuant
     to this Plan shall be binding  upon and inure to the benefit of the Sponsor
     or a Company,  its  successors  and  assigns,  and the  Participant  or his
     Eligible Spouse.

9.05 Suicide.  No benefit shall be payable  under the Plan to a  Participant  or
     Eligible Spouse where such  Participant  dies as a result of suicide within
     two (2) years of his commencement of participation herein.

9.06 Claims for Benefits.  Each  Participant  or Eligible  Spouse must claim any
     benefit to which he is entitled  under this Plan by a written  notification
     to the  Committee.  If a  claim  is  denied,  it must be  denied  within  a
     reasonable period of time, and be contained in a written notice stating the
     following:

          A. The specific reason for the denial.

          B.  Specific  reference  to the Plan  provision on which the denial is
          based.

          C. Description of additional information necessary for the claimant to
          present his claim,  if any, and an explanation of why such material is
          necessary.

          D. An explanation of the Plan's claims review procedure.  The claimant
          will have 60 days to request a review of the denial by the  Committee,
          which will provide a full and fair review. The request for review must
          be in writing  delivered  to the  Committee.  The  claimant may review
          pertinent documents, and he may submit issues and comments in writing.
          The decision by the Committee with respect to the review must be given
          within  60  days  after  receipt  of  the  request,   unless   special
          circumstances  require an  extension  (such as for a  hearing).  In no
          event shall the decision be delayed  beyond 120 days after  receipt of

                                       20
<PAGE>

          the  request  for review.  The  decision  shall be written in a manner
          calculated  to be  understood  by the  claimant,  and it shall include
          specific  reasons  and refer to  specific  Plan  provisions  as to its
          effect.

9.07 Entire Plan.  This  document and any  amendments  contain all the terms and
     provisions  of the Plan and shall  constitute  the entire  Plan,  any other
     alleged terms or provisions being of no effect.

9.08 Change in Control.  In the event of a Change in Control,  the Sponsor shall
     irrevocably set aside funds in one or more grantor trusts in an amount that
     is sufficient  to pay each  Participant  (or  Designated  Beneficiary)  the
     amount of benefits  accrued  under the Plan as of the date of the Change in
     Control.  Any such trust  shall be  subject  to the  claims of the  general
     creditors of the Company in the event of the  bankruptcy  or  insolvency of
     the Company.

                                   ARTICLE X

                                  CONSTRUCTION

10.01Governing  Law.  This Plan shall be construed  and  governed in  accordance
     with the laws of the State of North  Carolina,  to the extent not preempted
     by Federal Law.

10.02Gender. The masculine gender,  where appearing in the Plan, shall be deemed
     to include the  feminine  gender,  and the singular may include the plural,
     unless the context clearly indicates to the contrary.

10.03Headings,  etc. The cover page of this Plan,  the Table of Contents and all
     headings used in this Plan are for  convenience  of reference  only and are
     not part of the substance of this Plan.

10.04Action.  Any action  under this Plan  required or  permitted by the Sponsor
     shall be by action of its Board or its duly authorized designee.

                                       21
<PAGE>

                                   APPENDIX A

     North Carolina Natural Gas Company ("NCNG"); provided that for all purposes
of the Plan, Service for an employee of NCNG on December 31, 1999 (as defined in
Section  2.21) shall  include  employment  only with NCNG (or  another  adopting
Company)  on or after  January 1, 2000;  and further  provided  that the accrued
benefit  calculated  under  Sections  2.03,  2.04 and 2.05 shall not include the
"Accrued  Benefit" under  Supplement A,  Paragraph A-2 of the  Retirement  Plan,
attributable to the NCNG Employees Pension Plan.

     Progress Energy Florida, Inc. (non-bargaining  employees) ("PEF"); provided
that for all  purposes  of the Plan,  Service for an employee of PEF on December
31, 2001 (as defined in Section 2.21) shall include employment only with PEF (or
another adopting Company) on or after January 1, 2002; and further provided that
the accrued  benefit  calculated  under Sections  2.03,  2.04 and 2.05 shall not
include the  "Accrued  Benefit"  under  Supplement  B,  Paragraph  B-2(a) of the
Retirement Plan, attributable to the FPC Plan.

     Progress Telecom Corporation ("PTC"); provided that for all purposes of the
Plan, Service for an employee of PTC on December 31, 2001 (as defined in Section
2.21) shall include employment only with PTC (or another adopting Company) on or
after January 1, 2002; and further provided that the accrued benefit  calculated
under Sections 2.03, 2.04 and 2.05 shall not include the "Accrued Benefit" under
Supplement B, Paragraph B-2(a) of the Retirement  Plan,  attributable to the FPC
Plan.

     Progress Fuels Corporation (corporate employees) ("PFC"); provided that for
all  purposes of the Plan,  Service for an employee of PFC on December  31, 2001
(as defined in Section 2.21) shall include  employment only with PFC (or another
adopting  Company) on or after  January 1, 2002;  and further  provided that the

<PAGE>

accrued benefit  calculated under Sections 2.03, 2.04 and 2.05 shall not include
the "Accrued  Benefit" under  Supplement B,  Paragraph  B-2(a) of the Retirement
Plan, attributable to the FPC Plan.

     Progress Energy Carolinas, Inc.
     Progress Energy Service Company, LLC
     Progress Energy Ventures, Inc.