Carolina Power & Light Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   These consolidated interim financial statements are prepared in
     conformity with the accounting principles reflected in the financial
     statements included in the Company's 1995 Annual Report to
     Shareholders and the 1995 Annual Report on Form 10-K.  Due to
     temperature variations between seasons of the year, the timing of
     outages of electric generating units, especially nuclear-fueled units
     and the impact of Hurricane Fran, which is discussed below, the
     amounts reported in the Statements of Income for periods of less than
     twelve months are not necessarily indicative of amounts expected for
     the year. Certain amounts for 1995 have been reclassified to conform
     to the 1996 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.   In 1996, the Company entered into two new long-term revolving
     credit facilities totaling $350 million, which support the
     Company's commercial paper borrowings. The Company is required to
     pay minimal annual commitment fees to maintain these facilities.
     Consistent with management's intent to maintain its commercial
     paper on a long-term basis, and as supported by the long-term
     credit facilities, the Company included $244.7 million of
     commercial paper outstanding in long-term debt.

3.   In 1994, the Board of Directors of the Company authorized the
     repurchase of up to 10 million shares of the Company's common stock on
     the open market. In accordance with the stock repurchase program, the
     Company has purchased approximately 9.2 million shares through
     September 30, 1996.

4.   Included in the Company's Statements of Income is approximately
     $29.8 million of maintenance expense incurred as a result of Hurricane
     Fran striking the Company's service territory on September 5, 1996.
     The Company estimates that restoring its system from the hurricane's
     damage could result in expenditures of approximately $83 million.
     Approximately two-thirds of the cost represents capital expenditures
     related to labor and materials used in replacing destroyed poles,
     lines and other equipment.  The remaining one-third is related to
     repairs of damaged equipment.  On September 13, 1996, the Company
     proposed to the North Carolina Utilities Commission (NCUC) a plan that
     would allow deferral of hurricane-related maintenance expenses, with
     amortization over the next three years.  The capital expenditures
     related to the hurricane will be depreciated.  See Note 5 below for
     additional discussion of this matter.

5.   Contingencies existing as of the date of these statements
     are described below. No significant changes have occurred since
     December 31, 1995, with respect to the commitments discussed in
     Note 10 of the financial statements included in the Company's
     1995 Annual Report to Shareholders.
     
     a) In the Company's retail jurisdictions, provisions for nuclear
     decommissioning costs are approved by the NCUC and the South
     Carolina Public Service Commission and are based on site-specific
     estimates that include costs for removal of all radioactive and
     other structures at the site. In the wholesale jurisdiction, the
     provisions for nuclear decommissioning costs are based on amounts
     agreed upon in applicable rate agreements. Based on the site-
     specific estimates discussed below, and using an assumed after-
     tax earnings rate of 8.5% and an assumed cost escalation rate of
     4%, current levels of rate recovery for nuclear decommissioning
     costs are adequate to provide for decommissioning of the
     Company's nuclear facilities.

     The Company's most recent site-specific estimates of
     decommissioning costs were developed in 1993, using 1993 cost
     factors, and are based on prompt dismantlement decommissioning,
     which reflects the cost of removal of all radioactive and other
     structures currently at the site, with such removal occurring
     shortly after operating license expiration. These estimates, in
     1993 dollars, are $257.7 million for Robinson Unit No. 2, $235.4
     million for Brunswick Unit No. 1, $221.4 million for Brunswick
     Unit No. 2 and $284.3 million for the Harris Plant. These
     estimates are subject to change based on a variety of factors
     including, but not limited to, cost escalation, changes in
     technology applicable to nuclear decommissioning, and changes in
     federal, state or local regulations. The cost estimates exclude
     the portion attributable to North Carolina Eastern Municipal
     Power Agency, which holds an undivided ownership interest in the
     Brunswick and Harris nuclear generating facilities. Operating
     licenses for the Company's nuclear units expire in the year 2010
     for Robinson Unit No. 2, 2016 for Brunswick Unit No. 1, 2014 for
     Brunswick Unit No. 2 and 2026 for the Harris Plant.
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     The Financial Accounting Standards Board has reached several
     tentative conclusions with respect to its project regarding
     accounting practices related to closure and removal of long-lived
     assets. The primary conclusions as they relate to nuclear
     decommissioning are: 1) the cost of decommissioning should be
     accounted for as a liability and accrued as the obligation is
     incurred; 2) recognition of a liability for decommissioning
     results in recognition of an increase to the cost of the plant;
     3) the decommissioning liability should be measured based on
     discounted future cash flows using a risk-free rate; and 4)
     decommissioning trust funds should not be offset against the
     decommissioning liability. An exposure draft was issued in
     February 1996 and it is uncertain what impact, if any, the final
     statement may have on the Company's accounting for
     decommissioning and other closure and removal costs.
     
     b) As required under the Nuclear Waste Policy Act of 1982, the
     Company entered into a contract with the U. S. Department of
     Energy (DOE) under which the DOE agreed to dispose of the
     Company's spent nuclear fuel. The Company cannot predict whether
     the DOE will be able to perform its contractual obligations and
     provide interim storage or permanent disposal repositories for
     spent nuclear fuel and/or high-level radioactive waste materials
     on a timely basis.

     With certain modifications, the Company's spent fuel storage
     facilities are sufficient to provide storage space for spent fuel
     generated on the Company's system through the expiration of the
     current operating licenses for all of the Company's nuclear
     generating units. Subsequent to the expiration of the licenses,
     dry storage may be necessary.

     c) With regard to the Company's current retail rates, a petition
     was filed on July 19, 1996, by the Carolina Industrial Group for
     Fair Utility Rates (CIGFUR) with the NCUC requesting that the
     NCUC conduct an investigation of the Company's base rates.  The
     petition alleges that the Company's return on equity, which was
     authorized by the NCUC in the Company's last general rate
     proceeding in 1988, and earnings are too high.  The Company filed
     a response to the petition and motion to dismiss on July 29,
     1996, in which it argued that the petition was without merit. As
     part of this docket, the Company filed a proposal on September
     13, 1996, to accelerate amortization of certain regulatory
     assets.  The proposed accelerated amortizations will reduce net
     income by approximately $43 million in each of the next three
     years.  The Company anticipates filing a similar proposal to
     accelerate amortization of certain regulatory assets with the
     South Carolina Public Service Commission.  These adjustments, if
     approved, would reduce net income by approximately an additional
     $13 million in each of the next three years.  In addition to the
     acceleration of amortization on the regulatory assets, the
     Company proposed that the NCUC approve deferral of storm-related
     maintenance expenses from Hurricane Fran, to be amortized over
     the period 1997-1999.    The Company cannot predict the outcome
     of this matter.
     
     d) The Company is subject to federal, state and local regulations
     addressing air and water quality, hazardous and solid waste
     management and other environmental matters.

     Various organic materials associated with the production of
     manufactured gas, generally referred to as coal tar, are
     regulated under various federal and state laws, and a liability
     may exist for their remediation. There are several manufactured
     gas plant (MGP) sites to which the Company and certain entities
     that were later merged into the Company may have had some
     connection. In this regard, the Company, along with other
     entities alleged to be former owners and operators of MGP sites
     in North Carolina, is participating in a cooperative effort with
     the North Carolina Department of Environment, Health and Natural
     Resources, Division of Solid Waste Management (DSWM) to establish
     a uniform framework for addressing those sites. It is anticipated
     that the investigation and remediation of specific MGP sites will
     be addressed pursuant to one or more Administrative Orders on
     Consent between DSWM and individual potentially responsible
     parties. To date, the Company has not entered into any such
     orders. The Company continues to investigate the identities of
     parties connected to MGP sites in North Carolina, the relative
     relationships of the Company and other parties to those sites and
     the degree, if any, to which the Company should undertake shared
     voluntary efforts with others at individual sites.

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     The Company has been notified by regulators of its involvement or
     potential involvement in several sites, other than MGP sites,
     that require remedial action. Although the Company cannot predict
     the outcome of these matters, it does not expect costs associated
     with these sites to be material to the results of operations of
     the Company.

     The Company has recorded a liability for the estimated costs
     associated with investigation and remediation activities for
     certain MGP sites and for sites other than MGP sites. This
     liability is not material to the financial position of the
     Company.
     
     Due to the lack of information with respect to the operation of
     MGP sites for which a liability has not been accrued and due to
     the uncertainty concerning questions of liability and potential
     environmental harm, the extent and cost of required remedial
     action, if any, are not currently determinable.  The Company
     cannot predict the outcome of these matters or the extent to
     which other MGP sites may become the subject of inquiry.