EXHIBIT NO. 10b(16)
                              EMPLOYMENT AGREEMENT


         This Employment Agreement  ("Agreement") is made and entered into as of
September 1, 1992, by and between  Carolina  Power & Light Company  ("Employer")
and William Cavanaugh, III ("Employee").

         WHEREAS, Employer desires to retain Employee and Employee desires to be
retained by Employer as President and Chief  Operating  Officer of Employer,  on
the terms and conditions set forth in this Agreement.

         NOW,  THEREFORE,  in consideration of the mutual  agreements  contained
herein, the parties agree as follows:

                             SECTION 1 - EMPLOYMENT

         Employee shall be employed as President and Chief Operating  Officer by
Employer,  shall  devote  his  full  business  time  and  best  efforts  to  the
performance of the duties that are necessary and  appropriate as such.  Employee
will also perform all duties and obligations as the Chief  Executive  Officer of
the  Company  and the  Board of  Directors  may from  time to time  specifically
require,  including  without  limitation,  those duties and  obligations in this
Agreement.  Employee  shall be  responsible  and  report  directly  to the Chief
Executive  Officer of the Company.  Employee  agrees to such employment upon the
terms and conditions in this Agreement.

                         SECTION 2 - TERM OF EMPLOYMENT

         This employment is similar to the employment of other senior executives
of  Employer  and is at the  continued  will of both  parties.  If it  should be
terminated by either party, then the provisions of Section 7 herein shall apply.

                            SECTION 3 - COMPENSATION

         In  consideration  of all the  services  to be  rendered by Employee to
Employer under this Agreement, Employer shall compensate Employee as follows:

         (a) Employee  shall be paid an aggregate  annual  salary,  exclusive of
fringe benefits and benefits provided under employee benefit plans, of $400,000,
payable at such intervals, but not less frequently than monthly, as Employer may
determine.  Such salary shall be subject to periodic  review and  adjustment  by
Employer  commencing in calendar year 1993 and thereafter,  at the same time and
in the same manner as other executive officer salaries are reviewed and adjusted
by Employer;

         (b) Employee shall receive 2,000 shares of Employer common stock,  plus
such additional amounts as are necessary to pay the amount of federal, state and
local taxes due on the value of such stock;

         (c) Employee shall receive short-term incentive  compensation  payments
of:  (i)  $150,000,  to be paid on or before  March 15,  1993  with  respect  to
Employee's  services in calendar year 1992; and (ii) $150,000,  to be paid on or
before March 15, 1994 with respect to Employee's services in calendar year 1993.
Such cash payments  shall be in lieu of amounts that might  otherwise be payable
to  Employee  with  respect to  calendar  years  1992 and 1993 under  Employer's
Management Incentive Compensation Program or any similar program adopted in lieu
thereof.  With respect to calendar years after 1993,  Employee shall be eligible
to participate in Employer's  Management  Incentive  Compensation Program or any
similar program  adopted in lieu thereof and Employee's  entitlement to any such
short-term incentive compensation shall be determined under such program;

         (d) Employee shall be entitled to such long-term incentive compensation
payments  or awards  under plans or  programs  adopted  from time to time by the
Board of Directors of the Employer  which covers  eligible  executive  officers,
including Employee;

         (e)  Employee  shall be eligible  to  participate  in certain  employee
pension benefit  programs  (including  certain  deferred  compensation  plans or
agreements) as described in Section 4 of this Agreement;

         (f)  Employee  shall be eligible  to  participate  in certain  employee
welfare  benefit  plans or  programs  and shall be  entitled  to certain  fringe
benefits as described in Section 5 of this Agreement. Such fringe benefits shall
be taxable to the extent  required by law,  and  Employee  shall not receive any
additional amounts to pay the taxes due on any taxable fringe benefits except as
otherwise provided in Section 5.

             SECTION 4 - PENSION AND DEFERRED COMPENSATION BENEFITS

         (a) Employee  shall be entitled to  participate  in and be eligible for
such  pension and  deferred  compensation  benefit  plans or programs  available
generally to senior  executives of Employer,  including by way of  illustration,
but not by way of limitation,  the Stock Purchase-Savings Plan, the Supplemental
Retirement  Plan for  Employees,  the  Supplemental  Executive  Retirement  Plan
("SERP"),   the  Executive   Deferred   Compensation   Plan,  and  the  Deferred
Compensation  Plan for Key Management  Employees.  Employee shall be entitled to
participate in such plans and programs on the same terms and conditions as other
executive employees, except as follows:

                  (i) Employee  shall be entitled to a payment of $150,000 which
shall be deferred and paid to Employee as if it were deferred under the Deferred
Compensation  Plan for Key  Management  Employees  as a  one-year  deferral  for
calendar year 1992. This amount shall be utilized to provide  retirement  income
to Employee of $121,368 per year for 15 years, payable monthly,  commencing upon
Employee's  attainment of age 65. In addition,  reduced  payments  shall be made
pursuant to an agreed-upon schedule if Employee dies before reaching age 65.

                  (ii)  With  respect  to  the  SERP,   Employee   shall  become
immediately  eligible  to  participate  and shall be fully  vested  in  benefits
thereunder as of his date of employment. As of his date of employment,  Employee
shall  also  be  credited  with  14  years  of  service  and an  average  annual
compensation  for the three (3) years  ending  September 1, 1992 of $400,000 for
purposes of determining his benefits thereunder.

                     SECTION 5 - WELFARE AND FRINGE BENEFITS

         (a)  Employee  shall be entitled  to  participate  in all such  welfare
benefit  programs  and  plans  that  exist or may  hereafter  be  instituted  by
Employer,  and shall receive all other fringe  benefits  available  generally to
senior  executives  of Employer.  These  welfare  benefit plans and programs and
other  fringe  benefits  include,  by way  of  illustration,  but  not by way of
limitation,  group health insurance benefits, life insurance benefits, long-term
and short-term disability benefits, vacation days, and annual Employer holidays.

         (b)  Employee  shall be entitled to receive  the  following  additional
welfare  benefits and fringe  benefits on the same terms and conditions as other
executive employees, except as follows:

                  (i)  Employee  shall  be  provided  with   split-dollar   life
insurance  coverage in an amount equal to $1,200,000.  The cost of such coverage
shall be included in Employee's  taxable  income in accordance  with  applicable
regulations.  This split-dollar life insurance  coverage shall be in addition to
$50,000 in group-term  life  insurance  provided to all senior  executives  with
split-dollar life insurance coverage and shall be in lieu of any other insurance
coverage  available to Company  employees  under the Company's  group-term  life
insurance program.

                  (ii)  Employee  shall  be  provided  with   split-dollar  life
insurance  coverage  in the amount of  $3,000,000,  insuring  the joint lives of
Employee and his spouse,  with the Employee's portion of such premium to be paid
by Employee or the trustee of an irrevocable life insurance trust established by
the Employee if the trust is the owner of the policy;

                  (iii)  Employee  shall have the  opportunity  to obtain estate
planning  counseling  provided  through the trust department of Wachovia Bank of
North Carolina, N.A.;

                  (iv)  Employee  shall be  entitled to four (4) weeks of annual
vacation and additional  vacation days as approved on a  discretionary  basis by
the Chief Executive Officer of the Company;

                  (v)  Employer  shall  pay  initiation  fees  and  dues for the
Employee at the Capital City Club. At the option of Employee, Employer also will
pay the initiation fee to the country club of Employee's  choosing.  All monthly
country club dues will be paid by Employee;

                  (vi)  Employee  shall be  entitled  to  membership  in the Rex
Hospital Wellness Center, with the initiation fee and monthly dues to be paid by
Employer;

                  (vii)  Employer  shall  pay for  one  annual  physical,  to be
provided by a physician of Employee's choice;

                  (viii)  Employer  will provide  Employee  with a home security
system which shall include a central burglar alarm system;

                  (ix)  Employee  shall be provided an  automobile  of the class
available to senior executives of Employer, with a cellular telephone. Insurance
and  maintenance  for the vehicle  will be provided  by  Employer,  and all base
monthly telephone charges and the incremental  charges for all business calls on
the cellular telephone will be paid by Employer;

                  (x) Employee shall be entitled to utilize  chartered  aircraft
service  pursuant  to the  Employer's  policies  as  needed,  and,  pursuant  to
Employee's discretion, first class commercial air travel;

                  (xi) Employee  shall be provided  with a personal  computer at
his home for business use;

                  (xii) Employee shall be reimbursed for relocation  expenses as
described in Attachment A hereto; and

                  (xiii) Upon  retirement  from  employment  with the  Employer,
Employee  shall be entitled to the same  medical  and dental  coverage  provided
other future  retirees of the  Employer,  such as the  Chairman/Chief  Executive
Officer; provided, however, that to the extent that any such benefits may not be
provided to Employee due to statutory or regulatory limitations,  Employer shall
obtain substantially equivalent coverage on an insured basis.

                 SECTION 6 - REIMBURSEMENT OF BUSINESS EXPENSES

         Employer  shall   reimburse   Employee  for  all  reasonable   business
expenditures  incurred by Employee in the ordinary and necessary  performance of
his duties  hereunder in accordance with reasonable  practices  established from
time to time by Employer,  upon timely  presentation  by Employee of an itemized
account  of such  expenditures.  In  addition,  Employee  shall be  entitled  to
reimbursement  for travel expenses of Employee's spouse when she accompanies him
to business meetings when spousal attendance is customary.

                             SECTION 7 - TERMINATION

         (a)  Employee's  employment  may be  terminated  at any time by  either
Employee for Employer and for any reason.  No advance notice of such termination
shall be required to be provided by either party. Upon termination of Employee's
employment,  Employee  shall  be  entitled  to such  benefits  under  Employer's
established  benefit programs as determined under such programs and this Section
7 of this Agreement.

         (b)  If  Employee's   employment  is  terminated,   or   constructively
terminated,  by the Employer  for any reason other than good cause,  then to the
extent  vested,  Employee will retain all benefit  rights under all  established
benefit programs as well as all benefits  described herein.  Employee shall also
be entitled to salary continuation of his full base monthly salary for 24 months
following  such  termination.  During such 24-month  period,  Employee  shall be
entitled to continued coverage under the medical,  dental,  life insurance,  and
disability  programs,  provided,  however,  that to the extent any such employee
benefits  may  not be  provided  to  Employee  due to  statutory  or  regulatory
nondiscrimination  rules,  Employer  shall  obtain  for  Employee  substantially
equivalent  coverage on an insured basis. The cost of any such medical,  dental,
life insurance,  or disability  coverage shall be included in Employee's taxable
income, if required by and in accordance with applicable regulations.

         (c) At the option of the Employee,  to be exercised  within one year of
the occurrence of the event, Employee may deem any of the following events to be
a constructive termination of Employee's employment by Employer:

                  (i) Change in form of ownership of Employer (e.g., Employer is
acquired,  enters into a business  combination with another company or otherwise
changes form of ownership).

                  (ii)  Change  in  the  present  Chairman  of  the  Board/Chief
Executive Officer of the Employer or a material change in his responsibilities.

         (d) If  Employee's  employment is terminated by Employee for any reason
other than  death or  disability,  Employee  shall  retain all vested  benefits,
calculated as of the date of termination,  but shall not be entitled to any form
of salary or benefit continuance.

                    SECTION 8 - COOPERATION AFTER TERMINATION

         Following any  termination  of employment by Employee,  Employee  shall
fully  cooperate  with  Employer in all matters  relating to the  completion  of
Employee's  pending work on behalf of Employer  and the orderly  transfer of any
such  pending  work to other  employees  of  Employer  as may be  designated  by
Employer.  Employer shall be entitled to such full-time or part-time services of
Employee as Employer may reasonably require during all or any part of the 90-day
period  following  any notice of  termination  by the  Employee.  In such event,
Employee shall be compensated at a per diem rate equivalent to his previous base
salary with Employer.

                           SECTION 9 - CONFIDENTIALITY

         All confidential information acquired by Employee during his employment
with Employer  shall be regarded as  confidential  and solely for the benefit of
Employer.

                            SECTION 10 - ARBITRATION

In case of any dispute or  disagreement  arising out of or  connected  with this
Agreement,   the  parties   hereto  hereby  agree  to  submit  said  dispute  or
disagreement to the American Arbitration  Association in Raleigh, North Carolina
for a resolution  within 120 days after submission  thereof by three arbitrators
to be designated by said American Arbitration Association. Any decision or award
by said  arbitrators  shall be  binding,  and except in cases of gross  fraud or
misconduct  by one or more of the  arbitrators,  the decision or award  rendered
with  respect  to such  dispute  or  disagreement  shall not be  appealable.  In
addition,  the  prevailing  party  in such an  arbitration  proceeding  shall be
entitled to recover his attorney's fees, all reasonable  out-of-pocket costs and
disbursements,  as well as any and all charges which may be made for the cost of
the arbitration and fees of the arbitrators.

                            SECTION 11 - SEVERABILITY

         If, for any reason,  any  provision of this  Agreement is held invalid,
such invalidity shall not affect any other provisions of this Agreement not held
so invalid,  and each such other provision shall, to the full extent  consistent
with law, continue in full force and effect.

                             SECTION 12 - ASSIGNMENT

         Rights and duties of the parties  hereunder  shall not be assignable by
either  party except that this  Agreement  and all the rights  hereunder  may be
assigned by Employer to any  corporation or other business entity which succeeds
to all  or  substantially  all  of the  business  of  Employer  through  merger,
consolidation,   corporate   reorganization   or  by   acquisition   of  all  or
substantially  all of the  assets  of  Employer  and  which  assumes  Employer's
obligations under this Agreement.

                          SECTION 13 - ENTIRE AGREEMENT

         This  Agreement  supersedes  all prior  agreements  between the parties
concerning the subject matter hereof and this Agreement  constitutes  the entire
agreement  between the parties  with  respect  thereto.  This  Agreement  may be
modified only with a written instrument duly executed by each of the parties. No
person has any authority to make any  representation or promise on behalf of any
of the parties not set forth herein and this  Agreement has not been executed in
reliance upon any  representation  or promise except those contained  herein. No
waiver by any  party of any  breach  of this  Agreement  shall be deemed to be a
waiver of any preceding or succeeding breach.

                           SECTION 14 - GOVERNING LAW

         This Agreement is made and entered into in the State of North Carolina,
and the laws of North Carolina shall govern its validity and  interpretation and
the performance by the parties hereto of their respective duties and obligations
hereunder. This Agreement shall be binding upon the Employer and the Employee as
approved by the Board of  Directors  of the  Employer at its regular  meeting on
September 16, 1992.

                              SECTION 15 - HEADINGS

         Section  and  other  headings  contained  in  this  Agreement  are  for
reference  purposes  only  and  shall  not  affect  in any  way the  meaning  or
interpretation of this Agreement.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the date first written above.


WITNESS:                                     EMPLOYER:


/S/   Charles D. Barham, Jr.
-----------------------------          By:   /S/ Sherwood H. Smith, Jr.
Charles D. Barham, Jr.                      --------------------------------- 
                                             Sherwood H. Smith, Jr.     

                                             Title:  /S/
                                             ----------------------------
                                             Chairman

                                             EMPLOYEE:  /S/ William Cavanaugh
                                             ---------------------------------
                                             William Cavanaugh