12/01/2009



# Progress Energy Carolinas plans to retire remaining unscrubbed coal plants in N.C.

Green strategy includes 11 units at 4 sites, totali ng almost 30 percent of N.C. coal fleet

RALEIGH, N.C. (Dec. 1, 2009) – Progress Energy Caro linas, a wholly owned subsidiary of Progress Energy (NYSE: PGN), today announced that by the end of 20 17, the company intends to permanently shut down all of its remaining N.C. coal-fired power plants that do not have flue-gas desulfurization controls (scrubbers)

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In a report filed with the N.C. Utilities Commissio n today, the utility outlined its plan to close a t otal of 11 coal-fired units, totaling nearly 1,500 megawatts (MW) at four

sites in the state: • The 600-MW L.V. Sutton Plant near Wilmington. • The 316-MW Cape Fear Plant near Moncure. • The 172-MW W.H. Weatherspoon Plant near Lumberton

. • And the 397-MW H.F. Lee Plant near Goldsboro (ret irement announced in August). The commitment represents about 30 percent of the c ompany’s coal-fired power generation fleet in North Carolina. It will result in significant emission r eductions, including carbon dioxide, sulfur dioxide, nitrogen oxides, mercury and other pollutants.

“Progress Energy’s announcement is important for No rth Carolina’s air quality,” said N.C. Gov. Bev Per due. “The transition toward cleaner sources of ener gy is good for the environment and the economy.”

Progress Energy Carolinas has announced a plan to b uild new generation fueled by natural gas in Wayne County, N.C., and expects to announce additional ga s plans in the near future. The company will continue to opera te three coal-fired plants in North Carolina after 2017. The company has invested more than $2 billion in installing state-of-the-art emission controls at the 2,424-MW Roxboro Plant and the 742-MW Mayo Plant, both locat ed in Person County, and the 376-MW Asheville Plant in Buncombe County. Emissions of nitrogen oxides, sulf ur dioxide, mercury and other pollutants have been reduced significantly at those sites.

Resource planning is a continuous process. The plan s outlined today are based on certain assumptions a bout anticipated environmental requirements. Should those assumptions change, the utility’s plans might also change.

“This is a significant commitment to clean air in o ur state and a major down-payment on our company’s carbon-reduction strategy,” said Bill Johnson, chai rman, president and CEO-Progress Energy. “Within seven years, we ex pect to retire nearly one-third of our coal fleet i n North Carolina. We are aggressively pursuing a ba lanced solution for meeting future energy needs, including clean te chnologies and energy efficiency while continuing t o ensure that electricity remains available and rel iable 24 hours a day, seven days a week, for the 1.5 million househo lds and businesses that depend on us.”

“These plants and their employees have been an impo rtant part of our ability to meet the state’s elect ricity needs for more than a half-century,” said Ll oyd Yates, president and CEO for Progress Energy Carolinas. “They were t he backbone of the system and operated largely behi nd the scenes to make sure that when our customers flipped the switch, the lights came on.

“Coal-fueled generation will continue to be vital t o our ability to meet customer electricity needs,” Yates said. “But as environmental regulations conti nue to change, and as even more significant rule changes appear likely in the near future, the costs of retrofitting and ope rating these plants will increase dramatically. We believe this is the right decision for our customers, our state and our company.”

Installing emission controls on older, smaller coal -fired units is expensive, including hundreds of mi llions of dollars per unit for flue-gas desulfuriza tion equipment (scrubbers) and additional expense for other techno logies. Current and expected legislation affecting various pollutants will continue to increase the co st of coal-fired generation, particularly at smaller, older plants.

The plan filed today was in response to a request b y the N.C. Utilities Commission. The regulatory age ncy ordered the company to provide its retirement p lans related to

“unscrubbed” coal-fired units in North Carolina. Th e request was part of the commission’s approval in October of Progress Energy Carolinas’ plan to build a 950-MW power plant, fueled by clean-burning natural gas, i n Wayne County, N.C.

The plan filed today confirms the company’s decisio n to retire the Lee Plant in 2013. Additionally it provides tentative schedules for other retirements: • The company expects to retire the coal-fired Sutt on Plant in 2014. The plant has three units that ca me online in 1954, 1955 and 1972. In the coming wee ks, the company will seek approval from state regulators to build a natural gas-fueled plant of approximately the same size as the current coal plant (600 MW) at the Sutton site, located on the Cape Fear River near Wilmington. Du e to the location of the plant at the far eastern e nd of Progress Energy’s electric system, the compan y must replace the generation in the same area to maintain system reliability.

• The company’s Cape Fear and Weatherspoon plants h ave a total of five coal units (most built in the 1 950s). The company plans to retire the units betwee n 2013 and 2017. Due to the sites’ existing infrastructure and proximity to renewable fuel sources (such as wood waste), the company is evaluating the possibility o f converting a portion of the total capacity (50 to 150 MW) to use biomass. Progress Energy and other utilities in No rth Carolina must provide increased amounts of rene wable energy under a state law passed in 2007. Biomass is the st ate’s most plentiful renewable resource.

The company also is evaluating the potential for a future use of the Cape Fear and Weatherspoon plant sites for natural gas-fueled generation. No decisio ns have been made regarding specific retirement dates or biomass or gas conversion.

Progress Energy Carolinas employs about 260 people at the four coal-fired plants included in today’s r eport. The company is working to ensure that as man y as possible will have jobs at the new gas-fueled power plants o r opportunities to move to other positions at compa ny facilities during the multi-year transition peri od.

Progress Energy Carolinas maintains a mix of resour ces and options – nuclear, natural gas, coal, hydro electric, solar, biomass and energy efficiency. The balance helps make the company and state more energy independent and minimizes the risk of volatility in price and s upply for any single fuel source.

Progress Energy Carolinas’ 174-MW Robinson Plant in South Carolina is not affected by today’s announce ment.

Progress Energy (NYSE: PGN), headquartered in Ralei gh, N.C., is a Fortune 500 energy company with more than 22,000 megawatts of generation capacity and $ 9 billion in annual revenues. Progress Energy includes two ma jor electric utilities that serve approximately 3.1 million customers in the Carolinas and Florida. Th e company has

earned the Edison Electric Institute's Edison Award , the industry's highest honor, in recognition of i ts operational excellence, and was the first utilit y to receive the prestigious J.D. Power and Associates Founder's Awa rd for customer service. The company is pursuing a balanced strategy for a secure energy future, which includes aggressive energy-efficiency programs, investments in renewable energy technologies and a state-of-the -art electricity system. Progress Energy celebrate d a century of service in 2008. Visit the company’s Web site at www.progress-energy.com

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