**EXHIBIT
      B**


**TO**


**2002
      EQUITY INCENTIVE PLAN**





**BROAD-BASED
      PERFORMANCE SHARE SUB-PLAN**





(As
      amended effective January 1, 2007)








This Broad-Based Performance
      Share Sub-Plan (“Sub-Plan”) sets forth the rules and regulations adopted by the
      Committee for issuance of Performance Share Awards under Section 10 of the
      2002
      Equity Incentive Plan (“Plan”). These rules and regulations shall apply to
      Awards granted effective on and after January 1, 2005. Capitalized terms used
      in
      this Sub-Plan that are not defined herein shall have the meaning given in the
      Plan. In the event of any conflict between this Sub-Plan and the Plan, the
      terms
      and conditions of the Plan shall control. No award Agreement shall be required
      for participation in this Sub-Plan.





**Section
      1. Definitions**





When
      used
      in this Sub-Plan, the following terms shall have the meanings as set forth
      below, and are in addition to the definitions set forth in the
      Plan.





1.1
            “Account”
                means the account used to record and track the number of Performance
                Shares granted to each Participant as provided in Section
                2.4.





1.2
            “Award”
                as used in this Sub-Plan means each aggregate award of Performance
                Shares
                as provided in Section 2.2.





1.3
            “EBITDA”
                means earnings before interest, taxes, depreciation, and amortization
                as
                determined from time to time by the
                Committee.





1.4
            “EBITDA
                Growth”
                means the percentage increase (if any) in EBITDA for any Year, as
                compared
                to the previous Year as determined from time to time by the
                Committee.





1.5
            “Peer
                Group”
                means the peer group of utilities designated by the Committee prior
                to the
                beginning of the Performance Period for which an Award is
                granted.





1.6
            “Performance
                Period”
                for purposes of this Sub-Plan means three consecutive Years beginning
                with
                the Year in which an Award is
                granted.





1.7
            “Performance
                Schedule”
                means Attachment 1 to this Sub-Plan, which sets forth the Performance
                Measures applicable to this
                Sub-Plan.











1.8
            “Performance
                Share”
                for purposes of this Sub-Plan means each unit of an Award granted
                to a
                Participant, the value of which is equal to the value of Company
                Stock as
                hereinafter provided.





1.9
            “Retire”
                or “Retirement”
                means termination of employment on or
                after:





(a)  becoming
      65 years old with at least 5 years of service;





(b)  becoming
      55 years old with at least 15 years of service; or





(c)  achieving
      at least 35 years of service, regardless of age.





1.10
            “Salary”
                means the regular base rate of compensation payable by the Company
                to a
                Participant on an annual basis. Salary does not include bonuses,
                if any,
                or incentive compensation, if any. Such compensation shall not be
                reduced
                by any deferrals made under any other plans or programs maintained
                by the
                Company.





1.11
            “Total
                Shareholder Return”
                means the total percentage return realized by the owner of a share
                of
                stock during a relevant Year or any part thereof. Total Shareholder
                Return
                is equal to the appreciation or depreciation in value of the stock
                (which
                is equal to the closing value of the stock on the last trading day
                of the
                relevant period minus the closing value of the stock on the last
                trading
                day of the preceding Year) plus the dividends declared during the
                relevant
                period, divided by the closing value of the stock on the last trading
                day
                of the preceding Year.





1.12
            “Year”
                means a calendar year.





**Section
      2. Sub-Plan Participation and Awards**





2.1  Participation
      Selection .
      Participants under this Sub-Plan shall be recommended by the Chief Executive
      Officer of the Sponsor and approved by the Committee in its sole discretion
      as
      provided in Section 4.2 of the Sponsor of the Plan.





2.2  Awards .
      Subject
      to any adjustments to be made under Section 2.5, the Committee may, in its
      sole
      discretion, grant Awards to some or all of the Participants in the form of
      a
      specific number of Performance Shares. The target and maximum value of any
      Award
      granted to any Participant in any calendar Year will be based upon the
      following:





Participant
            Target
                Award
            Maximum
                AwardKey
                ManagersLevel
                I
            25%
                of Salary
            31.25%
                of SalaryLevel
                II
            15%
                of Salary
            18.75%
                of Salary











2.3  Award
      Valuation at Grant .
      In
      calculating the value of an Award for purposes of Section 2.2, the value of
      each
      Performance Share shall be equal to the closing price of a share of Stock on
      the
      last trading day of the Year before the Performance Period begins. The
      Participant’s Salary shall be determined as of the January 1 preceding the date
      the Award is granted, or such other time as is determined in the discretion
      of
      the Committee. Each Award is deemed to be granted on the day that it is approved
      by the Committee.





2.4  Accounting
      and Adjustment of Awards .
      The
      number of Performance Shares awarded to a Participant shall be recorded in
      a
      separate Account for each Participant. The number of Performance Shares recorded
      in a Participant’s Account shall be adjusted to reflect any splits or other
      adjustments in the Stock. If any cash dividends are paid on the Stock, the
      number of Performance Shares in each Participant’s Account shall be increased by
      a number equal to (i) the dividend multiplied by the number of Performance
      Shares in each Participant’s Account, divided by (ii) the closing price of a
      share of Stock on the payment date of the dividend. No adjustment shall be
      made
      to any outstanding Awards of a Retired Participant for cash dividends paid
      on
      Stock during the Performance Period following the Retirement of the
      Participant.





2.5  Performance
      Schedule and Calculation of Awards .
      Except
      as otherwise provided, each Award shall become vested on January 1 immediately
      following the end of the applicable Performance Period, subject to adjustment
      in
      accordance with the following procedure. In no event shall such date be
      construed to be earlier than January 1 immediately following the end of the
      applicable Performance Period:





(a)  One-half
      of the Award shall be adjusted as follows:





(i)  The
      Total
      Shareholder Return for the Company shall be determined for each Year during
      the
      Performance Period, and shall then be averaged (the “Company TSR”).





(ii)  The
      average Total Shareholder Return for the Peer Group utilities shall be
      determined for each Year during the Performance Period, and shall then be
      averaged (the “Peer Group TSR”). The two highest and two lowest performing
      utilities within the Peer Group shall be excluded for purposes of determining
      the Peer Group TSR.





(iii)  The
      Peer
      Group TSR for the Performance Period shall be subtracted from the Company TSR
      for the Performance Period. The remainder shall then be used to determine the
      number of vested Performance Shares using the Performance Schedule, based on
      one-half of the number of Performance Shares in the Participant’s
      Account.





(b)  The
      other
      one-half of the Award shall be adjusted as follows:





(i)  The
      EBITDA Growth for the Company shall be determined for each Year during the
      Performance Period, and shall then be averaged (the “Company EBITDA
      Growth”).








(ii)  The
      average EBITDA Growth for the Peer Group utilities shall be determined for
      each
      Year during the Performance period, and shall be averaged (the “Peer Group
      EBITDA Growth”). The two highest and two lowest performing utilities within the
      Peer Group shall be excluded for purposes of determining the Peer Group EBITDA
      Growth.





(iii)  The
      Peer
      Group EBITDA Growth for the Performance Period shall be subtracted from the
      Company EBITDA Growth for the Performance Period. The remainder shall then
      be
      used to determine the number of vested Performance Shares using the Performance
      Schedule, based on one-half of the number of Performance Shares in the
      Participant’s Account.





(c)  Except
      as
      provided in Section 3, the total number of vested Performance Shares payable
      to
      the Participant shall be the sum of the amounts determined in accordance with
      subsections (a) and (b) above.





(d)  The
      Performance Measures and the Performance Schedule will not change during any
      Performance Period with regard to any Awards that have already been granted.
      The
      Committee reserves the right to modify or adjust the Performance Measures and/or
      the Performance Schedule in the Committee’s sole discretion with regard to
      future grants.





2.6  Payment
      of Awards .
      Except
      as provided in Section 3, Awards shall be paid after expiration of the
      Performance Period. The Company will issue one share of Stock in payment for
      each vested Performance Share (rounded to the nearest whole Performance Share)
      credited to the Account of the Participant. Payment
      shall be made during the month of April of the Year immediately following
      expiration of the Performance Period, or as soon as practicable
      thereafter.





**Section
      3. Vesting and Forfeiture**





3.1  Retirement .
      In the
      event of the Retirement of the Participant, any
      outstanding Awards of the Participant for any unexpired Performance Period
      shall
      immediately vest
      on a
      prorated basis, beginning with January 1 of the Performance Period and ending
      with the month prior to the Retirement date. The vested portion of the
      Participant’s outstanding Awards shall be adjusted in accordance with Section
      2.5 and paid in accordance with Section 2.6 following the end of the
      Performance Period
      for the Award. If the Participant dies following Retirement but prior to the
      expiration of the Performance Period, the Participant’s outstanding Awards shall
      be adjusted and paid in accordance with Section 3.4.





3.2  Death
      or Divestiture .
      If the
      Participant dies prior
      to
      expiration of the Performance Period, or
      terminates employment as the result of a Divestiture during a Performance
      Period, any outstanding Awards of the Participant for any unexpired Performance
      Period shall vest on a prorated basis beginning with January 1 of the
      Performance Period and ending with the last month completed prior to the date
      the participant dies or the date of the termination as a result of the
      Divestiture. The Participant’s outstanding Awards shall be adjusted and paid in
      accordance with Section 3.4.








3.3  Change
      in Control. In the
      event of a Change in Control prior to the expiration of the Performance Period,
      any outstanding Award of the Participant for any unexpired Performance Period
      shall be treated as follows:





(a)  If
      the
      Award is assumed by the successor to the Sponsor as of the date of the Change
      in
      Control, each outstanding Award not previously forfeited shall continue to
      vest
      and shall be paid pursuant to the terms of this Sub-Plan; provided, however,
      that in the event the employment of the Participant is terminated by the Company
      without Cause following the Change in Control, any outstanding Award shall
      become fully vested as of the termination date, and the aggregate value of
      the
      Award shall be paid after being adjusted in accordance with Section
      3.4.




(b)  If
      the
      Award is not assumed by the successor to the Sponsor as of the date of the
      Change in Control, any outstanding Award shall become vested as of the date
      of
      the Change in Control, and the aggregate value of the Award shall be paid after
      being adjusted in accordance with Section 3.4.




3.4  Adjustment
      and Payment of Awards .
      Any
      Award which is vested prior to the end of the Performance Period due to the
      death
      of the Participant, termination of employment as a result of a Divestiture,
      or
      Change in Control during the Performance Period, or becomes payable upon death
      following Retirement pursuant to Section 3.1 above shall be adjusted and paid
      pursuant to the
      following procedure:





(a)  One-half
      of the Award shall be adjusted as follows:





(i)  The
      Company TSR shall be determined for each Year or partial Year, and a weighted
      average Company TSR shall be calculated for the period between the first day
      of
      the Performance Period and the date the Participant dies, the date of
      termination as a result of the Divestiture or the date that the Award is vested
      pursuant to Section 3.3 (the “Prorated Company TSR”).





(ii)  The
      average Peer Group TSR shall be determined for each Year or partial Year, and
      a
      weighted average Peer Group TSR shall be calculated for the period between
      the
      first day of the Performance Period and the date the Participant dies, the
      date
      of termination as a result of the Divestiture or the date that the Award is
      vested pursuant to Section 3.3 (the “Prorated Peer Group TSR”). The two highest
      and two lowest performing utilities within the Peer Group shall be excluded
      for
      purposes of determining the Peer Group TSR.





(iii)  The
      Prorated Peer Group TSR for the Performance Period shall be subtracted from
      the
      Prorated Company TSR for the Performance Period. The remainder shall then be
      used to determine the vested Performance Shares using the Performance Schedule,
      based on one-half of the number of Performance Shares in the Participant’s
      Account.








(b)  The
      other
      one-half of the Award shall be adjusted as follows:





(i)  The
      Company EBITDA Growth shall be determined for each Year or partial Year, and
      a
      weighted average Company EBITDA Growth shall be calculated for the period
      between the first day of the Performance Period and the end of the calendar
      quarter immediately preceding the date the Participant dies, the date of
      termination as a result of the Divestiture or the date that the Award is vested
      pursuant to Section 3.3 (the “Prorated Company EBITDA Growth”).





(ii)  The
      average Peer Group EBITDA Growth shall be determined for each Year or partial
      Year, and a weighted average Peer Group EBITDA Growth shall be calculated for
      the period between the first day of the Performance Period and the end of the
      calendar quarter immediately preceding the date the Participant dies, the date
      of termination as a result of the Divestiture or the date that the Award is
      vested pursuant to Section 3.3 (the “Prorated Peer Group EBITDA Growth”). The
      two highest and two lowest performing utilities within the Peer Group shall
      be
      excluded for purposes of determining the Peer Group EBITDA Growth.





(iii)  The
      Prorated Peer Group EBITDA Growth for the Performance Period shall be subtracted
      from the Prorated Company EBITDA Growth for the Performance Period. The
      remainder shall then be used to determine the vested Performance Shares using
      the Performance Schedule, based on one-half of the number of Performance Shares
      in the Participant’s Account.





(c)  The
      total
      number of vested Performance Shares payable to the Participant shall be the
      sum
      of the amounts determined in accordance with subsections (a) and (b)
      above.





(d)  In
      the
      event of the death of the Participant, payment shall be made within a reasonable
      time after the Participant dies to the Participant’s Designated Beneficiary. In
      the event of the termination of employment of the Participant as a result of
      a
      Divestiture, payment shall be made within a reasonable time after the date
      of
      termination. If the Award vests pursuant to Section 3.3, the Award shall be
      paid
      within a reasonable time after the date of vesting. The Company will issue
      one
      share of Stock in payment for each Performance Share (rounded to the nearest
      whole Performance Share) credited to the Account of the Participant.





3.5  Termination
      of Employment .
      In the
      event that a Participant’s employment with the Company terminates for any reason
      other than as provided in this Section 3, any Award made to the Participant
      which has not vested as provided in Section 2 or Section 3 shall be forfeited.








**Section
      4. Non-Assignability of Awards**





The
      Awards and any right to receive payment under the Plan and this Sub-Plan may
      not
      be anticipated, alienated, pledged, encumbered, or subject to any charge or
      legal process, and if any attempt is made to do so, or a Participant becomes
      bankrupt, then in the sole discretion of the Committee, any Award made to the
      Participant which has not vested as provided in Sections 2 and 3 shall be
      forfeited.





**Section
      5. Amendment and Termination**





This
      Sub-Plan shall be subject to amendment, suspension, or termination as provided
      in the Plan.








IN
      WITNESS WHEREOF, this instrument has been executed this 15th day of December,
      2006.





PROGRESS
      ENERGY, INC.







By:
/s/
      R obert
      B. McGehee


Robert
      B. McGehee


Chief Executive Officer

























ATTACHMENT
      1





**PERFORMANCE
      SCHEDULE**





**PERFORMANCE
      SHARE CALCULATION** **1**








The
      following table shall be used to adjust one half of the Participant’s Award in
      accordance with Section 2.5(a) or Section 3.4(a) of the Plan.





*If
                the Company TSR**2**minus*
              *the
                Peer Group TSR**2**is:*
            *Then
                the 50% of the vested*
              *Performance
                Share Award*
              *shall
                be multiplied by:*5%
                or better
            2.004.0
                - 4.99
            1.753.0
                - 3.99
            1.502.0
                - 2.99
            1.251.0
                - 1.99
            1.00(0.99)
                - 0.99
            .50(1.0)
                - (1.99)
            .25(2.0)
                or less
            0.00




The
      following table shall be used to adjust one half of the Participant’s Award in
      accordance with Section 2.5(b) or Section 3.4(b) of the Plan:





*If
                the Company EBITDA Growth**2**minus*
              *the
                Peer Group EBITDA Growth**2**is:*
            *Then
                the 50% of the vested*
              *Performance
                Share Award*
              *shall
                be multiplied by:*5%
                or better
            2.004.0
                - 4.99
            1.753.0
                - 3.99
            1.502.0
                - 2.99
            1.251.0
                - 1.99
            1.000.00
                - 0.99
            .50Less
                than 0
            0





1  The
      number of Performance Shares as calculated above shall be paid in accordance
      with the provisions of Section 2.5 and 2.6 of this Sub-Plan.





2 For
      purposes of Section 3, the Prorated Company TSR and EBITDA Growth and Prorated
      Peer Group TSR and EBITDA Growth shall be used, and the number of Performance
      Shares as calculated above shall be paid in accordance with the provisions
      of
      this Sub-Plan.