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, 2003

                                       OR

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

             For the transition period from          to          .
                                            --------    ---------
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

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

  1-8349                                Florida Progress Corporation                                 59-2147112
                                            A Florida Corporation
                                         410 South Wilmington Street
                                        Raleigh, North Carolina 27601
                                          Telephone (919) 546-6111



  1-3274                                  Florida Power Corporation                                  59-0247770
                                     d/b/a Progress Energy Florida, Inc.
                                            A Florida Corporation
                                             100 Central Avenue
                                        St. Petersburg, Florida 33701
                                          Telephone (727) 820-5151

                                                   NONE
             (Former name, former address and former fiscal year, if changed since last report)
</TABLE>

Indicate  by check mark  whether  the  registrants  (1) have  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) have been subject to such
filing requirements for the past 90 days. Yes X . No .

Indicate  by check mark  whether  the  registrants  are  accelerated  filers (as
defined in Rule 12b-2 of the Exchange Act). Yes __. No X.

This combined Form 10-Q is filed separately by two registrants: Florida Progress
Corporation and Florida Power Corporation. 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.

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, 2003,  each
registrant had the following shares of common stock outstanding:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

      Registrant                        Description                         Shares
      ----------                        -----------                         ------
Florida Progress Corporation     Common Stock, without par value      98,616,658 (all of which were
                                                                      held by Progress Energy, Inc.)
Florida Power Corporation        Common Stock, without par value      100 (all of which were held by
                                                                      Florida Progress Corporation)
</TABLE>

Florida Progress  Corporation and Florida Power  Corporation meet the conditions
set forth in General  Instruction H(1)(a) and (b) of Form 10-Q and are therefore
filing this form with the reduced disclosure format.

                                       1
<PAGE>

         FLORIDA PROGRESS CORPORATION AND PROGRESS ENERGY FLORIDA, INC.
                FORM 10-Q - For the Quarter Ended March 31, 2003

Glossary of Terms


Safe Harbor For Forward-Looking Statements


PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

      Florida Progress Corporation

      Consolidated Statements of Income
      Consolidated Balance Sheets
      Consolidated Statements of Cash Flows

      Florida Power Corporation
      d/b/a Progress Energy Florida, Inc.

      Statements of Income
      Balance Sheets
      Statements of Cash Flows

Notes to Financial Statements
    Florida Progress Corporation and Progress Energy Florida, Inc.


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


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Item 4.  Controls and Procedures


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

Item 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>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

       TERM                                          DEFINITION

AFUDC                            Allowance for funds used during construction
the Agreement                    Stipulation and Settlement Agreement
Bcf                              Billion cubic feet
Btu                              British thermal units
Company or Florida Progress      Florida Progress Corporation
Code                             Internal Revenue Service Code
CP&L Energy                      CP&L Energy, Inc.
CR3                              Florida Power's nuclear generating plant, Crystal River Unit No. 3
DIG                              Derivative Implementation Group
DOE                              United States Department of Energy
EBITDA                           Earnings before interest, taxes, and depreciation and amortization
EPA                              United States Environmental Protection Agency
FASB                             Financial Accounting Standards Board
FDEP                             Florida Department of Environmental Protection
FERC                             Federal Energy Regulatory Commission
Florida Progress or FPC          Florida Progress Corporation
FPSC                             Florida Public Service Commission
Funding Corp.                    Florida Progress Funding Corporation
IRS                              Internal Revenue Service
ISO                              Independent System Operator
KWh                              Kilowatt hour
MACT                             Maximum Available Control Technology
MGP                              Manufactured Gas Plant
MW                               Megawatts
NEIL                             Nuclear Electric Insurance Limited
NRC                              United States Nuclear Regulatory Commission
PEF or the utility               Progress Energy Florida, Inc.
PFA                              IRS Prefiling Agreement
the Plan                         Revenue Sharing Incentive Plan
PLR                              Private Letter Ruling
Preferred Securities             7.10% Cumulative Quarterly Income Preferred Securities, Series A, of FPC Capital
                                 I, fully and unconditionally guaranteed by Florida Progress
Preferred Stock                  Florida Power Cumulative Preferred Stock, $100 par value
Progress Capital                 Progress Capital Holdings, Inc.
Progress Energy                  Progress Energy, Inc.
Progress Rail                    Progress Rail Services Corporation
Progress Telecom                 Progress Telecommunications Corporation
PVI                              Progress Ventures, Inc., formerly referred to as Energy Ventures
PUHCA                            Public Utility Holding Company Act of 1935, as amended
RAFT                             Railcar Asset Financing Trust
RTO                              Regional Transmission Organization
SEC                              United States Securities and Exchange Commission
Section 29                       Section 29 of the Internal Revenue Service Code
Service Company                  Progress Energy Service Company, LLC
SFAS                             Statement of Financial Accounting Standards
SFAS No. 5                       Statement of Financial Accounting Standards No. 5, "Accounting for
                                 Contingencies"
SFAS No. 71                      Statement of Financial Accounting Standards No. 71, "Accounting for the Effects
                                 of Certain Types of Regulation"
SFAS No. 133                     Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
                                 and Hedging Activities"
SFAS No. 142                     Statement of Financial Accounting Standards No. 142, "Goodwill and Other
                                 Intangible Assets"
SFAS No. 143                     Statement of Financial Accounting Standards No. 143, "Accounting for Asset
                                 Retirement Obligations"

</TABLE>

                                       3
<PAGE>
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

SFAS No. 148                     Statement of Financial Accounting Standards No. 148, "Accounting for Stock-Based
                                 Compensation - Transition and Disclosure - An Amendment of FASB Statement No.
                                 123"
SFAS No. 149                     Statement of Financial Accounting Standards No. 149, "Amendment of Statement 133
                                 on Derivative Instruments and Hedging Activities"
SMD NOPR                         Notice of Proposed Rulemaking in Docket No. RM01-12-000, Remedying Undue
                                 Discrimination through Open Access Transmission and Standard Market Design
the Trust                        FPC Capital I
</TABLE>


                                       4

<PAGE>

SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS

This combined report contains  forward-looking  statements within the meaning of
the safe harbor  provisions of the Private  Securities  Litigation Reform Act of
1995.  The matters  discussed  throughout  this  combined 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  "Liquidity and
Capital  Resources"  concerning  operating  cash  flows  and  estimated  capital
requirements.

Any forward-looking statement speaks only as of the date on which such statement
is made, and Florida Progress and Progress Energy Florida,  Inc. (PEF) undertake
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:  the impact of fluid and  complex  government  laws and  regulations,
including those relating to the environment;  the impact of recent events in the
energy markets that have  increased the level of public and regulatory  scrutiny
in the energy industry and in the capital markets;  the impact of the settlement
of PEF's rate case;  deregulation or restructuring in the electric industry that
may result in  increased  competition  and  unrecovered  (stranded)  costs;  the
uncertainty   regarding   the  timing,   creation  and   structure  of  regional
transmission  organizations;  weather  conditions  that  directly  influence the
demand for  electricity  and natural gas;  recurring  seasonal  fluctuations  in
demand for  electricity  and natural  gas;  fluctuations  in the price of energy
commodities and purchased power;  successful  maintenance and operation of PEF's
energy   commodities  and  purchased  power;   economic   fluctuations  and  the
corresponding impact on PEF's commercial and industrial customers;  the inherent
risks associated with operating  nuclear  facilities,  including  environmental,
health,  regulatory  and  financial  risks;  the  impact of any  terrorist  acts
generally and on our generating facilities and other properties;  the ability to
access capital markets on favorable terms; the impact that increases in leverage
may have on the Company and PEF;  the ability of the Company and PEF to maintain
their current  credit  ratings;  the impact of derivative  contracts used in the
normal course of business; the Company's continued ability to use Section 29 tax
credits  related  to its coal and  synthetic  fuels  businesses;  the  continued
depressed state of the telecommunications  industry and the Company's ability to
realize future returns from Progress  Telecommunications  Corporation  (Progress
Telecom);  the Company's ability to successfully integrate newly acquired assets
or properties  into its operations as quickly or as profitably as expected;  and
unanticipated  changes in operating expenses and capital  expenditures.  Many of
these risks similarly impact the Company's subsidiaries.

These and other risks are  detailed  from time to time in the SEC reports of the
Company  and  PEF.   All  such  factors  are   difficult  to  predict,   contain
uncertainties  that may materially affect actual results,  and may be beyond the
control of the Company and PEF. Many, but not all of the factors that may impact
actual results of the Company and PEF are discussed in the Risk Factors  section
of PEF's annual  report on Form 10-K for the year ended  December 31, 2002 filed
with the SEC on March 21, 2003. You should carefully read these SEC reports. 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
Florida Progress and PEF.


                                       5
<PAGE>

                          PART I. FINANCIAL INFORMATION


Item 1. FINANCIAL STATEMENTS

                          Florida Progress Corporation
                    CONSOLIDATED INTERIM FINANCIAL STATEMENTS
                                 March 31, 2003
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

CONSOLIDATED STATEMENTS of INCOME
(Unaudited)
                                                                  Three Months Ended
                                                                       March 31,
---------------------------------------------------------------------------------------
(In thousands)                                                  2003         2002
---------------------------------------------------------------------------------------
Operating Revenues
   Utility                                                     $  728,417    $ 686,441
   Diversified business                                           315,737      292,338
---------------------------------------------------------------------------------------
        Total Operating Revenues                                1,044,154      978,779
---------------------------------------------------------------------------------------
Operating Expenses
Utility
   Fuel used in electric generation                               186,081      198,862
   Purchased power                                                129,562      107,964
   Operation and maintenance                                      139,750      132,763
   Depreciation and amortization                                   79,429       69,294
   Taxes other than on income                                      58,635       57,141
Diversified business
   Cost of sales                                                  269,310      275,374
   Depreciation and amortization                                   18,706       16,390
   Other                                                           35,081       18,308
---------------------------------------------------------------------------------------
        Total Operating Expenses                                  916,554      876,096
---------------------------------------------------------------------------------------
Operating Income                                                  127,600      102,683
---------------------------------------------------------------------------------------
Other Income (Expense)
   Interest income                                                    904          721
   Other, net                                                      (5,254)      (3,632)
---------------------------------------------------------------------------------------
        Total Other Income (Expense)                               (4,350)      (2,911)
---------------------------------------------------------------------------------------
Interest Charges
   Interest charges                                                46,815       47,531
   Allowance for borrowed funds used during construction           (1,961)        (459)
---------------------------------------------------------------------------------------
        Total Interest Charges, Net                                44,854       47,072
---------------------------------------------------------------------------------------
Income before Income Taxes                                         78,396       52,700
Income Tax Benefit                                                 (2,521)     (23,073)
---------------------------------------------------------------------------------------
Net Income                                                     $   80,917    $  75,773
---------------------------------------------------------------------------------------
</TABLE>

See Notes to Interim Financial Statements.

                                       6
<PAGE>
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Florida Progress Corporation
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)                                                               March 31,         December 31,
Assets                                                                         2003                2002
----------------------------------------------------------------------------------------------------------------
Utility Plant
  Utility plant in service                                                  $  7,654,721         $  7,477,025
  Accumulated depreciation                                                    (3,882,750)          (4,123,947)
----------------------------------------------------------------------------------------------------------------
        Utility plant in service, net                                          3,771,971            3,353,078
  Held for future use                                                              7,921                7,921
  Construction work in progress                                                  452,643              426,641
  Nuclear fuel, net of amortization                                               72,517               40,260
----------------------------------------------------------------------------------------------------------------
        Total Utility Plant, Net                                               4,305,052            3,827,900
----------------------------------------------------------------------------------------------------------------
Current Assets
  Cash and cash equivalents                                                       14,610               33,601
  Accounts receivable                                                            403,451              385,431
  Unbilled accounts receivable                                                    59,744               60,481
  Receivables from affiliated companies                                           70,195               42,418
  Deferred income taxes                                                            5,444               26,209
  Inventory                                                                      476,699              492,273
  Deferred fuel cost                                                              91,249               37,503
  Prepayments and other current assets                                            88,724               93,802
----------------------------------------------------------------------------------------------------------------
        Total Current Assets                                                   1,210,116            1,171,718
----------------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
  Regulatory assets                                                              129,563              130,114
  Unamortized debt expense                                                        30,990               23,363
  Nuclear decommissioning trust funds                                            367,607              373,551
  Diversified business property, net                                             828,849              699,493
  Miscellaneous other property and investments                                    79,605               83,222
  Prepaid pension cost                                                           226,907              226,413
  Other assets and deferred debits                                               109,477               90,716
----------------------------------------------------------------------------------------------------------------
        Total Deferred Debits and Other Assets                                 1,772,998            1,626,872
----------------------------------------------------------------------------------------------------------------
         Total Assets                                                       $  7,288,166         $  6,626,490
----------------------------------------------------------------------------------------------------------------
Capitalization and Liabilities
----------------------------------------------------------------------------------------------------------------
Capitalization
----------------------------------------------------------------------------------------------------------------
  Common stock                                                              $  1,761,536         $  1,628,951
  Retained earnings                                                              556,005              598,191
  Accumulated other comprehensive loss                                           (16,790)             (15,737)
  Preferred stock of subsidiaries - not subject to mandatory redemption           33,497               33,497
  Unsecured note with parent                                                     500,000              500,000
  Long-term debt, net                                                          2,188,519            1,710,363
----------------------------------------------------------------------------------------------------------------
        Total Capitalization                                                   5,022,767            4,455,265
----------------------------------------------------------------------------------------------------------------
Current Liabilities
  Current portion of long-term debt                                              230,164              275,397
  Accounts payable                                                               398,021              348,842
  Payables to affiliated companies                                                76,547              102,619
  Notes payable to affiliated companies                                          220,803              379,677
  Interest accrued                                                                54,979               68,120
  Short-term obligations                                                         175,900              257,100
  Customer deposits                                                              122,838              121,998
  Other current liabilities                                                      157,687              167,164
----------------------------------------------------------------------------------------------------------------
        Total Current Liabilities                                              1,436,939            1,720,917
----------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
  Accumulated deferred investment tax credits                                     46,403               47,914
  Regulatory liabilities                                                         124,230               61,004
  Asset retirement obligation                                                    316,460                    -
  Other liabilities and deferred credits                                         341,367              341,390
----------------------------------------------------------------------------------------------------------------
        Total Deferred Credits and Other Liabilities                             828,460              450,308
----------------------------------------------------------------------------------------------------------------
 Commitments and Contingencies (Note 14)
----------------------------------------------------------------------------------------------------------------
         Total Capitalization and Liabilities                               $  7,288,166         $  6,626,490
----------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Interim Financial Statements.

                                       7
<PAGE>
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Florida Progress Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                                                       Three Months Ended
                                                                                            March 31,
(In thousands)                                                                         2003          2002
---------------------------------------------------------------------------------------------------------------
Operating Activities
Net income                                                                            $  80,917     $  75,773
Adjustments to reconcile net income to net cash provided by operating activities:
      Depreciation and amortization                                                     102,709        88,593
      Deferred income taxes and investment tax credits, net                              19,455        19,354
      Deferred fuel cost (credit)                                                       (53,746)       37,377
      Net increase in accounts receivable                                               (39,866)      (26,240)
      Net (increase) decrease in inventories                                             14,840       (11,527)
      Net increase in prepayments and other current assets                               (2,790)         (415)
      Net increase in accounts payable                                                   40,422         1,505
      Net increase in customer deposits                                                   1,088         4,601
      Net decrease in income taxes, net                                                 (19,902)      (26,250)
      Net increase (decrease) in other current liabilities                              (14,280)        14,196
      Other                                                                              13,903         2,583
---------------------------------------------------------------------------------------------------------------
        Net Cash Provided by Operating Activities                                       142,750       179,550
---------------------------------------------------------------------------------------------------------------
Investing Activities
Property additions                                                                     (141,380)      (77,508)
Diversified business property additions and acquisitions                               (164,609)      (40,722)
Nuclear fuel additions                                                                  (38,361)            -
Net contributions to nuclear decommissioning trust                                            -        (2,001)
Other                                                                                      (287)       (1,508)
---------------------------------------------------------------------------------------------------------------
        Net Cash Used in Investing Activities                                          (344,637)     (121,739)
---------------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of long-term debt                                                639,138             -
Net increase (decrease) in short-term obligations                                       (81,200)       77,700
Retirement of long-term debt                                                           (225,598)      (54,836)
Net decrease in intercompany notes                                                     (158,874)       (5,176)
Equity contributions from parent                                                        132,582        33,809
Dividends paid to parent                                                               (123,112)     (100,000)
Other                                                                                       (40)         (481)
---------------------------------------------------------------------------------------------------------------
        Net Cash Provided by (Used in) Financing Activities                             182,896       (48,984)
---------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents                                    (18,991)        8,827
---------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at Beginning of the Period                                     33,601         5,201
---------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of the Period                                        $  14,610     $  14,028
---------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information
Cash paid during the year - interest (net of amount capitalized)                      $  57,994     $  43,678
                            income taxes (net of refunds)                             $     990     $   3,937
</TABLE>

See Notes to Interim Financial Statements.

                                       8
<PAGE>

                            Florida Power Corporation
                       d/b/a Progress Energy Florida, Inc.
                          INTERIM FINANCIAL STATEMENTS
                                 March 31, 2003

<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

STATEMENTS of INCOME
(Unaudited)
                                                                          Three Months Ended
                                                                              March 31,
-------------------------------------------------------------------------------------------------------
(In thousands)                                                         2003              2002
-------------------------------------------------------------------------------------------------------
Operating Revenues
   Utility                                                             $ 728,417          $ 686,441
-------------------------------------------------------------------------------------------------------
        Total Operating Revenues                                         728,417            686,441
-------------------------------------------------------------------------------------------------------

Operating Expenses
   Fuel used in electric generation                                      186,081            198,862
   Purchased power                                                       129,562            107,964
   Operation and maintenance                                             139,750            132,763
   Depreciation and amortization                                          79,429             69,294
   Taxes other than on income                                             58,635             57,141
-------------------------------------------------------------------------------------------------------
        Total Operating Expenses                                         593,457            566,024
-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------
Operating Income                                                         134,960            120,417
-------------------------------------------------------------------------------------------------------
Other Income (Expense)
   Interest income                                                           120                708
   Other, net                                                               (480)            (1,336)
-------------------------------------------------------------------------------------------------------
        Total Other Income (Expense)                                        (360)              (628)
-------------------------------------------------------------------------------------------------------
Interest Charges
   Interest charges                                                       28,463             28,739
   Allowance for borrowed funds used during construction                  (1,961)              (459)
-------------------------------------------------------------------------------------------------------
        Total Interest Charges, Net                                       26,502             28,280
-------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------
Income before Income Taxes                                               108,098             91,509
Income Tax Expense                                                        36,963             33,388
-------------------------------------------------------------------------------------------------------
Net Income                                                             $  71,135          $  58,121
Dividends on Preferred Stock                                                 378                378
-------------------------------------------------------------------------------------------------------
Earnings for Common Stock                                              $  70,757          $  57,743
-------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Interim Financial Statements.

                                       9
<PAGE>
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Florida Power Corporation
d/b/a Progress Energy Florida, Inc.
BALANCE SHEETS
(Unaudited)
(In thousands)                                                                     March 31,         December 31,
Assets                                                                               2003                2002
----------------------------------------------------------------------------------------------------------------------
Utility Plant
  Utility plant in service                                                        $  7,654,721         $  7,477,025
  Accumulated depreciation                                                          (3,882,750)          (4,123,947)
----------------------------------------------------------------------------------------------------------------------
        Utility plant in service, net                                                3,771,971            3,353,078
  Held for future use                                                                    7,921                7,921
  Construction work in progress                                                        452,643              426,641
  Nuclear fuel, net of amortization                                                     72,517               40,260
----------------------------------------------------------------------------------------------------------------------
        Total Utility Plant, Net                                                     4,305,052            3,827,900
----------------------------------------------------------------------------------------------------------------------
Current Assets
  Cash and cash equivalents                                                             12,212               15,636
  Accounts receivable                                                                  172,750              186,630
  Unbilled accounts receivable                                                          59,744               60,481
  Receivables from affiliated companies                                                 41,556               44,976
  Deferred income taxes                                                                  5,444               26,209
  Inventory                                                                            238,921              235,043
  Deferred fuel cost                                                                    91,249               37,503
  Prepayments and other current assets                                                   4,409                5,339
----------------------------------------------------------------------------------------------------------------------
        Total Current Assets                                                           626,285              611,817
----------------------------------------------------------------------------------------------------------------------
Deferred Debits and Other Assets
  Regulatory assets                                                                    129,563              130,114
  Unamortized debt expense                                                              22,208               14,503
  Nuclear decommissioning trust funds                                                  367,607              373,551
  Miscellaneous other property and investments                                          37,065               39,298
  Prepaid pension cost                                                                 222,838              222,543
  Other assets and deferred debits                                                       6,210                6,517
----------------------------------------------------------------------------------------------------------------------
        Total Deferred Debits and Other Assets                                         785,491              786,526
----------------------------------------------------------------------------------------------------------------------
         Total Assets                                                             $  5,716,828         $  5,226,243
----------------------------------------------------------------------------------------------------------------------
Capitalization and Liabilities
----------------------------------------------------------------------------------------------------------------------
Capitalization
----------------------------------------------------------------------------------------------------------------------
  Common stock                                                                    $  1,081,257         $  1,081,257
  Retained earnings                                                                    917,441              969,795
  Accumulated other comprehensive loss                                                  (2,450)              (2,684)
  Preferred stock - not subject to mandatory redemption                                 33,497               33,497
  Long-term debt, net                                                                1,747,254            1,244,411
----------------------------------------------------------------------------------------------------------------------
        Total Capitalization                                                         3,776,999            3,326,276
----------------------------------------------------------------------------------------------------------------------
Current Liabilities
  Current portion of long-term debt                                                    146,974              216,921
  Accounts payable                                                                     216,865              147,978
  Payables to affiliated companies                                                      57,253               88,661
  Notes payable to affiliated companies                                                 19,099              237,425
  Taxes accrued                                                                         15,760               24,472
  Interest accrued                                                                      46,234               55,675
  Short-term obligations                                                               175,900              257,100
  Customer deposits                                                                    122,839              121,998
  Other current liabilities                                                             61,838               55,323
----------------------------------------------------------------------------------------------------------------------
        Total Current Liabilities                                                      862,762            1,205,553
----------------------------------------------------------------------------------------------------------------------
Deferred Credits and Other Liabilities
  Accumulated deferred income taxes                                                    382,091              361,133
  Accumulated deferred investment tax credits                                           45,917               47,423
  Regulatory liabilities                                                               124,230               61,004
  Asset retirement obligation                                                          306,841                    -
  Other liabilities and deferred credits                                               217,988              224,854
----------------------------------------------------------------------------------------------------------------------
        Total Deferred Credits and Other Liabilities                                 1,077,067              694,414
----------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 14)
----------------------------------------------------------------------------------------------------------------------
         Total Capitalization and Liabilities                                     $  5,716,828         $  5,226,243
----------------------------------------------------------------------------------------------------------------------
</TABLE>

See Notes to Interim Financial Statements.

                                       10
<PAGE>
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

Florida Power Corporation
d/b/a Progress Energy Florida, Inc.
STATEMENTS OF CASH FLOWS
(Unaudited)
                                                                                       Three Months Ended
                                                                                           March 31,
(In thousands)                                                                         2003         2002
--------------------------------------------------------------------------------------------------------------
Operating Activities
Net income                                                                            $  71,135    $  58,121
Adjustments to reconcile net income to net cash provided by operating activities:
     Depreciation and amortization                                                       84,098       72,279
     Deferred income taxes and investment tax credits, net                               38,314       15,281
     Deferred fuel (credit) cost                                                        (53,746)      37,377
     Net (increase) decrease in accounts receivable                                      18,037      (17,855)
     Net (increase) decrease in inventories                                              (3,878)       4,364
     Net (increase) decrease in prepayments and other current assets                        930       (4,574)
     Net increase (decrease) in accounts payable                                         37,479      (78,567)
     Net increase in customer deposits                                                      841        6,137
     Net increase (decrease) in income taxes, net                                        (8,712)      12,263
     Net increase (decrease) in other current liabilities                                (2,549)      30,136
     Other                                                                                1,644       (7,870)
--------------------------------------------------------------------------------------------------------------
        Net Cash Provided by Operating Activities                                       183,593      127,092
--------------------------------------------------------------------------------------------------------------
Investing Activities
Property additions                                                                     (141,380)     (77,508)
Nuclear fuel additions                                                                  (38,361)           -
Net contributions to nuclear decommissioning trust                                            -       (2,001)
Other                                                                                     2,227        1,015
--------------------------------------------------------------------------------------------------------------
        Net Cash Used in Investing Activities                                          (177,514)     (78,494)
--------------------------------------------------------------------------------------------------------------
Financing Activities
Proceeds from issuance of long-term debt                                                639,138            -
Net increase (decrease) in short-term obligations                                       (81,200)      77,700
Retirement of long-term debt                                                           (225,625)           -
Net decrease in intercompany notes                                                     (218,326)     (20,022)
Dividends paid to parent                                                               (123,112)    (100,000)
Dividends paid on preferred stock                                                          (378)        (378)
--------------------------------------------------------------------------------------------------------------
        Net Cash Used in Financing Activities                                            (9,503)     (42,700)
--------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents                                     (3,424)       5,898
--------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at Beginning of the Period                                     15,636            -
--------------------------------------------------------------------------------------------------------------
Cash and Cash Equivalents at End of the Period                                        $  12,212    $   5,898
--------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information
Cash paid during the year - interest (net of amount capitalized)                      $  35,943    $  40,276
                            income taxes (net of refunds)                             $   9,621    $   3,980
</TABLE>

See Notes to Interim Financial Statements.

                                       11
<PAGE>

Florida Progress Corporation and Florida Power Corporation
d/b/a Progress Energy Florida, Inc.
NOTES TO INTERIM FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A.  Organization

     Florida Progress Corporation (the Company or Florida Progress) is a holding
     company under the Public Utility  Holding  Company Act of 1935 (PUHCA),  as
     amended.  The Company became subject to the  regulations of PUHCA when CP&L
     Energy,   Inc.  acquired  it  on  November  30,  2000.  CP&L  Energy,  Inc.
     subsequently  changed its name to Progress Energy, Inc. (Progress Energy or
     the Parent).  Effective  January 1, 2003,  Florida Power  Corporation began
     doing business  under the assumed name Progress  Energy  Florida,  Inc. The
     legal name of the entity has not changed and there was no  restructuring of
     any kind related to the name  change.  The current  corporate  and business
     unit   structure   remains   unchanged.   Florida   Progress'  two  primary
     subsidiaries  are Progress  Energy  Florida,  Inc. (PEF) and Progress Fuels
     Corporation.

     PEF is a regulated  public  utility  engaged in the  generation,  purchase,
     transmission,  distribution  and sale of electricity  primarily in Florida.
     PEF is regulated by the Florida  Public Service  Commission  (FPSC) and the
     Federal Energy Regulatory Commission (FERC).

     Progress Fuels  Corporation is a diversified  non-utility  energy  company,
     whose  principal  business  segments are Fuels and Rail Services.  Progress
     Fuels' Rail Services and the  non-Florida  portion of its Fuels  operations
     report their results one month in arrears.

     B.  Basis of Presentation

     These financial statements have been prepared in accordance with accounting
     principles  generally  accepted in the United States of America  (GAAP) 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 GAAP for complete financial  statements.  Because the
     accompanying  consolidated  interim financial statements do not include all
     of the information  and footnotes  required by GAAP, they should be read in
     conjunction  with  the  audited  financial  statements  and  notes  thereto
     included  in  Florida  Progress'  and PEF's  Form  10-K for the year  ended
     December 31, 2002.

     The amounts included in the consolidated  interim financial  statements are
     unaudited  but,  in the  opinion of  management,  reflect  all  adjustments
     necessary to fairly present Florida Progress' and PEF'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,  the
     results of operations for interim periods are not necessarily indicative of
     amounts expected for the entire year. Certain  reclassifications  have been
     made to prior-year amounts to conform to the 2003 presentation.

     The financial  statements  include the financial results of the Company and
     its  majority-owned  operations.  Investments  in 20% to  50%  owned  joint
     ventures are accounted for using the equity method.  Other  investments are
     stated principally at cost.

     In preparing financial  statements that conform with GAAP,  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.  ACQUISITION OF NATURAL GAS RESERVES

     During the first quarter of 2003, Progress Fuels Corporation,  a subsidiary
     of Florida Progress, entered into three independent transactions to acquire
     approximately  162  natural  gas-producing  wells with  proven  reserves of
     approximately  195 billion cubic feet (Bcf) from Republic Energy,  Inc. and
     two other  privately-owned  companies,  all  headquartered  in  Texas.  The
     primary assets in the acquisition  have been  contributed to Progress Fuels
     North  Texas  Gas,  L.P.,  a wholly  owned  subsidiary  of  Progress  Fuels
     Corporation.  The total cash purchase price for the  transactions  was $148
     million.


                                       12
<PAGE>

3.   RAILCAR LTD. DIVESTITURE

     In  December  2002,  the  Progress  Energy  Board of  Directors  adopted  a
     resolution  to sell the  assets  of  Railcar  Ltd.,  a  leasing  subsidiary
     included in the Rail Services  segment.  A series of sales  transactions is
     expected to take place throughout  2003. An estimated  impairment on assets
     held for sale was  recognized  in December  2002 for the  write-down of the
     assets to be sold to fair value less the costs to sell.

     The assets of Railcar  Ltd.  have been  grouped as assets held for sale and
     are included in other current assets on the Consolidated  Balance Sheets as
     of March 31, 2003.

     On March  12,  2003,  the  Company  signed a letter  of  intent to sell the
     majority of Railcar Ltd. assets to The Andersons,  Inc. The majority of the
     proceeds  from the sale will be used to pay off certain  Railcar  Ltd.  off
     balance sheet lease  obligations  for railcars that will be  transferred to
     The Andersons as part of the sales transaction.  The transaction is subject
     to various closing conditions  including  financing,  due diligence and the
     completion of a definitive purchase agreement.

4.   FINANCIAL INFORMATION BY BUSINESS SEGMENT

     The  Company's  principal  business  segment is PEF,  an  electric  utility
     engaged in the generation, purchase, transmission, distribution and sale of
     electricity  primarily in Florida.  The other reportable  business segments
     are Fuels and Rail Services (Rail).  The Fuels segment includes natural gas
     drilling and production, coal and synthetic fuel operations, river terminal
     services and off-shore  marine  transportation.  The Rail segment  includes
     railcar repair,  rail parts  reconditioning and sales,  railcar leasing and
     sales, providing rail and track material, and scrap metal recycling.  Other
     consists  primarily of Progress  Telecommunications  Corporation  (Progress
     Telecom),  the  Company's  telecommunications   subsidiary;  the  Company's
     investment in FPC Capital Trust, which holds the Preferred Securities;  and
     the holding company, Florida Progress Corporation. Progress Telecom markets
     wholesale  fiber-optic  based capacity service in the Eastern United States
     and also markets wireless structure  attachments to wireless  communication
     companies and governmental entities.

     The Company's  business  segment  information for the first quarter of 2003
     and 2002 is summarized  below.  The Company's  significant  operations  are
     geographically  located in the United  States with  limited  operations  in
     Mexico and Canada.  The  Company's  segments  are based on  differences  in
     products  and  services,   and  therefore  no  additional  disclosures  are
     presented. Intersegment sales and transfers consist primarily of coal sales
     from the Fuels segment to PEF. The price that Fuels charges PEF is based on
     market rates for coal procurement and for water-borne  transportation under
     a methodology  approved by the FPSC. Rail  transportation  is also based on
     market rates plus a return allowed by the FPSC on equity in  transportation
     equipment  utilized in transporting coal to PEF. The allowed rate of return
     is  currently  12%.  No  single  customer  accounted  for  10% or  more  of
     unaffiliated revenues.

     Financial data for business  segments for the periods  covered in this Form
     10-Q are presented in the table below:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

     (In thousands)                                PEF        Fuels          Rail          Other       Consolidated
     ----------------------------------------------------------------------------------------------------------------
     Three months ended March 31, 2003:
       Revenues                                 $728,417      $ 128,740   $ 177,687         $  9,310    $ 1,044,154
       Intersegment  revenues                          -         84,208         122          (84,330)             -
          Total revenues                         728,417        212,948     177,809          (75,020)     1,044,154
       Net Income                                 70,757         13,556      (3,396)               -         80,917
       Total segment assets                    5,716,828        977,302     504,533           89,503      7,288,166
     ================================================================================================================

                                                   PEF        Fuels          Rail          Other       Consolidated
     ----------------------------------------------------------------------------------------------------------------
     Three months ended March 31, 2002:
       Revenues                                 $686,441      $ 128,876   $ 154,469         $  8,993      $ 978,779
       Intersegment  revenues                          -         72,573         496          (73,069)             -
          Total revenues                         686,441        201,449     154,965          (64,076)       978,779
          Net Income                              57,743         27,648        (701)          (8,917)        75,773
       Total segment assets                    5,039,094        800,406     596,765          101,074      6,537,339
     ================================================================================================================
</TABLE>


                                       13
<PAGE>

5.   IMPACT OF NEW ACCOUNTING STANDARDS

     SFAS No. 148, "Accounting for Stock-Based Compensation" For purposes of the
     pro forma disclosures required by SFAS No. 148, "Accounting for Stock-Based
     Compensation  - Transition  and Disclosure - an Amendment of FASB Statement
     No. 123," the estimated  fair value of Progress  Energy's  stock options is
     amortized  to expense  over the  options'  vesting  period.  The  Company's
     information  related to the pro forma  impact on  earnings  assuming  stock
     options were expensed for the three months ended March 31 is as follows.
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

     (in thousands)
     FLORIDA PROGRESS                                                 2003              2002
                                                              ----------------  ----------------
     Net income, as reported                                         $ 80,917          $ 75,773
     Deduct:  Total stock option expense determined under fair
       value method for all awards, net of related tax effects            418               310
                                                              ----------------  ----------------
     Pro forma net income                                            $ 80,499          $ 75,463
                                                              ================  ================

     PROGRESS ENERGY FLORIDA, INC.                                    2003              2002
                                                              ----------------  ----------------
     Earnings for common stock, as reported                          $ 70,757          $ 57,743
     Deduct:  Total stock option expense determined under fair
       value method for all awards, net of related tax effects            383               295
                                                               ----------------  ----------------
     Pro forma earnings for common stock                             $ 70,374          $ 57,448
                                                               ================  ================
</TABLE>

     In April 2003, the Financial  Accounting  Standards  Board (FASB)  approved
     certain decisions on its stock-based  compensation project. Some of the key
     decisions reached by the FASB were that stock-based  compensation should be
     recognized  in the  income  statement  as an expense  and that the  expense
     should be measured as of the grant date at fair value. A significant  issue
     yet to be addressed  by the FASB is the  determination  of the  appropriate
     fair value  measure.  The FASB has not  scheduled  when it will  deliberate
     additional  issues in this  project;  however,  the FASB  plans to issue an
     exposure draft in 2003 that could become effective in 2004.

     SFAS No. 149,  "Amendment of Statement 133 on  Derivative  Instruments  and
     Hedging Activities"
     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
     Derivative  Instruments and Hedging  Activities."  The statement amends and
     clarifies SFAS No. 133 on accounting for derivative instruments,  including
     certain derivative instruments embedded in other contracts, and for hedging
     activities.  The new guidance  incorporates  decisions  made as part of the
     Derivatives  Implementation  Group  (DIG)  process,  as well  as  decisions
     regarding  implementation  issues raised in relation to the  application of
     the  definition  of a derivative.  SFAS No. 149 is generally  effective for
     contracts  entered  into or modified  after June 30,  2003.  The Company is
     currently  evaluating what effects, if any, this statement will have on its
     results of operations and financial position.

     FIN  No.  45,  "Guarantor's  Accounting  and  Disclosure  Requirements  for
     Guarantees,  Including  Indirect  Guarantees of  Indebtedness of Others"
     In November of 2002, the FASB issued  Interpretation  No. 45,  "Guarantor's
     Accounting and Disclosure  Requirements for Guarantees,  Including Indirect
     Guarantees of Indebtedness of Others - an interpretation of FASB Statements
     No. 5, 57 and 107 and  Rescission of FASB  Interpretation  No. 34" (FIN No.
     45).  This  interpretation  clarifies  the  disclosures  to  be  made  by a
     guarantor in its interim and annual financial  statements about obligations
     under  certain  guarantees  that it has issued.  It also  clarifies  that a
     guarantor is required to recognize, at the inception of certain guarantees,
     a liability for the fair value of the obligation  undertaken in issuing the
     guarantee.  The initial recognition and initial  measurement  provisions of
     this  interpretation  are  applicable on a prospective  basis to guarantees
     issued or modified after December 31, 2002. The applicable disclosures have
     been  made in Notes 8 and 14.  The  adoption  of FIN No.  45 did not have a
     material  effect  on the  Company's  results  of  operations  or  financial
     position.

     FIN No. 46,  "Consolidation of Variable Interest Entities"
     In January 2003, the FASB issued  Interpretation No. 46,  "Consolidation of
     Variable Interest Entities - an Interpretation of ARB No. 51" (FIN No. 46).
     This  interpretation  provides  guidance  related to  identifying  variable
     interest  entities  (previously  known as special purpose entities or SPEs)
     and  determining  whether such  entities  should be  consolidated.  Certain
     disclosures  are required if it is reasonably  possible that a company will
     consolidate or disclose  information  about a variable interest entity when
     it  initially  applies  FIN No.  46.  This  interpretation  must be applied
     immediately to variable interest entities created or obtained after January
     31, 2003. During the first quarter of 2003, the Company did not participate
     in the  creation  of, or obtain a new  variable  interest  in, any variable
     interest entity.  For those variable  interest entities created or obtained
     on or before January 31, 2003, the Company must apply the provisions of FIN
     No. 46 in the third quarter of 2003.

                                       14
<PAGE>

     The  Company  is  currently   evaluating   what   effects,   if  any,  this
     interpretation  will  have  on its  results  of  operations  and  financial
     position.  During this evaluation process, several arrangements through its
     Railcar Ltd.  subsidiary have been identified to which this  interpretation
     may apply.  These  arrangements  include an agreement  with  Railcar  Asset
     Financing  Trust (RAFT),  a  receivables  securitization  trust,  and seven
     synthetic  leases.  Because  the  Company  expects to sell the  majority of
     Railcar Ltd.  during 2003 (See Note 3) and divest of its interests in these
     arrangements,  the  application  of FIN No.  46 is not  expected  to have a
     material impact with respect to these arrangements.  If these interests are
     not divested as currently planned, the maximum cash obligations under these
     arrangements  total  approximately  $54.3  million.   However,   management
     believes the maximum cash obligations would be significantly  reduced based
     on the  current  fair  values of the  underlying  assets  related  to these
     arrangements.

6.   ASSET RETIREMENT OBLIGATIONS

     SFAS No.  143,  "Accounting  for Asset  Retirement  Obligations,"  provides
     accounting  and   disclosure   requirements   for  retirement   obligations
     associated with long-lived  assets and was adopted by the Company effective
     January  1,  2003.  This  statement  requires  that  the  present  value of
     retirement  costs for which the Company has a legal  obligation be recorded
     as a  liability  with an  equivalent  amount  added to the  asset  cost and
     depreciated over an appropriate period. The liability is then accreted over
     time by  applying  an  interest  method  of  allocation  to the  liability.
     Cumulative  accretion and accumulated  depreciation were recognized for the
     time period from the date the liability  would have been recognized had the
     provisions  of this  statement  been in effect,  to the date of adoption of
     this statement.

     Upon adoption of SFAS No. 143, PEF recorded  asset  retirement  obligations
     (AROs)  totaling  $302.8  million for nuclear  decommissioning  of radiated
     plant.   PEF  used  an  expected   cash  flow  approach  to  measure  these
     obligations.  This  amount  includes  accruals  recorded  prior to adoption
     totaling  $283.9  million,  which were  previously  recorded in accumulated
     depreciation.  The  related  asset  retirement  costs,  net of  accumulated
     depreciation,  recorded upon  adoption  totaled $38.5 million for regulated
     operations.  The adoption of this  statement had no impact on the income of
     PEF,  as the  effects  were  offset by the  establishment  of a  regulatory
     liability  in the  amount  of  $19.6  million,  pursuant  to SFAS  No.  71,
     "Accounting for the Effects of Certain Types of Regulation." The regulatory
     liability  represents  the  amount by which  previously  recorded  accruals
     exceeded the cumulative accretion and accumulated depreciation for the time
     period  from the date the  liability  would  have been  recognized  had the
     provisions of this statement been in effect to the date of adoption.

     Funds set aside in PEF's nuclear decommissioning trust fund for the nuclear
     decommissioning  liability  totaled  $367.6  million at March 31,  2003 and
     $373.6 million at December 31, 2002.

     The  Company  also  recorded  AROs  totaling  $9.6  million  for coal  mine
     operations,  synthetic fuel operations and gas production of Progress Fuels
     Corporation.  The Company  used an expected  cash flow  approach to measure
     these obligations. This amount includes accruals recorded prior to adoption
     totaling $4.6 million,  which were previously recorded in other liabilities
     and  deferred   credits.   The  related  asset  retirement  costs,  net  of
     accumulated  depreciation,  recorded upon adoption totaled $3.4 million for
     nonregulated operations.  The cumulative effect of initial adoption of this
     statement  related to  nonregulated  operations was $1.6 million of pre-tax
     expense.   The  ongoing  impact  on  earnings   related  to  accretion  and
     depreciation was not significant for the three months ended March 31, 2003.

     Pro forma net income has not been presented for prior years because the pro
     forma  application of SFAS No. 143 to prior years would result in pro forma
     net income not materially different from the actual amounts reported.

     The Company has identified but not  recognized ARO  liabilities  related to
     electric   transmission   and   distribution,    gas   distribution,    and
     telecommunications  assets as the result of  easements  over  property  not
     owned by the Company.  These  easements  are  generally  perpetual and only
     require  retirement  action upon  abandonment  or  cessation  of use of the
     property for the specified purpose.  The ARO liability is not estimable for
     such  easements,  as  the  Company  intends  to  utilize  these  properties
     indefinitely.  In the event the Company decides to abandon or cease the use
     of a particular easement, an ARO liability would be recorded at that time.

     PEF has previously  recognized removal costs as a component of depreciation
     in accordance with regulatory treatment.  As of March 31, 2003, the portion
     of such costs not representing  AROs under SFAS No. 143 was $931.4 million.
     This amount is included in  accumulated  depreciation  on the  accompanying
     Balance Sheets. PEF has collected amounts for non-radiated areas at nuclear
     facilities, which do not represent AROs. These amounts as of March 31, 2003
     totaled $61.5 million, which is included in accumulated depreciation on the
     accompanying   Balance  Sheets.   PEF  previously   collected  amounts  for
     dismantlement of its fossil  generation  plants. As of March 31, 2003, this
     amounted to $142.0,  which is included in accumulated  depreciation  on the
     accompanying  Balance Sheets. This collection was suspended pursuant to the
     rate case settlement discussed in Note 9.

                                       15
<PAGE>

     On January 23, 2003, the Staff of the FPSC issued a notice of proposed rule
     development to adopt provisions  relating to accounting for AROs under SFAS
     No. 143.  Accompanying  the notice was a draft rule  presented by the Staff
     which adopts the  provisions of SFAS No. 143 along with the  requirement to
     record the difference between amounts prescribed by the FPSC and those used
     in the  application  of SFAS No.  143 as  regulatory  assets or  regulatory
     liabilities, which was accepted by all parties. The adoption and acceptance
     of this draft rule is subject to FPSC approval.

7.   GOODWILL AND OTHER INTANGIBLE ASSETS

     Effective January 1, 2002, the Company adopted SFAS No. 142,  "Goodwill and
     Other  Intangible  Assets."  This  statement  clarifies  the  criteria  for
     recording of other intangible  assets  separately from goodwill.  Effective
     January 1, 2002,  goodwill was no longer subject to  amortization  over its
     estimated useful life.  Instead,  goodwill is subject to at least an annual
     assessment  for  impairment by applying a two-step  fair-value  based test.
     This assessment could result in periodic  impairment  charges.  The Company
     completed the first step of the initial  transitional  goodwill  impairment
     test,  which  indicated that the Company's  goodwill was not impaired as of
     January 1, 2002.  The  Company's  carrying  amount of goodwill at March 31,
     2003  and  December  31,  2002,   was  $9.9  million  and  $11.1   million,
     respectively,  in the Fuels  segment.  PEF has no  goodwill as of March 31,
     2003 and  December  31,  2002.  The  Company  and PEF  have no  significant
     intangible assets as of March 31, 2003 and December 31, 2002.

8.   COMPANY-OBLIGATED   MANDATORILY   REDEEMABLE  CUMULATIVE  QUARTERLY  INCOME
     PREFERRED  SECURITIES OF A SUBSIDIARY TRUST HOLDING SOLELY FLORIDA PROGRESS
     GUARANTEED SUBORDINATED DEFERRABLE INTEREST NOTES

     In  April  1999,  FPC  Capital  I (the  Trust),  an  indirect  wholly-owned
     subsidiary of the Company,  issued 12 million  shares of $25 par cumulative
     Company-obligated  mandatorily  redeemable preferred securities  (Preferred
     Securities) due 2039, with an aggregate  liquidation  value of $300 million
     with an annual  distribution rate of 7.10%,  payable quarterly.  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 the Company.

     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.

     The Company has fully and  unconditionally  guaranteed  the  obligations of
     Funding  Corp.  under the  subordinated  notes  (the Notes  Guarantee).  In
     addition,  the Company  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 the Company 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.

     These  Preferred  Securities  are  classified as long-term  debt on Florida
     Progress' Consolidated Balance Sheets.

9.   REGULATORY MATTERS

     A.  Retail Rate Matters

     On  March  27,  2002,  the  parties  in  PEF's  rate  case  entered  into a
     Stipulation and Settlement Agreement (the Agreement) related to retail rate
     matters.  The  Agreement  was approved by the FPSC on April 23,  2002.  The
     Agreement  provides that PEF will operate under a Revenue Sharing Incentive
     Plan (the Plan) through 2005, and thereafter until terminated by the FPSC.

                                       16
<PAGE>

     The Plan  provides  that all retail base  revenues  between an  established
     threshold  and cap will be  shared - a 2/3  share to be  refunded  to PEF's
     retail customers, and a 1/3 share to be received by PEF's shareholders. All
     retail  base  rate  revenues  above  the  retail  base  rate  revenue  caps
     established  for each year will be refunded 100% to retail  customers on an
     annual  basis.  The retail base revenue cap for 2003 is $1.393  billion and
     will  increase $37 million each year  thereafter.  As of December 31, 2002,
     $4.7 million was accrued and was  refunded to  customers in March 2003.  On
     February 24, 2003,  the parties to the Agreement  filed a motion seeking an
     order from the FPSC to enforce the Agreement.  In this motion,  the parties
     dispute PEF's  calculation of retail revenue  subject to refund and contend
     that the refund  should be  approximately  $23 million.  This issue will be
     addressed by the FPSC in the near future.  The Company  cannot  predict the
     outcome of this matter.

     On March 4, 2003,  the FPSC  approved  PEF's  petition to increase its fuel
     factors  due to  continuing  increases  in oil and  natural  gas  commodity
     prices.  The  crisis in the  Middle  East  along  with the  Venezuelan  oil
     workers' strike have put upward pressure on commodity  prices that were not
     anticipated  by the Company when fuel factors for 2003 were approved by the
     FPSC in November 2002. New rates became effective on March 28, 2003.

     B.  Regional Transmission Organizations

     In early 2000 the FERC issued Order 2000  regarding  regional  transmission
     organizations (RTOs). This Order set minimum  characteristics and functions
     that RTOs must  meet,  including  independent  transmission  service.  As a
     result of Order 2000,  PEF,  along with Florida  Power & Light  Company and
     Tampa  Electric  Company,   filed  with  the  FERC,  in  October  2000,  an
     application  for  approval of a  GridFlorida  RTO. In March 2001,  the FERC
     issued an order provisionally approving GridFlorida. However, in July 2001,
     FERC issued orders recommending that companies in the Southeast engage in a
     mediation  to  develop  a plan  for a  single  RTO for the  Southeast.  PEF
     participated   in  the  mediation.   The  FERC  has  not  issued  an  order
     specifically  on this  mediation.  In July 2002,  FERC issued its Notice of
     Proposed   Rulemaking   in  Docket   No.   RM01-12-000,   Remedying   Undue
     Discrimination  through  Open  Access  Transmission  Service  and  Standard
     Electricity Market Design (SMD NOPR). If adopted as proposed, the rules set
     forth  in  the  SMD  NOPR  would  materially  alter  the  manner  in  which
     transmission  and generation  services are provided and paid for. PEF, as a
     subsidiary  of Progress  Energy,  filed  comments on November  15, 2002 and
     supplement comments on January 10, 2003. On April 28, 2003, FERC released a
     White Paper on the Wholesale Market  Platform.  The White Paper provides an
     overview of what FERC  currently  intends to include in a final rule in the
     SMD NOPR docket. The White Paper retains the fundamental and most protested
     aspects  of SMD NOPR,  including  mandatory  RTOs and FERC's  assertion  of
     jurisdiction  over certain aspects of retail service.  PEF, as a subsidiary
     of Progress Energy, plans to file comments on the White Paper. The FERC has
     also indicated that it expects to issue final rules during the summer 2003.
     The Company  cannot predict the outcome of these matters or the effect that
     they may have on the GridFlorida  proceedings  currently ongoing before the
     FERC.

     The Company has actively  participated in the RTO formation in Florida. The
     three   peninsular   Florida   investor-owned   utilities,   Florida  Power
     Corporation,  Florida Power and Light Company,  and Tampa Electric Company,
     (the Applicants)  have proposed the formation of GridFlorida,  a single ISO
     (Independent  System  Operator) for peninsular  Florida.  Participation  is
     expected  from  many of the  other  transmission  owners  in the  state  of
     Florida.  The GridFlorida  proposal is pending before both the FERC and the
     FPSC.  The FERC  provisionally  approved the  structure  and  governance of
     GridFlorida  in May 2001.  In December  2001 the FPSC found the  Applicants
     were prudent in proactively  forming GridFlorida but ordered the Applicants
     to modify the proposal in several material respects,  including a change to
     status as a  not-for-profit  ISO.  The  Commission's  most recent  order in
     September  2002  ordered  further  state  proceedings.  The  issues  to  be
     addressed as  modifications  include but are not limited to 1) pricing/rate
     structure;  2)  elimination  of  pancaking  revenues;  3) cost  recovery of
     incremental  costs;  5) demarcation  dates for new facilities and long term
     transmission  contracts;  6) market  design.  The Florida  Office of Public
     Counsel  appealed the September  order to the Florida  Supreme Court and on
     October 15, 2002 the FPSC abated its proceedings pending the outcome of the
     appeal.  Oral Argument  before the Florida Supreme Court occurred on May 6,
     2003.  It is unknown  what the outcome of this appeal will be at this time.
     It is unknown  when the FERC or the FPSC will take final action with regard
     to the status of GridFlorida or what the impact of further proceedings will
     have on the Company's earnings, revenues or prices.

10.  COMPREHENSIVE INCOME

     Comprehensive  income for Florida Progress for the three months ended March
     31,  2003 and 2002 was  $79.9  million  and  $75.4  million,  respectively.
     Comprehensive  income for PEF for the three months ended March 31, 2003 was
     $71.4 million. PEF did not have any items of other comprehensive income for
     the three months ended March 31, 2002. Items of other comprehensive  income

                                       17
<PAGE>

     for the three month periods consisted primarily of changes in fair value of
     derivatives  used to hedge cash flows related to interest on long-term debt
     and gas sales, and to foreign currency translation adjustments.

11.  FINANCING ACTIVITIES

     On February 21,  2003,  PEF issued $425  million of First  Mortgage  Bonds,
     4.80%  Series Due March 1, 2013 and $225 million of First  Mortgage  Bonds,
     5.90% Series Due March 1, 2033.

     On March 1, 2003, $70 million of PEF First Mortgage  Bonds,  6.125% Series,
     matured  and were  retired.  PEF funded  this  maturity  through  the First
     Mortgage Bonds issued in February 2003.

     On March 24, 2003,  PEF redeemed $150 million of First Mortgage  Bonds,  8%
     Series,  Due  December 1, 2022 at 103.75% of the  principal  amount of such
     bonds.  PEF funded this maturity through the First Mortgage Bonds issued in
     February 2003.

     On April 1,  2003,  PEF  entered  into a new $200  million  364-day  credit
     agreement and a new $200 million three-year credit agreement  replacing its
     prior credit  facilities (which had been a $90 million 364-day facility and
     a $200 million five-year facility).

     The new PEF credit facilities contain a defined maximum total debt to total
     capital ratio of 65%; as of March 31, 2003 the calculated  ratio was 50.9%.
     The new credit  facilities  also  contain a  requirement  that the ratio of
     EBITDA, as defined in the facilities,  to interest expense to be at least 3
     to 1; as of March 31, 2003 the calculated ratio was 8.7 to 1.

12.  RISK MANAGEMENT ACTIVITIES AND DERIVATIVE TRANSACTIONS

     Progress Energy and its  subsidiaries  are exposed to various risks related
     to  changes  in  market  conditions.  The  Company  has a  risk  management
     committee  that is  chaired by the Chief  Financial  Officer  and  includes
     senior  executives  from  various  business  groups.  The  risk  management
     committee is responsible for  administering  risk  management  policies and
     monitoring compliance with those policies by all subsidiaries.

     The Company manages its market risk in accordance with its established risk
     management  policies,  which may include  entering into various  derivative
     transactions.

     Progress  Energy,  on behalf of the Company,  uses interest rate derivative
     instruments  to adjust the fixed and variable  rate debt  components of its
     debt portfolio and to hedge interest rates with regard to future fixed rate
     debt issuances.

     Progress Fuels Corporation  periodically enters into derivative instruments
     to hedge its  exposure to price  fluctuations  on natural gas sales.  As of
     March 31, 2003, Progress Fuels Corporation has executed cash flow hedges on
     approximately  22.6 Bcf of natural gas sales through  December 2004.  These
     instruments  did not have a material  impact on the Company's  consolidated
     financial position or results of operations.

     In connection  with the January 2003 FASB Emerging Issues Task Force (EITF)
     meeting, the FASB was requested to reconsider an interpretation of SFAS No.
     133.  The   interpretation,   which  is   contained   in  the   Derivatives
     Implementation  Group's C11  guidance,  relates to the pricing of contracts
     that include broad market indices (e.g., CPI). In particular, that guidance
     discusses  whether the pricing in a contract  that  contains  broad  market
     indices could qualify as a normal  purchase or sale (the normal purchase or
     sale term in a defined accounting term, and may not, in all cases, indicate
     whether the contract would be "normal" from an operating entity viewpoint).
     In April 2003, the FASB issued  tentative  superceding  guidance (DIG Issue
     C20) on this issue that is expected to be  finalized in the second or third
     quarter of 2003.

13.  OTHER INCOME AND OTHER EXPENSE

     Other  income and expense  includes  interest  income and other  income and
     expense items as discussed  below. The components of other, net as shown on
     the Consolidated  Statements of Income for the three months ended March 31,
     2003 and 2002 are as follows:

                                       18
<PAGE>
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

     (in thousands)                                                   2003                2002
                                                              -----------------    ----------------
     Other income
     Net energy purchased for resale gain                             $  1,188            $     98

     Nonregulated energy and delivery services income                    3,303               4,047
     AFUDC equity                                                          789                 185
     Other                                                                  92                   9
                                                              -----------------    ----------------
         Total other income - PEF                                     $  5,372            $  4,339
                                                              -----------------    ----------------
     Other income - Florida Progress                                         -               1,066
                                                              -----------------    ----------------
         Total other income - Florida Progress                        $  5,372            $  5,405
                                                              -----------------    ----------------

       Other expense
     Nonregulated energy and delivery services expenses               $  2,243            $  1,504
     Donations                                                           2,027               2,898
     Other                                                               1,582               1,273
                                                              -----------------    ----------------
        Total other expense - PEF                                     $  5,852            $  5,675
                                                              -----------------    ----------------
     Loss from equity investments                                        2,297               2,983
     Other expense - Florida Progress                                    2,477                 379
                                                              -----------------    ----------------
        Total other expense - Florida Progress                        $ 10,626            $  9,037
                                                              -----------------    ----------------
     Other, net                                                       $ (5,254)           $ (3,632)
                                                              =================    ================
</TABLE>

     Net energy purchased for resale represents  electricity  purchased for sale
     to a third party.  Nonregulated  energy and delivery services include power
     protection  services and mass market programs (surge protection,  appliance
     services and area light sales) and delivery,  transmission  and  substation
     work for other utilities.

14.  COMMITMENTS AND CONTINGENCIES

     Commitments

     Guarantees

     As a part of normal  business,  Florida  Progress and certain  subsidiaries
     including  PEF  enter  into  various  agreements   providing  financial  or
     performance   assessments  to  third  parties.   Such  agreements   include
     guarantees,  standby letters of credit and surety bonds.  These  agreements
     are  entered  into  primarily  to support or enhance  the  creditworthiness
     otherwise  attributed  to a  subsidiary  on a  stand-alone  basis,  thereby
     facilitating   the  extension  of  sufficient   credit  to  accomplish  the
     subsidiaries' intended commercial purposes.

     At March 31, 2003, outstanding guarantees are as follows:

     (in millions)
     Standby letters of credit                 $ 42.5
     Surety bonds                                36.5
     Other guarantees                            10.1
                                        --------------------
        Total
                                               $ 89.1
                                        ====================

     Each of these guarantees is discussed more fully below.

     Standby Letters of Credit
     The Company has issued standby letters of credit to financial  institutions
     for the benefit of third parties that have  extended  credit to the Company
     and certain  subsidiaries.  PEF has issued letters of credit totaling $11.1
     million  which is included in the balance  above.  These  letters of credit
     have been issued primarily for the purpose of supporting  payments of trade
     payables,  securing  performance  under contracts and lease obligations and
     self  insurance  for workers  compensation.  If a  subsidiary  does not pay
     amounts when due under a covered contract, the counterparty may present its
     claim for payment to the financial institution,  which will in turn request
     payment from the Company.  Any amounts owed by the  Company's  subsidiaries
     are reflected in the Consolidated Balance Sheets.

     Surety Bonds
     At March 31, 2003, the Company had $36.5 million in surety bonds,  of which
     PEF accounted for $4.4  million,  purchased  primarily for purposes such as
     providing workers compensation coverage and obtaining licenses, permits and
     rights-of-way.  Surety bonds  decreased $2.0 million for the Company during
     the  quarter.  Bonds for PEF  account  for  approximately  one-half  of the
     decrease.  To the  extent  liabilities  are  incurred  as a  result  of the
     activities  covered by the surety bonds,  such  liabilities are included in
     the Consolidated Balance Sheets.

                                       19
<PAGE>

     Other Guarantees
     The Company has other guarantees  outstanding  related  primarily to prompt
     performance  payments,  lease  obligations,  and other payments  subject to
     contingencies.  Approximately  $5.0 million in additional  guarantees  were
     issued during the quarter.

     Progress  Energy  has  issued   approximately  $7.5  million  of  financial
     guarantees on behalf of Progress Rail Services  Corporation for obligations
     related to the purchase and sale of railcar parts, equipment and services.

     As of March 31, 2003, management does not believe conditions are likely for
     performance under these agreements.

     Contingencies

     1)  Claims and Uncertainties

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

     Hazardous and Solid Waste Management

     Various  organic  materials  associated with the production of manufactured
     gas,  generally  referred to as coal tar, are  regulated  under federal and
     state laws.  The  principal  regulatory  agency that is  responsible  for a
     specific former  manufactured gas plant (MGP) site depends largely upon the
     state in which the site is  located.  There are  several MGP sites to which
     the Company has some connection.  In this regard, PEF and other potentially
     responsible  parties, are participating in investigating and, if necessary,
     remediating former MGP sites with several regulatory  agencies,  including,
     but not limited to, the U.S. Environmental Protection Agency (EPA), and the
     Florida Department of Environmental  Protection (FDEP). In addition, PEF 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.

     PEF There are two former  MGP sites and 11 other  active  sites  associated
     with PEF that have  required or are  anticipated  to require  investigation
     and/or   remediation   costs.  As  of  March  31,  2003,  PEF  has  accrued
     approximately $10.8 million, for probable and reasonably estimable costs at
     these  sites.  PEF does not believe  that it can provide an estimate of the
     reasonably  possible  total  remediation  costs  beyond  what is  currently
     accrued. In 2002, PEF filed a petition for annual recovery of approximately
     $4.0 million in environmental  cost through the Environmental Cost Recovery
     Clause with the FPSC. PEF was successful  with this filing and will recover
     costs through  rates for  investigation  and  remediation  associated  with
     transmission  and  distribution  substations  and  transformers.   As  more
     activity  occurs at these  sites,  PEF will  assess  the need to adjust the
     accruals.  These accruals have been recorded on an undiscounted  basis. PEF
     measures  its  liability  for  these  sites  based  on  available  evidence
     including its experience in investigating  and remediating  environmentally
     impaired  sites.  This process  often  includes  assessing  and  developing
     cost-sharing  arrangements  with  other  potentially  responsible  parties.
     Presently,  PEF cannot  determine  the total  costs that may be incurred in
     connection  with  the  remediation  of  all  sites.  According  to  current
     information,  these  future  costs at the PEF sites are not  expected to be
     material to the Company's financial condition or results of operations.

     Florida   Progress  In  2001,   Florida   Progress   sold   Inland   Marine
     Transportation  to AEP  Resources,  Inc.  Florida  Progress  established an
     accrual  to  address  indemnities  and  retained  environmental   liability
     associated  with the  transaction.  The  balance  in this  accrual  is $9.9
     million at March 31,  2003.  Florida  Progress  estimates  that its maximum
     contractual liability to AEP Resources,  Inc. associated with Inland Marine
     Transportation  is $60  million.  This  accrual has been  determined  on an
     undiscounted  basis.  Florida Progress measures its liability for this site
     based on estimable and probable remediation scenarios. The Company believes
     that it is  reasonably  probable  that  additional  costs,  which cannot be
     currently   estimated,   may  be  incurred  related  to  the  environmental
     indemnification  provision  beyond the amount  accrued.  The Company cannot
     predict the outcome of this matter.

     PEF has  filed  claims  with  the  Company's  general  liability  insurance
     carriers to recover costs arising out of actual or potential  environmental
     liabilities.  Some claims have been  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  financial  position or
     results of operations.

                                       20
<PAGE>

     Certain  historical waste sites exist that are being addressed  voluntarily
     by the Fuels segment. The Company cannot determine the total costs that may
     be  incurred  in  connection   with  these  sites.   According  to  current
     information,  these  future  costs are not  expected  to be material to the
     Company's financial condition or results of operations.

     Rail Services is voluntarily addressing certain historical waste sites. The
     Company cannot determine the total costs that may be incurred in connection
     with these sites. According to current information,  these future costs are
     not expected to be material to the Company's financial condition or results
     of operations.

     The Company is also currently in the process of assessing  potential  costs
     and exposures at other  environmentally  impaired sites. As the assessments
     are developed and analyzed,  the Company will accrue costs for the sites to
     the extent the costs are probable and can be reasonably estimated.

     Air and Water Quality

     There has been and may be further  proposed federal  legislation  requiring
     reductions in air emissions for nitrogen  oxides,  sulfur  dioxide,  carbon
     dioxide and mercury.  Some of these proposals establish nationwide caps and
     emission   rates  over  an   extended   period  of  time.   This   national
     multi-pollutant approach to air pollution control could involve significant
     capital  costs  which  could  be  material  to the  Company's  consolidated
     financial  position  or  results of  operations.  Some  companies  may seek
     recovery  of  the  related  cost  through  rate   adjustments   or  similar
     mechanisms. However, the Company cannot predict the outcome of this matter.

     The EPA is  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.
     PEF was asked to provide  information to the EPA as part of this initiative
     and  cooperated in providing the  requested  information.  During the first
     quarter of 2003, PEF received a supplemental  information  request from the
     EPA and will respond to it in the second  quarter.  The EPA initiated civil
     enforcement  actions against other  unaffiliated  utilities as part of this
     initiative. Some of these actions resulted in settlement agreements calling
     for expenditures, ranging from $1.0 billion to $1.4 billion. A utility that
     was not subject to a civil enforcement action settled its New Source Review
     issues with the EPA for $300  million.  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  or similar  mechanisms.  The Company  cannot predict the
     outcome of this matter.

     Other Environmental Matters

     The Kyoto  Protocol  was  adopted in 1997 by the United  Nations to address
     global  climate  change by reducing  emissions of carbon  dioxide and other
     greenhouse  gases.  The United  States has not adopted the Kyoto  Protocol;
     however,  a number of carbon dioxide  emissions control proposals have been
     advanced   in   Congress   and  by  the  Bush   Administration.   The  Bush
     Administration  favors  voluntary  programs.  Reductions in carbon  dioxide
     emissions  to  the  levels   specified  by  the  Kyoto  Protocol  and  some
     legislative   proposals  could  be  materially  adverse  to  the  Company's
     financials  and  operations  if associated  costs cannot be recovered  from
     customers. The Company favors the voluntary program approach recommended by
     the administration, and is evaluating options for the reduction, avoidance,
     and sequestration of greenhouse gases.  However, the Company cannot predict
     the outcome of this matter.

     In 1997,  the EPA's  Mercury  Study  Report and Utility  Report to Congress
     conveyed  that mercury is not a risk to the average  American and expressed
     uncertainty  about whether  reductions in mercury emissions from coal-fired
     power plants would reduce human exposure.  Nevertheless, the EPA determined
     in 2000 that regulation of mercury  emissions from coal-fired  power plants
     was appropriate. Pursuant to a Court Order, the EPA is developing a Maximum
     Available Control  Technology (MACT) standard,  which is expected to become
     final in December 2004, with compliance in 2008.  Achieving compliance with
     the MACT standard  could be materially  adverse to the Company's  financial
     condition and results of  operations.  However,  the Company cannot predict
     the outcome of this matter.

     Legal Matters

     1)  Franchise Litigation

     Six cities, with a total of approximately  49,000 customers,  have sued PEF
     in various circuit courts in Florida.  The lawsuits  principally seek (1) a
     declaratory  judgment  that the  cities  have the right to  purchase  PEF's

                                       21
<PAGE>

     electric distribution system located within the municipal boundaries of the
     cities,  (2) a  declaratory  judgment  that the  value of the  distribution
     system must be determined  through  arbitration,  and (3) injunctive relief
     requiring PEF to continue to collect from PEF's  customers and remit to the
     cities,  franchise fees during the pending  litigation,  and as long as PEF
     continues to occupy the cities'  rights-of-way to provide electric service,
     notwithstanding the expiration of the franchise  ordinances under which PEF
     had agreed to collect such fees.  Five circuit  courts have entered  orders
     requiring  arbitration  to establish the purchase  price of PEF's  electric
     distribution  system within five cities.  Two appellate  courts have upheld
     those circuit court decisions and authorized  cities to determine the value
     of  PEF's   electric   distribution   system  within  the  cities   through
     arbitration. To date, no city has attempted to actually exercise the option
     to  purchase  any  portion  of  PEF's  electric   distribution  system.  An
     arbitration  in one of the  cases  (the  City of  Casselberry)  was held in
     August  2002 and an award was issued in October  2002  setting the value of
     PEF's distribution system within that city at approximately $22 million. On
     April 2,  2003,  PEF filed a rate  filing  with the FERC to  recover  $10.6
     million in  stranded  costs from the City of  Casselberry  in the event the
     city  ultimately  chooses  and is  allowed  to  form a  municipal  electric
     utility. PEF has made a settlement proposal, which is scheduled to be voted
     on by the City  Commission on May 12, 2003. At this time,  whether and when
     there will be further proceedings  regarding the City of Casselberry cannot
     be  determined.  A second  arbitration  (with the City of Winter  Park) was
     completed in February 2003. A decision from the  arbitration  panel has not
     yet been  issued  in that  case.  Two  additional  arbitrations  have  been
     scheduled to occur in the second  quarter of 2003 and the first  quarter of
     2004.

     As part of the above  litigation,  two  appellate  courts have also reached
     opposite  conclusions  regarding  whether PEF must continue to collect from
     its  customers and remit to the cities  "franchise  fees" under the expired
     franchise  ordinances.  PEF has filed an appeal  with the  Florida  Supreme
     Court to resolve the conflict between the two appellate courts. The Florida
     Supreme Court has set oral argument for August 27, 2003. PEF cannot predict
     the outcome of these matters at this time.

     2)  DOE Litigation

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

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

     After the DOE  failed to comply  with the  decision  in  Indiana & Michigan
     Power v. DOE,  a group of  utilities  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 its  delay was  unavoidable,  and the DOE was  excused  from
     performance  under the terms and  conditions of the contract.  The Court of
     Appeals did not order the DOE to begin taking spent nuclear  fuel,  stating
     that the utilities had a potentially  adequate remedy by filing a claim for
     damages under the contract.

     After the DOE failed to begin  taking  spent  nuclear  fuel by January  31,
     1998,  a group of  utilities  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
     Federal 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. PEF is in the process of evaluating  whether it should file
     a similar action for damages.

     On July 9, 2002, Congress passed an override resolution to Nevada's veto of
     DOE's  proposal to locate a permanent  underground  nuclear  waste  storage
     facility  at  Yucca  Mountain,  Nevada.  DOE  plans  to  submit  a  license
     application for the Yucca Mountain  facility by the end of 2004. PEF cannot
     predict the outcome of this matter.

                                       22
<PAGE>

     3)  Easement Litigation

     In  December  1998,  PEF was served  with a class  action  lawsuit  seeking
     damages,  declaratory and injunctive relief for the alleged improper use of
     electric transmission easements.  The plaintiffs contend that the licensing
     of   fiber-optic    telecommunications    lines   to   third   parties   or
     telecommunications  companies  for other than PEF's  internal use along the
     electric  transmission line  right-of-way  exceeds the authority granted in
     the  easements.  In June 1999,  plaintiffs  amended their  complaint to add
     Progress Telecom as a defendant and adding counts for unjust enrichment and
     constructive   trust.  In  January  2000,  the  trial  court  conditionally
     certified the class statewide. In mediation held in March 2000, the parties
     reached a tentative  settlement of this claim.  In January 2001,  the trial
     court preliminarily  approved the amended settlement  agreement,  certified
     the settlement  class and approved the class notice.  On November 16, 2001,
     the trial court  issued a final order  approving  the  settlement.  Several
     objectors to the settlement  appealed the order to the First District Court
     of Appeal.  On February 12,  2003,  the  appellate  court issued an opinion
     upholding the trial court's subject matter  jurisdiction over the case, but
     reversing the trial court's order approving the mandatory  settlement class
     for purposes of declaratory  and  injunctive  relief.  The appellate  court
     remanded the case to the trial court for further  proceedings.  The Company
     filed a motion to seek  discretionary  review  before the  Florida  Supreme
     Court. Other parties filed similar motions as well as motions for rehearing
     before the First  District  Court of  Appeal.  Subsequent  to filing  these
     motions,  the Company and the appellants reached a settlement resolving the
     appellants' dispute. The settlement is ultimately contingent upon the trial
     court  approving a mandatory  class  settlement  consistent  with the First
     District  Court of Appeal's  February 12, 2003 opinion.  The First District
     Court of Appeal  thereafter  granted the parties joint motion to relinquish
     jurisdiction of the case to the trial court. The Company cannot predict the
     outcome of any future proceedings in this case.

     4)  Synthetic Fuel Tax Credits

     The  Company,  through  its  subsidiaries,  is a  majority  owner  in three
     entities and a minority owner in three  entities that own  facilities  that
     produce  synthetic  fuel from coal fines.  The  production  and sale of the
     synthetic  fuel from  these  facilities  qualifies  for tax  credits  under
     Section 29 of the Code (Section 29) if certain  requirements are satisfied,
     including a requirement  that the synthetic fuel differs  significantly  in
     chemical composition from the coal used to produce such synthetic fuel. Any
     synthetic  fuel  tax  credit  amounts  not  utilized  are  carried  forward
     indefinitely.   All   three   majority-owned   entities   and   all   three
     minority-owned  entities have received  private  letter rulings (PLRs) from
     the Internal  Revenue  Service (IRS) with respect to their  synthetic  fuel
     operations.  These tax credits are subject to review by the IRS, and if the
     Company fails to prevail through the administrative or legal process, there
     could be a significant  tax liability owed for previously  taken Section 29
     credits, with a significant impact on earnings and cash flows.

     One synthetic fuel entity,  Colona Synfuel  Limited  Partnership,  L.L.L.P.
     (Colona),  from which  Progress  Energy (and Florida  Progress prior to its
     acquisition  by Progress  Energy)  has been  allocated  approximately  $231
     million in tax credits to date,  is being  audited by the IRS. The audit of
     Colona was expected.  The Company is audited regularly in the normal course
     of business,  as are most similarly situated companies.  In September 2002,
     all of Progress Energy's majority-owned synthetic fuel entities,  including
     Colona, were accepted into the IRS Prefiling  Agreement (PFA) program.  The
     PFA program allows taxpayers to voluntarily accelerate the IRS exam process
     in order to seek resolution of specific  issues.  Either Progress Energy or
     the IRS can withdraw from the program at any time,  and issues not resolved
     through the program may proceed to the next level of the IRS exam  process.
     While  the  ultimate  outcome  is  uncertain,  the  Company  believes  that
     participation  in the PFA program will likely shorten the tax exam process.
     In  management's  opinion,  Progress  Energy  is  complying  with  all  the
     necessary  requirements  to be allowed  such credits  under  Section 29 and
     believes it is likely,  although it cannot provide certainty,  that it will
     prevail if challenged by the IRS on any credits taken.  The current Section
     29 tax credit program expires in 2007.

     5)  Other Legal Matters

     Florida  Progress  and PEF are  involved in various  other claims and legal
     actions arising in the ordinary  course of business,  some of which involve
     claims for substantial amounts. Where appropriate,  accruals have been made
     in accordance with SFAS No. 5, "Accounting for  Contingencies,"  to provide
     for such matters. Florida Progress and PEF believe the ultimate disposition
     of these  matters  will not have a  material  adverse  effect  upon  either
     company's  consolidated   financial  position,   results  of  operation  or
     liquidity.

                                       23
<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

The following  Management's  Discussion  and Analysis  contains  forward-looking
statements that 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.

OPERATING RESULTS

Florida  Progress'  net income for the three months  ended March 31,  2003,  was
$80.9 million compared to earnings of $75.8 million for the same period in 2002.

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

PROGRESS ENERGY FLORIDA (PEF)

PEF  contributed  income from  continuing  operations of $70.8 million and $57.7
million in the first  quarter of 2003 and 2002,  respectively.  This increase is
primarily  attributed to favorable weather,  retail growth/usage and the absence
of the impact of the retroactive rate refund in 2002. Partially offsetting these
improvements  was the impact of the reduced rates in 2003 resulting from the May
2002 rate case settlement.

In March 2002, PEF settled a rate case which provided for a one-time retroactive
rate refund,  decreased  future retail rates by 9.25%  (effective  May 1, 2002),
provided for lower  depreciation  and amortization and provided for increases in
certain service revenue rates.

Revenues

PEF's electric revenues for the first quarter of 2003 and 2002 and the amount
and percentage change by quarter and by customer class are as follows:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

-----------------------------------------------------------------------------------
(in millions)
-----------------------------------------------------------------------------------
Customer Class                     2003     Amount Change    % Change     2002
-----------------------------------------------------------------------------------
Residential                          $385.0      $5.8           1.5%       $379.2
Commercial                            150.4     (16.4)         (9.8)        166.8
Industrial                             47.5      (2.5)         (5.0)         50.0
Governmental                           38.0      (1.9)         (4.8)         39.9
Revenue Sharing/Rate Refund               -      35.0         100.0         (35.0)
                                  -------------------------------------------------
    Total retail revenues             620.9      20.0           3.3         600.9
Wholesale                              71.3      18.9          36.1          52.4
Unbilled                               (0.7)     (7.2)            -           6.5
Miscellaneous                          36.9      10.3          38.7          26.6
                                  -------------------------------------------------
    Total electric revenues          $728.4     $42.0           6.1%       $686.4
-----------------------------------------------------------------------------------
</TABLE>

PEF's  electric  energy  sales  for the first  quarter  of 2003 and 2002 and the
amount and percentage change by quarter and by customer class are as follows:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

----------------------------------------------------------------------------------
(in thousands of mWh)
----------------------------------------------------------------------------------
Customer Class                    2003     Amount Change    % Change     2002
----------------------------------------------------------------------------------
Residential                          4,553      493           12.1%         4,060
Commercial                           2,442      (14)          (0.6)         2,456
Industrial                             916       34            3.9            882
Governmental                           657       36            5.8            621
                                 -------------------------------------------------
    Total Retail Energy Sales        8,568      549            6.8          8,019
Wholesale                            1,277      298           30.4            979
Unbilled                                54       22             -              32
                                 -------------------------------------------------
    Total mWh Sales                  9,899      869            9.6%         9,030
----------------------------------------------------------------------------------
</TABLE>


                                       24
<PAGE>

The first quarter 2002 rate refund of $35.0 million was virtually  offset by the
2003 first  quarter rate  reduction,  both of which  resulted from the 2002 rate
case  settlement.  Excluding these impacts,  revenue  increased due to favorable
weather in the first  quarter of 2003,  as compared to the first quarter of 2002
(heating  degree days  increased  25.6%) and continued  retail  customer  growth
(retail  customer base increased  1.25%).  Increased demand from other utilities
drove the wholesale revenue  increase.  Higher service rates allowed in the rate
case settlement contributed to the higher miscellaneous revenues.

Expenses

The following summarizes PEF's expenses for the first quarter of 2003 and 2002.
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>

-----------------------------------------------------------------------------------------
(in millions)
-----------------------------------------------------------------------------------------
Expense Category                    2003       Amount Change     % Change       2002
-----------------------------------------------------------------------------------------
Fuel and purchased power           $315.6          $8.8             2.9%        $306.8
Operations and maintenance          139.8           7.0             5.3          132.8
Depreciation and amortization        79.4          10.1            14.6           69.3
Taxes other than on income           58.6           1.5             2.6           57.1
Interest expense, net                26.5          (1.8)           (6.4)          28.3
Income taxes                         37.0           3.6            10.8           33.4
Other expenses                        0.7          (0.3)          (30.0)           1.0
                                 --------------------------------------------------------
    Total expenses                 $657.6         $28.9             4.6%        $628.7
-----------------------------------------------------------------------------------------
</TABLE>

Fuel and purchased power expenses are recovered  primarily through cost recovery
clauses and, as such, have no material impact on operating results.

The increase in operations and  maintenance  expense results from a $5.3 million
lower pension credit.

The increase in depreciation  and amortization  expense relates  primarily to an
increase in amortization of the Tiger Bay regulatory  asset. The amortization is
recovered  through a cost  recovery  clause and has no impact on  earnings.  The
regulatory  asset was  created as a result of the early  termination  of certain
long-term  cogeneration  contracts and is amortized according to a plan approved
by the Florida Public Service Commission.

In accordance with an SEC order under PUHCA, effective in the second quarter of
2002, tax benefits not related to acquisition interest expense that were
previously held unallocated at the holding company must be allocated to the
profitable subsidiaries. As a result, $3.4 million of the tax benefit that was
previously held at the holding company was allocated to PEF in the first quarter
of 2003. The allocation has no impact on Progress Enegy's consolidated tax
expense or net income. Other fluctuations in income taxes are primarily due to
changes in pre-tax income.

FUELS

The Fuels segment,  which includes coal and synthetic fuel  operations,  natural
gas operations and other fuel related operations, earned $13.6 million and $27.6
million in the first  quarter of 2003 and 2002,  respectively.  The decrease was
due primarily to a change in the synthetic fuel production  pattern schedule for
2003.  The Fuels segment  produced 0.9 million and 1.5 million tons of synthetic
fuel for the three  months  ended  March 31, 2003 and 2002,  respectively,  that
resulted in tax credits of $23.2 million and $43.9 million, respectively.  These
tax credits more than offset the pre-tax  operating  losses of $17.8 million and
$31.1 million for the first quarters of 2003 and 2002, respectively.

In addition,  gas operations generated income from continuing operations of $4.9
million and $0.3  million in the first  quarter of 2003 and 2002,  respectively.
The increase in  production  drove the  increased  revenue and earnings with the
addition of the Westchester  operations accounting for 64% of the gas production
in the first quarter of 2003.

As a result of an SEC audit of the Progress  Energy Service  Company  allocation
methodology,  Fuels  incurred  additional  Service  Company  allocations of $4.7
million (after tax).

RAIL SERVICES (RAIL)

Rail's operations include railcar and locomotive repair,  trackwork,  rail parts
reconditioning and sales, scrap metal recycling,  railcar leasing and other rail
related  services.  The Company  intends to sell the assets of Railcar  Ltd.,  a
leasing  subsidiary,  in 2003 and has  reported  these assets as assets held for
sale at March 31, 2003.

Progress Rail contributed losses from continuing  operations of $3.4 million and
$0.7 million for the first quarters of 2003 and 2002, respectively.  As a result
of the SEC audit, Rail incurred additional pretax Service Company allocations of

                                       25
<PAGE>

$4.7  million for prior year  allocations  and $1.0  million  for  current  year
allocations in the first quarter of 2003.  Rail's results for both quarters were
affected by the downturn in the overall economy. Rail experienced revenue growth
in the first quarter of 2003 with stronger wheel set sales and recycling  sales.
Aggressive cost management  programs were identified  throughout 2002 and in the
first quarter of 2003.

An SEC order  approving the merger of FPC requires  Progress Energy to divest of
Rail by November 30, 2003.  Progress Energy is pursuing  alternatives,  but does
not expect to find the right  divestiture  opportunity by that date.  Therefore,
Progress Energy has sought an extension from the SEC.

OTHER

The other group  includes  telecommunications,  holding  company  and  financing
expenses  and  was  earnings  neutral  in  the  first  quarter  of  2003,  while
contributing  a loss  of  $8.9  million  in  the  first  quarter  of  2002.  The
improvement  is due  primarily to the  recording of an  intra-period  income tax
allocation  adjustment  which  GAAP  requires  in  order  to  apply a  levelized
effective  tax rate to interim  periods that is  consistent  with the  estimated
annual  rate.  This  resulted in a tax benefit  being  allocated  from  Progress
Energy,  Inc. of $4.5 million in the first  quarter of 2003 and a tax expense of
$2.8 million being allocated in the first quarter of 2002.

LIQUIDITY AND CAPITAL RESOURCES

Statements of Cash Flows and Financing Activities

Cash provided by operating activities decreased $37 million for the three months
ended March 31, 2003,  when  compared to the  corresponding  period in the prior
year. Improved operating cash flow at PEF of $56.5 million was offset by reduced
operating cash flow from the Company's nonregulated activities.

Net cash used in  investing  activities  increased  $223  million  for the three
months ended March 31, 2003,  when compared to the  corresponding  period in the
prior year. During the first three months of 2003, $141 million was spent on the
PEF construction  program and $165 million was spent in diversified  operations,
which  included  $148  million for the  acquisition  of gas reserves by Progress
Fuels Corporation (See Note 2).

Net cash provided by financing  activities  increased $232 million for the three
months ended March 31, 2003,  when compared to the  corresponding  period in the
prior year. The increase in financing  requirements  reflects the higher capital
expenditures for both regulated and nonregulated activities, which exceeded cash
from operations and dividend requirements during the quarter.

On February 7, 2003,  Moody's  Investors  Service  (Moody's)  announced  that it
changed the outlook of Progress  Energy  Florida,  Inc. (A1 senior  secured) and
Progress Capital  Holdings,  Inc. (A3 senior unsecured) from stable to negative.
Moody's cited PEF's 2002 base rate reduction and higher capital  expenditures as
factors  contributing  to their  change in  outlook.  The  change in  outlook by
Moody's has not  materially  affected the Company's or PEF's access to liquidity
or the cost of its short-term borrowings.

On February 21, 2003,  PEF issued $425 million of First  Mortgage  bonds,  4.80%
Series Due March 1, 2013 and $225 million of First Mortgage bonds,  5.90% Series
Due March 1, 2033.  Proceeds  from this  issuance  were used and will be used to
repay the balance of its outstanding  commercial paper, to refinance its secured
and unsecured indebtedness including $70 million of First Mortgage bonds, 6.125%
Series and to redeem the aggregate  outstanding balance of its 8% First Mortgage
Bonds due 2022.

On March 24, 2003, PEF redeemed $150 million of First Mortgage bonds, 8% Series,
Due  December  1, 2022 at 103.75% of the  principal  amount of such  bonds.  PEF
funded this maturity through the First Mortgage bonds issued in February 2003.

On April 1, 2003, PEF entered into a new $200 million  364-day credit  agreement
and a new $200 million  three-year credit agreement,  replacing its prior credit
facilities  (which had been a $90 million  364-day  facility  and a $200 million
five-year facility).

                                       26
<PAGE>

The new PEF  credit  facilities  contain a defined  maximum  total debt to total
capital ratio of 65%; as of March 31, 2003 the calculated  ratio was 50.9%.  The
new credit  facilities also contain a requirement  that the ratio of EBITDA,  as
defined  in the  facilities,  to  interest  expense to be at least 3 to 1; as of
March 31, 2003 the calculated ratio was 8.7 to 1.

Future Commitments

As of March  31,  2003,  both  Florida  Progress'  and  PEF's  contractual  cash
obligations and other  commercial  commitments  has not changed  materially from
what was reported in the 2002 Annual Report on Form 10-K.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information called for by ITEM 3 is omitted pursuant to Instruction  H(2)(c)
to Form 10-Q (Omission of Information by Certain Wholly Owned Subsidiaries).

                                       27
<PAGE>

ITEM 4.  CONTROLS AND PROCEDURES

Florida Progress Corporation

Within the 90 days prior to the filing  date of this  report,  Florida  Progress
carried out an evaluation,  under the supervision and with the  participation of
its management,  including  Florida  Progress' Chief Executive Officer (CEO) and
Chief Financial  Officer (CFO), of the effectiveness of the design and operation
of Florida Progress' disclosure controls and procedures pursuant to Rules 13a-14
and  15d-14  under  the  Securities  Exchange  Act  of  1934.  Based  upon  that
evaluation, Florida Progress' CEO and CFO concluded that its disclosure controls
and  procedures  are effective in timely  alerting them to material  information
relating to Florida Progress (including its consolidated  subsidiaries) required
to be included in its periodic SEC filings.

Since the date of the  evaluation,  there  have been no  significant  changes in
Florida Progress' internal controls or in other factors that could significantly
affect these controls.

Progress Energy Florida, Inc.

Within the 90 days prior to the filing date of this  report,  PEF carried out an
evaluation,  under the supervision and with the participation of its management,
including PEF's CEO and CFO, of the effectiveness of the design and operation of
PEF's  disclosure  controls and  procedures  pursuant to Rules 13a-14 and 15d-14
under the Securities Exchange Act of 1934. Based upon that evaluation, PEF's CEO
and CFO concluded that its  disclosure  controls and procedures are effective in
timely  alerting them to material  information  relating to PEF  (including  its
consolidated subsidiaries) required to be included in its periodic SEC filings.

Since the date of the  evaluation,  there  have been no  significant  changes in
PEF's  internal  controls or in other  factors that could  significantly  affect
these controls.

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

Legal aspects of certain matters are set forth in Part I, Item 1. See Note 14 to
the Florida  Progress  Corporation and Progress Energy Florida,  Inc.  Financial
Statements.  There  have  been no  material  developments  from  the  disclosure
provided in the Company's Form 10-K for the year ended December 31, 2002.



                                       28
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:
<TABLE>
<S>     <C>    <C>    <C>    <C>    <C>    <C>


     Exhibit                                                                             Florida                Progress Energy
     Number                                Description                           Progress Corporation           Florida, Inc.
     ------                                -----------                           --------------------           -------------

     *10 (i)          Progress Energy, Inc. Amended and Restated Management                 X                          X
                      Deferred Compensation Plan Adopted as of January 1,
                      2000, Revised and Restated effective January 1, 2003
                      (filed as Exhibit 4.3 to Progress Energy Form S-8 on May
                      2, 2003, File No. 333-104952).

     10 (ii)          Florida Power Corporation d/b/a Progress Energy                                                  X
                      Florida, Inc. 364-Day $200,000,000 Credit Agreement
                      dated as of April 1, 2003

     10(iii)          Florida Power Corporation d/b/a Progress Energy                                                  X
                      Florida, Inc. 3-Year $200,000,000 Credit Agreement
                      dated as of April 1, 2003

        99            Certifications pursuant to Section 906 of the                         X                          X
                      Sarbanes-Oxley Action of 2002

     *Incorporated herein by reference as indicated.

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

     Florida Progress Corporation

                               Financial
                 Item          Statements
               Reported         Included             Date of Event                Date Filed
               --------         --------             -------------                ----------
                  7               Yes              February 18, 2003          February 18, 2003
                  5               No               April 1, 2003              April 1, 2003
                9, 12             Yes              April 23, 2003             April 23, 2003

     Progress Energy Florida, Inc.


                               Financial
                 Item          Statements
               Reported         Included             Date of Event                Date Filed
               --------         --------             -------------                ----------
                  5               No               January 1, 2003            January 3, 2003
                  5               No               February 7, 2003           February 12, 2003
                  7               Yes              February 18, 2003          February 18, 2003
                  5               No               February 18, 2003          February 18, 2003
                  5               No               February 21, 2003          February 21, 2003
                  5               No               April 1, 2003              April 1, 2003
                9, 12             Yes              April 23, 2003             April 23, 2003
</TABLE>


                                       29
<PAGE>

                                   SIGNATURES


         Pursuant to the 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.



                                        FLORIDA PROGRESS CORPORATION
                                        FLORIDA POWER CORPORATION
                                        (Registrants)




Date:  May 9, 2003                      By:  /s/ Peter M. Scott III
                                        ------------------------------------
                                        Peter M. Scott III
                                        Executive Vice President and
                                        Chief Financial Officer





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



                                       30

<PAGE>

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, William Cavanaugh III, certify that:

1.   I have  reviewed  this  quarterly  report on Form 10-Q of Florida  Progress
     Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;
     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and
     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of registrant's board of directors:

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date: May 9, 2003                       /s/ William Cavanaugh III
                                        -------------------------
                                        William Cavanaugh III
                                        Chairman and Chief Executive Officer

                                       31
<PAGE>

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Peter M. Scott III, certify that:

1.   I have  reviewed  this  quarterly  report on Form 10-Q of Florida  Progress
     Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;
     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and
     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of registrant's board of directors:

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date: May 9, 2003                       /s/ Peter M. Scott III
                                        ----------------------
                                        Peter M. Scott III
                                        Executive Vice President and
                                        Chief Financial Officer

                                       32
<PAGE>

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, H. William Habermeyer, Jr., certify that:

1.   I have  reviewed  this  quarterly  report  on Form  10-Q of  Florida  Power
     Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;
     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and
     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of registrant's board of directors:

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date: May 9, 2003                       /s/ H. William Habermeyer, Jr.
                                        ------------------------------
                                        H. William Habermeyer, Jr.
                                        President and Chief Executive Officer


                                       33
<PAGE>

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, Peter M. Scott III, certify that:

1.   I have  reviewed  this  quarterly  report  on Form  10-Q of  Florida  Power
     Corporation;

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   The  registrant's  other  certifying  officer  and  I are  responsible  for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;
     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and
     c)   presented  in  this  quarterly   report  our  conclusions   about  the
          effectiveness  of the disclosure  controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's  other certifying  officer and I have disclosed,  based on
     our most recent  evaluation,  to the  registrant's  auditors  and the audit
     committee of registrant's board of directors:

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and
     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   The  registrant's  other  certifying  officer and I have  indicated in this
     quarterly report whether or not there were significant  changes in internal
     controls  or in other  factors  that could  significantly  affect  internal
     controls  subsequent to the date of our most recent  evaluation,  including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



Date: May 9, 2003                       /s/ Peter M. Scott III
                                        ----------------------
                                        Peter M. Scott III
                                        Executive Vice President and
                                        Chief Financial Officer



                                       34
<PAGE>

                                                                      EXHIBIT 99



                       CERTIFICATION FURNISHED PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection  with the Quarterly  Report on Form 10-Q of Florida  Progress
Corporation  (the  "Company") for the period ending  September 30, 2002 as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
I, William  Cavanaugh III,  Chairman and Chief Executive Officer of the Company,
certify,  pursuant to 18 U.S.C.  ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:

     (1) the Report fully  complies  with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company.



/s/ William Cavanaugh III
William Cavanaugh III
Chairman and Chief Executive Officer
May 9, 2003


A signed  original of this  written  statement  required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.

                                       35
<PAGE>

                       CERTIFICATION FURNISHED PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection  with the Quarterly  Report on Form 10-Q of Florida  Progress
Corporation  (the  "Company") for the period ending  September 30, 2002 as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
I, Peter M. Scott III,  Executive Vice President and Chief Financial  Officer of
the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss.
906 of the Sarbanes-Oxley Act of 2002, that:

     (1) the Report fully  complies  with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company.



/s/ Peter M. Scott III
Peter M. Scott III
Executive Vice President and
Chief Financial Officer
May 9, 2003



A signed  original of this  written  statement  required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.


                                       36
<PAGE>

                       CERTIFICATION FURNISHED PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In  connection  with the  Quarterly  Report on Form 10-Q of  Florida  Power
Corporation  (the  "Company") for the period ending  September 30, 2002 as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
I, H. William  Habermeyer,  Jr.,  President and Chief  Executive  Officer of the
Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906
of the Sarbanes-Oxley Act of 2002, that:

     (1) the Report fully  complies  with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company.



/s/ H. William Habermeyer, Jr.
H. William Habermeyer, Jr.
President and Chief Executive Officer
May 9, 2003



A signed  original of this  written  statement  required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.


                                       37
<PAGE>

                       CERTIFICATION FURNISHED PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In  connection  with the  Quarterly  Report on Form 10-Q of  Florida  Power
Corporation  (the  "Company") for the period ending  September 30, 2002 as filed
with the Securities and Exchange  Commission on the date hereof (the  "Report"),
I, Peter M. Scott III,  Executive Vice President and Chief Financial  Officer of
the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss.
906 of the Sarbanes-Oxley Act of 2002, that:

     (1) the Report fully  complies  with the  requirements  of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and result of  operations of the
Company.



/s/ Peter M. Scott III
Peter M. Scott III
Executive Vice President and
Chief Financial Officer
May 9, 2003


A signed  original of this  written  statement  required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its staff upon request.


                                       38