UNITED
STATESSECURITIES AND EXCHANGE
COMMISSIONWashington, D.C. 20549

FORM 10-K/A(Amendment
No. 1)

|(Mark One)                                        |  |                                                                                               
|------------------------------------------------- |  | ----------------------------------------------------------------------------------------------
|[ X ]                                             |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934    
|                                                  |  |                                                                                               
|For the fiscal year ended December 31,
      2011
|                                                 
|OR                                               
|                                                 
|[    ]                                            |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

For the transition period
from __________ to

|            | Exact name of registrant as specified in its
      charter,  | I.R.S. Employer
|----------- | ------------------------------------------------------------ | ---------------
|Commission  | state of incorporation, address of principal
      executive | Identification 
|File Number | office, and telephone
      number                           | Number         




|1-15929                                    | Progress Energy, Inc. | 56-2155481
|------------------------------------------ | --------------------- | ----------
|410 South Wilmington Street               
|Raleigh, North Carolina
  27601-1748      
|Telephone: (919) 546-6111                 
|State of Incorporation: North
    Carolina

SECURITIES REGISTERED
PURSUANT TO SECTION 12(b) OF THE ACT:

|Title of each class              | Name of each exchange on which registered
|-------------------------------- | -----------------------------------------
|Common Stock (Without Par Value) | New
      York Stock Exchange            

|SECURITIES REGISTERED PURSUANT TO SECTION
      12(g) OF THE ACT:
|-----------------------------------------------------------------
|None                                                             

|Indicate by check mark whether the registrant is a well-known
      seasoned issuer, as defined in Rule 405 of the Act.                                                                                                                                                                                                                                                          |  | Yes x |  | No o
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | ----
|                                                                                                                                                                                                                                                                                                                                                                                
|Indicate by check mark whether the registrant is not required to
      file reports pursuant to Section 13 or Section 15(d) of the Act.                                                                                                                                                                                                                                          |  | Yes o |  | No x
|                                                                                                                                                                                                                                                                                                                                                                                
|Indicate by check mark whether the registrant (1) has 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) has
      been subject to such filing requirements for the past 90 days. |  | Yes x |  | No o

---



|Indicate by check mark whether the registrant has submitted
      electronically and posted to its corporate Web site, if any, every
      Interactive Data File required to be submitted and posted pursuant to Rule
      405 of Regulation S-T during the preceding 12 months (or for such shorter
      period that the registrant was required to submit and post such
      files). |  | Yes x |  | No o
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | ----
|                                                                                                                                                                                                                                                                                                                                                                                         
|Indicate by check mark if disclosure of delinquent filers pursuant
      to Item 405 of Regulation S-K is not contained herein, and will not be
      contained, to the best of each registrants knowledge, in definitive proxy
      or information statements incorporated by reference in PART III of this
      Form 10-K or any amendment to this Form 10-K.                        |  |       |  | o   
|                                                                                                                                                                                                                                                                                                                                                                                         
|Indicate by check mark whether the registrant is a large
      accelerated filer, an accelerated filer, a non-accelerated filer, or a
      smaller reporting company. See definitions of large accelerated filer,
      accelerated filer and smaller reporting company in Rule 12b-2 of the
      Exchange Act:                                                                   |  |       |  |     

|Large accelerated filer      x       | Accelerated filer         | o
|------------------------------------ | ------------------------- | -
|Non-accelerated filer      
       o | Smaller reporting company | o

|Indicate by
      check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act). |  | Yes
      o |  | No
      x
|------------------------------------------------------------------------------------------------------------------- |  | ----------- |  | ----------

As of June 30, 2011, the
aggregate market value of the voting and nonvoting common equity of Progress
Energy held by nonaffiliates was $14,107,388,747.

As of March 28, 2012, the
registrant had the following shares of common stock outstanding:

|Description                      |  |             | Shares
|-------------------------------- |  | ----------- | ------
|Common Stock (Without Par Value) |  | 295,954,515

2

---



TABLE OF CONTENTS

|PART III | 
|-------- | 
|         | 
|ITEM 10. | 
|         | 
|ITEM 11. | 
|         | 
|ITEM 12. | 
|         | 
|ITEM 13. | 
|         | 
|ITEM 14. | 
|         | 
|PART IV  | 
|         | 
|ITEM 15. | 

3

---



EXPLANATORY NOTE FOR FORM
10-K/A

Pursuant to General Instruction G to Form 10-K, this Amendment No. 1 on
Form 10-K/A (this Amendment) amends the Annual Report on Form 10-K of Progress
Energy, Inc. for the fiscal year ended December 31, 2011, originally filed with
the Securities and Exchange Commission (the SEC) on February 29, 2012 (the
Original Filing). Throughout this Amendment, we use the words Progress
Energy, the Company, we, us, or our to refer to Progress Energy, Inc.
(Carolina Power & Light Company d/b/a Progress Energy Carolinas, Inc.
(PEC) and Florida Power Corporation d/b/a Progress Energy Florida, Inc.
(PEF), which are noted below, are wholly owned subsidiaries of the Company.)
We are filing this Amendment for the sole purpose of including the information
required by Part III, Items 10-14 for Progress Energy that was not included in
the Original Filing. In light of the Companys pending merger with Duke Energy
Corporation (Duke Energy) pursuant to a definitive merger agreement dated
January 8, 2011, the Companys 2012 Annual Meeting of Shareholders is scheduled
to occur on August 8, 2012, contingent upon the merger with Duke Energy not
closing before that date. As a result, the Company is amending the Original
Filing to provide the disclosures required in Part III. The reference on the
cover of the Original Filing to the incorporation by reference of PECs
definitive proxy statement into Part III of the Original Filing remains
unchanged.

In accordance with Rule 12b-15 under the
Securities Exchange Act of 1934, as amended (the Exchange Act), Part III,
Items 10-14 of the Original Filing, solely as they relate to Progress Energy,
have been amended and restated in their entirety, and Part IV, Item 15 of the
Original Filing has been amended solely to include as exhibits the new
certifications for Progress Energy required by Rule 13a-14(a) under the Exchange
Act and the Companys Policy on Related Person Transactions.

Except as described above, no other
changes have been made to the Original Filing, and we have not modified or
updated the other disclosures presented in the Original Filing, including,
without limitation, the financial statements. In particular, no changes have
been made to the Original Filing with respect to PEC or PEF, and this Form
10-K/A is not, and shall not be deemed to be an amendment of the Form 10-K filed
by PEC and PEF as part of the Original Filing. The Original Filing continues to
speak as of the date of the Original Filing, and we have not updated the
disclosures contained therein to reflect any events which occurred at a date
subsequent to the filing of the Original Filing. Accordingly, this Amendment
should be read in conjunction with the Original Filing and the Companys other
filings made with the SEC subsequent to the filing of the Original Filing.

SAFE HARBOR FOR
FORWARD-LOOKING STATEMENTS

This 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
document 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. Any forward-looking
statement is based on information current as of the date of this report and
speaks only as of the date on which such statement is made, and the Company
undertakes 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:

- our ability to obtain the approvals
  required to complete the proposed merger with Duke Energy and the
  impact of compliance with material
  restrictions or conditions potentially imposed by our
  regulators;
- the risk that the merger is terminated
  prior to completion and results in significant transaction costs to
  us;
- our ability to achieve the anticipated
  results and benefits of the merger;
- the impact of business uncertainties
  and contractual restrictions while the merger is pending;
- the scope of necessary repairs of the
  delamination of PEFs Crystal River Unit No. 3 Nuclear Plant could
  prove more extensive than is currently
  identified, such repairs could prove not to be feasible, the costs of
  repair and/or replacement power could
  exceed our estimates and insurance coverage or may not be recoverable through the regulatory
  process;
- the impact of fluid and complex laws
  and regulations, including those relating to the environment and energy
  policy;

4

---



- our ability to recover eligible costs
  and earn an adequate return on investment through the regulatory
  process;
- the ability to successfully operate
  electric generating facilities and deliver electricity to
  customers;
- the impact on our facilities and
  businesses from a terrorist attack, cyber security threats and other
  catastrophic events;
- the ability to meet the anticipated
  future need for additional baseload generation and associated
  transmission facilities in our
  regulated service territories and the accompanying regulatory and financial
  risks;
- our ability to meet current and future
  renewable energy requirements;
- the inherent risks associated with the
  operation and potential construction of nuclear facilities, including
  environmental, health, safety, regulatory
  and financial risks;
- the financial resources and capital
  needed to comply with environmental laws and regulations;
- risks associated with climate
  change;
- weather and drought conditions that
  directly influence the production, delivery and demand for
  electricity;
- recurring seasonal fluctuations in
  demand for electricity;
- the ability to recover in a timely
  manner, if at all, costs associated with future significant weather
  events through the regulatory
  process;
- fluctuations in the price of energy
  commodities and purchased power and our ability to recover such costs
  through the regulatory
  process;
- our ability to control costs,
  including operations and maintenance expense and large construction
  projects;
- the ability of our subsidiaries to pay
  upstream dividends or distributions to Progress Energy;
- current economic
  conditions;
- the ability to successfully access
  capital markets on favorable terms;
- the stability of commercial credit
  markets and our access to short- and long-term credit;
- the impact that increases in leverage
  or reductions in cash flow may have on the Company;
- our ability to maintain our current
  credit ratings and the impacts in the event our credit ratings are
  downgraded;
- the investment performance of our
  nuclear decommissioning trust funds;
- the investment performance of the
  assets of our pension and benefit plans and resulting impact on future funding
  requirements;
- the impact of potential goodwill
  impairments;
- our ability to fully utilize tax
  credits generated from the previous production and sale of qualifying
  synthetic fuels under Internal
  Revenue Code Section 29/45K; and
- the outcome of any ongoing or future
  litigation or similar disputes and the impact of any such outcome or
  related settlements.

Many
of these risks similarly impact our reporting and nonreporting
subsidiaries.

These and other risk factors are detailed
from time to time in our filings with the SEC. All such factors are difficult to
predict, contain uncertainties that may materially affect actual results and may
be beyond our control. New factors emerge from time to time, and it is not
possible for management to predict all such factors, nor can management assess
the effect of each such factor on the Company.

PART III

Item 10.Directors, Executive
Officers and Corporate Governance

Board of Directors

The names of the 14 members of the Board
of Directors, along with their ages, principal occupations or employment for the
past five years, directorships of public companies held during the past five
years, and disclosures regarding the specific experience, qualifications,
attributes or skills that led the Board to conclude that such individual should
serve on the Board, are set forth below. Directors are elected for a term of one
year expiring at the next annual meeting of shareholders and hold office until
their respective successors are elected and qualified.

5

---



JOHN D. BAKER II, age 63, is Executive Chairman of Patriot
Transportation Holding, Inc., which is engaged in the transportation and real
estate businesses, since October 2010. He served as President and Chief
Executive Officer of Patriot Transportation Holding from February 2008 to
October 2010. Mr. Baker was President and Chief Executive Officer of Florida
Rock Industries, Inc., a producer of cement, aggregates, concrete and concrete
products, from 1997 to 2007. As a lawyer and business executive with more than
35 years of experience in the construction materials and trucking industries,
Mr. Baker brings to the Board business insight and expertise that are valuable
to the Company as it undertakes the long-range investments and initiatives
necessary to meet customers energy needs, control costs and comply with public
policies in a complex and changing business environment. He has first-hand
knowledge of the economic and business development issues facing companies in
the State of Florida. Mr. Bakers executive experience and service on the boards
of other public companies have prepared him to respond to financial and
operational challenges and have enhanced his ability to work effectively with
other directors, understand board processes and functions, and oversee
management. Mr. Baker has served as a director of the Company since 2009. He is
a member of the Boards Finance Committee and the Organization and Compensation
Committee.

Other public directorships in past five years:Patriot Transportation Holding, Inc. (1986 to
present)Wells Fargo & Company (January 2009 to present)Texas
Industries, Inc. (October 2010 to present)Vulcan Materials Co. (November
2007 until February 2009)Wachovia Bank, N.A. (2001 until December
2008)Florida Rock Industries, Inc. (1979 until November 2007)

**JAMES E. BOSTIC,
JR.**, age 64, has been
Managing Director of HEP & Associates, a business consulting firm, and a
partner of Coleman Lew & Associates, an executive search consulting firm,
since 2006. He retired as Executive Vice President of Georgia-Pacific
Corporation, a manufacturer and distributor of tissue, paper, packaging,
building products, pulp and related chemicals, in 2006. During his 20 years at
Georgia-Pacific, Mr. Bostic served in various senior positions, including
service as Senior Vice PresidentEnvironmental, Government Affairs and
Communications. Mr. Bostics business background and his expertise on
environmental and regulatory issues are significant assets to the Company and
the Board of Directors. That expertise will be particularly helpful as we
continue to advocate for the creation of effective energy policies and
regulations, and take action to reduce our greenhouse gas emissions through our
balanced solution strategy of energy efficiency, renewable and alternative
energy and a state-of-the-art power system. Additionally, as a result of his
extensive service on the Board, Mr. Bostic has developed a keen understanding of
how the Company operates, the key issues it faces, and the Companys strategy
for addressing those issues as it carries out its responsibilities to its
shareholders and other stakeholders. Mr. Bostic has served as a director of the
Company since 2002. He is a member of the Boards Audit and Corporate
Performance Committee and the
Operations and Nuclear Oversight Committee.

**HARRIS
E. DELOACH,  JR.**, age 67, is Chairman and  Chief Executive Officer of
Sonoco Products Company, a manufacturer of paperboard  and paper and plastic packaging products, since December 2010. He
served as  Chairman, President and Chief Executive Officer of Sonoco Products from April  2005 to December, 2010, and as
President and Chief Executive Officer from July  2000 to April 2005. Mr. DeLoach joined Sonoco Products in 1986 and has
served in  various management positions during his tenure there. Prior to joining Sonoco,  Mr. DeLoach was in private law
practice and served as an outside counsel to  Sonoco for 15 years. As a business leader in the State of South Carolina, Mr.
DeLoach has first-hand knowledge of the economic and business development issues  facing the communities we serve. Mr.
DeLoachs legal background and years of  experience leading a global packaging company are valuable to the Company as it
undertakes the long-range investments and initiatives necessary to meet  customers energy needs, control costs and
comply with public policies while  creating long-term value in a challenging economy and changing business  environment. Mr.
DeLoach has served as a director of the Company since 2006. He  is Chair of the Boards Operations and Nuclear Oversight
Committee and a member  of the Executive Committee, the Corporate Governance Committee
and the Organization and Compensation Committee.

Other public directorships in past five years:Sonoco Products Company (1998 to
present)Goodrich Corporation (2001 to present)

6

---



JAMES B. HYLER, JR., age 64, is Managing Director of Investors
Management Corporation, a firm which invests in and acquires companies in
various industries, since December 2011. He retired as Vice Chairman and Chief
Operating Officer of First Citizens Bank in 2008, and served in these positions
from 1994 until 2008. Mr. Hyler was President of First Citizens Bank from 1988
to 1994, and served as Chief Financial Officer of First Citizens Bank from 1980
to 1988. Prior to joining First Citizens Bank, Mr. Hyler was an auditor with
Ernst & Young for 10 years. He has more than 40 years of experience in the
financial services industry. Mr. Hylers knowledge and expertise in financial
services and corporate finance provide him with the skills needed to assist the
Board in its analysis and decision making regarding financial matters as our
utilities continue to move forward with the long-range investments and
initiatives necessary to optimize our balanced solution strategy for meeting
growth in our customers energy needs, controlling costs and complying with
public policies while creating long-term value in a challenging economy and
changing business environment. Mr. Hyler has served as a director of the Company
since 2008. He is a member of the Boards Finance Committee and the Organization
and Compensation Committee.

Other public directorships in past five years:First Citizens BancShares (August 1988 until
January 2008)

**WILLIAM D.
JOHNSON**, age 58, is
Chairman, President and Chief Executive Officer of Progress Energy, since
October 2007. Mr. Johnson is also Chairman of PEC and PEF. He has served as
Chairman of the Company since July 2007. Mr. Johnson previously served as
President and Chief Operating Officer of Progress Energy, from January 2005 to
October 2007. In that role, Mr. Johnson oversaw the generation and delivery of
electricity by PEC and PEF. Mr. Johnson has been with Progress Energy (formerly
CP&L) in a number of roles since 1992, including Group President for Energy
Delivery, President and Chief Executive Officer for Progress Energy Service
Company, LLC and General Counsel and Corporate Secretary for Progress Energy.
Before joining Progress Energy, Mr. Johnson was a partner with the Raleigh,
N.C., law office of Hunton & Williams LLP, where he specialized in the
representation of utilities. Mr. Johnson has served in a variety of senior
management positions during his tenure with the Company. His background as a
lawyer representing utilities, coupled with his years of hands-on experience at
the Company, provides him with a unique perspective and a keen understanding of
the opportunities and challenges facing the Company and our industry. Mr.
Johnsons breadth of knowledge and experience in addressing key operational,
policy, legislative and strategic issues, and his proven leadership skills will
be significant assets to the Company as it focuses on optimizing its balanced
solution strategy for meeting our customers future energy needs in the face of
a challenging economy, and a changing regulatory and legislative environment.
Mr. Johnson is Chair of the Boards Executive Committee.

**ROBERT W.
JONES**, age 61, is the sole
owner of Turtle Rock Group, LLC, founded in May 2009. From 1974 until May 2009,
Mr. Jones held various management positions at Morgan Stanley, a global provider
of financial services to companies, governments and investors. He served as a
Senior Advisor from 2006 until May 2009, and as Managing Director and Vice
Chairman from 1997 until 2006. While at Morgan Stanley, Mr. Jones specialized in
the utility industry for many years before being named Vice Chairman. Turtle
Rock Group, LLC is a financial advisory consulting firm whose sole current
client is Morgan Stanley. During his career, Mr. Jones has participated in many
major international and domestic utility and project financing transactions,
with a particular focus on strategic advisory and capital-raising assignments.
He has testified before numerous state public utility commissions and has been a
frequent speaker on regulatory and corporate governance issues. Mr. Joness
expertise in financial services and his experience in the regulatory arena
provide him with a unique perspective that will be beneficial to the Company as
it undertakes the long-range investments and initiatives necessary to meet
growth in its customers future energy needs and comply with public policies,
while creating long-term value. Mr. Jones has served as a director of the
Company since 2007. He is Chair of the Boards Finance Committee and a member of
the Executive Committee, the Corporate Governance Committee and the Organization and
Compensation Committee.

7

---



W.
STEVEN JONES, age 60, is Dean (Emeritus) and Professor of Strategy and
Organizational Behavior at the Kenan-Flagler Business School at the University
of North Carolina at Chapel Hill, since 2008. He served as Dean of the
Kenan-Flagler Business School from August 2003 until August 2008. Prior to
joining the Kenan-Flagler Business School in 2003, Mr. Jones had a 30-year
career in business. That career included serving as Chief Executive Officer and
Managing Director of Suncorp-Metway Ltd., which provides banking, insurance and
investing services in Brisbane, Queensland, Australia. He also worked for ANZ,
one of Australias four major banks, in various capacities for eight years. Mr.
Jones has international experience in developing strategy, leading change and
building organizational capability in a variety of industries. His expertise in
the financial services arena continues to be beneficial as the Company
undertakes the long-range investments and initiatives necessary to meet its
customers future energy needs, control costs and comply with public policies,
while creating long-term value. Mr. Jones has served as a director of the
Company since 2005. He is a member of the Boards Audit and Corporate
Performance Committee and the
Operations and Nuclear Oversight Committee.

Other public directorships in past five years:Premiere Global Services, Inc. (2007 to
present)State Farm Mutual
Automobile Insurance Co. (June 2010 to present)Bank of America (April 2005
until April 2008)

**MELQUIADES R. MEL
MARTINEZ**, age 65, is a
Managing Director of JPMorgan Chase & Co., since August 2010. Mr. Martinez
has had a distinguished career in both the public and private sectors, most
recently as partner in the law firm of DLA Piper in its Orlando, Florida office
from September 2009 to July 2010 and as a United States Senator from Florida
from 2005 to 2009. While serving in the U.S. Senate, he addressed multiple
policy and legislative issues as a member of the following Senate committees:
Armed Services; Banking, Housing & Urban Affairs; Foreign Relations; Energy
and Natural Resources; Commerce; and Special Committee on Aging. Prior to his
election, Mr. Martinez served as the Secretary of Housing and Urban Development
from 2001 to 2004. His extensive legal, policy and legislative experience will
be valuable to the Company as we continue to advocate for the creation of
effective energy policies and regulations. Prior to representing the State of
Florida in the U.S. Senate, Mr. Martinez served as Mayor of Orange County,
Florida, and as a board member of the Orlando Utilities Commission. He also
spent over 25 years in private legal practice, conducting numerous trials in
state and federal courts throughout Florida. As a resident and former public servant of
the State of Florida, Mr. Martinez brings to our Board a unique perspective and
first-hand knowledge that continues to be beneficial as we address key
regulatory issues in that state. Mr. Martinezs diversified experience and
background are significant assets to our Companys Board. Mr. Martinez has
served as a director of the Company since 2010. He is a member of the Operations
and Nuclear Oversight Committee and the Organization and Compensation Committee.

Other public directorships in past five years:Marriott Vacations Worldwide Corporation (November
2011 to present)

**E. MARIE
MCKEE**, age 61, is President
of the Corning Museum of Glass, since 1998, and served as Senior Vice President
of Corning Incorporated, a manufacturer of components for high-technology
systems for consumer electronics, mobile emissions controls, telecommunications
and life sciences, from 1996 to 2010. Ms. McKee has over 30 years of experience
at Corning, where she held a variety of positions with increasing levels of
responsibility. She initially served in various human resources manager
positions including Human Resources Director for Cornings Electronics Division,
its Research & Development Division and its Centralized Engineering
Division. While serving in these positions, Ms. McKee gained significant
experience in designing and implementing human resources strategies, business
processes and organizational change efforts. She then served in various
management positions, including Division Vice President of Corporate Strategic
Staffing, Vice President, Human Resources and Senior Vice President, Human
Resources and Corporate Diversity Officer. Ms. McKee served as Chairman of
Steuben Glass from 1998 until the company was sold in 2008. During her tenure on
the Board, Ms. McKees business experience and perspective have proven valuable
to the Company as it has addressed various operational and human resources
issues. Ms. McKees depth of experience has provided her with a thorough
knowledge of employment and compensation practices and strategies that enables
her to assist the Organization and Compensation Committee and the Board in their
analysis and decision making regarding executive compensation, succession
planning, diversity and other matters. Her experience will continue to be
beneficial to the Company as shareholders, regulators and legislators continue
to focus on executive compensation and corporate governance issues. Ms. McKee
has served as a director of the Company and its predecessors since 1999. She is
Chair of the Boards Organization and Compensation Committee and a member of the
Executive Committee, the Corporate Governance Committee and the Operations and Nuclear Oversight Committee.

8

---



JOHN H. MULLIN, III, age 70, is Chairman of Ridgeway Farm, LLC, a
limited liability company engaged in farming and timber management, since 1989.
He is a former Managing Director of Dillon, Read & Co., a former investment
banking firm. Mr. Mullin was employed by Dillon Read for approximately 20 years.
During that time, he worked with a diversified mix of clients and was involved
in a variety of corporate assignments, including private and public offerings,
and corporate restructurings. Since 1989, Mr. Mullin has managed the diversified
businesses of Ridgeway Farm. He has served on the boards of a number of other
major publicly traded companies, providing him with substantial experience in
the areas of corporate strategy, oversight and governance. Mr. Mullins
executive and board experience have enabled him to develop the skills needed to
work effectively with other directors, understand board processes and functions,
and oversee management. Additionally, as a result of his many years of service
on the Board, Mr. Mullin has developed a keen understanding of the Companys
operations, the key issues it faces and the Companys strategy for undertaking
the long-range investments and initiatives necessary to address those issues
while creating long-term value. He has effectively utilized his broad and
extensive business experiences and knowledge of the Company to provide
leadership to the Companys Board as Lead Director. Mr. Mullin has served as a
director of the Company and its predecessors since 1999. He is Chair of the
Boards Corporate Governance Committee and a member of the Executive Committee, the
Finance Committee and the Organization and Compensation Committee.

Other public directorships in past five years:Sonoco Products Company (2002 to present)Hess
Corporation (2007 to present)

**CHARLES
W. PRYOR,  JR.**, age 67, is Chairman of  Urenco USA Inc. (formerly Urenco
Investments, Inc.), a global provider of  services and technology to the nuclear generation industry worldwide, since
January 2007. He served as President and Chief Executive Officer of Urenco  Investments, Inc. from 2004 to 2006. Mr. Pryor
served as President and Chief  Executive Officer of the Utilities Business Group of British Nuclear Fuels from  2002 to 2004.
From 1997 to 2002, he served as President and Chief Executive  Officer of Westinghouse Electric Co., a supplier of nuclear
fuel, nuclear  services and advanced nuclear plant designs to utilities operating nuclear power  plants. Mr. Pryors
former service as chief executive officer of a multi-billion  dollar company provides him with experience that enables him to
understand the  financial statements and financial affairs of the Company. He has extensive  experience in managing
capital-intensive industries and skillfully addressing  regulatory matters, strategic planning and corporate development. Mr.
Pryors  knowledge and experience in engineering, power generation, nuclear fuel and the  utility industry will be
tremendous assets to the Board in the years ahead as  our Company executes its plan to improve the performance of its nuclear
fleet  and optimizes its balanced solution strategy for meeting growth in customer  demand and complying with public
policies, while creating long-term value. Mr.  Pryor has served as a director of the Company since 2007. He is
a member of the Boards Audit and  Corporate Performance Committee and the Operations and Nuclear Oversight
Committee.

Other public directorships in past five years:DTE Energy Co. (1999 to present)

9

---



CARLOS A.
SALADRIGAS, age 63, is Chairman and Chief
Executive Officer of Regis HRG, which offers a full suite of outsourced human
resources services to small and mid-sized businesses. He has served in these
positions since July 2008. Mr. Saladrigas also serves as Chairman and Chief
Executive Officer of Concordia Holdings, Inc., which specializes in managed
behavioral health, since January 2011. He served as Vice Chairman, from 2007 to
2008, and Chairman, from 2002 to 2007, of Premier American Bank in Miami,
Florida. In 2002, Mr. Saladrigas retired as Chief Executive Officer of ADP Total
Source (previously the Vincam Group, Inc.), a Miami-based human resources
outsourcing company that provides services to small and mid-sized businesses.
Mr. Saladrigas has extensive expertise in both the human resources and financial
services arenas. His accounting background provides him with an understanding of
the principles used to prepare the Companys financial statements and enables
him to effectively analyze those financial statements. Mr. Saladrigas is a
resident of Florida and is familiar with the economic policy issues facing that
state. As a result of his years of service on the Board, Mr. Saladrigas has
gained institutional knowledge about the Company and its operations. His unique
perspective and business acumen will continue to be valuable assets to the Board
as the Company executes its plans to optimize its balanced solution strategy for
meeting growth in customer demand while controlling costs and complying with
public policies in a challenging economy and a changing business environment.
Mr. Saladrigas has served as a director of the Company since 2001. He is a
member of the Boards Audit and Corporate Performance Committee and the Finance
Committee. Mr. Saladrigas is one of the Boards two designated Audit Committee
Financial Experts.

Other public directorships in past five years:Advance
Auto Parts, Inc. (2003 to present)

**THERESA M. STONE**, age 67,
retired as Senior Advisor to the President of the Massachusetts Institute of
Technology Corporation (M.I.T.). She served in that position from October 2011
to January 31, 2012. Ms. Stone served as Executive Vice President and Treasurer
of M.I.T. from February 2007 until October 2011. In her role as Executive Vice
President and Treasurer, Ms. Stone was responsible for M.I.T.s capital
programs, facilities, human resources and information technology, and served as
M.I.T.s Chief Financial Officer and Treasurer. From November 2001 to March
2006, Ms. Stone served as Executive Vice President and Chief Financial Officer
of Jefferson-Pilot Financial (now Lincoln Financial Group). Ms. Stone began her
career as an investment banker, advising clients primarily in the financial
services industry on financial and strategic matters and has held senior
financial executive officer positions at various companies since that time. Ms.
Stones knowledge and expertise in finance make her uniquely qualified to
understand and effectively analyze the Companys financial statements. Her depth
of experience in finance and management provide her with the skills needed to
assist the Board in its analysis and decision making regarding financial matters
as the Company undertakes the long-range investments and initiatives necessary
to optimize its balanced solution strategy for meeting its customers future
energy needs while controlling costs and complying with public policies in a
challenging economy and a changing business environment. Ms. Stone has served as
a director of the Company since 2005. She is Chair of the Boards Audit and
Corporate Performance Committee and a member of the Executive Committee, the
Finance Committee and the Corporate Governance Committee. Ms. Stone is one of the Boards
two designated Audit Committee Financial Experts.

**ALFRED C. TOLLISON, JR.**,  age 69, retired as Chairman and
Chief Executive Officer of the Institute of  Nuclear Power Operations (INPO), a nuclear industry-sponsored
nonprofit  organization, in March 2006. He was employed by INPO from 1987 until March 2006.  During his tenure there, Mr.
Tollisons responsibilities included industry and  government relations, communications, information systems and
administrative  activities. He also served as the executive director of the National Academy for  Nuclear Training. From 1970
until 1987, Mr. Tollison was employed by PEC, where  he served in a variety of management positions, including plant general
manager  of the Brunswick Nuclear Plant and manager of nuclear training. His management  experience as a chief executive
officer of a large nonprofit entity in the  energy industry, as well as his in-depth knowledge of that industry, enables him
to bring a unique perspective to the Companys Board. Mr. Tollisons track  record and expertise in promoting the
safe and reliable operations of our  nations nuclear generating plants will continue to be a significant asset to  our
Board as the Company executes its plan for improving the performance of its  nuclear fleet and optimizes its balanced
solution strategy for meeting the  future energy needs of its customers safely, reliably and affordably. Mr.  Tollison has
served as a director of the Company since 2006. He is a member of the Boards
Audit and  Corporate Performance Committee and the Operations and Nuclear Oversight  Committee. Mr. Tollison also serves as
the Nuclear Oversight Director.

10

---



There are no
family relationships between any of the directors, or any executive officers of
the Company or its subsidiaries, and there is no arrangement or understanding
between any director and any other person pursuant to which the director was
selected.

Executive Officers

Information regarding the Companys executive officers is contained in
the discussion entitled Executive Officers of the Registrants in Part I of the
Original Filing.

Section 16(a) Beneficial Ownership
Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our
directors and executive officers to file reports of their holdings and
transactions in our securities with the SEC and the New York Stock Exchange (the
NYSE). Based on our records and other information, we believe that all Section
16(a) filing requirements applicable to our directors and executive officers
with respect to the Companys 2011 fiscal year were met, except as follows:
Jeffrey M. Stone inadvertently failed to file on a timely basis a Form 4 with
respect to an ad hoc restricted stock unit award granted on April 4, 2011 under
the Progress Energy 2007 Equity Incentive Plan. A Form 4 reporting the
transaction was filed on April 12, 2011.

Code of Ethics

In keeping with the Boards commitment to sound corporate governance, we
have adopted a comprehensive written Code of Ethics that incorporates an
effective reporting and enforcement mechanism. The Code of Ethics is applicable
to all of our employees, including our Chief Executive Officer, our Chief
Financial Officer, our Chief Accounting Officer and our Controller. The Board
has adopted the Companys Code of Ethics as its own standard. Board members, our
officers and our employees certify their compliance with our Code of Ethics on
an annual basis.

Our Code of Ethics is posted on our Internet website and can be accessed
atwww.progress-energy.com/investorand is available in print at no cost to any shareholder upon written request.

We intend to satisfy the disclosure requirement under Item 5.05 of Form
8-K relating to amendments to or waivers from any provision of the Code of
Ethics applicable to our Chief Executive Officer, Chief Financial Officer, Chief
Accounting Officer and Controller by posting such information on our website,
which can be accessed at the Internet address noted above.

Procedures for Shareholders to
Recommend Director Nominees

Please see Future Shareholder Proposals on page 12 for information
regarding the procedures by which shareholders may recommend nominees to the
Board of Directors.

Audit and Corporate Performance
Committee

The Audit and Corporate Performance Committee (the Audit Committee) is
presently composed of the following six nonmanagement directors: Ms. Theresa M.
StoneChair, and Messrs. James E. Bostic, Jr., W. Steven Jones, Charles W.
Pryor, Jr., Carlos A. Saladrigas, and Alfred C. Tollison, Jr. All members of the
committee are independent as that term is defined under the enhanced
independence standards for audit committee members contained in the Securities
Exchange Act of 1934 and the related rules, as amended, as incorporated into the
listing standards of the NYSE. Mr. Saladrigas and Ms. Stone have been designated
by the Board as the Audit Committee Financial Experts, as that term is defined
in the SECs rules. The work of the Audit Committee includes oversight
responsibilities relating to the integrity of our financial statements,
compliance with legal and regulatory requirements, the qualifications and
independence of our independent registered public accounting firm, performance
of the internal audit function and of the independent registered public
accounting firm, and the Corporate Ethics Program. The Audit Committee held
eight meetings in 2011.

11

---



Future Shareholder Proposals

Our 2012 Annual
Meeting of Shareholders will be held on August 8, 2012, unless the merger with
Duke Energy has been completed by that date, in which case no 2012 Annual
Meeting of Shareholders will be held. Shareholder proposals submitted for
inclusion in the proxy statement for our 2012 Annual Meeting must be received no
later than May 1, 2012, at our principal executive offices, addressed to the
attention of:

| | John R. McArthur                                                       
| | -----------------------------------------------------------------------
| | Executive Vice President, General Counsel
      and Corporate Secretary
| | Progress Energy, Inc.                                                  
| | P.O. Box 1551                                                          
| | Raleigh, North Carolina
  27602-1551                                   

Upon receipt of
any such proposal, we will determine whether or not to include such proposal in
the proxy statement and proxy in accordance with regulations governing the
solicitation of proxies.

A Progress Energy shareholder who otherwise intends to present business
at the 2012 Annual Meeting of Shareholders, or who wishes to nominate a
candidate for director, must comply with our By-Laws. Our By-Laws require, among
other things, that for nominations of persons for election to the board of
directors or the proposal of business not included in the notice of meeting to
be considered by the shareholders at an annual meeting, a shareholder must give
timely written notice thereof. To be timely for the 2012 Annual Meeting of
Shareholders, our Corporate Secretary must receive that notice not later than
May 1, 2012, and the Corporate Secretary must receive notice of a shareholder's
intention to present other business not later than May 1, 2012. The notice must
contain and be accompanied by certain information as specified in our By-Laws.
We reserve the right to reject, rule out of order or take other appropriate
action with respect to any proposal that does not comply with these or other
applicable requirements.

Any shareholder
desiring a copy of our By-Laws will be furnished one without charge upon written
request to the Corporate Secretary. A copy of the By-Laws, as amended and
restated on May 10, 2006, was filed as an exhibit to our Quarterly Report on
Form 10-Q for the quarter ended June 30, 2006, and is available at the SECs
website atwww.sec.gov.

12

---



Item 11.Executive Compensation

COMPENSATION DISCUSSION AND ANALYSIS

EXECUTIVE SUMMARY

We are an
integrated electric utility primarily engaged in the regulated utility business.
Our executive compensation philosophy is designed to provide competitive
compensation consistent with key principles that we believe are critical to our
long-term success. The Organization and Compensation Committee of the Companys
Board of Directors (in this Compensation Discussion and Analysis section, the
Committee) took into account the affirmative shareholder advisory vote on
executive compensation at the 2011 Annual Meeting. Because a vast majority (over
92%) of our shareholders approved the compensation described in the proxy
statement for the 2011 Annual Meeting, the Committee did not implement changes
to our compensation program as a result of the shareholder advisory vote.

We are committed to providing an executive compensation program that
supports the following goals and philosophies:

- Aligning our management teams interests with
  shareholders expectations of long-term shareholder value, earnings per share growth and a competitive dividend
  yield;
- Effectively compensating our management team for
  actual performance over the short and long term;
- Rewarding operating performance results that are
  sustainable and consistent with safe, reliable and efficient electric service;
- Attracting, engaging and retaining an experienced
  and effective management team;
- Motivating and rewarding our management team to
  create shareholder value that is sustainable and consistent with prudent risk-taking and based on sound corporate
  governance practices; and
- Providing market competitive levels of target
  (i.e., opportunity) compensation.

Highlights of the 2011 executive
compensation program were:

- Our named executive officers (NEOs) target
  (i.e., opportunity) total compensation levels were approximately 24% below the 50thpercentile of our
  benchmarking peer group as described below in the Benchmarking section.
- We continued to provide only minimal executive
  perquisites (only those prevalent in the marketplace and that are conducive to promoting our desired business outcomes) and
  no tax gross-ups were made on any
  perquisites.
- Payments under the Management Incentive
  Compensation Plan (MICP) and the Performance Share Sub-Plan (PSSP) were based on the achievement of multiple performance
  factors that we believe drive shareholder
  value.

13

---



- Based on managements achievement of key strategic
  initiatives, the Committee made a number of decisions including:

- providing on average a 3% merit-based salary
  increase;
- awarding equity grants at target
  value;
- awarding ad hoc restricted stock unit (RSU)
  grants to each of the NEOs to, among other things, provide a long-term retention incentive for the pending merger with
  Duke Energy; and
- increasing our Chief Executive Officers annual incentive target
  opportunity from 85% to 100%.

For 2011, the
Companys NEOs were:

- William D. Johnson, Chairman, President and Chief
  Executive Officer;
- Mark F. Mulhern, Senior Vice President and Chief
  Financial Officer;
- Jeffrey J. Lyash, Executive Vice President 
  Energy Supply;
- Lloyd M. Yates, President and Chief Executive
  Officer, Progress Energy Carolinas, Inc. (PEC); and
- John R. McArthur, Executive Vice President,
  General Counsel and Corporate Secretary.

I. COMPENSATION OVERVIEW

ASSESSMENT OF RISK

Our Company is highly regulated at both the federal and state levels.
Risks which are undertaken outside the normal course of business are carefully
evaluated by senior management and our Board of Directors. We believe our
compensation program for executive officers does not incentivize excessive risk
taking for the following reasons:

- Our compensation program is evaluated annually by
  the Committee, with the assistance of its compensation consultant, for its effectiveness and consistency with the
  Companys goals.
- Our incentive compensation practices do not reward
  the executive officers for meeting or exceeding volume or revenue targets.
- Our compensation program appropriately balances
  short- and long-term incentives with approximately 63% of total target compensation for the Chief Executive Officer and approximately 52%
  of total target compensation for the other NEOs
  provided in equity and focused on long-term performance.
- The PSSP rewards significant and sustainable
  performance over the longer term by focusing on three-year earnings per share growth and three-year relative total
  shareholder return.
- The MICP focuses on ongoing earnings per share and    legal entity net income, as defined
      in the MICP,       because       we believe that these measures fundamentally drive
      shareholder value       and the       long-term    health of the Company.
- The executive officers are subject to stock
  ownership guidelines independently set by the Committee to ensure long-term alignment with
  shareholders.
- Directors and employees, including the NEOs, are
  not permitted to enter into hedging transactions involving our stock.
- The Committee has discretion to adjust all
  incentive awards based on factors it deems appropriate, including the Companys and the individual executives
  performance and how results are achieved.

14

---



We have
determined that the compensation program for executive officers who are in
senior management positions does not encourage excessive risk taking for all the
reasons stated above.

PROGRAM ADMINISTRATION

Our executive compensation program was administered by the Committee
comprised of seven independent directors (as defined under the NYSE Corporate
Governance Rules). The Committee may form and delegate to subcommittees such
power and authority as the Committee deems appropriate. Members of the Committee
currently have not received compensation under any compensation program in which
our executive officers participate. For a discussion of director compensation,
see the Director Compensation section on page 57.

The Committees charter authorizes the Committee to hire outside
consultants. The Committee evaluates the performance of its compensation
consultant annually to assess the consultants effectiveness in assisting the
Committee with implementing the Companys compensation program and principles.
The Committee retained Meridian Compensation Partners, LLC (Meridian) as its
independent executive compensation consultant to assist the Committee in meeting
the Companys compensation objectives. The Committee met regularly with its
consultant in executive session to discuss matters independent of management.
Under the terms of its engagement, in 2011 Meridian reported directly to the
Committee. Meridians only professional service is executive compensation
advisory services, which it provided to the Committee. Meridian provided no
other services to the Committee or the Company.

Members of management met periodically with the compensation consultant
to ensure the consultant understands our business strategy. On an as-needed
basis, our executive officers and other Company employees provided the
consultant with information regarding our executive compensation and benefit
plans and how we administer them. In addition, the executive officers ensured
that the Committee received administrative support and assistance, and made
recommendations to the Committee to ensure that compensation plans were aligned
with our business strategy and met the principles described above. John R.
McArthur, our Executive Vice President, served as managements liaison to the
Committee. William D. Johnson, our Chief Executive Officer, is responsible for
conducting annual performance evaluations of the other executive officers and
making recommendations to the Committee regarding those executives
compensation. The independent directors of the Board conduct an annual
performance evaluation of Mr. Johnson. The Committee discusses the results of
the evaluation with Mr. Johnson and makes compensation decisions for him giving
consideration to the evaluation results.

COMPETITIVE POSITIONING PHILOSOPHY

The Committees
philosophy is to target the midpoint (i.e., 50th percentile) of the
marketplace in setting compensation levels. Also consistent with 50th
percentile market practices, it is our philosophy to deliver a preponderance of
total compensation to executives in the form of short- and long-term incentive
compensation. The Committee believes this compensation philosophy balances the
need for competitiveness in attracting, engaging and retaining top talent while
being measured and cost effective. This philosophy is also aligned with our
executive compensation objective of linking pay to performance. When we
benchmark and set compensation for our executives against a peer group, we focus
on target compensation. Target compensation is the value of a pay opportunity
as of the beginning of the year. For short-term incentives, this means the value
of that incentive opportunity based on the target percentage of salary if our
performance objectives are achieved. For example, our Chief Executive Officers
target annual incentive opportunity is 100% of salary. This means if we reach
our targeted financial objectives for the year, a target incentive award would
likely be paid. Correspondingly, if performance should fall short or rise above
these goals, then the earned incentive award would typically be lesser or
greater than targeted. In any event, target annual incentive opportunities are
not a certainty but are a function of business results.

15

---



For the
performance shares, the ultimate value of any earned award is entirely a
function of performance against the pre-established 3-year performance goals as
well as the value of the underlying stock price. Also, for the RSUs the value of
any earned award is a function of continued service and the value of the
underlying stock price. The target value is not a certainty but only the value
of the opportunity.

What ultimately might be earned from either short- or long-term
incentives is a function of performance and extended service. With respect to
our variable pay programs, it is generally not the Companys purpose to deliver
comparable pay outcomes versus that of other companies because outcomes can
differ by company based on their performance. Rather, our general compensation
objective is to deliver comparable pay opportunities. Realized results will then
be a significant function of performance and continued service. This is a common
convention among companies; nonetheless, it is an important context to consider
when reviewing the remainder of this CD&A where regular references to target
award opportunities and/or grant date values for our compensation programs
appear.

Target total compensation opportunities are intended to approximate the
50th percentile of our peer group (as defined below) with flexibility
to pay higher or lower amounts based on individual contribution, competition,
retention, succession planning and the uniqueness and complexity of a position.
To review overall compensation delivered, the Committee utilizes tally sheets
that provide a summary of the elements of compensation for each senior
executive. The tally sheets indicate compensation opportunities and actual pay
earned.

The compensation opportunities vary significantly from individual to
individual based on the specific nature of the executive position. For example,
our Chief Executive Officer is responsible for the overall performance of the Company and, as such,
his position has a greater scope of responsibility than our other executive
positions and is benchmarked accordingly. From a market perspective, the
position of Chief Executive Officer receives a greater compensation opportunity
than other executive positions. The Committee therefore sets our Chief Executive Officers
compensation opportunity at a level that reflects the responsibilities of his
position and the Committees expectations.

COMPETITIVE BENCHMARKING

On an annual
basis, the Committees compensation consultant provides the Committee with a
written analysis comparing base salaries, target annual incentives and the grant
date value of long-term incentives of our executive officers to compensation
opportunities provided to executive officers of our peers. The comparative
analysis is based on the 50th percentile (i.e., the median) values of
the peer group. For 2011, the Committee approved the use of a peer group of 21
integrated utilities (the Benchmarking Peer Group). The Benchmarking Peer
Group is comprised of utilities that have regulated and non-regulated business
and was chosen based primarily on comparability of business, similarity in size,
and likely competitors for talent. The 2010 median revenue of the Benchmarking Peer
Group is $10.9 billion compared to the Companys $10.2 billion. These companies
would likely be companies with which we primarily compete for executive talent.
The table below lists the companies in the Benchmarking Peer Group.

|Benchmarking Peer
      Group    
|---------------------------------
|Allegheny Energy, Inc.1          
|Ameren Corporation               
|American Electric Power Co., Inc.
|CenterPoint Energy, Inc.         
|CMS Energy Corporation           
|Dominion Resources, Inc.         
|DTE Energy Company               

1 Allegheny Energy, Inc.
merged with FirstEnergy Corporation on February 25, 2011.

16

---



The electric
utility industry has subsectors identified frequently as competitive merchant,
regulated delivery, regulated integrated, and unregulated integrated (typically
state-regulated delivery and unregulated generation). Each of these subsectors
typically differs in financial performance and market valuation characteristics
such as earnings multiples, earnings growth prospects and dividend yields.
Progress Energy generally is identified as being in the regulated integrated
subsector. The Committee annually evaluates the Benchmarking Peer Group to
ensure that it remains appropriate for compensation comparisons.

SECTION 162(m) IMPACTS

Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
(with certain exceptions) the amount a publicly held company may deduct each
year for compensation over $1 million paid or accrued with respect to its chief
executive officer and any of the other three most highly compensated officers
(excluding the chief financial officer). Certain performance-based compensation
is, however, specifically exempt from the deduction limit. To qualify as
performance-based, compensation must be paid pursuant to a plan that is:

- administered by a committee of outside
  directors;
- based on achieving objective performance goals;
  and
- disclosed to and approved by the
  shareholders.

The Committee considers the impact of Section 162(m) when designing
executive compensation elements and attempts to minimize nondeductible
compensation. The PSSP under the 2007 Equity Incentive
Plan (the Equity Incentive Plan) approved by the Companys shareholders in
2007 is designed to meet the deductibility requirements of Section 162(m) as
performance-based pay. The Company also received shareholder approval of the
Progress Energy 2009 Executive Incentive Plan (the EIP), an annual cash
incentive plan for the Companys NEOs, in 2009. The MICP and EIP were designed to
work together to enable the Company to preserve the tax deductibility of
incentive awards under Section 162(m) of the Internal Revenue Code, as amended,
to the extent practicable. The sole purpose of the EIP is to preserve the tax
deductibility of incentive awards that are qualified performance-based
compensation.

STOCK OWNERSHIP GUIDELINES

To align the interests of our executives with the interests of our
shareholders, the Committee utilizes stock ownership guidelines for all
executive officers. The guidelines are designed to ensure that our management
maintains a significant financial stake in the Companys long-term success. The
guidelines require each senior executive to own a multiple of his or her base
salary in the form of Company common stock within five years of assuming his or
her position. The required levels of ownership are designed to reflect the level
of responsibility that the executive positions entail and to be consistent with
prevailing market practices.

The Committee benchmarked both the position levels and the multiples of
our guidelines against those of the Benchmarking Peer Group and general industry
practices. The benchmarking for 2011 indicated that the Companys guidelines
were at market with respect to ownership levels, the types of equity that
count toward ownership, and the timeframe for compliance. The stock ownership
guidelines for our executive officer positions are shown in the table below:

|Position Level                                                    | Stock Ownership
      Guidelines
|----------------------------------------------------------------- | --------------------------------
|Chief Executive Officer                                           | 5.0 times Base Salary           
|Chief Operating Officer                                           | 4.0 times Base Salary           
|Chief Financial Officer                                           | 3.0 times Base Salary           
|Presidents/Executive Vice Presidents/Senior
      Vice Presidents | 3.0 times Base
Salary           

17

---



For purposes of
meeting the applicable guidelines, the following are considered as common stock
owned by an executive: (i) shares owned outright by the executive; (ii) stock
held in a defined contribution, Employee Stock Ownership Plan, or other
stock-based plan; (iii) phantom stock deferred under an annual incentive or base
salary deferral plan; (iv) stock earned and deferred in any long-term incentive
plan account; (v) restricted stock awards and RSUs; and (vi) stock held in a
family trust or immediate family holdings.

Directors and employees, including the NEOs, are not permitted to enter
into hedging transactions involving the Companys stock.

As of February 22, 2012, our NEOs exceeded the guidelines (see Management
Ownership table on page 61 for specific details).

18

---



II. ELEMENTS OF COMPENSATION

The table below
summarizes the current elements of our executive compensation program.

|                                                                    |                                                                                                                                                        |                                                                                                                                                                                                                                                                      | Short-
  or               
|------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------
|                                                                    |                                                                                                                                                        |                                                                                                                                                                                                                                                                      | Long-Term                 
|Element                                                             | Brief
      Description                                                                                                                                | Primary
      Purpose                                                                                                                                                                                                                                                | Focus                     
|Base Salary                                                         | Fixed compensation. Annual merit increases
      reward individual performance and growth in the position.                                             | Basic element of compensation that pays for
      expertise and experience and is necessary to attract, engage and retain
      executives.                                                                                                                          | Short-term(annual)        
|Annual Incentive                                                    | Variable compensation based on achievement
      of annual performance goals.                                                                          | Rewards operating performance results that
      are consistent with providing safe, reliable and efficient electric
      service.                                                                                                                                  | Short-term(annual)        
|Long-Term Incentives Performance
      Shares                      | Variable compensation based on achievement
      of long-term performance goals.                                                                       | Align interests of shareholders and
      management and aid in attracting, engaging and retaining
    executives.                                                                                                                                                   | Long-term                 
|Long-Term Incentives Restricted
      Stock/Restricted Stock Units | Variable compensation based on target
      levels. Service-based vesting.                                                                             | Align interests of shareholders and
      management and essential in attracting, engaging and retaining
      executives.                                                                                                                                           | Long-term                 
|Supplemental Senior Executive Retirement
      Plan                 | Formula-based compensation, based on salary,
      annual incentives and eligible years of service.                                                    | Provides long-term retirement benefit
      influenced by service and performance. Aids in attracting, engaging and
      retaining executives.                                                                                                                      | Long-term                 
|Management Change-In-Control
    
Plan                              | Defines Companys relationship with
      executives in the event of a change-in-control.                                                              | Aligns interests of shareholders and
      management and aids in (i) attracting executives; (ii) engaging and
      retaining executives during transition following a change-in-control; and
      (iii) focusing executives on maximizing value for shareholders. | Long-term                 
|Employment Agreements                                               | Define Companys relationship with its
      executives and provide protection to each of the parties in the event of
      termination of employment. | Aid in attracting, engaging and retaining
      executives.                                                                                                                                                                                                          | Long-term                 
|Executive Perquisites                                               | Personal benefits awarded outside of base
      pay and incentives.                                                                                    | Aid in attracting, engaging and retaining
      executives and allowing executives to focus their energies on Company
      priorities.                                                                                                                              | Short-term(annual)        
|Other Broad-Based Benefits                                          | Employee benefits such as health and welfare
      benefits, 401(k) and pension plan.                                                                  | Basic elements of compensation expected in
      the marketplace. Aid in attracting, engaging and retaining
      executives.                                                                                                                                        | Both Short-and
  Long-term
|Deferred Compensation                                               | Provides executives with tax deferral
      options in addition to those available under our qualified
plans.                                          | Aids in attracting, engaging and retaining
      executives.                                                                                                                                                                                                         | Long-term                 

19

---



The table below
shows the target awards of short-term and long-term incentives to each NEO for
2011. Target opportunities for incentives are expressed as a percentage of base
salary. Additional elements of compensation are discussed further in this
section.

|                   |                    | Short-Term | Long-Term
      Incentive |            
|------------------ | ------------------ | ---------- | ------------------------- | -----------
|                   |                    | (annual)   | Targets                   | Total      
|Named Executive    | Base Salary        | Incentive  | Performance               | Restricted 
|Officer            | (as of
    1/1/12) | Target1    | Shares2                   | Stock
Units
|William D. Johnson | $1,030,000         | 100%       | 233%                      | 117%       
|Mark F. Mulhern    | $495,945           | 55%        | 117%                      | 58%        
|Jeffrey J. Lyash   | $466,590           | 55%        | 117%                      | 58%        
|Lloyd M. Yates     | $461,440           | 55%        | 117%                      | 58%        
|John R. McArthur   | $502,640           | 55%        | 117%                      | 58%        

1 Annual incentive awards can range from 0%-200% of target
percentages.

2 Payout opportunities can range from 0%-200% of target
percentages.

1.BASE
SALARY

The primary
purpose of base salaries is to provide a basic element of compensation necessary
to attract and retain executives. Base salary levels are established based on
data from the Benchmarking Peer Group and in consideration of each executive
officers skills, experience, responsibilities and performance. Market
compensation levels that approximate the 50th percentile of the
Benchmarking Peer Group are used to assist in establishing each executives job
value (commonly called the midpoint at other companies). These job values
serve as the market reference for determining base salaries.

Each year, the compensation consultant provides the market values for our
executive officer positions. Based, in part, on these market values and, in
part, on the executives achievement of individual and Company goals, the Chief
Executive Officer then recommends to the Committee base salary adjustments for
our executive officers (excluding himself). The Committee reviews the proposed
base salaries and adjusts them as it deems appropriate based on the executives
achievement of individual and Company goals and market trends that result in
changes to job values. The Committee approves them in the first quarter of each
year. The Committee meets in executive session with the compensation consultant
to review and establish the Chief Executive Officers base salary.

2.ANNUAL
INCENTIVE

The MICP is an annual cash incentive plan in which our executives,
managers and supervisors participate. The Company includes managers and
supervisors in the MICP to increase accountability for all levels of the
Companys management team and to better align compensation with management
performance. Annual incentive opportunities are provided to executive officers
to promote the achievement of annual performance objectives. MICP targets are
based on a percentage of each executives base salary and are intended to offer
target award opportunities that approximate the 50th percentile of
the market for the Benchmarking Peer Group.

20

---



Each year, the Committee establishes,
based on the recommendations of the Chief Executive Officer, the threshold, target and outstanding
levels for the performance measures applicable to the NEOs. The 2011 MICP
performance measures were ongoing earnings per share (Ongoing EPS) and legal
entity net income for PEC and PEF as shown in the table below:

|2011 MICP
      Financial Performance Goals
|-------------------------------------------
|(in millions except
      Ongoing EPS)     
|Progress Energy Ongoing EPS                
|PEC Net Income                             
|PEF Net Income                             

The MICPs
performance targets are designed to align with our financial plan and are
intended to appropriately motivate the executive officers to achieve the desired
corporate financial objectives by focusing on legal entity net income results.
The potential MICP funding for each performance measure is 50% at threshold,
100% at target and 200% at outstanding (maximum). Interpolation is applied when
actual performance is between the identified levels. Each performance measure is
assigned a weight based on the relative importance of that measure to the
Companys performance. During the year, updates are provided to the Committee on
the Companys performance as compared to the performance measures. For 2011, the
NEOs performance measures under the MICP were weighted among Ongoing EPS and
legal entity net income as follows:

|                              |             | Performance
      Measures        
|----------------------------- | ----------- | ----------------------------------
|                              |             | (Relative
      Percentage Weight)
|                              |             | Company                           
|****Named
      Executive**** | Target      | Ongoing                           
|****Officer****               | Opportunity | EPS                               
|William D. Johnson            | 100%        | 100%                              
|Mark F. Mulhern               | 55%         | 100%                              
|Jeffrey J. Lyash              | 55%         | 35%                               
|Lloyd M. Yates                | 55%         | 45%                               
|John R. McArthur              | 55%         | 100%                              

The determination of the annual MICP
award that each NEO receives has two steps: i) funding the MICP awards based on
the performance as compared to the financial goals specified above; and ii)
determining individual MICP awards.

First, the Committee approves the total
amount that will be made available to fund MICP awards to managers and
executives, including the NEOs. To determine the total amount available to fund
all MICP awards, we calculate an amount for each MICP participant by multiplying
each participants base salary by a performance factor (based on the sum of a
participants weighted target award achievements). The performance factor ranges
between 0 and 200% of a participants target award, depending upon the results
of each applicable performance measure. The sum of these amounts for all
participants is the total amount of funds available to pay to all participants,
including the NEOs.

Second, the Chief Executive Officer recommends to the
Committee an MICP award payment for executives (excluding himself) based on the
executives target award opportunity, the degree to which the Company achieved
certain goals, and the executives individual performance based on achieving
individual goals and operating results. The Committee reviews the Chief Executive Officers
recommendations and approves and/or makes adjustments as appropriate. The Chief Executive Officers
MICP award payment is determined by the Committee based upon the Committees
annual evaluation of his performance. The Committee may reduce but cannot
increase the amount payable to a participant according to business factors
determined by the Committee, including the performance measures under the
MICP.

As allowed by the MICP, the Committee
uses discretion to adjust funding amounts up or down depending on factors that
it deems appropriate, such as weather, storm costs, impairments, restructuring
costs, and gains/losses on sales of assets. The Committee uses Ongoing EPS as
defined and reported by the Company in its annual earnings release. See the
reconciliation of Ongoing EPS to GAAP EPS attributable to controlling interests
under the caption Results of Operations in Item 7 of the Companys Form 10-K for the
year ended December 31, 2011, filed on February 29, 2012.

21

---



Based on
managements recommendations, with respect to 2011, the Committee exercised
discretion for the three performance measures: the Companys Ongoing EPS, PEC
net income, and PEF net income. The Committee approved adjusting the Companys
Ongoing EPS results upward by a net $0.11 to account for favorable weather, storm
costs, regulatory costs and discretionary spending. The Committee approved
adjusting PECs net income for favorable weather, storm costs, regulatory costs
and discretionary spending for a net upward adjustment of $35 million. The
Committee approved adjusting PEFs net income for favorable weather, tax expense
and the results of a litigation settlement for a net downward adjustment of $26
million.

3.LONG-TERM
INCENTIVES

The Equity Incentive Plan allows the Committee to make various types of
long-term incentive awards to Equity Incentive Plan participants, including the
NEOs. The awards are provided to the NEOs to align the interests of each
executive with those of the Companys shareholders. Long-term incentive awards
are intended to offer target award opportunities that approximate the
50th percentile of the Benchmarking Peer Group. Currently, the
Committee utilizes two types of equity-based incentives: RSUs and performance
shares.

The Committee has determined that to accomplish our compensation
programs purposes effectively, equity-based awards should consist of one-third
RSUs and two-thirds performance shares. This allocation reflects the Committees
strategy of utilizing long-term incentives to retain officers, align officers
interests with those of the Companys shareholders and drive specific financial
performance.

Performance shares are intended to focus executive officers on the
multi-year sustained achievement of financial and shareholder value objectives.
RSUs are intended to further align executives interests with shareholder
interests while providing strong retention for the executive to remain with the
Company long enough for the RSUs to vest.

See the table on page 20 for the 2011 long-term incentive targets for
the NEOs.

After October 2004, we ceased granting stock options. All previously
granted stock options remain valid in accordance with their terms and
conditions.

Performance Shares

The PSSP under the Equity Incentive Plan authorizes
the Committee to issue performance shares to executives as selected by the
Committee in its sole discretion. The value of a performance share is equal to
the value of a share of the Companys common stock, and earned performance share
awards are paid in Company common stock. The performance period for a
performance share is the three-consecutive-calendar-year period beginning in the
year in which it is granted. Dividends or dividend equivalents are not paid on
unvested performance shares. Rather, dividend equivalents accrue quarterly and
are reinvested in additional shares that are only paid on earned performance
shares at the end of each three-year performance cycle.

To determine the number of performance shares granted at the beginning of
each performance cycle, the Company divides the target award value by the
closing stock price on the last trading day of the year prior to the beginning
of the performance period. The performance shares must then be earned over the
three-year performance cycle. The granting of performance shares does not
provide the participant with any guarantee of actually receiving the awards.

Notwithstanding the above calculation, the Committee may exercise
discretion in determining the size of each performance share grant, with the
maximum grant size at 125% of target. In 2011, the Committee did not exercise
this discretion with respect to any grant to the NEOs.

22

---



2007 Performance Share Sub-Plan (the
2007 PSSP)

The 2007 PSSP
provides for an adjusted measure of total shareholder return (referred to as
Total Business Return or TBR) to be utilized as the sole measure for
determining the amount of a performance share award upon vesting. TBR is
computed assuming a constant price to earnings ratio, which was set at the
beginning of each performance period. During a period when the Company was
undergoing transformation of its underlying operating portfolio, this measure
was intended to filter out external or market-based variations in the Companys
stock price and focus on internal restructuring. The performance measure also
uses the Companys publicly reported Ongoing EPS as the earnings component for
determining performance share awards. The Committee chose this method as the
sole performance measure to support its desire to better align the long-term
incentives with the interests of the Companys shareholders and to emphasize our
focus on dividend and Ongoing EPS growth. TBR was used for the 2007  2009 and
2008  2010 performance share grants made under the 2007 PSSP. The performance
measures for the 2008  2010 performance cycle are shown in the table below.

|                                       | Threshold | Target | Outstanding
|-------------------------------------- | --------- | ------ | -----------
|2008 Total Business Return1            |           | 5%     |            
|2008 Percentage of Target Award Earned |           | 25%    |            

1 Total shareholder return, adjusted to reflect a constant
price to earnings ratio set at January 1 of the grant year and to reflect the
Companys Ongoing EPS for each year of the performance period.

Additionally, the Committee retained the discretion to reduce the number
of performance shares awarded if it determines that the payouts resulting from
the TBR do not appropriately reflect the Companys actual performance.

In the first quarter of 2011, the Committee approved a payout of 100% of
the target value for the 2008  2010 PSSP grants.

2009 Performance Share Sub-Plan (the
2009 PSSP)

The 2009 PSSP uses two equally weighted performance measures: relative
total shareholder return (TSR) and earnings growth. TSR, unlike the previously
discussed TBR, is based on the conventional metric of annual share price
appreciation and dividends. By using a combination of relative TSR and ongoing
earnings growth, the 2009 PSSP allows the Committee to consider the Companys
performance as compared to the PSSP Peer Group (as defined below), and
managements achievement of internal goals.

Relative TSR

The relative TSR performance is calculated using the Companys three-year
annualized TSR ranked against the PSSP Peer Group. TSR is defined as the
appreciation or depreciation in the value of the stock, plus dividends paid
during the year, divided by the closing value of the stock on the last trading
day of the preceding year. A 30-day opening/closing average stock value is used
in determining the results to moderate the impact of wide swings in the stock
value. The table below shows the percent of target awards that may be earned
based on the Companys relative TSR percentile ranking:

|Performance and Award Structure (50%)
|-------------------------------------
|Percentile Ranking                   
|                                     
|                                     
|                                     
|                                     

23

---



However,
regardless of the relative ranking, if the Companys TSR is negative for the
performance period, no award above the threshold can be earned.

In making awards under the 2009 PSSP, the Committee used a group of
highly regulated utilities with a business strategy similar to ours based on a
percentage of regulated earnings (the PSSP Peer Group). These companies have a
significant amount of their earnings generated from regulated assets. In
addition, the PSSP Peer Group was selected based on other factors including
revenues, market capitalization, and enterprise value. The PSSP Peer Group
differs from the Benchmarking Peer Group the Committee uses for purposes of
benchmarking compensation. The Benchmarking Peer Group is a broader group that
represents those companies with which we primarily compete for executive talent
and includes companies that are not regulated integrated utilities. The
Committee believes that for purposes of our long-term incentive plan, it is more
appropriate to use the PSSP Peer Group comprised of companies that derive a
significant percentage of their earnings from regulated businesses. The table
below lists the companies in the PSSP Peer Group.

|PSSP Peer
      Group        
|-----------------------------
|Alliant Energy Corporation   
|American Electric Power, Inc.
|Consolidated Edison, Inc.    
|Duke Energy Corporation      
|Great Plains Energy, Inc.    

Earnings Growth

Earnings growth is based on the Companys annual Ongoing EPS. Ongoing EPS
is determined in accordance with the Companys Policy for Disclosure of
Non-GAAP Measures. See the reconciliation of Ongoing EPS to GAAP EPS
attributable to controlling interests under the caption Results of Operations
in Item 7 of the Companys Form 10-K for the year ended December 31, 2011, filed on
February 29, 2012. The earnings growth component of the PSSP award is based on
the Companys earnings growth performance as measured against pre-established
goals set at the beginning of the performance period. The Committee determined
the earnings growth targets for the 2011 annual grant were appropriate in
consideration of consistency with analysts expectations and the 2011 projected
analysts consensus on earnings growth for the PSSP Peer Group. The table below
shows the percent of target awards that may be earned based on the Companys
earnings growth performance:

|            | Performance
      and Award Structure (50%)
|----------- | -------------------------------------------
|            | Three-Year Average Ongoing                 
|Performance | EPS
      Growth                           
|            | 2009-2011                                  
|Threshold   | 2%                                         
|Target      | 4%                                         
|Maximum     | 6%                                         

Restricted Stock Units

The RSU component of the current long-term incentive program helps us
retain executives and aligns the interests of management with those of our
shareholders and management by rewarding executives for increasing and
sustaining shareholder value. The Committee believes that the service-based
nature of RSUs is essential in retaining an experienced and capable management
team and is a common market practice.

24

---



Executive
officers typically receive a grant of service-based RSUs in the first quarter of
each year, which is subject to a three-year graded vesting schedule. The size of
each grant is based on the executive officers target award opportunity and is
determined by using the closing stock price of the Companys common stock on the
last trading day of the year prior to the date of the award. The Committee
establishes target levels based on the peer group information discussed under
the caption Competitive Positioning Philosophy on page 15 above. The 2011 RSU
targets for the NEOs are shown in the table
on page 20 above. The granting of RSUs does not provide the participant with
any guarantee of actually receiving the awards. Holders of RSUs receive
quarterly cash dividend equivalents equal to the amount of any quarterly
dividends paid on our common stock.

To further accent the retention quality of the Equity Incentive Plan and
to recognize the contribution of the officer team, including the NEOs, the
Committee may also issue in its discretion service-based ad hoc grants of RSUs
to executives. Ad hoc grants were awarded by the Committee during 2011 to each
of our NEOs as described under the caption 2011 Compensation Decisions on page
32 below.

4.SUPPLEMENTAL SENIOR EXECUTIVE  RETIREMENT PLAN

The Supplemental Senior Executive Retirement Plan (SERP) provides a
supplemental, unfunded pension benefit for executive officers who have at least
10 years of service with at least three years of service on our Senior
Management Committee (SMC), i.e., service as a Senior Vice President or above.
The SERP is designed to provide pension benefits above those earned under our
qualified pension plan. Current tax laws place various limits on the benefits
payable under our qualified pension plan, including a limit on the amount of
annual compensation that can be taken into account when applying the plans
benefit formulas. Therefore, the retirement incomes provided to the NEOs by the
qualified plans generally constitute a smaller percentage of final pay than is
typically the case for other Company employees. To make up for this shortfall
and to maintain the market-competitiveness of the Companys executive retirement
benefits, we maintain the SERP for members of the SMC, including the NEOs.

The SERP defines covered compensation as annual base salary plus the
annual cash incentive award. The qualified plans define covered compensation as
base salary only. The Committee believes it is appropriate to include annual
cash incentive awards in the definition of covered compensation for purposes of
determining pension plan benefits for the NEOs to ensure that the NEOs can
replace in retirement a portion of total compensation received during
employment. This approach takes into account the fact that base pay alone
comprises a relatively smaller percentage of a NEOs total compensation than of
other Company employees total compensation.

The Committee believes that the SERP is a valuable and effective tool for
attraction and retention due to its significant benefit and vesting
requirements. It is also a common tool among the Benchmarking Peer Group and
utilities in general. Total years of service attributable to an eligible
executive officer may consist of actual or deemed years. The Committee grants
deemed years of service on a case-by-case basis depending upon our need to
attract and retain a particular executive officer. All of our NEOs participate
in the SERP and are fully vested in the SERP.

Payments
under the SERP are made in the form of an annuity, payable at  age 65. The monthly SERP payment is calculated using a
formula that equates to  4% per year of service (capped at 62%) multiplied by the average monthly  eligible pay for the
highest completed 36 months of eligible pay within the  preceding 120-month period. Eligible pay includes base salary and
annual incentive. (For those executives who became SERP participants on or after  January 1, 2009, other than executives who
were members of SMC on December 31, 2008, the target benefit percentage is 2.25% rather than 4% per year  of service. None
of the NEOs for 2011 are subject to the new benefit percentage.)  Benefits
under the SERP are fully offset by Social Security benefits and by  benefits paid under our qualified pension plan. An
executive officer who is age  55 or older with at least 15 years of service may elect to retire and commence  his or her SERP
benefit prior to age 65. The early retirement benefit will be reduced by 2.5% for each year the participant receives the
benefit prior to  reaching age 65.

25

---



On March 16,
2011, the Board amended the SERP in two respects. The SERP was amended to
provide that all service with the Company and its affiliates, including Duke
Energy and its affiliates, after completion of the merger will be treated as
service as a Senior Vice President or above for purposes of meeting the SERPs
eligibility requirements. Second, the SERP was amended to limit participation in
the SERP to executives who were members of the SMC on January 8, 2011. On March
14, 2012, the SERP was further amended to clarify that for all members of the
SMC on December 31, 2008, the target benefit percentage is 4%.

5.MANAGEMENT
CHANGE-IN-CONTROL PLAN

We sponsor a Management Change-In-Control Plan (the CIC Plan) for
selected employees. The purpose of the CIC Plan is to:

- retain key management employees who are critical
  to the negotiation and subsequent success of any transition resulting from a change-in-control (CIC) of the
  Company;
- focus executives on maximizing shareholder
  value;
- ensure business continuity during a transition and
  thereby maintain the value of the acquired company;
- allow executives to focus on their jobs and not
  alternative future employment if they should be terminated; and
- retain key executives during a period of
  potentially protracted transition for the benefit of our shareholders and customers.

Providing such protection to executive officers in general minimizes
disruption during a pending or anticipated CIC. Under our CIC Plan, we generally
define a CIC as occurring at the earliest of the following:

- the date any person or group becomes the
  beneficial owner of 25% or more of the combined voting power of our then outstanding securities; or
- the date a tender offer for the ownership of more
  than 50% of our then outstanding voting securities is consummated; or
- the date we consummate a merger, share exchange or
  consolidation with any other corporation or entity, regardless of whether we are the surviving company, unless our
  outstanding securities immediately prior to the
  transaction continue to represent more than 60% of the combined voting
  power of the outstanding voting securities of the
  surviving entity immediately after the transaction; or
- the date, when, as a result of a tender offer,
  exchange offer, proxy contest, merger, share exchange, consolidation, sale of assets or any combination of the foregoing, the
  directors serving as of the effective date of
  the change-in-control plan, or elected thereafter with the support of not less
  than 75% of those directors, cease to
  constitute at least two-thirds (2⁄3) of the members of the Board of
  Directors; or
- the date when our shareholders approve a plan of
  complete liquidation or winding-up or an agreement for the sale or disposition by us of all or substantially all of our
  assets; or
- the date of any other event that our Board of
  Directors determines should constitute a CIC.

26

---



The Committee has
the sole authority and discretion to designate employees and/or positions for
participation in the CIC Plan. Consistent with the level of responsibility
inherent in their roles and consistent with market practice, the Committee has
designated certain positions, including all of the NEO positions, for
participation in the CIC Plan. The benefits provided under the CIC Plan do not
duplicate the employment agreement severance benefits in the case of CIC Plan
participants. Participants are not eligible to receive any of the CIC Plans
benefits absent both a CIC of the Company and an involuntary termination of the
participants employment without cause, including voluntary termination for good
reason. Good reason termination includes changes in employment circumstances
such as a:

- reduction of base salary or material reduction of
  incentive compensation opportunity;
- material adverse change in position or scope of
  authority;
- significant change in work location; or
- breach of provisions of the CIC Plan.

Rather than allowing benefit amounts to be determined at the discretion
of the Committee, the CIC Plan has specified multipliers designed to be
competitive with current market practices. With the assistance of its
compensation consultant, the Committee has reviewed the design of the CIC Plan
to ensure that it meets the Companys business objectives and falls within
competitive parameters. The Committee has determined that the current CIC Plan
is effective at meeting the goals described above.

The CIC Plan provides separate tiers of severance benefits based on the
position a participant holds within our Company. The continuation of health and
welfare benefits coverage and the degree of excise tax gross-up for terminated
participants align with the length of time during which they will receive
severance benefits.

The following table sets forth the key provisions of the CIC Plan
benefits as it relates to our NEOs:

|                                       | Tier I                                                                                           | Tier II                                        
|-------------------------------------- | ------------------------------------------------------------------------------------------------ | -----------------------------------------------
|Eligible Positions                     | Chief Executive Officer, Chief Operating
      Officer, Presidents and Executive Vice Presidents | Senior
      Vice Presidents                   
|Cash
      Severance                   | 300% of base salary and annual
      incentive1                                                  | 200% of base salary and annual
      incentive1
|Health & Welfare Coverage
      Period | Coverage up to 36 months                                                                         | Coverage up to 24 months                       
|Gross-ups                              | Full gross-up of excise tax                                                                      | Conditional gross-up of excise
  tax           

1 The cash severance payment will be equal to the sum of the
applicable percentage of annual base salary and the greater of the average of
the participants annual incentive award for the three years immediately
preceding the participants employment termination date, or the participants
target annual incentive award for the year the participants employment with the
Company terminates.

27

---



Additionally, the CIC Plan has the
following key provisions:

|Benefit                                            | Description                                                                                                                                                                                                              
|-------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Annual
      Incentive                             | 100% of target
      incentive if terminated within coverage period after CIC.                                                                                                                                           
|Restricted
      StockAgreements                   | Restrictions are
      fully waived on all outstanding grants if terminated during coverage
      period (unless outstanding awards are not assumed by the acquiring company
      in which case they would vest at CIC).
|Performance
      ShareSub-Plan                    | Outstanding awards
      vest (at the target level) as of the termination date (unless outstanding
      awards are not assumed by the acquiring company in which case they would
      vest at CIC).                    
|Supplemental
      SeniorExecutive Retirement Plan | Participant shall be
      deemed to have met minimum service requirements for benefit purposes, and
      participant shall be entitled to payment of benefit under the
    SERP.                                       
|Deferred
      Compensation                        | Entitled to payment
      of accrued benefits in all accrued nonqualified deferred compensation
      plans.                                                                                                             

The CIC Plan also permits the Board
to establish a nonqualified trust to protect the benefits of the impacted
participants. This type of trust generally is established and funded to protect
nonqualified and/or deferred compensation against various risks such as a CIC or
a management change-of-heart. Any such trust the Board establishes would be
irrevocable and inaccessible to future or current management. In July, 2011, the
CIC Plan was amended to eliminate the Boards right to establish such a trust in
the event of a merger with Duke Energy.

Application of the CIC Plan and Other
Compensation Related Consequences of the Proposed Merger with Duke Energy

On January 8, 2011, Duke Energy and
the Company entered into an Agreement and Plan of Merger (the Merger
Agreement). Pursuant to the Merger Agreement, if the merger is consummated, the
Company will become a wholly owned subsidiary of Duke Energy and shareholders of
the Company will receive shares of Duke Energy common stock. Consummation of the
merger is subject to customary conditions, including among other things,
regulatory approval. The shareholders of Duke Energy and the Company approved
the proposed merger in August, 2011.

Our NEOs will not receive additional
compensation or benefits under their employment agreements or the CIC Plan
solely on account of the consummation of the merger with Duke Energy. However,
subject to the limitations described below, if an NEO is terminated without
cause or resigns with good reason within twenty-four months after
consummation of the merger, they will be entitled to severance benefits under
the CIC Plan as set forth in the Involuntary or Good Reason Termination (CIC)
column of the tables captioned Potential Payments Upon Termination, on pages
47 through 56 below. The eligibility of certain NEOs to receive the CIC Plan
benefits is limited by the following:

- Each of our NEOs are expected to assume new
  positions with Duke Energy effective upon consummation of the merger. Thus, we do not expect that these
  executives employment will be terminated in
  connection with consummation of the merger.

28

---



- In connection with the execution of the Merger
  Agreement, Duke Energy and Mr. Johnson executed a term sheet pursuant to which
  the parties agreed to enter into an employment agreement upon consummation of
  the merger. Pursuant to the term sheet, Mr. Johnson has waived his right to
  resign with good reason, and receive CIC Plan benefits or to assert a
  constructive termination under his existing employment agreement, on account
  of (i) his required relocation to Charlotte, North Carolina, (ii) any changes
  to his positions, duties and responsibilities in connection with his
  acceptance of the new position with Duke Energy, or (iii) any changes to his
  total incentive compensation opportunity following the merger with Duke
  Energy. In addition, Mr. Johnsons term sheet specifies that if he is
  involuntarily terminated without cause or resigns for good reason on or
  prior to the second anniversary of the completion of the merger, he will not
  receive a tax gross-up for the parachute payment excise tax under Sections
  280G and 4999 of the Internal Revenue Code. In addition to the waivers
  described above, Mr. Johnsons term sheet also specifies that if he is
  involuntarily terminated without cause or resigns for good reason
  following the second anniversary of, but prior to the third anniversary of,
  the consummation of the merger, he will be entitled to the severance benefits
  provided under his current employment agreement. If the merger with Duke
  Energy is not completed, the waivers described in this paragraph will not take
  effect.
- Also in connection with the execution of the
  Merger Agreement, each of Messrs. Yates, Lyash, McArthur and Mulhern entered into a letter agreement with the Company
  waiving certain rights of such executive officer under the CIC Plan and such executive officers employment
  agreement. Messrs. Yates, Lyash, McArthur and
  Mulhern have each waived the right to resign with good reason, and receive
  the CIC Plan benefits or to assert a
  constructive termination under his employment agreement, on account of
  (i) a required relocation to Charlotte, North
  Carolina, (ii) a change in his position, duties or responsibilities in
  connection with his acceptance of the new position
  with Duke Energy or (iii) a reduction in his total incentive compensation opportunity by virtue of his participation in
  Duke Energys incentive compensation plans
  (provided that his target incentive compensation opportunity is substantially
  similar to that of similarly situated Duke
  Energy executives). Thus, Messrs. Yates, Lyash, McArthur and Mulhern
  cannot claim entitlement to CIC Plan benefits or
  severance under their employment agreements upon a resignation following the merger for any of these reasons. The letter
  agreements will be terminated in the event that
  the Merger Agreement is terminated prior to the merger with Duke Energy being
  consummated.

Upon consummation of the merger,
outstanding options to purchase shares of the Companys common stock and
outstanding awards of restricted stock, RSUs, phantom shares and performance
shares will be converted into equity or equity-based awards in respect of a
number of shares of Duke Energy common stock equal to the number of shares of
Company common stock represented by such award multiplied by the exchange ratio
under the Merger Agreement and will remain subject to the same vesting
requirements as were applicable to such awards prior to consummation of the
merger with Duke Energy. In other words, the vesting of options and other equity
awards held by our NEOs will not be accelerated on account of the completion of
the merger. The outstanding annual incentive awards of our NEOs also will remain
subject to their original vesting requirements and will remain subject to
performance criteria. The compensation committee of the Duke Energy board of
directors will adjust the original performance criteria for outstanding
performance shares and annual incentive awards as it determines is appropriate
and equitable to reflect the merger, the Companys performance prior to
completion of the merger and the performance criteria of awards made to
similarly situated Duke Energy employees.

Notwithstanding the provisions of
the CIC Plan, the SERP, the MICP, the PSSP, and the Management Deferral
Compensation Plan (the MDCP) providing for the funding of a nonqualified trust
to protect the benefits of the impacted participants, the terms of the Merger
Agreement prohibit the funding of any such trust and stipulate that all
applicable plans must be amended prior to the consummation of the merger to
eliminate any funding requirement. Each of these plans was amended on July 12,
2011, to eliminate any requirement to establish or fund a nonqualified trust in
connection with a merger with Duke Energy.

29

---



6.EMPLOYMENT AGREEMENTS

Each NEO has an employment agreement
that documents the Companys relationship with that executive. We provide these
agreements to the executives as a means of attracting and retaining them. Each
agreement has a term of three years. When an agreements remaining term
diminishes to two years, the agreement automatically adds another year to the
term, unless we give a 60-day advance notice that we do not want to extend the
agreement. If an NEO is terminated without cause during the term of the
agreement, he is entitled to severance payments equal to his base salary times
2.99, as well as up to 18 months of COBRA reimbursement. A description of each
NEOs employment agreement is discussed under the Employment Agreement section
of the Discussion of Summary Compensation Table and Grants of Plan-Based Awards
Table on page 40.

In anticipation of the closing of
the proposed merger with Duke Energy and the transition to Duke Energys
employment practices for executives, in October, 2011, the Company notified its
NEOs that it would not renew their employment agreements upon expiration of the
current terms.

7.EXECUTIVE PERQUISITES

We provide limited perquisites and
other benefits to our executives. Amounts attributable to perquisites are
disclosed in the All Other Compensation column of the Summary Compensation
Table on page 36.

The Committee has determined that
the current perquisites are appropriate and consistent with market practices.
The perquisites available to the NEOs during 2011 include:

|Perquisites for
      2011                                                        | Description                                                                                                                                                                 
|--------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Personal Travel on Corporate Aircraft
      andBusiness-Related Spousal Travel1 | Personal and spousal travel on
      corporate aircraft is permitted under very limited circumstances.                                                                      
|Financial and Estate Planning                                                     | An annual allowance of up to $16,500
      for the purpose of purchasing financial and estate planning counseling and
      services and preparation of personal tax return.
|Luncheon and Health Club Dues                                                     | Membership in an approved luncheon
      club and membership in a health club of executive officers choice.                                                                
|Executive Physical                                                                | Reimbursement of up to $2,500 for an
      extensive physical at a clinic specializing in executive physicals, every
      other year.                                      
|Internet and Telecom
      Service2                                               | Monthly fees for Internet and
      telecom access.                                                                                                                         
|Home Security                                                                     | An installed home security system
      and payment of monitoring fees.                                                                                                     
|Accidental Death and Dismemberment
      Insurance                                | $500,000 of AD&D insurance for
      each executive officer.                                                                                                                

1 Personal travel on the
Companys aircraft in the event of a family emergency or similar situation is
permitted with the approval of the Chief Executive Officer. Executives spouses
may also travel on the Companys aircraft to accompany the executives to
business-related events that executives spouses are requested to attend. For
2011, the NEOs whose perquisites included spousal travel on corporate aircraft
for business purposes were Messrs. Johnson, Lyash and Yates.

2 Including home use of
Company-owned computer.

30

---



The Committee believes that the
perquisites we provide to our executives are reasonable, competitive and
consistent with our overall executive compensation program in that they help us
attract and retain skilled and qualified executives. We believe that these
benefits generally allow our executives to work more efficiently and, in the
case of the tax and financial planning services, help them to optimize the value
received from all of the compensation and benefits programs offered. The costs
of these benefits constitute only a small percentage of each NEOs total
compensation.

8. OTHER BROAD-BASED BENEFITS

The NEOs receive our general
corporate benefits provided to all of our regular, full-time, nonbargaining
employees. These broad-based benefits include the following:

- participation in our 401(k) Plan (including a
  limited Company match of up to 6% of eligible compensation);
- participation in our funded, tax-qualified,
  noncontributory defined-benefit pension plan, which uses a cash balance formula to accrue benefits;
and
- general health and welfare benefits such as
  medical, dental, vision and life insurance, as well as long-term disability coverage.

9.DEFERRED COMPENSATION

We sponsor the MDCP, an unfunded,
deferred compensation arrangement. The plan is designed to provide executives
with tax deferral options, in addition to those available under the existing
qualified plans. An executive may elect to defer, on a pre-tax basis, payment of
up to 50% of his or her salary for a minimum of five years or until his or her
date of retirement. As a make-up for the 401(k) statutory compensation limits,
executives receive deferred compensation credits of 6% of their base salary over
the Internal Revenue Code statutory compensation limit on 401(k) retirement
plans. The Committee views the matching feature as a restoration benefit
designed to restore the matching contribution the executive would have received
under the 401(k) retirement plan in the absence of the Internal Revenue Service
compensation limits. Each executive may allocate his or her deferred
compensation among available deemed investment funds that mirror those options
available under the Companys 401(k) plan. Executives may elect to receive
distributions, either in a lump sum or installments of 2 to 10 years, on (1) the
April 1 following the date that is 5 years from the last day of the plan year in
which the deferral was made; or (2) upon separation from employment.

Executives can elect to defer up to
100% of their MICP and/or performance share awards. The deferral option is
provided as an additional benefit to executive officers to provide flexibility
in the receipt of compensation. Deferred awards may be allocated among deemed
investment options that mirror the Companys 401(k) Plan. Effective September 1,
2010, the NEOs cannot allocate deferred awards to the deemed Company stock
investment fund. In anticipation of the merger with Duke Energy, the MICP was
amended to eliminate the deferral option for awards earned in 2012. Executives
may elect to receive distributions any date that is 5 years subsequent to when
the award would otherwise be payable or any date that is within 2 years of the
executives retirement date. Executives will receive a distribution upon
separation of employment other than by reason of death or retirement.

31

---



III. 2011 COMPENSATION
DECISIONS

Chief Executive Officer Compensation

*William D. Johnson*

In March 2011, the Committee
considered Mr. Johnsons salary against the salaries of the chief executive
officers in the Benchmarking Peer Group and the Companys performance. Based on
these factors, the Committee approved a salary of $1,030,000, representing a 4%
increase to his 2010 salary of $990,000. Mr. Johnsons current target total base
compensation is approximately 11% below the 50th percentile of the
Benchmarking Peer Group. It is the Committees intention to increase Mr.
Johnsons salary over time to a level that is at the 50th percentile
of the Benchmarking Peer Group. For 2011, the Committee set Mr. Johnsons MICP
target award at 100% of base salary to move his target closer to the market
median of 104%. His MICP target award opportunity in 2010 was 85%. The payout of
the 2011 MICP award was based on the extent to which Mr. Johnson achieved his
performance goals, which were focused on the following general areas for the
Companys success:

- Excelling in the fundamentals of safety,
  operational excellence and customer satisfaction;
- Managing revenue, expenses and capital to achieve
  financial objectives;
- Promoting public, regulatory and political
  support;
- Ensuring effective regulatory compliance;
- Improving nuclear fleet performance by leveraging
  enterprise capability to strengthen plant operations, outage execution and continuous improvement;
- Accelerating continuous business excellence to
  improve efficiency and service while achieving sustainable savings and effective workforce plans;
- Optimizing the balanced solution strategy of
  investments and initiatives that meet customer needs and public policies while creating long-term value; and
- Achieving effective integration planning and
  timely merger approvals for the proposed merger with Duke Energy to position the combined company for success.

In recognition of his
accomplishments in 2011, the Committee awarded Mr. Johnson an MICP award of
$1,223,000, which is equal to 120% of Mr. Johnsons target award opportunity.
The Committee considered, among other things, Mr. Johnsons leadership in the
Companys achieving a record low in the OSHA recordable injury rate and lost
days due to injury; achieving strong financial performance; managing capital
projects within budget; improving the overall reliability and financial
performance of the nuclear fleet; receiving positive customer feedback for
system stability in the face of sustained summer heat and for the storm
restoration efforts after Hurricane Irene; improving efficiency while achieving
sustainable savings and effective workforce plans through the Continuous
Business Excellence initiative; and positioning the Company for a successful
merger with Duke Energy to create long-term benefits for shareholders and
customers.

With respect to his long-term
incentive compensation during 2011, Mr. Johnson was granted 26,640 RSUs and
53,052 performance shares in accordance with his pre-established targets of 117%
and 233%, respectively, of his base salary. The performance shares are earned
based on performance over the three years ending December 31, 2013.
Additionally, 54,124 shares of the 2008 annual grant vested in 2011 and were
paid out at 100% of target. The Committee also awarded Mr. Johnson an ad hoc
grant of 10,000 RSUs that vest in 2014. The purpose of this grant was to address
shortfalls in compensation compared to the Companys Benchmarking Peer Group.
The total year-over year compensation to Mr. Johnson for 2011, as compared to
2010, as noted in the Summary Compensation Table on page 36, increased by
52.8%, largely due to an increase in his accrued pension benefits.

32

---



Chief Financial Officer Compensation

*Mark F. Mulhern*

In March 2011, Mr. Johnson
recommended the Committee approve a merit and market-based adjustment to Mr.
Mulherns base salary supported by market data prepared by the Committees
independent compensation consultant. The Committee approved a base salary of
$495,945 for Mr. Mulhern, representing a 3% merit increase and 7.2% market-based
adjustment increase to his previous salary of $450,000. The new base salary was
set at 9% below the 50th percentile of the Benchmarking Peer Group.
Mr. Mulherns base salary was established at this level to more closely align
with the market. It is the Committees intention to increase Mr. Mulherns
salary over time to a level that is at the 50th percentile of the
Benchmarking Peer Group.

For 2011, Mr. Mulherns MICP target
award was set at 55% of his base salary. This target award is the same target
Mr. Mulhern had in 2009 after he assumed the Chief Financial Officer position
and represents a target award opportunity that is below the 50th
percentile of the market. Mr. Mulherns performance goals for 2011 focused on
the following general areas for the Companys success:

- Achieving financial objectives;
- Integrating long-range planning and targeted
  nuclear project management improvement support;
- Continuing focus on capital discipline and timely
  identification of risk areas; and
- Achieving effective integration planning and
  required approvals for the proposed merger with Duke Energy to position the combined company for success.

In recognition of the achievements
he accomplished in 2011 and on Mr. Johnsons recommendation, the Committee
awarded Mr. Mulhern an MICP award of $250,000, which is equal to 94% of Mr.
Mulherns target award. The Committee considered, among other things, Mr.
Mulherns significant role in the Companys achievement of a 36% total
shareholder return representing a first place ranking position in the Companys
Benchmarking Peer Group; the execution of a tender offer to repurchase the
Companys outstanding contingent value obligations issued in 2000; developing common baseline
numbers to provide a foundation for tracking synergies associated with the
proposed merger with Duke Energy; and negotiating a sublease of a building
utilized by the Company as one of its headquarters facilities that will mitigate
a substantial liability after the proposed merger with Duke Energy.

With respect to his long-term
incentive compensation, in 2011, Mr. Mulhern was granted 6,003 RSUs and 12,109
performance shares in accordance with his pre-established targets of 58% and
117%, respectively, of base salary. The performance shares are earned based on
performance over the three years ending December 31, 2013. Additionally, 6,814
shares of the 2008 annual grant vested in 2011 and were paid out at 100% of
target. On Mr. Johnsons recommendation, the Committee also awarded Mr. Mulhern
an ad hoc grant of 4,000 RSUs that vest in 2014. The purpose of this grant was
to address shortfalls in compensation compared to the Companys Benchmarking
Peer Group and to provide a retention incentive for the pending merger with Duke
Energy. Mr. Mulherns total compensation in 2011 increased by 39.9% from the amount of
total compensation he received in 2010, largely due to an increase in his
accrued pension benefits.

Compensation of Other Named Executive
Officers

For 2011, Mr. Johnson recommended
and the Committee approved merit-based adjustments to the base salaries for
Messrs. Yates, Lyash and McArthur. These increases to base salaries were
supported by market data prepared by the Committees independent compensation
consultant. Mr. Yates base salary was adjusted to $461,440, representing a 3%
increase to his previous salary of $448,000. Mr. McArthurs base salary was
adjusted to $502,640, representing a 3% increase to his previous salary of
$488,000. Mr. Lyashs base salary was adjusted to $466,590, representing a 3%
increase to his previous salary of $453,000.

33

---



On Mr. Johnsons recommendation, the
Committee awarded Messrs. Yates, Lyash and McArthur 2011 MICP awards as
described in the table below.

|Named Executive
      Officer | 2011
      MICPAward | Percent
      ofTarget | Explanation of
      Award                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|----------------------------- | -------------------- | ---------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Lloyd M. Yates                | $220,000             | 87%                    | Mr. Yates played a significant role
      in managing PECs operations and maintenance (O&M) expenses that were
      impacted by higher nuclear maintenance costs to improve the Robinson
      Nuclear Plant performance and by storm restoration costs; successfully
      completing the Companys first audit of the North American Electric
      Reliability Corporations cyber security standards by the SERC Reliability
      Corporation; and completing the new combined cycle plant at the Sherwood
      H. Smith, Jr. Energy Complex on time and under budget.
|Jeffrey J. Lyash              | $220,000             | 86%                    | Mr. Lyash played a significant role
      in improving the overall reliability and financial performance of the
      nuclear fleet; implementing the Companys balanced solution strategy
      through the effective shutdown of the Weatherspoon Coal Plant and the
      start-up of a combined cycle plant; and managing the Energy Supply
      organizations O&M expenses below budget.                                                                                                                                                                                
|John R. McArthur              | $305,000             | 111%                   | Mr. McArthur played a significant
      role in negotiating a favorable regulatory settlement in Florida to
      increase base rates through 2016, ensure cost recovery of expenditures
      associated with the proposed Levy Nuclear Plant, and resolve substantial
      portions of the prudence case for the Crystal River 3 Nuclear Plant;
      promoting reasonable environmental regulation with adequate compliance
      timeframes; and substantially achieving favorable regulatory approvals for
      the proposed merger of the Company with Duke Energy.    

With respect to long-term
compensation, in 2011 each of the other NEOs received annual grants of RSUs and
performance shares in accordance with their pre-established targets. The table
below describes those grants.

|Named Executive
      Officer | Restricted Stock
      Units Vesting in 1/3 Increments in 2012, 2013 and
    2014 | Performance Shares
      Vesting in 2014 | Ad Hoc Restricted
      Stock Units Vesting in 2014
|----------------------------- | --------------------------------------------------------------------------------- | ---------------------------------------- | ---------------------------------------------------
|Lloyd M. Yates                | 5,976                                                                             | 12,055                                   | 4,000                                              
|Jeffrey J. Lyash              | 6,043                                                                             | 12,190                                   | 4,000                                              
|John R. McArthur              | 6,510                                                                             | 13,132                                   | 4,000                                              

Mr. Yates total compensation as
shown in the Summary Compensation Table on page 36 increased 35.6% from the
amount of total compensation he received in 2010, largely due to an increase in
his accrued pension benefits.

34

---



Mr. Lyashs total compensation as
shown in the Summary Compensation Table on page 36 increased 36.2% from the
amount of total compensation he received in 2010, largely due to an increase in
his accrued pension benefits.

Mr. McArthurs total compensation as
shown in the Summary Compensation Table on page 36 increased 23.4% from the
amount of total compensation he received in 2010, largely due to an increase in
his stock awards.

IV. COMPENSATION COMMITTEE REPORT

The Committee has reviewed and
discussed this CD&A with management as required by Item 407(e)(5) of
Regulation S-K. Based on such review and discussions, the Committee recommended
to the Companys Board of Directors that the CD&A be included in this
document.

Organization and Compensation
      CommitteeE. Marie McKee, ChairJohn D. Baker IIHarris E. DeLoach, Jr.James B. Hyler, Jr.Robert W. JonesMelquiades R. Mel
  MartinezJohn H. Mullin,
  III


Unless specifically stated otherwise
in any of the Companys filings under the Securities Act of 1933 or the
Securities Exchange Act of 1934, the foregoing Compensation Committee Report
shall not be deemed soliciting material, shall not be incorporated by reference
into any such filings and shall not otherwise be deemed filed under such
Acts.

35

---



SUMMARY COMPENSATION TABLE

The following Summary Compensation
Table discloses the compensation during 2011 and the prior two fiscal years of
our Chief Executive Officer, Chief Financial Officer, and the other three most
highly paid executive officers who were serving at the end of 2011.
Additionally, column (h) is dependent upon actuarial assumptions for determining
the amounts included. A change in these actuarial assumptions would impact the
values shown in this column. Where appropriate, we have indicated the major
assumptions in the footnote to column (h).

|Name andPrincipal
      Position(a) | Year(b) | Salary1($)(c) | Stock

      Awards2($)(e) | Non-EquityIncentive
      PlanCompensation3($)(g) | Change inPension
      ValueandNonqualifiedDeferredCompensationEarnings4($)(h) | All
      OtherCompensation5($)(i) | Total($)(j)
|----------------------------------- | ------- | ------------- | -------------------------- | ------------------------------------------------- | ------------------------------------------------------------------------------ | ---------------------------------- | -----------
|William D. Johnson,                 | 2011    | $1,019,231    | $3,995,779                 | $1,223,000                                        | $2,887,591                                                                     | $389,087                           | $9,514,688 
|Chairman, President                 | 2010    | 990,000       | 3,109,607                  | 715,000                                           | 1,096,829                                                                      | 316,051                            | 6,227,487  
|and Chief Executive
      Officer6  | 2009    | 979,231       | 3,090,605                  | 950,000                                           | 1,144,448                                                                      | 289,726                            | 6,454,010  
|Mark F. Mulhern,                    | 2011    | $483,575      | $985,090                   | $250,000                                          | $874,620                                                                       | $81,855                            | $2,675,140 
|Senior Vice President and Chief     | 2010    | 443,269       | 667,916                    | 205,000                                           | 517,696                                                                        | 77,672                             | 1,911,553  
|Financial Officer                   | 2009    | 414,231       | 655,990                    | 225,000                                           | 369,822                                                                        | 102,137                            | 1,767,180  
|Jeffrey J. Lyash,                   | 2011    | $462,931      | $990,481                   | $220,000                                          | $583,916                                                                       | $117,902                           | $2,375,230 
|Executive Vice President           | 2010    | 453,000       | 711,892                    | 195,000                                           | 281,882                                                                        | 102,290                            | 1,744,064  
|Energy Supply                       | 2009    | 450,846       | 728,120                    | 235,000                                           | 244,369                                                                        | 292,061                            | 1,950,396  
|Lloyd M. Yates,                     | 2011    | $457,822      | $981,481                   | $220,000                                          | $644,644                                                                       | $97,533                            | $2,401,480 
|President and                       | 2010    | 448,000       | 704,043                    | 195,000                                           | 342,925                                                                        | 80,548                             | 1,770,516  
|Chief Executive Officer, PEC        | 2009    | 445,846       | 720,683                    | 235,000                                           | 308,815                                                                        | 119,432                            | 1,829,776  
|John R. McArthur,                   | 2011    | $498,699      | $1,053,252                 | $305,000                                          | $100,633                                                                       | $78,080                            | $2,035,664 
|Executive Vice President, General   | 2010    | 488,000       | 766,911                    | 220,000                                           | 81,601                                                                         | 92,677                             | 1,649,189  
|Counsel and Corporate Secretary     | 2009    | 485,846       | 780,070                    | 250,000                                           | 74,001                                                                         | 116,381                            | 1,706,298  

1 Consists of base salary
earnings prior to (i) employee contributions to the Progress Energy 401(k)
Savings & Stock Ownership Plan and (ii) voluntary deferrals, if any, under
the MDCP. See Deferred Compensation discussion in Part II of the CD&A.
Salary adjustments, if deemed appropriate, generally occur in March of each
year.

2 Includes the fair value
of stock awards as of the grant date computed in accordance with Financial
AccountingStandards Board (FASB) Accounting
Standards Codification (ASC) Topic 718. The table below shows the fair value of stock awards
granted in 2011 and the maximum potential payout for the performance shares
granted in 2011, which are based on the March 16, 2011 closing stock price of $44.55.

|2011 Stock Awards (column
      (e)) | Maximum Potential Payout
      forPerformance Shares
|------------------------------------ | ----------------------------------------------------
|Name                                 | Grant Date Fair
      Value                         
|RestrictedStock
      Units          | PerformanceShares                                   
|William D. Johnson                   | $1,632,312                                          
|Mark F. Mulhern                      | 445,634                                             
|Jeffrey J. Lyash                     | 447,416                                             
|Lloyd M. Yates                       | 444,431                                             
|John R. McArthur                     | 468,221                                             

3 Includes the awards
earned under the MICP for 2009, 2010 and 2011 performance.

36

---



4 Includes the change in
present value of the accrued benefit under Progress Energys Pension Plan, SERP,
and/or the Restoration Retirement Plan (Restoration Plan) where applicable.
The current incremental present values were determined using actuarial present
value factors as provided by our actuarial consultants, Buck Consultants, based
on FAS mortality assumptions post-age 65 and FAS discount rates for the years
shown as follows:

**FAS Discount
    Rates**Year
    Pension
      Plan
    SERP
    RestorationRetirement Plan2011
    4.70%
    4.85%
    4.45%2010
    5.50%
    5.70%
    5.00%2009
    5.95%
    6.10%
    5.45%


All NEOs participate in the Progress
Energy Pension Plan (Pension Plan), a noncontributory defined benefit pension
plan sponsored by Progress Energy for eligible non-bargaining employees.
The Pension Plan was amended and restated as of January 1, 1999, to become a
cash balance defined benefit plan. The cash balance benefit accrues each year
with pay credits and interest credits. Pay credits range from 3% to 7% depending
on the participants age at the beginning of each plan year, January 1. Interest
credits are added to cash balance accounts on December 31 of each year based on
account balances as of January 1. The Board of Directors approved the interest
credit rate for the Pension Plan to be set at 5% for 2011. Generally, employees
become vested under the Pension Plan on the earlier of the date they complete
three years of vesting service or the date they reach normal retirement age,
which is age 65. All of the NEOs have satisfied the eligibility requirements to
receive their account benefit upon termination of employment. At benefit
commencement, an employee has several lump sum and annuity payment
options.

The Restoration Plan is a
nonqualified deferred compensation plan that provides retirement benefits which
otherwise would be provided under the Pension Plan, in the absence of limits
imposed by applicable law on benefits which may be provided under the Pension
Plan. The Restoration Plan is intended to constitute an unfunded retirement plan
for a select group of management or highly compensated employees. Mr. McArthur
is the only NEO who was a participant in the Restoration Plan in 2011. His
accumulated benefit under the Restoration Plan was forfeited when he became a
participant in the SERP on January 1, 2012.

In addition, column (h) includes the
above market earnings on deferred compensation under the Deferred Compensation
Plan for Key Management Employees. The 1996-1999 Deferred Compensation Plan for
Key Management Employees provided a fixed rate of return of 10.0% on deferred
amounts, which was 2.7% above the market interest rate of 7.3% at the time the
plan was frozen in 1996. The Deferred Compensation Plan for Key Management
Employees was discontinued in 2000 and replaced with the MDCP, which does not
have a guaranteed rate of return. NEOs who were participants
in the 1996-1999 Deferred Compensation Plan for Key Management Employees
continue to receive plan benefits with respect to amounts deferred prior to its
discontinuance in 2000. The above market earnings under the Deferred
Compensation Plan for Key Management Employees are included in this column for
Mr. Johnson. Changes in the accrued benefit under each plan for NEOs are shown
in the table below:

|2011 Change in Pension Value and
      Nonqualified Deferred Compensation Earnings (column (h))
|-----------------------------------------------------------------------------------------------
|Name                                                                                           
|William D. Johnson                                                                             
|Mark F. Mulhern                                                                                
|Jeffrey J. Lyash                                                                               
|Lloyd M. Yates                                                                                 
|John R. McArthur                                                                               

37

---



5 Includes the following
items: Company match contributions under the Progress Energy 401(k) Plan;
deferred credits under the MDCP; perquisites; the Companys payment of the FICA tax
on the non-qualified retirement accrual and the tax gross-up on the imputed
income of that tax payment; and cash dividends and cash dividend equivalents
paid as the result of outstanding restricted stock or RSUs held in Company Plan
accounts. The total value of perquisites and personal benefits received by
Messrs. Mulhern and McArthur was less than $10,000 each. Thus, those amounts are
excluded from this column. NEOs were compensated for these
items as follows:

|2011 All
      Other Compensation (column (i))
|----------------------------------------------
|                                              
|                                              
|                                              
|Name                                          
|William
      D. Johnson                      
|Mark F.
      Mulhern                         
|Jeffrey
      J. Lyash                        
|Lloyd M.
      Yates                          
|John R.
      McArthur                        

Perquisites that exceed the greater of $25,000 or 10% of the total amount
of perquisites and personal benefits for each officer are quantified in the
table below. Other perquisites include luncheon and health club dues, spousal
meals, Internet and telecom access, AD&D insurance, residential phone lines,
and gifts.

|2011
      Perquisites (Component of column (i))
|------------------------------------------------
|                                                
|                                                
|Name                                            
|William
      D. Johnson                        
|Jeffrey
      J. Lyash                          
|Lloyd M.
      Yates                            

* Reflects spousal travel on
corporate aircraft for business-related purposes. It also
includes personal travel for Mr. Johnson on corporate aircraft by him and his spouse valued at
$26,488. Personal and spousal travel on corporate aircraft included in the table
above is valued at the incremental cost to the Company, which is calculated as
the expense deduction disallowed under IRS rules.

6 Mr. Johnson did not receive additional compensation for his
service on the Board of Directors.

38

---





2011 GRANTS OF PLAN-BASED
AWARDS

|                                                                                 |              | **EstimatedFuture Payouts UnderNon-Equity IncentivePlan
      Awards1** | **EstimatedFuture Payouts UnderEquity IncentivePlan
      Awards2** | AllOtherStockAwards:Numberof
      Sharesof
      Stockor
      Units3(#)(i) | Grant
      DateFair
      Valueof
      Stockand
      OptionAwards4($)(j)
|-------------------------------------------------------------------------------- | ------------ | ----------------------------------------------------------------------- | ------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ---------------------------------------------------------------------------
|                                                                                 |              |                                                                         |                                                                     |                                                                              |                                                                            
|Name(a)                                                                          | GrantDate(b) | Threshold($)(c)                                                         | Target($)(d)                                                        | Maximum($)(e)                                                                | Threshold(#)(f)                                                            
|William D. Johnson,Chairman, President, andChief Executive Officer               | MICP         | $509,615                                                                | $1,019,231                                                          | $2,038,461                                                                   |                                                                            
|RSUs3/16/11                                                                      |              |                                                                         |                                                                     |                                                                              |                                                                            
|PSSP3/16/11                                                                      |              |                                                                         |                                                                     | 26,526                                                                       | 53,052                                                                     
|Mark F. Mulhern,Senior Vice Presidentand Chief FinancialOfficer                  | MICP         | $132,983                                                                | $265,966                                                            | $531,933                                                                     |                                                                            
|RSUs3/16/11                                                                      |              |                                                                         |                                                                     |                                                                              |                                                                            
|PSSP3/16/11                                                                      |              |                                                                         |                                                                     | 6,055                                                                        | 12,109                                                                     
|Jeffrey J. Lyash,Executive VicePresident  Energy Supply                         | MICP         | $127,306                                                                | $254,612                                                            | $509,224                                                                     |                                                                            
|RSUs3/16/11                                                                      |              |                                                                         |                                                                     |                                                                              |                                                                            
|PSSP3/16/11                                                                      |              |                                                                         |                                                                     | 6,095                                                                        | 12,190                                                                     
|Lloyd M. Yates,President and ChiefExecutive Officer, PEC                         | MICP         | $125,901                                                                | $251,802                                                            | $503,604                                                                     |                                                                            
|RSUs3/16/11                                                                      |              |                                                                         |                                                                     |                                                                              |                                                                            
|PSSP3/16/11                                                                      |              |                                                                         |                                                                     | 6,028                                                                        | 12,055                                                                     
|John R. McArthur,Executive Vice President,General Counsel andCorporate Secretary | MICP         | $137,142                                                                | $274,284                                                            | $548,568                                                                     |                                                                            
|RSUs3/16/11                                                                      |              |                                                                         |                                                                     |                                                                              |                                                                            
|PSSP3/16/11                                                                      |              |                                                                         |                                                                     | 6,566                                                                        | 13,132                                                                     

1 Award amounts are shown at
threshold, target, and maximum  levels. The target award is calculated using the 2011 eligible earnings times  the
executives target percentage. See target percentage in table on page 21
of  the CD&A. Threshold is calculated at 50% of target and maximum is calculated  at 200% of target. Actual award amounts
paid are reflected in the Summary Compensation Table under the Non-Equity Incentive Plan Compensation column.

2 Reflects the potential
payouts in shares of the 2011 PSSP grants. The grant size was calculated by
multiplying the executives salary as of January 1, 2011, times his 2011 PSSP
target and dividing by the December 31, 2010, closing stock price of $43.48. The
Threshold column reflects the payment level under the PSSP at 50%
of the amount shown in the Target column. The amount shown in the maximum
column is 200% of the target amount.

3 Reflects the number of
RSUs granted during 2011 under the 2007 Equity Incentive Plan. The number of
shares granted was determined by multiplying the executives salary as of
January 1, 2011, times his 2011 RSU target and dividing by the December 31,
2010, closing stock price of $43.48.

4Reflects the grant date fair value of the award
based on the following assumptions: market value of RSUs granted on March 16,
2011, based on the closing price of $44.55 per share, times the shares granted
in column (i); market value of PSSP awards granted on March 16, 2011, based on
the closing stock price on March 16, 2011, of $44.55 times the target number of
shares in column (g). The 2011 PSSP grant payout is expected to be 100% of
target.

39

---







DISCUSSION OF SUMMARY
COMPENSATION TABLE AND GRANTS OFPLAN-BASED AWARDS TABLE

EMPLOYMENT AGREEMENTS

In 2007, Messrs. Johnson, Mulhern, Lyash, Yates and McArthur entered into
employment agreements with the Company or one of its subsidiaries, referred to
collectively in this section as the Company. The employment agreements
replaced the previous employment agreements in effect for each of these
officers.

The employment agreements provide
for base salary, annual incentives, perquisites and participation in the various
executive compensation plans offered to our senior executives. Upon expiration,
the agreements are automatically extended by an additional year on January 1 of
each year. Each employment agreement contains restrictive covenants imposing
non-competition obligations, restricting solicitation of employees and
protecting our confidential information and trade secrets for specified periods
if the applicable officer is terminated without cause or otherwise becomes
eligible for the benefits under the agreement.

Except for the application of
previously granted years of service credit to our post-employment health and
welfare plans as discussed below, the employment agreements do not affect the
compensation, benefits or incentive targets payable to the applicable officers.

With respect to Mr. Johnson, the
Employment Agreement specifies that the years of service credit we previously
granted to him for purposes of determining eligibility and benefits in the SERP
will also be applicable for purposes of determining eligibility and benefits in
our post-employment health and welfare benefit plans.Mr. Johnson was awarded seven years of deemed
service toward the benefits and vesting requirements of the SERP. However, as of
2008, Mr. Johnson reached the maximum service accrual and therefore benefit
augmentation for deemed service is $0. Three of those years also were deemed to
have been in service on the SMC for purposes of SERP eligibility.

Each Employment Agreement provides
that if the applicable officer is terminated without cause or is constructively
terminated (as defined in Paragraph 8(a)(i) of the agreement), then the officer
will receive (i) severance equal to 2.99 times the officers then-current base
salary and (ii) reimbursement for the costs of continued coverage under certain
of our health and welfare benefit plans for a period of up to 18 months.

In anticipation of the closing of
the proposed merger with Duke Energy and the transition to Duke Energys
employment practices for executives, in October, 2011, the Company notified its
NEOs that it would not renew their employment agreements upon expiration of the
current terms. All of the NEOs employment agreements expire on December 31,
2012.

40

---



OUTSTANDING EQUITY AWARDS
AT 2011 FISCAL YEAR-END

|                                                                                             | Stock
      Awards                                                     
|-------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------
|Name(a)                                                                                      | Number
      ofShares or Units ofStock ThatHave Not
      Vested(#)(g)1
|William
      D. Johnson,Chairman, President and ChiefExecutive
Officer                      | 73,938                                                                 
|Mark F.
      Mulhern,Senior Vice President andChief Financial Officer                       | 18,765                                                                 
|Jeffrey
      J. Lyash,Executive Vice President Energy Supply                               | 19,195                                                                 
|Lloyd M.
      Yates,President and Chief ExecutiveOfficer, PEC                               | 19,066                                                                 
|John R.
      McArthur,Executive Vice President,General Counsel andCorporate
      Secretary | 19,999                                                                 

1 Consists of outstanding RSUs as follows:

Number of
      Units of Stock That Have Not Vested (column (g))Stock
      Award
    Vesting
      Date
    William
      D.Johnson
    Mark
      F.Mulhern
    Jeffrey
      J.Lyash
    Lloyd
      M.Yates
    John
      R.McArthurRestricted Stock
      Units
    March 16,
      2012
    16,412
    3,604
    3,723
    3,682
    4,011Restricted Stock
      Units
    March 17,
      2012
    17,298
    4,368
    4,159
    4,135
    4,329Restricted Stock
      Units
    March 20,
      2012
    4,936
    1,188
    1,575
    1,575
    1,478Restricted Stock
      Units
    March 16,
      2013
    16,412
    3,604
    3,723
    3,682
    4,011Restricted Stock
      Units
    March 16,
      2014
    18,880
    6,001
    6,015
    5,992
    6,170Total
      (column (g))
    73,938
    18,765
    19,195
    19,066
    19,999


2 Market value of units of stock that have not vested is based
on a December 31, 2011, closing price of $56.02 per share.

3 The 2009 PSSP grant
vests on January 1, 2012; the 2010 grant vests on January 1, 2013; and the 2011
grant vests on January 1, 2014. Performance share value for the 2009 annual
grant is expected to be at 50% of target while the 2010 annual grant and 2011
annual grant are expected to be 100% of target. The value in Column (j) is
derived by multiplying the shares (rounded to the nearest whole share) times the
December 31, 2011 closing stock price ($56.02). The difference between the
calculated value and the noted value is attributable to fractional shares. See
further discussion under Performance Shares in Part II of the CD&A.
Outstanding performance shares for NEOs are shown in the table below:

Number of
      Unearned Shares, Units or Other Rights That Have Not Vested (column
      (i))Stock
      Award
    Vesting
      Date
    William
      D.Johnson
    Mark
      F.Mulhern
    Jeffrey
      J.Lyash
    Lloyd
      M.Yates
    John
      R.McArthurPerformance
      Shares
    January 1,
      2012
    65,191
    13,267
    15,334
    15,161
    16,540Performance
      Shares
    January 1,
      2013
    61,838
    13,332
    14,209
    14,053
    15,307Performance
      Shares
    January 1,
      2014
    55,097
    12,576
    12,660
    12,520
    13,639Total
      (column (i))
    182,126
    39,175
    42,203
    41,734
    45,486


41

---



OPTION EXERCISES AND
STOCK VESTED IN 2011

|                                                                                        | Option
      Awards                                       | Stock
      Awards                       
|--------------------------------------------------------------------------------------- | --------------------------------------------------------- | -----------------------------------------
|Name(a)                                                                                 | **Number
      ofSharesAcquiredon
      Exercise(#)(b)**1 | **ValueRealizedon
      Exercise($)(c)**2
|William D. Johnson,Chairman, President and Chief Executive
      Officer                | -                                                         | -                                        
|Mark F. Mulhern,Senior Vice President and Chief Financial
      Officer                 | 7,000                                                     | $57,750                                  
|Jeffrey J. Lyash,Executive Vice President  Energy
    Supply                           | -                                                         | -                                        
|Lloyd M. Yates,President and Chief Executive Officer,
    PEC                           | -                                                         | -                                        
|John R. McArthur,Executive Vice President, General Counsel
      andCorporate Secretary | -                                                         | -                                        

1 Reflects the number of shares of stock for options that were
exercised in 2011.

2 The value realized upon
exercise is equal to the difference between the market price of the underlying
securities at exercise and the exercise price of the options.

3Reflects the number of
restricted stock shares, RSUs, and performance shares that vested in 2011 for
NEOs as shown in the table below.

|Number of
      Shares Acquired on Vesting (column (d))
|-------------------------------------------------------
|Stock
      Award                                      
|Performance Shares                                     
|Restricted Stock                                       
|RSUs                                                   
|RSUs                                                   
|RSUs                                                   
|RSUs                                                   
|Total
      (column (d))                               

4 The value of the 2008
performance share units was calculated using the closing stock price for
Progress Energy Common Stock on the business day prior to when distribution
occurred. The value of the restricted stock was calculated using the opening
stock price for Progress Energy Common Stock three days prior to the day vesting
occurred. The value of the RSUs was calculated using the closing stock price for
Progress Energy Common Stock on the business day prior to when vesting occurred.
Values realized on vesting during 2011 for NEOs are shown in the table
below:

|Value
      Realized on Vesting (column (e))
|--------------------------------------------
|Stock
      Award                           
|Performance Shares                          
|Restricted Stock                            
|RSUs                                        
|RSUs                                        
|RSUs                                        
|RSUs                                        
|Total
      (column (e))                    

42

---



PENSION BENEFITS

|Name(a)                                                                                                  | Plan Name(b)                       | Number
      ofYearsCreditedService(#)(c) | PresentValue
      ofAccumulatedBenefit1($)(d) | PaymentsDuring LastFiscal
      Year($)(e)
|-------------------------------------------------------------------------------------------------------- | ---------------------------------- | ----------------------------------------- | ---------------------------------------------- | ------------------------------------------
|William
      D. Johnson,Chairman,
      President andChief Executive Officer                            | Progress Energy Pension Plan       | 19.3                                      | $627,896                                       | $0                                        
|Supplemental Senior ExecutiveRetirement
      Plan                                                       | 26.32                              | $11,063,3013                              | $0                                            
|Mark F.
      Mulhern,Senior Vice
      President andChief
      Financial Officer                       | Progress Energy Pension Plan       | 15.8                                      | $411,117                                       | $0                                        
|Supplemental Senior ExecutiveRetirement
      Plan                                                       | 15.8                               | $2,395,3654                               | $0                                            
|Jeffrey
      J. Lyash,Executive Vice
      President Energy
      Supply                               | Progress Energy Pension Plan       | 18.6                                      | $422,617                                       | $0                                        
|Supplemental Senior
      ExecutiveRetirement Plan                                                       | 18.6                               | $2,136,8065                               | $0                                            
|Lloyd M.
      Yates,President
      andChief
      ExecutiveOfficer, PEC                                | Progress Energy Pension Plan       | 13.1                                      | $260,702                                       | $0                                        
|Supplemental Senior Executive Retirement
      Plan                                                      | 13.1                               | $1,950,1816                               | $0                                            
|John R.
      McArthur,Executive Vice
      President,General Counsel
      andCorporate
      Secretary | Progress
      Energy Pension Plan | 10.1                                      | $245,431                                       | $0                                        
|Restoration Retirement
      Plan                                                                        | 10.1                               | $210,297                                  | $0                                            

1 Actuarial present value factors as provided by our actuarial
consultants, Buck Consultants, based on FAS mortality assumptions post-age 65
and FAS discount rates as of December 31, 2011, for computation of accumulated
benefit under the SERP and the Progress Energy Pension Plan were 4.85% and
4.70%, respectively. Additional details on the formulas for computing benefits
under the SERP and Progress Energy Pension Plan can be found under the headings
Supplemental Senior Executive Retirement Plan and Other Broad-Based
Benefits, respectively, in the CD&A.

2 Includes seven years of
deemed service. However, as of 2008, Mr. Johnson reached the maximum service
accrual and therefore benefit augmentation for deemed service is $0.

3 Based on an estimated
annual benefit payable at age 65 of $1,153,308.

4 Based on an estimated
annual benefit payable at age 65 of $331,774.

5Based on estimated
annual benefit payable at age 65 of $325,367.

6 Based on estimated
annual benefit payable at age 65 of $283,214.

43

---



NONQUALIFIED DEFERRED
COMPENSATION

The table below shows the nonqualified deferred compensation for each of
the NEOs. Information regarding details of the deferred compensation plans
currently in effect can be found under the heading Deferred Compensation in
Part II of the CD&A. In addition, the Deferred Compensation Plan for Key
Management Employees is discussed in footnote 4 to the Summary Compensation
Table.

|Name and
      Position(a)                                                             | ExecutiveContributionsin Last FY1($)(b) | RegistrantContributionsin Last
      FY2($)(c) | AggregateEarningsin Last
      FY3($)(d) | AggregateWithdrawals/Distributions($)(e) | AggregateBalanceat Last
      FYE4($)(f)
|-------------------------------------------------------------------------------------- | --------------------------------------- | ---------------------------------------------- | ---------------------------------------- | ---------------------------------------- | ----------------------------------------
|William D. Johnson,Chairman, President andChief Executive
      Officer                | $0                                      | $46,049                                        | $71,800                                  | $0                                       | $967,553                                
|Mark F. Mulhern,Senior Vice President andChief Financial
      Officer                 | $0                                      | $13,850                                        | $16,097                                  | ($83,467)5                               | $179,741                                
|Jeffrey J. Lyash,Executive Vice President Energy
      Supply                         | $0                                      | $12,938                                        | $55,770                                  | $0                                       | $236,721                                
|Lloyd M. Yates,President andChief Executive Officer,
      PEC                         | $22,891                                 | $12,633                                        | $145,409                                 | $0                                       | $782,054                                
|John R. McArthur,Executive Vice President,General Counsel
      andCorporate Secretary | $24,935                                 | $15,074                                        | ($5,446)                                 | $0                                       | $335,778                                

1 Reflects salary deferred under the MDCP, which is reported
as Salary in the Summary Compensation Table. For 2011, NEOs deferred the
following percentages of their base salary: (i) Mr. Yates  5%; and Mr. McArthur 
5%.

2 Reflects registrant
contributions under the MDCP, which is reported as All Other Compensation in
the Summary Compensation Table.

3 Includes aggregate
earnings in the last fiscal year under the following nonqualified plans: MICP,
MDCP, PSSP, and Deferred Compensation Plan for Key Management Employees. For Mr.
Johnson, aggregate earnings includes above market earnings of $12,898 under the
Deferred Compensation Plan for Key Management Employees, which is reported as
Change in Pension Value and Nonqualified Deferred Compensation Earnings in the
Summary Compensation Table.

4 Includes December 31,
2011 balances under the following deferred compensation plans: MICP, PSSP, MDCP,
and Deferred Compensation Plan for Key Management Employees. Balances for NEOs
under each deferral plan are shown in the table below. The aggregate balances as
of December 31, 2011 for each NEO includes the following aggregate amounts of
prior deferrals of base salary, employer matching contributions, and above
market earnings for nonqualified deferred compensation earnings that were
previously earned and reported as compensation on the Summary Compensation Table
for 2009 and 2010: (i) Mr. Johnson - $136,717; (ii) Mr. Mulhern - $64,158; (iii)
Mr. Lyash - $24,736; (iv) Mr. Yates - $46,536; and (v) Mr. McArthur - $175,013.
These amounts have been adjusted, pursuant to the terms of the Deferred
Compensation Plans for investment performance (e.g. earnings and losses),
deferrals, contributions, and distributions.

44

---



Aggregate
      Balance at Last FYE (column (f))Name
    MDCP
    MICP
    DeferredCompensation for
      KeyManagementEmployees
    PSSP
    Total(column
      (f))William
      D. Johnson
    $554,999
    $105,398
    $307,156
    -
    $967,553Mark F.
      Mulhern
    126,806
    52,935
    -
    -
    179,741Jeffrey
      J. Lyash
    236,721
    -
    -
    -
    236,721Lloyd M.
      Yates
    224,807
    164,591
    -
    392,656
    782,054John R.
      McArthur
    335,778
    -
    -
    -
    335,778


5 Mr. Mulhern received distributions from his Management
Incentive Deferred Compensation Plan: $41,418; and PSSP: $42,049.

45

---



CASH COMPENSATION AND
VALUE OF VESTING EQUITY TABLE

The following table shows the actual cash compensation and value of
vesting equity received in 2011 by the NEOs. The Committee believes that this
table is important in order to distinguish between the actual cash and vested
value received by each NEO as opposed to the grant date fair value of equity
awards as shown in the Summary Compensation Table.

|Name
      andPosition                                                                   | BaseSalary(a)1 | AnnualIncentive(paid
      in2011)(b)2 | RestrictedStock/UnitsVesting(c)3 | PerformanceSharesVesting(d)4 | RestrictedStock/UnitDividends(e)5 | ValueRealizedon
      StockOptionExercises(f)6 | Perquisites(g)7 | TaxGross-ups(h)8 | Total     
|---------------------------------------------------------------------------------------- | -------------- | -------------------------------------- | -------------------------------- | ---------------------------- | --------------------------------- | ---------------------------------------------- | --------------- | ---------------- | ----------
|William
      D.Johnson,Chairman,President andChief
      ExecutiveOfficer               | $1,019,231     | $715,000                               | $1,564,976                       | $2,501,113                   | $182,318                          | -                                              | $64,273         | $17,404          | $6,064,318
|Mark F.
      Mulhern,Senior VicePresidentand ChiefFinancial
      Officer               | $483,575       | $205,000                               | $312,085                         | $372,881                     | $44,652                           | $57,750                                        | $8,027          | $8,653           | $1,492,623
|Jeffrey
      J.Lyash, ExecutiveVice President Energy Supply                            | $462,931       | $195,000                               | $376,423                         | $528,798                     | $46,589                           | -                                              | $11,499         | $711             | $1,621,951
|Lloyd
      M.Yates,Presidentand ChiefExecutive
    Officer,PEC                          | $457,822       | $195,000                               | $374,495                         | $528,798                     | $46,284                           | -                                              | $5,619          | $5,216           | $1,613,234
|John
      R.McArthur,ExecutiveVice President,GeneralCounsel
      andCorporateSecretary | $498,699       | $220,000                               | $395,022                         | $491,551                     | $48,544                           | -                                              | $9,557          | $799             | $1,664,172

1 Consists of the total
2011 base salary earnings prior to (i) employee contributions to the Progress
Energy 401(k) Plan and (ii) voluntary deferrals, if applicable, under the MDCP.
For 2011, NEOs deferred the following amounts under the MDCP: (i) Mr. Yates 
$22,891; and Mr. McArthur  $24,935.

2 Reflects awards given
under the MICP attributable to Plan Year 2010 and paid in 2011.

3 Reflects the value of
restricted stock and RSUs vesting in 2011. The value of the restricted stock was
calculated using the opening stock price for Progress Energy Common Stock three
days prior to the day vesting occurred. The value of the RSUs was calculated
using the closing stock price for Progress Energy Common Stock on the business
day prior to when vesting occurred.

4Reflects performance shares vested on January 1, 2011. The value of the 2008 performance
share units is calculated using the closing stock price for Progress Energy
Common Stock on the business day prior to when distribution occurred.

5 Reflects cash dividends
and cash dividend equivalents paid as the result of outstanding restricted stock
or RSUs held in Company Plan accounts.

6 Reflects the value
realized upon exercise for options that were exercised in 2011. The value
realized upon exercise is equal to the difference between the market price of
the underlying securities at exercise and the exercise price of the
options.

7Reflects the value of all perquisites provided during 2011.
For a complete listing of the perquisites, see the Executive Perquisites
in Part II of the CD&A. Perquisite details for each NEO are discussed in the Summary Compensation
Table footnotes. Personal and spousal travel on corporate aircraft included in
the table above is valued at the amounts imputed as income to the NEOs for tax
purposes using the Standard Industry Fare Level (SIFL) formula in accordance
with IRS guidelines.

8Reflects the Companys
payment of the Medicare portion of the FICA tax on the non-qualified retirement
accrual and the tax gross-up on the imputed income of that tax payment
provided during 2011.

46

---



POTENTIAL PAYMENTS UPON TERMINATIONWilliam D. Johnson, Chairman,
President and Chief Executive Officer

Amounts reflected in the following table
assume a triggering event occurred on December 31, 2011.

|                                 |              |                 |                  |                  | Involuntary     |             |           
|-------------------------------- | ------------ | --------------- | ---------------- | ---------------- | --------------- | ----------- | ----------
|                                 |              |                 | Involuntary      |                  | or Good         |             |           
|                                 |              |                 | Not for          |                  | Reason          |             |           
|                                 | Voluntary    | Early           | Cause            | For Cause        | **Termination** |             |           
|                                 | Termination1 | **Retirement1** | **Termination1** | **Termination1** | (CIC)           | Disability  | Death     
|                                 | ($)          | ($)             | ($)              | ($)              | ($)             | ($)         | ($)       
|Compensation                     |              |                 |                  |                  |                 |             |           
|Base
      Salary$1,030,0002    | $0           | $0              | $3,079,700       | $0               | $6,180,000      | $618,000    | $0        
|Annual
      Incentive3          | $0           | $1,223,000      | $0               | $0               | $1,030,000      | $1,223,000  | $1,223,000
|Long-term Incentives:            |              |                 |                  |                  |                 |             |           
|Performance Shares
      (PSSP)4 |              |                 |                  |                  |                 |             |           
|2009
      PSSP Grant            | $0           | $1,826,000      | $0               | $0               | $3,652,000      | $1,826,000  | $1,826,000
|2010
      PSSP Grant            | $0           | $2,309,443      | $0               | $0               | $3,464,165      | $2,309,443  | $2,309,443
|2011
      PSSP Grant            | $0           | $1,028,845      | $0               | $0               | $3,086,534      | $1,028,845  | $1,028,845
|Restricted Stock Units (RSU)5    |              |                 |                  |                  |                 |             |           
|2007
      RSU Grant             | $0           | $262,689        | $0               | $0               | $276,515        | $276,515    | $276,515  
|2009
      RSU Grant             | $0           | $888,281        | $0               | $0               | $969,034        | $969,034    | $969,034  
|2010
      RSU Grant             | $0           | $615,333        | $0               | $0               | $843,885        | $843,885    | $843,885  
|2011
      RSU Grant             | $0           | $824,054        | $0               | $0               | $2,052,573      | $0          | $0        
|Benefits and
      Perquisites   |              |                 |                  |                  |                 |             |           
|Deferred Compensation6           | $967,552     | $967,552        | $967,552         | $967,552         | $967,552        | $967,552    | $967,552  
|Post-retirement Health Care7     | $0           | $0              | $26,475          | $0               | $51,911         | $0          | $0        
|Executive AD&D Proceeds8         | $0           | $0              | $0               | $0               | $0              | $500,000    | $500,000  
|280G
      Tax Gross-up9         | $0           | $0              | $0               | $0               | $7,441,493      | $0          | $0        
|TOTAL                            | $967,552     | $9,945,197      | $4,073,727       | $967,552         | $30,015,662     | $10,562,274 | $9,944,274

1 Mr.
Johnson became eligible for early retirement at age 55 in January 2009.
Therefore, under the voluntary termination, involuntary not for cause
termination, and for cause termination scenarios, Mr. Johnson would be treated
as having met the early retirement criteria under the Equity Incentive Plan, and
would be paid out under the early retirement provisions of that plan. The payout
would equal amounts listed under early retirement in the table above for
performance shares and RSUs ($7,754,645). This amount would be added to the
totals above for combined totals as follows: $8,722,197 under voluntary
termination; $11,828,372 under involuntary not for cause termination; and
$8,722,197 under for cause termination. Mr. Johnson is not eligible for normal
retirement.

2 There is no provision for payment of salary under voluntary
termination, early retirement, for cause termination or death. In the event of
involuntary not for cause termination, the salary continuation provision of Mr.
Johnsons employment agreement requires a severance equal to 2.99 times his then
current base salary ($1,030,000) payable in equal installments over a period of
2.99 years. In the event of involuntary or good reason termination (CIC), the
maximum benefit allowed under the cash payment provision of the Management
Change-in-Control Plan equals three times the sum of annual salary plus target
MICP award (($1,030,000 + $1,030,000) x 3). In the event of a long-term
disability, Mr. Johnson would receive 60% of base salary during the period of
his disability, offset by any Social Security benefits and Progress Energy
Pension Plan payments. The long-term disability payment as shown in the table
above represents an annual amount before offsets.

3 There is no provision for payment of annual incentive under
voluntary termination, involuntary not for cause termination, or for cause
termination. In the event of involuntary or good reason termination (CIC), Mr.
Johnson would receive 100% of his target award under the Annual Cash Incentive
Compensation Plan provisions of the Management Change-in-Control Plan,
calculated as 100% times $1,030,000. In the event of early retirement, death or
disability, Mr. Johnson would receive a pro-rata incentive award for the period
worked during the year. For December 31, 2011, this is based on the full award.
For 2011, Mr. Johnsons MICP award was $1,223,000.

47

---







4
Amounts shown for performance shares are based on a December 31, 2011, closing
price of $56.02 per share. Voluntary termination, involuntary not for cause
termination, and for cause termination are not applicable, but see footnote 1
with respect to early retirement eligibility under these scenarios. In the event
of early retirement or disability, a pro rata percentage of performance shares
would vest based upon the period of employment during the performance
measurement period and the extent that the performance factors are satisfied. In
the event of involuntary or good reason termination (CIC), unvested performance
shares vest as of the date of Management Change-in-Control and payment is made
based upon the target value of the award. In the event of death, the 2009
performance shares would vest 100% and be paid in an amount using performance
factors determined at the time of the event. For the 2010 and 2011 performance
grants, a pro-rata payment would be made based upon the target value of the
award and time in the plan.

5 Amounts shown for RSUs are based on a December 31, 2011,
closing price of $56.02 per share. For a detailed description of outstanding
RSUs, see the Outstanding Equity Awards at 2011 Fiscal Year-End. Voluntary
termination, involuntary not for cause termination, and for cause termination
are not applicable, but see footnote 1 with respect to early retirement
eligibility under these scenarios. In the event of early retirement, Mr. Johnson
would receive a pro-rata percentage of all unvested RSUs, based upon the number
of full months elapsed between the grant date and the date of early retirement.
In the event of involuntary or good reason termination (CIC), all outstanding
RSUs would vest immediately. Upon death or disability, all outstanding RSUs that
are more than one year past their grant date would vest immediately. RSUs that
are less than one year past their grant date would be forfeited. Mr. Johnson
would immediately vest RSUs granted in 2007, 2009, and 2010, and would forfeit
RSUs granted in 2011.

6 All outstanding deferred compensation balances will be paid
immediately following termination, subject to IRC Section 409(a) regulations,
under each scenario.

7 No post-retirement health care benefits apply under voluntary
termination, for cause termination, death or disability. In the event of early
retirement, Mr. Johnson would receive no additional benefits above what all
full-time, nonbargaining employees would receive. Under involuntary not for
cause termination, Mr. Johnson would be reimbursed for 18 months of COBRA
premiums at $1,470.83 per month as provided in his employment agreement. In the
event of involuntary or good reason termination (CIC), the Management
Change-in-Control Plan provides for Company-paid medical, dental and vision
coverage in the same plan Mr. Johnson was participating in prior to termination
for 36 months at $1,441.99 per month.

8 Mr. Johnson would be eligible to receive $500,000 proceeds
from the executive AD&D policy.

9 Upon a change in control, the Management Change-in-Control
Plan provides for the Company to pay all excise taxes under IRC Section 280G
plus applicable gross-up amounts for Mr. Johnson. Under IRC Section 280G, Mr.
Johnson would be subject to excise tax on $13,328,855 of excess parachute
payments above his base amount. Those excess parachute payments result in
$2,665,771 of excise taxes, $4,669,363 of tax gross-ups, and $106,359 of
employer Medicare tax related to the excise tax payment.

48

---



POTENTIAL PAYMENTS UPON
TERMINATIONMark F. Mulhern, Senior Vice President and Chief Financial
Officer

Amounts reflected in the following table
assume a triggering event occurred on December 31, 2011.

|                                    |             |             |             | Involuntary |            |           
|----------------------------------- | ----------- | ----------- | ----------- | ----------- | ---------- | ----------
|                                    |             | Involuntary |             | or Good     |            |           
|                                    |             | Not for     |             | Reason      |            |           
|                                    | Voluntary   | Cause       | For Cause   | Termination |            |           
|                                    | Termination | Termination | Termination | (CIC)       | Disability | Death     
|                                    | ($)         | ($)         | ($)         | ($)         | ($)        | ($)       
|Compensation                        |             |             |             |             |            |           
|****Base Salary$495,9451           | $0          | $1,482,876  | $0          | $1,537,430  | $297,567   | $0        
|****Annual Incentive2               | $0          | $0          | $0          | $272,770    | $250,000   | $250,000  
|Long-term Incentives:               |             |             |             |             |            |           
|Performance Shares (PSSP)3          |             |             |             |             |            |           
|****2009 PSSP Grant                 | $0          | $0          | $0          | $743,217    | $371,609   | $371,609  
|****2010 PSSP Grant                 | $0          | $0          | $0          | $746,859    | $497,906   | $497,906  
|****2011 PSSP Grant                 | $0          | $0          | $0          | $704,508    | $234,836   | $234,836  
|Restricted Stock Units
      (RSU)4 |             |             |             |             |            |           
|****2007 RSU Grant                  | $0          | $0          | $0          | $66,552     | $66,552    | $66,552   
|****2009 RSU Grant                  | $0          | $0          | $0          | $244,695    | $244,695   | $244,695  
|****2010 RSU Grant                  | $0          | $0          | $0          | $179,600    | $179,600   | $179,600  
|****2011 RSU Grant                  | $0          | $0          | $0          | $560,368    | $0         | $0        
|Benefits and
      Perquisites      |             |             |             |             |            |           
|****Deferred Compensation5          | $179,741    | $179,741    | $179,741    | $179,741    | $179,741   | $179,741  
|****Post-retirement Health Care6    | $0          | $16,028     | $0          | $20,952     | $0         | $0        
|****Executive AD&D Proceeds7        | $0          | $0          | $0          | $0          | $500,000   | $500,000  
|****280G Tax Gross-up8              | $0          | $0          | $0          | $1,626,271  | $0         | $0        
|TOTAL                               | $179,741    | $1,678,645  | $179,741    | $6,882,963  | $2,822,506 | $2,524,939

1
There is no provision for payment of salary under voluntary termination, for
cause termination or death. Mr. Mulhern is not eligible for early retirement or
normal retirement. In the event of involuntary not for cause termination, the
salary continuation provision of Mr. Mulherns employment agreement requires a
severance equal to 2.99 times his then current base salary ($495,945) payable in
equal installments over a period of 2.99 years. In the event of involuntary or
good reason termination (CIC), the maximum benefit allowed under the cash
payment provision of the Management Change-in-Control Plan equals two times the
sum of annual salary plus annual target MICP award (($495,945 + $272,770) x 2).
In the event of a long-term disability, Mr. Mulhern would receive 60% of base
salary during the period of his disability, offset by any Social Security
benefits and Progress Energy Pension Plan payments. The long-term disability
payment as shown in the table above represents an annual amount before offsets.

2 There is no provision for payment of annual incentive under
voluntary termination, involuntary not for cause termination, or for cause
termination. Mr. Mulhern is not eligible for early retirement or normal
retirement. In the event of involuntary or good reason termination (CIC), Mr.
Mulhern would receive 100% of his target award under the Annual Cash Incentive
Compensation Plan provisions of the Management Change-in-Control Plan,
calculated as 55% times $495,945. In the event of death or disability, Mr.
Mulhern would receive a pro-rata incentive award for the period worked during
the year. For December 31, 2011, this is based on the full award. For 2011, Mr.
Mulherns MICP award was $250,000.

3 Amounts shown for performance shares are based on a December
31, 2011, closing price of $56.02 per share. Unvested performance shares would
be forfeited under voluntary termination, involuntary not for cause termination,
or for cause termination. Mr. Mulhern is not eligible for early retirement or
normal retirement. In the event of involuntary or good reason termination (CIC),
unvested performance shares vest as of the date of Management Change-in-Control
and payment is made based upon the target value of the award. In the event of
disability, a pro rata percentage of performance shares would vest based upon
the period of employment during the performance measurement period and the
extent that the performance factors are satisfied. In the event of death, the
2009 performance shares would vest 100% and be paid in an amount using
performance factors determined at the time of the event. For the 2010 and 2011
performance grants, the target value of the award would be paid based upon time
in the plan.

49

---



4
Amounts shown for RSUs are based on a December 31, 2011, closing price of $56.02
per share. For a detailed description of outstanding RSUs, see the Outstanding
Equity Awards at 2011 Fiscal Year-End. Unvested RSUs would be forfeited under
voluntary termination, involuntary not for cause termination, or for cause
termination. Mr. Mulhern is not eligible for early retirement or normal
retirement. In the event of involuntary or good reason termination (CIC), all
outstanding RSUs would vest immediately. Upon death or disability, all
outstanding RSUs that are more than one year past their grant date would vest
immediately. RSUs that are less than one year past their grant date would be
forfeited. Mr. Mulhern would immediately vest RSUs granted in 2007, 2009, and
2010; and would forfeit RSUs granted in 2011.

5 All outstanding deferred compensation balances will be paid
immediately following termination, subject to IRC Section 409(a) regulations,
under each scenario. Mr. Mulhern is not eligible for early retirement or normal
retirement.

6 No post-retirement health care benefits apply under
voluntary termination, for cause termination, death or disability. Mr. Mulhern
is not eligible for early retirement or normal retirement. Under involuntary not
for cause termination, Mr. Mulhern would be reimbursed for 18 months of COBRA
premiums at $890.45 per month as provided in his employment agreement. In the
event of involuntary or good reason termination (CIC), the Management
Change-in-Control Plan provides for Company-paid medical, dental and vision
coverage in the same plan Mr. Mulhern was participating in prior to termination
for 24 months at $872.99 per month.

7 Mr. Mulhern would be eligible to receive $500,000 proceeds
from the executive AD&D policy.

8Upon a change in control, the
Management Change-in-Control Plan provides for the Company to pay all excise
taxes under IRC Section 280G plus applicable gross-up amounts for Mr. Mulhern.
Under IRC Section 280G, Mr. Mulhern would be subject to excise tax on $2,912,901
of excess parachute payments above his base amount. Those excess parachute
payments result in $582,580 of excise taxes, $1,020,447 of tax gross-ups, and
$23,244 of employer Medicare tax related to the excise tax payment.

50

---



POTENTIAL PAYMENTS UPON
TERMINATIONJeffrey J. Lyash, Executive Vice President  Energy Supply

Amounts reflected in the following table
assume a triggering event occurred on December 31, 2011.

|                                    |             |                 |                 | Involuntary |            |           
|----------------------------------- | ----------- | --------------- | --------------- | ----------- | ---------- | ----------
|                                    |             | Involuntary     |                 | or Good     |            |           
|                                    |             | Not for         |                 | Reason      |            |           
|                                    | Voluntary   | Cause           | For Cause       | Termination |            |           
|                                    | Termination | **Termination** | **Termination** | (CIC)       | Disability | Death     
|                                    | ($)         | ($)             | ($)             | ($)         | ($)        | ($)       
|Compensation                        |             |                 |                 |             |            |           
|Base
      Salary$466,5901         | $0          | $1,395,104      | $0              | $2,169,644  | $279,954   | $0        
|Annual
      Incentive2             | $0          | $0              | $0              | $256,625    | $220,000   | $220,000  
|Long-term Incentives:               |             |                 |                 |             |            |           
|Performance Shares
      (PSSP)3    |             |                 |                 |             |            |           
|2009
      PSSP Grant               | $0          | $0              | $0              | $859,011    | $429,505   | $429,505  
|2010
      PSSP Grant               | $0          | $0              | $0              | $795,988    | $530,659   | $530,659  
|2011
      PSSP Grant               | $0          | $0              | $0              | $709,213    | $236,404   | $236,404  
|Restricted Stock Units
      (RSU)4 |             |                 |                 |             |            |           
|2007
      RSU Grant                | $0          | $0              | $0              | $88,232     | $88,232    | $88,232   
|2009
      RSU Grant                | $0          | $0              | $0              | $232,987    | $232,987   | $232,987  
|2010
      RSU Grant                | $0          | $0              | $0              | $191,476    | $191,476   | $191,476  
|2011
      RSU Grant                | $0          | $0              | $0              | $562,609    | $0         | $0        
|Benefits and
      Perquisites      |             |                 |                 |             |            |           
|Deferred Compensation5              | $236,721    | $236,721        | $236,721        | $236,721    | $236,721   | $236,721  
|Post-retirement Health Care6        | $0          | $18,716         | $0              | $36,697     | $0         | $0        
|Executive AD&D Proceeds7            | $0          | $0              | $0              | $0          | $500,000   | $500,000  
|280G
      Tax Gross-up8            | $0          | $0              | $0              | $1,961,904  | $0         | $0        
|TOTAL                               | $236,721    | $1,650,541      | $236,721        | $8,101,107  | $2,945,938 | $2,665,984

1
There is no provision for payment of salary under voluntary termination, for
cause termination or death. Mr. Lyash is not eligible for early retirement or
normal retirement. In the event of involuntary not for cause termination, the
salary continuation provision of Mr. Lyashs employment agreement requires a
severance equal to 2.99 times his then current base salary ($466,590) payable in
equal installments over a period of 2.99 years. In the event of involuntary or
good reason termination (CIC), the maximum benefit allowed under the cash
payment provision of the Management Change-in-Control Plan equals three times
the sum of annual salary plus annual target MICP award (($466,590 + $256,625) x
3). In the event of a long-term disability, Mr. Lyash would receive 60% of base
salary during the period of his disability, offset by any Social Security
benefits and Progress Energy Pension Plan payments. The long-term disability
payment as shown in the table above represents an annual amount before offsets.

2 There is no provision for payment of annual incentive under
voluntary termination, involuntary not for cause termination, or for cause
termination. Mr. Lyash is not eligible for early retirement or normal
retirement. In the event of involuntary or good reason termination (CIC), Mr.
Lyash would receive 100% of his target award under the Annual Cash Incentive
Compensation Plan provisions of the Management Change-in-Control Plan,
calculated as 55% times $466,590. In the event of death or disability, Mr. Lyash
would receive a pro-rata incentive award for the period worked during the year.
For December 31, 2011, this is based on the full award. For 2011, Mr. Lyashs
MICP award was $220,000.

3 Amounts shown for performance shares are based on a December
31, 2011, closing price of $56.02 per share. Unvested performance shares would
be forfeited under voluntary termination, involuntary not for cause termination,
or for cause termination. Mr. Lyash is not eligible for early retirement or
normal retirement. In the event of involuntary or good reason termination (CIC),
unvested performance shares vest as of the date of Management Change-in-Control
and payment is made based upon the target value of the award. In the event of
disability, a pro rata percentage of performance shares would vest based upon
the period of employment during the performance measurement period and the
extent that the performance factors are satisfied. In the event of death, the
2009 performance shares would vest 100% and be paid in an amount using
performance factors determined at the time of the event. For the 2010 and 2011
performance grants, the target value of the award would be paid based upon time
in the plan.

51

---



4
Amounts shown for RSUs are based on a December 31, 2011, closing price of $56.02
per share. For a detailed description of outstanding RSUs, see the Outstanding
Equity Awards at 2011 Fiscal Year-End. Unvested RSUs would be forfeited under
voluntary termination, involuntary not for cause termination, or for cause
termination. Mr. Lyash is not eligible for early retirement or normal
retirement. In the event of involuntary or good reason termination (CIC), all
outstanding RSUs would vest immediately. Upon death or disability, all
outstanding RSUs that are more than one year past their grant date would vest
immediately. RSUs that are less than one year past their grant date would be
forfeited. Mr. Lyash would immediately vest RSUs granted in 2007, 2009, and
2010; and would forfeit RSUs granted in 2011.

5 All outstanding deferred compensation balances will be paid
immediately following termination, subject to IRC Section 409(a) regulations,
under each scenario. Mr. Lyash is not eligible for early retirement or normal
retirement.

6 No post-retirement health care benefits apply under
voluntary termination, for cause termination, death or disability. Mr. Lyash is
not eligible for early retirement or normal retirement. Under involuntary not
for cause termination, Mr. Lyash would be reimbursed for 18 months of COBRA
premiums at $1,039.75 per month as provided in his employment agreement. In the
event of involuntary or good reason termination (CIC), the Management
Change-in-Control Plan provides for Company-paid medical, dental and vision
coverage in the same plan Mr. Lyash was participating in prior to termination
for 36 months at $1,019.37 per month.

7 Mr. Lyash would be eligible to receive $500,000 proceeds
from the executive AD&D policy.

8 Upon a change in control, the Management Change-in-Control
Plan provides for the Company to pay all excise taxes under IRC Section 280G
plus applicable gross-up amounts for Mr. Lyash. Under IRC Section 280G, Mr.
Lyash would be subject to excise tax on $3,514,070 of excess parachute payments
above his base amount. Those excess parachute payments result in $702,814 of
excise taxes, $1,231,049 of tax gross-ups, and $28,041 of employer Medicare tax
related to the excise tax payment.

52

---



POTENTIAL PAYMENTS UPON TERMINATIONLloyd M. Yates, President and
Chief Executive Officer, PEC

Amounts reflected in the following table
assume a triggering event occurred on December 31, 2011.

|                                    |             |                 |                 | Involuntary |            |           
|----------------------------------- | ----------- | --------------- | --------------- | ----------- | ---------- | ----------
|                                    |             | Involuntary     |                 | or Good     |            |           
|                                    |             | Not for         |                 | Reason      |            |           
|                                    | Voluntary   | Cause           | For Cause       | Termination |            |           
|                                    | Termination | **Termination** | **Termination** | (CIC)       | Disability | Death     
|                                    | ($)         | ($)             | ($)             | ($)         | ($)        | ($)       
|Compensation                        |             |                 |                 |             |            |           
|Base
      Salary$461,4401         | $0          | $1,379,706      | $0              | $2,145,696  | $276,864   | $0        
|Annual
      Incentive2             | $0          | $0              | $0              | $253,792    | $220,000   | $220,000  
|Long-term Incentives:               |             |                 |                 |             |            |           
|Performance Shares
      (PSSP)3    |             |                 |                 |             |            |           
|2009
      PSSP Grant               | $0          | $0              | $0              | $849,319    | $424,660   | $424,660  
|2010
      PSSP Grant               | $0          | $0              | $0              | $787,249    | $524,833   | $524,833  
|2011
      PSSP Grant               | $0          | $0              | $0              | $701,370    | $233,790   | $233,790  
|Restricted Stock Units
      (RSU)4 |             |                 |                 |             |            |           
|2007
      RSU Grant                | $0          | $0              | $0              | $88,232     | $88,232    | $88,232   
|2009
      RSU Grant                | $0          | $0              | $0              | $231,643    | $231,643   | $231,643  
|2010
      RSU Grant                | $0          | $0              | $0              | $189,348    | $189,348   | $189,348  
|2011
      RSU Grant                | $0          | $0              | $0              | $558,856    | $0         | $0        
|Benefits and
      Perquisites      |             |                 |                 |             |            |           
|Deferred Compensation5              | $782,054    | $782,054        | $782,054        | $782,054    | $782,054   | $782,054  
|Post-retirement Health Care6        | $0          | $26,475         | $0              | $51,911     | $0         | $0        
|Executive AD&D Proceeds7            | $0          | $0              | $0              | $0          | $500,000   | $500,000  
|280G
      Tax Gross-up8            | $0          | $0              | $0              | $1,952,354  | $0         | $0        
|TOTAL                               | $782,054    | $2,188,235      | $782,054        | $8,591,824  | $3,471,424 | $3,194,560

1
There is no provision for payment of salary under voluntary termination, for
cause termination or death. Mr. Yates is not eligible for early retirement or
normal retirement. In the event of involuntary not for cause termination, the
salary continuation provision of Mr. Yates employment agreement requires a
severance equal to 2.99 times his then current base salary ($461,440) payable in
equal installments over a period of 2.99 years. In the event of involuntary or
good reason termination (CIC), the maximum benefit allowed under the cash
payment provision of the Management Change-in-Control Plan equals three times
the sum of annual salary plus annual target MICP award (($461,440 + $253,792) x
3). In the event of a long-term disability, Mr. Yates would receive 60% of base
salary during the period of his disability, offset by any Social Security
benefits and Progress Energy Pension Plan payments. The long-term disability
payment as shown in the table above represents an annual amount before offsets.

2 There is no provision for payment of annual incentive under
voluntary termination, involuntary not for cause termination, or for cause
termination. Mr. Yates is not eligible for early retirement or normal
retirement. In the event of involuntary or good reason termination (CIC), Mr.
Yates would receive 100% of his target award under the Annual Cash Incentive
Compensation Plan provisions of the Management Change-in-Control Plan,
calculated as 55% times $461,440. In the event of death or disability, Mr. Yates
would receive a pro-rata incentive award for the period worked during the year.
For December 31, 2011 this is based on the full award. For 2011, Mr. Yates MICP
award was $220,000.

3 Amounts shown for performance shares are based on a December
31, 2011, closing price of $56.02 per share. Unvested performance shares would
be forfeited under voluntary termination, involuntary not for cause termination,
or for cause termination. Mr. Yates is not eligible for early retirement or
normal retirement. In the event of involuntary or good reason termination (CIC),
unvested performance shares vest as of the date of Management Change-in-Control
and payment is made based upon the target value of the award. In the event of
disability, a pro rata percentage of performance shares would vest based upon
the period of employment during the performance measurement period and the
extent that the performance factors are satisfied. In the event of death, the
2009 performance shares would vest 100% and be paid in an amount using
performance factors determined at the time of the event. For the 2010 and 2011
performance grants, the target value of the award would be paid based upon time
in the plan.

53

---



4
Amounts shown for RSUs are based on a December 31, 2011, closing price of $56.02
per share. For a detailed description of outstanding RSUs, see the Outstanding
Equity Awards at 2011 Fiscal Year-End. Unvested RSUs would be forfeited under
voluntary termination, involuntary not for cause termination, or for cause
termination. Mr. Yates is not eligible for early retirement or normal
retirement. In the event of involuntary or good reason termination (CIC), all
outstanding RSUs would vest immediately. Upon death or disability, all
outstanding RSUs that are more than one year past their grant date would vest
immediately. RSUs that are less than one year past their grant date would be
forfeited. Mr. Yates would immediately vest RSUs granted in 2007, 2009, and
2010; and would forfeit RSUs granted in 2011.

5 All outstanding deferred compensation balances will be paid
immediately following termination, subject to IRC Section 409(a) regulations,
under each scenario. Mr. Yates is not eligible for early retirement or normal
retirement.

6 No post-retirement health care benefits apply under
voluntary termination, for cause termination, death or disability. Mr. Yates is
not eligible for early retirement or normal retirement. Under involuntary not
for cause termination, Mr. Yates would be reimbursed for 18 months of COBRA
premiums at $1,470.83 per month as provided in his employment agreement. In the
event of involuntary or good reason termination (CIC), the Management
Change-in-Control Plan provides for Company-paid medical, dental and vision
coverage in the same plan Mr. Yates was participating in prior to termination
for 36 months at $1,441.99 per month.

7 Mr. Yates would be eligible to receive $500,000 proceeds
from the executive AD&D policy.

8 Upon a change in control, the Management Change-in-Control
Plan provides for the Company to pay all excise taxes under IRC Section 280G
plus applicable gross-up amounts for Mr. Yates. Under IRC Section 280G, Mr.
Yates would be subject to excise tax on $3,496,965 of excess parachute payments
above his base amount. Those excess parachute payments result in $699,393 of
excise taxes, $1,225,056 of tax gross-ups, and $27,905 of employer Medicare tax
related to the excise tax payment.

54

---



POTENTIAL PAYMENTS UPON TERMINATIONJohn R. McArthur, Executive Vice
President, General Counsel and Corporate Secretary

Amounts reflected in the following table
assume a triggering event occurred on December 31, 2011.

|                                        |              |                 |              |                  | Involuntary     |            |           
|--------------------------------------- | ------------ | --------------- | ------------ | ---------------- | --------------- | ---------- | ----------
|                                        |              |                 | Involuntary  |                  | or Good         |            |           
|                                        |              |                 | Not for      |                  | Reason          |            |           
|                                        | Voluntary    | Early           | Cause        | For Cause        | **Termination** |            |           
|                                        | Termination1 | **Retirement**1 | Termination1 | **Termination1** | (CIC)           | Disability | Death     
|                                        | ($)          | ($)             | ($)          | ($)              | ($)             | ($)        | ($)       
|Compensation                            |              |                 |              |                  |                 |            |           
|Base Salary$502,6402                   | $0           | $0              | $1,502,894   | $0               | $2,337,276      | $301,584   | $0        
|Annual Incentive3                       | $0           | $0              | $0           | $0               | $276,452        | $305,000   | $305,000  
|Long-term Incentives:                   |              |                 |              |                  |                 |            |           
|Performance Shares
      (PSSP)4        |              |                 |              |                  |                 |            |           
|2009 PSSP Grant                         | $0           | $463,285        | $0           | $0               | $926,571        | $463,285   | $463,285  
|2010 PSSP Grant                         | $0           | $571,665        | $0           | $0               | $857,498        | $571,665   | $571,665  
|2011 PSSP Grant                         | $0           | $254,686        | $0           | $0               | $764,057        | $254,686   | $254,686  
|Restricted Stock Units
      (RSU)5     |              |                 |              |                  |                 |            |           
|2007 RSU Grant                          | $0           | $78,658         | $0           | $0               | $82,798         | $82,798    | $82,798   
|2009 RSU Grant                          | $0           | $222,301        | $0           | $0               | $242,511        | $242,511   | $242,511  
|2010 RSU Grant                          | $0           | $150,402        | $0           | $0               | $206,266        | $206,266   | $206,266  
|2011 RSU Grant                          | $0           | $223,170        | $0           | $0               | $588,770        | $0         | $0        
|Benefits and
      Perquisites          |              |                 |              |                  |                 |            |           
|Incremental Nonqualified
      Pension6 | $0           | $0              | $0           | $0               | $1,915,600      | $0         | $0        
|Deferred Compensation7                  | $335,778     | $335,778        | $335,778     | $335,778         | $335,778        | $335,778   | $335,778  
|Post-retirement Health
      Care8      | $0           | $0              | $17,837      | $0               | $34,975         | $0         | $0        
|Executive AD&D
      Proceeds9          | $0           | $0              | $0           | $0               | $0              | $500,000   | $500,000  
|280G Tax Gross-up10                     | $0           | $0              | $0           | $0               | $3,162,063      | $0         | $0        
|TOTAL                                   | $335,778     | $2,299,945      | $1,856,509   | $335,778         | $11,730,615     | $3,263,573 | $2,961,989

1 Mr.
McArthur became eligible for early retirement at age 55 with 10 years of service
in December 2011 under the Equity Incentive Plan only. Therefore, under the
voluntary termination, involuntary not for cause termination, and for cause
termination scenarios, Mr. McArthur would be treated as having met the early
retirement criteria under the Equity Incentive Plan and would be paid out under
the early retirement provisions of that plan. The payout would equal amounts
listed under early retirement in the table above for performance shares and RSUs
($1,964,167). This amount would be added to the totals above for combined totals
as follows: $2,299,945 under voluntary termination; $3,820,676 under involuntary
not for cause termination, and $2,299,945 under for cause termination. Mr.
McArthur is not eligible for early retirement under the MICP as he has less than
15 years of service at December 31, 2011. Mr. McArthur is not eligible for
normal retirement.

2There is no provision for payment of salary under voluntary
termination, early retirement, for cause termination or death. In the event of
involuntary not for cause termination, the salary continuation provision of Mr.
McArthurs employment agreement requires a severance equal to 2.99 times his
then current base salary ($502,640) payable in equal installments over a period
of 2.99 years. In the event of involuntary or good reason termination (CIC), the
maximum benefit allowed under the cash payment provision of the Management
Change-in-Control Plan equals three times the sum of annual salary plus annual
target MICP award (($502,640 + $276,452) x 3). In the event of a long-term
disability, Mr. McArthur would receive 60% of base salary during the period of
his disability, offset by any Social Security benefits and Progress Energy
Pension Plan payments. The long-term disability payment as shown in the table
above represents an annual amount before offsets.

3 There is no provision for payment of annual incentive under
voluntary termination, involuntary not for cause termination, or for cause
termination. Mr. McArthur is not eligible for early retirement or normal
retirement. In the event of involuntary or good reason termination (CIC), Mr.
McArthur would receive 100% of his target bonus under the Annual Cash Incentive
Compensation Plan provisions of the Management Change-in-Control Plan,
calculated as 55% times $502,640. In the event of death or disability, Mr.
McArthur would receive a pro-rata incentive award for the period worked during
the year. For December 31, 2011, this is based on the full award. For 2011, Mr.
McArthurs MICP award was $305,000.

55

---



4
Amounts shown for performance shares are based on a December 31, 2011, closing
price of $56.02 per share. Voluntary termination, involuntary not for cause
termination, and for cause termination are not applicable, but see footnote 1
with respect to early retirement eligibility under these scenarios. Mr. McArthur
is not eligible for normal retirement. In the event of involuntary or good
reason termination (CIC), unvested performance shares vest as of the date of
Management Change-in-Control and payment is made based upon the target value of
the award. In the event of early retirement or disability, a pro rata percentage
of performance shares would vest based upon the period of employment during the
performance measurement period and the extent that the performance factors are
satisfied. In the event of death, the 2009 performance shares would vest 100%
and be paid in an amount using performance factors determined at the time of the
event. For the 2010 and 2011 performance grants, the target value of the award
would be paid based upon time in the plan.

5Amounts shown for RSUs are based on a December 31, 2011,
closing price of $56.02 per share. For a detailed description of outstanding
RSUs, see the Outstanding Equity Awards at 2011 Fiscal Year-End. Voluntary
termination, involuntary not for cause termination, and for cause termination
are not applicable, but see footnote 1 with respect to early retirement
eligibility under these scenarios. In the event of early retirement, Mr.
McArthur would receive a pro rata percentage of all unvested RSUs, based upon
the number of full months elapsed between the grant date and the date of early
retirement. Mr.McArthur is not eligible for
normal retirement. In the event of involuntary or good reason termination (CIC),
all outstanding RSUs would vest immediately. Upon death or disability, all
outstanding RSUs that are more than one year past their grant date would vest
immediately. RSUs that are less than one year past their grant date would be
forfeited. Mr. McArthur would immediately vest RSUs granted in 2007, 2009, and
2010; and would forfeit RSUs granted in 2011.

6Mr. McArthur was not vested under the SERP as of December
31, 2011, so this is the incremental value due to accelerated vesting under
involuntary or good reason termination (CIC). No accelerated vesting or
incremental nonqualified pension benefit applies under any other scenario above.

7All outstanding deferred compensation balances will be paid
immediately following termination, subject to IRC Section 409(a) regulations,
under each scenario. Mr. McArthur is not eligible for early retirement or normal
retirement.

8No post-retirement health care benefits apply under
voluntary termination, for cause termination, death or disability. Mr. McArthur
is not eligible for early retirement or normal retirement. Under involuntary not
for cause termination, Mr. McArthur would be reimbursed for 18 months of COBRA
premiums at $990.95 per month as provided in his employment agreement. In the
event of involuntary or good reason termination (CIC), the Management
Change-in-Control Plan provides for Company-paid medical, dental and vision
coverage in the same plan Mr. McArthur was participating in prior to termination
for 36 months at $971.52 per month.

9Mr. McArthur would be eligible to receive $500,000 proceeds
from the executive AD&D policy.

10Upon a change in control, the Management Change-in-Control
Plan provides for the Company to pay all excise taxes under IRC Section 280G
plus applicable gross-up amounts for Mr. McArthur. Under IRC Section 280G, Mr.
McArthur would be subject to excise tax on $5,663,739 of excess parachute
payments above his base amount. Those excess parachute payments result in
$1,132,748 of excise taxes, $1,984,120 of tax gross-ups, and $45,195 of employer
Medicare tax related to the excise tax payment.

56

---



2011 DIRECTOR COMPENSATION

The following
includes the required table and related narrative detailing the compensation
each director received for his or her services in 2011.

|                                   | Fees
      Earned | Stock   |           
|---------------------------------- | ----------------- | ------- | ----------
|                                   | or Paid in Cash1  | Awards2 | **Total3**
|Name                               | ($)               | ($)     | **($)**   
|(a)                                | (b)               | (c)     | **(h)**   
|John D. Baker II                   | $118,500          | $60,000 | $178,500  
|James E. Bostic,
    Jr.           | $120,000          | $60,000 | $180,000  
|Harris E. DeLoach,
      Jr.       | $130,000          | $60,000 | $190,000  
|James B. Hyler,
    Jr.            | $118,500          | $60,000 | $178,500  
|Robert W. Jones                    | $140,500          | $60,000 | $200,500  
|W. Steven Jones                    | $127,500          | $60,000 | $187,500  
|Melquiades R. Mel
      Martinez | $120,000          | $60,000 | $180,000  
|E. Marie McKee                     | $133,500          | $60,000 | $193,500  
|John H. Mullin,
    III            | $133,500          | $60,000 | $193,500  
|Charles W. Pryor,
      Jr.        | $132,000          | $60,000 | $192,000  
|Carlos A.
    Saladrigas           | $118,500          | $60,000 | $178,500  
|Theresa M. Stone                   | $132,000          | $60,000 | $192,000  
|Alfred C. Tollison,
      Jr.      | $128,000          | $60,000 | $188,000  

1 Reflects the annual retainer plus any Board or Committee
fees earned in 2011. Amounts may have been paid in cash or deferred under the
Non-Employee Director Deferred Compensation Plan.

2 Reflects the grant date fair value of awards granted
under the Non-Employee Director Stock Unit Plan in 2011. The assumptions made in
the valuation of awards granted pursuant to the Non-Employee Director Stock Unit
Plan are not addressed in our consolidated financial statements, footnotes to
our consolidated financial statements or in Managements Discussion and Analysis
because the Director Plan is immaterial to our consolidated financial
statements. As a liability plan under FASB ASC Topic 718, the fair value of the
Director Plan is re-measured at each financial statement date. The grant date
fair value for each stock unit granted to each director on January 3, 2011 was
$43.61.

3The total value of the perquisites and personal benefits
received by each director was less than $10,000. Thus, those amounts are
excluded from this table.

57

---



DISCUSSION OF DIRECTOR
COMPENSATION TABLE

The Corporate
Governance Committee establishes the compensation of the Companys Board of
Directors. At the request of the Corporate Governance Committee, the
compensation consultant prepared and provided a survey of our Benchmarking Peer
Groups director compensation. The elements of our director compensation program
are discussed below.

RETAINER AND MEETING FEES

During 2011, Directors who were not employees of the Company received
the following retainers:

- An
  annual retainer of $105,000, of which $30,000 was automatically deferred under
  the Non-Employee Director Deferred Compensation Plan (see below);
- An additional retainer of $15,000 was
  paid to the Lead Director/Chair of each of the following standing Board
  Committees: Audit and Corporate Performance Committee; Governance Committee;
  and Organization and Compensation Committee;
- An additional retainer of $10,000 was
  paid to the Chair of each of the following standing Board Committees: Finance
  Committee and Operations and Nuclear Oversight Committee;
- An additional retainer of $7,500 was
  paid to the non-Chair members of the following standing Board Committees:
  Audit and Corporate Performance Committee and Organization and Compensation
  Committee;
- An additional retainer of $6,000 was
  paid to the non-Chair members of the following standing Board Committees:
  Governance Committee; Finance Committee; and Operations and Nuclear Oversight
  Committee;
- An attendance fee of $1,500 per
  meeting was paid to each member of a special committee appointed by the
  Governance Committee to investigate shareholder derivative claims resulting
  from the proposed merger with Duke Energy; and
- An additional retainer of $8,000 was
  paid to the Nuclear Oversight Director.

A special meeting fee of $1,500 was paid in the January 1, 2011
retainer to each member of the Operations and Nuclear Oversight Committee. The
special meeting was held on September 15, 2010, and the special meeting fee was
approved by the Governance Committee on December 7, 2010.

Directors who are not employees of the Company received a fee of
$1,500 per meeting, paid with the next quarterly retainer, for noncustomary
meetings or reviews of the Companys operations that are approved by the
Governance Committee. Directors who are employees of our Company do not receive
an annual retainer or attendance fees. All Directors are reimbursed for expenses
incidental to their service as Directors. Committee positions held by the
Directors are discussed in the Board Committees section of this document.

The Non-Employee Director Stock Unit Plan provides that each Director
will receive an annual grant of stock units that is equivalent to $60,000.

NON-EMPLOYEE DIRECTOR DEFERRED
COMPENSATION PLAN

In addition to $30,000 from the annual retainer that is automatically
deferred, outside Directors may elect to defer any portion of the remainder of
their annual retainer and Board attendance fees until after the termination of
their service on the Board under the Non-Employee Director Deferred Compensation
Plan. Any deferred fees are deemed to be invested in a number of units of Common
Stock of the Company, but participating Directors receive no equity interest or
voting rights in any shares of the Common Stock. The number of units credited to
the account of a participating Director is equal to the dollar amount of the
deferred fees divided by the average of the high and low selling prices (i.e.,
market value) of the Common Stock on the day the deferred fees would otherwise
be payable to the participating Director. The number of units in each account is
adjusted from time to time to reflect the payment of dividends on the number of
shares of Common Stock represented by the units. Unless otherwise agreed to by
the participant and the Board, when the participant ceases to be a member of the
Board of Directors, he or she will receive cash equal to the market value of a
share of the Companys Common Stock on the date of payment multiplied by the
number of units credited to the participants account.

58

---



The table
below includes the number of stock units deemed outstanding in the Non-Employee
Director DeferredCompensation Plan as of
December 31, 2011 for each Director listed in the Director Compensation Table
above and the dollar values of dividend reinvestments and unit
appreciation/depreciation accrued on such stock units during 2011.

**Stock Units Deemed**
    Dividend
      Reinvestments**Outstanding as
      of**
    and Unit
      Appreciation/Name
    **Dec. 31, 2011**
    DepreciationJohn D. Baker II
    5,909
    $75,465James E. Bostic, Jr.
    14,943
    $214,828Harris E. DeLoach, Jr.
    16,212
    $226,100James B. Hyler, Jr.
    3,569
    $45,318Robert W. Jones
    13,114
    $178,482W. Steven Jones
    17,720
    $248,020Melquiades R. Mel Martinez
    3,293
    $36,957E. Marie McKee
    33,447
    $489,270John H. Mullin, III
    22,798
    $332,562Charles W. Pryor, Jr.
    3,640
    $50,462Carlos A. Saladrigas
    8,937
    $128,599Theresa M. Stone
    14,568
    $201,565Alfred C. Tollison, Jr.
    15,697
    $218,705


NON-EMPLOYEE DIRECTOR STOCK UNIT
PLAN

Effective January 1, 1998, we established the Non-Employee Director
Stock Unit Plan (Stock Unit Plan). The Stock Unit Plan provides for an annual
grant of stock units equivalent to $60,000 to each non-employee Director. Each
unit is equal in economic value to one share of the Companys Common Stock, but
does not represent an equity interest or entitle its holder to vote. The number
of units is adjusted from time to time to reflect the payment of dividends with
respect to the Common Stock of the Company. Effective January 1, 2007, a
Director shall be fully vested at all times in the stock units credited to his
or her account. Unless otherwise agreed to by the participant and the Board,
when the participant ceases to be a member of the Board of Directors, he or she
will receive cash equal to the market value of a share of the Companys Common
Stock on the date of payment multiplied by the number of stock units credited to
the participants account.

The table below includes the number of stock units deemed outstanding
in the Non-Employee Director Stock Unit Plan as of December 31, 2011 for each
Director listed in the Director Compensation Table above and the dollar values
of dividend reinvestments and unit appreciation/depreciation accrued on such
stock units during 2011.

**Stock Units Deemed**
    Dividend
      Reinvestments**Outstanding as
      of**
    and Unit
      Appreciation/Name
    **Dec. 31, 2011**
    DepreciationJohn D. Baker II
    3,085
    $45,223James E. Bostic,
    Jr.
    12,461
    $183,193Harris E. DeLoach,
      Jr.
    8,032
    $118,020James B. Hyler,
    Jr.
    4,845
    $71,121Robert W. Jones
    6,437
    $94,541W. Steven Jones
    9,718
    $142,819Melquiades R. Mel
      Martinez
    1,448
    $21,133E. Marie McKee
    15,606
    $229,460John H. Mullin,
    III
    16,152
    $237,496Charles W. Pryor,
      Jr.
    6,437
    $94,542Carlos A.
    Saladrigas
    13,556
    $199,304Theresa M. Stone
    9,718
    $142,819Alfred C. Tollison,
      Jr.
    8,032
    $118,021


59

---



OTHER COMPENSATION

Directors are
eligible to receive certain perquisites, including tickets to various cultural
arts and sporting events, which arede
minimisin value. Each retiring
Director also receives a gift valued at approximately $1,500 in appreciation for
his/her service on the Board.

We charge Directors with imputed income in connection with (i) their
travel on Company aircraft for non-Company related purposes and (ii) their
spouses travel on Company aircraft.

Compensation Committee Interlocks and
Insider Participation

None of the directors who served as members of the Compensation Committee
during 2011 was our employee or former employee and none of them had any
relationship requiring disclosure under Item 404 of Regulation S-K. During 2011,
none of our executive officers served on the compensation committee (or
equivalent), or the board of directors of another entity whose executive
officer(s) served on our Compensation Committee or Board of Directors.

Item 12.Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters

Equity Compensation Plan Information as
of December 31, 2011

|                                                |                |                           | (c)                           
|----------------------------------------------- | -------------- | ------------------------- | ------------------------------
|                                                | (a)            |                           | Number of                     
|                                                | Number of      |                           | securities                    
|                                                | securities to  |                           | remaining available           
|                                                | be issued upon | (b)                       | for future issuance           
|                                                | exercise of    | Weighted-average          | under equity                  
|                                                | outstanding    | exercise price of         | compensation plans            
|                                                | options,       | outstanding               | (excluding                    
|                                                | warrants and   | options,                  | securities                    
|Plan category                                   | rights         | warrants and
      rights | reflected in column
      (a))
|Equity compensation plans approved
    by       |                |                           |                               
|security holders                                | 2,833,447      | $44.56                    | 5,073,752                     
|Equity compensation plans not approved
      by |                |                           |                               
|security holders                                | N/A            | N/A                       | N/A                           
|Total                                           | 2,833,447      | $44.56                    | 5,073,752                     

Column (a) includes stock options outstanding, outstanding performance
units assuming maximum payout potential, and outstanding restricted stock units.

Column (b) includes only the weighted-average exercise price of
outstanding options.

Column (c) includes reduction for unissued, outstanding performance units
assuming maximum payout potential and unissued, outstanding restricted stock
units, and issued restricted stock.

60

---



Stock Ownership by Principal
Stockholders, Directors and Management

Principal Shareholders

The table below
sets forth the only shareholder we know to beneficially own more than 5 percent
(5%) of the outstanding shares of our Common Stock as of December 31, 2011. We
do not have any other class of voting securities.

|Title of     |  | Name and Address
      of |  | Number of
      Shares |  | Percentage
    of
|------------ |  | ------------------------- |  | ---------------------- |  | -----------------
|Class        |  | Beneficial Owner          |  | Beneficially Owned     |  | Class            
|Common Stock |  | State Street Corporation  |  | 27,404,6881            |  | 9.3              
|             |  | One Lincoln Street        |  |                        |  |                  
|             |  | Boston, MA 02111          |  |                        |  |                  

1
Consists of shares of Common Stock held by State Street Corporation, acting in
various fiduciary capacities. State Street Corporation has sole power to vote
with respect to 0 shares, sole dispositive power with respect to 0 shares,
shared power to vote with respect to 27,404,688 shares and shared power to
dispose of 27,404,688 shares. State Street Corporation has disclaimed beneficial
ownership of all shares of Common Stock. (Based solely on information contained
in a Schedule 13G filed by State Street Corporation on February 13, 2012.)


Management Ownership of Common
Stock

The following table describes the beneficial ownership of our Common
Stock as of February 29, 2012, of (i) all current directors, (ii) each executive
officer named in the Summary Compensation Table presented earlier in this
document, and (iii) all directors and executive officers as a group. As of
February 29, 2012, none of the individuals or the group in the above categories
owned one percent (1%) or more of our voting securities. Unless otherwise noted,
all shares of Common Stock set forth in the table are beneficially owned,
directly or indirectly, with sole voting and investment power, by such
shareholder.

|                                                                               | Number of      
|------------------------------------------------------------------------------ | ---------------
|                                                                               | Shares         
|                                                                               | of
      Common
|                                                                               | Stock          
|                                                                               | Beneficially   
|Name                                                                           | Owned1         
|John D. Baker II                                                               | 7,450          
|James E. Bostic, Jr.                                                           | 8,655          
|Harris E. DeLoach,
      Jr.                                                   | 5,000          
|James B. Hyler, Jr.                                                            | 1,000          
|William D.
    Johnson                                                         | 240,142        
|Robert W. Jones                                                                | 1,000          
|W. Steven Jones                                                                | 1,000          
|Jeffrey J. Lyash                                                               | 28,087         
|Melquiades R. Mel
      Martinez                                             | 500            
|John R. McArthur                                                               | 76,535         
|E. Marie McKee                                                                 | 3,000          
|Mark F. Mulhern                                                                | 51,918         
|John H. Mullin,
    III                                                        | 10,000         
|Charles W. Pryor, Jr.                                                          | 1,042          
|Carlos A.
    Saladrigas                                                       | 7,000          
|Theresa M. Stone                                                               | 1,000          
|Alfred C. Tollison,
      Jr.                                                  | 1,000          
|Lloyd M. Yates                                                                 | 51,837         
|Shares of Common Stock
      beneficially owned by all directors and executive |                
|officers of the Company
      as a group (24 persons)                          | 609,769        

61

---



1Includes shares of our Common Stock such director has the right to acquire
beneficial ownership of within 60 days through the exercise of certain stock
options, as follows:


Stock**Director**
    OptionsJames E. Bostic, Jr.
    4,000E. Marie McKee
    2,000John H. Mullin, III
    6,000Carlos A. Saladrigas
    6,000


2  Includes 18,000
shares in the aggregate that group members have the right to  acquire
beneficial ownership of within 60 days through the exercise of certain  stock options.

Ownership of Units Representing Common
Stock

The table below shows ownership of units representing our Common Stock
under the Non-Employee Director Deferred Compensation Plan and units under the
Non-Employee Director Stock Unit Plan as of February 29, 2012. A unit of Common
Stock does not represent an equity interest in the Company, and possesses no
voting rights, but is equal in economic value at all times to one share of
Common Stock.

DirectorsDeferred
    Non-EmployeeCompensation
    DirectorDirector
    Plan
    Stock Unit
      PlanJohn D. Baker II
    6,074
    4,192James E. Bostic, Jr.
    15,251
    13,612Harris E. DeLoach, Jr.
    16,874
    9,162James B. Hyler, Jr.
    3,924
    5,960Robert W. Jones
    13,761
    7,559W. Steven Jones
    18,344
    10,855Melquiades R. Mel Martinez
    3,847
    2,547E. Marie McKee
    33,742
    16,771John H. Mullin, III
    23,042
    17,320Charles W. Pryor, Jr.
    3,794
    7,559Carlos A. Saladrigas
    9,116
    14,712Theresa M. Stone
    15,237
    10,855Alfred C. Tollison, Jr.
    16,346
    9,162


The table below  shows ownership as of February
29, 2012, of (i) performance units recorded to reflect  awards deferred under
the MICP; (ii)  performance
shares awarded under the Performance Share Sub-Plan of the 1997,  2002 and 2007 Equity Incentive Plans (PSSP)
(see Outstanding Equity Awards at 2011 Fiscal Year-End Table on page 41);
(iii) units recorded to reflect awards  deferred under the PSSP; (iv) replacement units representing the value of our
contributions to the 401(k) Savings & Stock Ownership Plan that would have  been made but for the deferral of salary
under the MDCP and contribution limitations under Section 415 of the Internal
Revenue Code of 1986, as amended; and (v) RSUs  awarded under the 2002 and
2007 Equity Incentive Plans.

PSSPOfficer
    MICP
    PSSP
    Deferred
    MDCP
    RSUsWilliam
      D. Johnson
    1,890
    117,490
    
    1,170
    73,938Jeffrey
      J. Lyash
    
    26,996
    
    3,898
    19,195John R.
      McArthur
    
    29,083
    
    
    19,999Mark F.
      Mulhern
    949
    26,030
    
    
    18,765Lloyd M.
      Yates
    2,952
    26,699
    7,043
    175
    19,066


62

---









Changes in Control

On January 8,
2011, Duke Energy and Progress Energy entered into a Merger Agreement. Pursuant to the Merger Agreement, Progress
Energy will be acquired by Duke Energy in a stock-for-stock transaction and
become a wholly owned subsidiary of Duke Energy. Both companies shareholders
have approved the merger. However, the consummation of the merger is subject to
customary conditions, including, among other things, expiration or termination
of the applicable Hart-Scott-Rodino Act waiting period, and receipt of approval,
to the extent required, from the Federal Energy Regulatory Commission, the
Federal Communications Commission, the Nuclear Regulatory Commission, the North
Carolina Utilities Commission, the Kentucky Public Service Commission, and the
South Carolina Public Service Commission. Although there are no merger-specific
regulatory approvals required in Indiana, Ohio or Florida, the companies will
continue to update the public service commissions in those states on the merger,
as applicable and as required.

Item 13.Certain Relationships and Related Transactions, and Director
Independence

Transactions with Related Persons

There were no transactions in 2011, and there are no currently proposed
transactions involving more than $120,000, in which the Company or any of its
subsidiaries was or is to be a participant and in which any of the Companys
directors, executive officers, nominees for director or any of their immediate
family members had a direct or indirect material interest.

Our Board of Directors has adopted policies and procedures for the
review, approval or ratification of Related Person Transactions under Item
404(a) of Regulation S-K (the Policy), which is filed herewith as Exhibit
99.1. The Board has determined that the Governance Committee is best suited to
review and approve Related Person Transactions because the Governance Committee
oversees the Board of Directors assessment of our directors independence. The
Governance Committee will review and may recommend to the Board amendments to
this Policy from time to time.

For the purposes of the Policy, a Related Person Transaction is a
transaction, arrangement or relationship, including any indebtedness or
guarantee of indebtedness (or any series of similar transactions, arrangements
or relationships), in which we (including any of our subsidiaries) were, are or
will be a participant and the amount involved exceeds $120,000, and in which any
Related Person had, has or will have a direct or indirect material interest. The
term Related Person is defined under the Policy to include our directors,
executive officers, nominees to become directors and any of their immediate
family members.

Our general policy is to avoid Related Person Transactions. Nevertheless,
we recognize that there are situations where Related Person Transactions might
be in, or might not be inconsistent with, our best interests and those of our
shareholders. These situations could include (but are not limited to) situations
where we might obtain products or services of a nature, quantity or quality, or
on other terms, that are not readily available from alternative sources or when
we provide products or services to Related Persons on an arms length basis on
terms comparable to those provided to unrelated third parties or on terms
comparable to those provided to employees generally. In determining whether to
approve or disapprove each Related Person Transaction, the Governance Committee
considers various factors, including (i) the identity of the Related Person;
(ii) the nature of the Related Persons interest in the particular transaction;
(iii) the approximate dollar amount involved in the transaction; (iv) the
approximate dollar value of the Related Persons interest in the transaction;
(v) whether the Related Persons interest in the transaction conflicts with his
obligations to the Company and its shareholders; (vi) whether the transaction
will provide the Related Person with an unfair advantage in his dealings with
the Company; and (vii) whether the transaction will affect the Related Persons
ability to act in the best interests of the Company and its shareholders. The
Governance Committee will approve only those Related Person Transactions that
are in, or are not inconsistent with, the best interests of the Company and its
shareholders.

Director Independence

The Board of Directors has determined that the following current members
of the Board are independent, as that term is defined under the general
independence standards contained in the listing standards of the NYSE:

John D. Baker II
    E. Marie McKeeJames E. Bostic, Jr.
    John H. Mullin, IIIHarris E. DeLoach, Jr.
    Charles W. Pryor, Jr.James B. Hyler, Jr.
    Carlos A. SaladrigasRobert W. Jones
    Theresa M. StoneW. Steven Jones
    Alfred C. Tollison, Jr.Melquiades R. Mel Martinez


63

---



In addition to considering the NYSEs
general independence standards, the Board has adopted categorical standards to
assist it in making determinations of independence. The Boards categorical
independence standards are outlined in our Governance Guidelines. The Governance
Guidelines are available on our Internet website and can be accessed atwww.progress-energy.com/investor. All
directors identified as independent in
this document meet these categorical standards. Additionally, all members of the Audit and Corporate Performance Committee satisfy the NYSE and SEC independence requirements that apply to audit committee members.

In determining
that the individuals named above are or were independent directors, the
Corporate Governance Committee (the Governance Committee) considered their
involvement in various ordinary course commercial transactions and relationships
during 2011 as described below:

- Mr. DeLoach served as an officer and
      director, and Mr. Mullin served as a director of a company that has been       among       the       purchasers of    the
      largest       amounts       of       electric       energy       sold       by       PEC       during       the       last
      three         preceding          calendar       years. These       transactions       involve the       rendering of
      services             by a public       utility at       rates fixed in       conformity with       governmental
      authorities.
- Messrs. Baker, Hyler, W. Steven Jones and
  Saladrigas served as directors of companies that purchase electric energy from
  PEC, and Messrs. Baker, W. Steven Jones, Mullin and Saladrigas served as
  directors of companies that purchase electric energy from PEF. These
  transactions involve the rendering of services by public utilities at rates
  fixed in conformity with governmental authorities.
- Mr. Baker currently serves as a director of Wells
  Fargo & Company and is a former director of Wachovia Corporation. Both of
  these entities have been part of our core bank group and have provided a
  variety of banking and investment services to us during the past several
  years.
- Mr. W. Steven Jones serves as a director of a
  communications technology company that provided services to us in
  2011.
- Mr. Martinez is a Managing Director of JPMorgan
  Chase & Co., which has provided a variety of investment banking services
  to us during the past several years.
- Mr. Pryor is a director of a company that has
  affiliates that provide uranium enrichment services to PEC and
  PEF.
- Mr. Tollison is a former employee of PEC and thus
  receives a modest pension from us.

All of the described transactions were ordinary course commercial
transactions conducted at arms length and in compliance with the NYSEs
standards for director independence. In addition, the Governance Committee
considers the relationships our directors have with tax-exempt organizations
that receive contributions from the Company. The Governance Committee considered
each of these transactions and relationships and determined that none of them
was material or affected the independence of the directors involved under either
the general independence standards contained in the NYSEs listing standards or
our categorical independence standards.

Item 14.Principal Accounting Fees and Services

Independent Registered Public
Accounting Firms Fees

Set forth in the table below is certain information relating to the
aggregate fees billed by the Companys independent registered public accounting
firm, Deloitte & Touche LLP, the member firms of Deloitte & Touche
Tohmatsu and their respective affiliates (collectively, Deloitte) for
professional services rendered to us for the fiscal years ended December 31,
2011 and 2010.

|                   |  | 2011       |  | 2010      
|------------------ |  | ---------- |  | ----------
|Audit fees         |  | $3,808,000 |  | $3,395,000
|Audit-related fees |  | 22,000     |  | 64,000    
|Tax fees           |  | 19,000     |  | 22,000    
|Other fees         |  |           |  |          
|Total fees         |  | $3,849,000 |  | $3,481,000

64

---



Audit
feesinclude fees billed for services
rendered in connection with (i) the audits of our annual financial statements
and those of our SEC reporting subsidiaries (PEC and PEF); (ii) the audit of the
effectiveness of our internal control over financial reporting; (iii) the
reviews of the financial statements included in our Quarterly Reports on Form
10-Q and those of our SEC reporting subsidiaries; (iv) accounting consultations
arising as part of the audits; and (v) audit services in connection with
statutory, regulatory or other filings, including comfort letters and consents
in connection with SEC filings and financing transactions. Audit fees for 2011
and 2010 also include $1,202,000 and $1,175,000, respectively, for services in
connection with the Sarbanes-Oxley Act Section 404 and the related Public
Company Accounting Oversight Board (PCAOB) Standard No. 5 relating to our
internal control over financial reporting.

**Audit-related fees**include fees billed for (i) special procedures and letter reports; (ii) benefit
plan audits when fees are paid by us rather than directly by the plan; (iii)
accounting consultations for prospective transactions not arising directly from
the audits; and (iv) accounting research tool subscriptions.

**Tax fees**include fees
billed for tax compliance matters.

The Audit Committee has concluded that the provision of the non-audit
services listed above as Tax fees is compatible with maintaining Deloittes
independence.

None of the services provided required approval by the Audit Committee
pursuant to thede minimiswaiver provisions described below.

Audit Committees Pre-approval Policies
and Procedures

The Audit Committee has actively monitored all services provided by
Deloitte and the relationship between audit and nonaudit services provided by
Deloitte. We have adopted policies and procedures for preapproving all audit
and permissible nonaudit services rendered by Deloitte, and the fees billed for
those services. Our Controller (the Controller) is responsible to the Audit
Committee for enforcement of this procedure, and for reporting noncompliance.
Pursuant to the preapproval policy, the Audit Committee specifically
preapproved the use of Deloitte for audit, audit-related and tax services.

The preapproval policy requires management to obtain specific
preapproval from the Audit Committee for the use of Deloitte for any
permissible nonaudit services, which generally are limited to tax services,
including tax compliance, tax planning, and tax advice services such as return
review and consultation and assistance. Other types of permissible nonaudit
services will not be considered for approval except in limited instances, which
could include circumstances in which proposed services provide significant
economic or other benefits to us. In determining whether to approve these
services, the Audit Committee will assess whether these services adversely
impair the independence of Deloitte. Any permissible nonaudit services provided
during a fiscal year that (i) do not aggregate to more than 5 percent of the
total fees paid to Deloitte for all services rendered during that fiscal year
and (ii) were not recognized as nonaudit services at the time of the engagement
must be brought to the attention of the Controller for prompt submission to the
Audit Committee for approval. Thesede
minimisnonaudit services must be approved
by the Audit Committee or its designated representative before the completion of
the services. Nonaudit services that are specifically prohibited under the
Sarbanes-Oxley Act Section 404, SEC rules, and PCAOB rules are also specifically
prohibited under the policy.

Prior to approval of permissible tax services by the Audit Committee, the
policy requires Deloitte to (1) describe in writing to the Audit Committee (a)
the scope of the service, the fee structure for the engagement and any side
letter or other amendment to the engagement letter or any other agreement
between the Company and Deloitte relating to the service and (b) any
compensation arrangement or other agreement, such as a referral agreement, a
referral fee or fee-sharing arrangement, between Deloitte and any person (other
than the Company) with respect to the promoting, marketing or recommending of a
transaction covered by the service; and (2) discuss with the Audit Committee the
potential effects of the services on the independence of Deloitte.

The policy also requires the Controller to update the Audit Committee
throughout the year as to the services provided by Deloitte and the costs of
those services. The policy also requires Deloitte to annually confirm its
independence in accordance with SEC and NYSE standards. The Audit Committee will
assess the adequacy of this policy as it deems necessary and revise
accordingly.

65

---



PART IV

Item 15. Exhibits, Financial Statement
Schedules




3. Exhibits Filed:




See EXHIBIT
INDEX.


66

---



SIGNATURES

Pursuant to the requirements of Section 13
or 15(d) 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.



PROGRESS ENERGY,
      INC.Date: March 30,
    2012
    (Registrant)By:/s/ William D.
      JohnsonWilliam D.
JohnsonChairman, President and Chief
      Executive OfficerBy:/s/ Mark F.
      MulhernMark F. MulhernSenior Vice President and
      Chief Financial OfficerBy:/s/ Jeffrey M.
      StoneJeffrey M. StoneChief Accounting Officer and
      Controller


Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
date indicated.



Signature
    
    
    Title
    
    
    Date/s/ William D.
      Johnson
    
    Chairman
    
    March 30, 2012(William D. Johnson)/s/ John D. Baker
      II
    
    Director
    
    March 30, 2012(John D. Baker II)/s/ James E. Bostic,
      Jr.
    
    Director
    
    March 30, 2012(James E. Bostic,
    Jr.)/s/ Harris E. DeLoach,
      Jr.
    
    Director
    
    March 30, 2012(Harris E. DeLoach,
    Jr.)/s/ James B. Hyler,
      Jr.
    
    Director
    
    March 30, 2012(James B. Hyler,
Jr.)/s/ Robert W.
      Jones
    
    Director
    
    March 30, 2012(Robert W. Jones)/s/ W. Steven
      Jones
    
    Director
    
    March 30, 2012(W. Steven Jones)/s/ Melquiades R.
      Martinez
    
    Director
    
    March 30, 2012(Melquiades R.
    Martinez)/s/ E. Marie
      McKee
    
    Director
    
    March 30, 2012(E. Marie McKee)/s/ John H. Mullin,
      III
    
    Director
    
    March 30, 2012(John H. Mullin,
III)/s/ Charles W. Pryor,
      Jr.
    
    Director
    
    March 30, 2012(Charles W. Pryor,
    Jr.)/s/ Carlos A.
      Saladrigas
    
    Director
    
    March 30, 2012(Carlos A.
    Saladrigas)/s/ Theresa M.
      Stone
    
    Director
    
    March 30, 2012(Theresa M. Stone)/s/ Alfred C. Tollison,
      Jr.
    
    Director
    
    March 30, 2012(Alfred C. Tollison,
      Jr.)





67





---



Exhibit Index

|Number    | Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*2a(1)    | Agreement and Plan of Merger, dated as of
      January 8, 2011, by and among Duke Energy Corporation, Diamond Acquisition
      Corporation and Progress Energy, Inc. (filed as Exhibit 2.1 to the Current
      Report on Form 8-K, dated January 8, 2011, File No. 1-15929).                                                                                                                                                                                                                               
|*3a(1)    | Amended and Restated Articles of
      Incorporation of Progress Energy, Inc. (f/k/a CP&L Energy, Inc.), as
      amended and restated on June 15, 2000 (filed as Exhibit No. 3a(1) to
      Quarterly Report on Form 10-Q for the quarterly period ended June 30,
      2000, File No. 1-15929 and No. 1-3382).                                                                                                                                                                                              
|*3a(2)    | Articles of Amendment to the Amended and
      Restated Articles of Incorporation of Progress Energy, Inc. (f/k/a
      CP&L Energy, Inc.), dated December 4, 2000 (filed as Exhibit 3b(1) to
      Annual Report on Form 10-K for the year ended December 31, 2001, as filed
      with the SEC on March 28, 2002, File No. 1-15929).                                                                                                                                                                        
|*3a(3)    | Articles of Amendment to the Amended and
      Restated Articles of Incorporation of Progress Energy, Inc., dated May 10,
      2006 (filed as Exhibit 3.A to Quarterly Report on Form 10-Q for the
      quarterly period ended June 30, 2006, File No. 1-15929, 1-3382 and
      1-3274).                                                                                                                                                                                                                   
|*3b(1)    | By-Laws of Progress Energy, Inc., as amended
      on May 10, 2006 (filed as Exhibit 3.B to Quarterly Report on Form 10-Q for
      the quarterly period ended June 30, 2006, File No. 1-15929, 1-3382 and
      1-3274).                                                                                                                                                                                                                                                                                     
|*4b(1)    | Indenture, dated as of February 15, 2001,
      between Progress Energy, Inc. and Bank One Trust Company, N.A., as
      Trustee, with respect to Senior Notes (filed as Exhibit 4(a) to Form 8-K
      dated February 27, 2001, File No. 1-15929).                                                                                                                                                                                                                                                           
|*4e       | Contingent Value Obligation Agreement, dated
      as of November 30, 2000, between CP&L Energy, Inc. and The Chase
      Manhattan Bank, as Trustee (Exhibit 4.1 to Current Report on Form 8-K
      dated December 12, 2000, File No. 1-3382).                                                                                                                                                                                                                                                              
|*10b(1)   | Progress Energy, Inc. Amended and Restated
      Credit Agreement dated as of February 15, 2012 (filed as Exhibit 10.1 to
      Current Report on Form 8-K dated February 15, 2012, File No.
      1-15929).                                                                                                                                                                                                                                                                                                  
|+*10c(1)  | Progress Energy, Inc. Form of Stock Option
      Agreement (filed as Exhibit 4.4 to Form S-8 dated September 27, 2001, File
      No. 333-70332).                                                                                                                                                                                                                                                                                                                                                             
|+*10c(2)  | Progress Energy, Inc. Form of Stock Option
      Award (filed as Exhibit 4.5 to Form S-8 dated September 27, 2001, File No.
      333-70332).                                                                                                                                                                                                                                                                                                                                                                 
|+*10c(3)  | 2002 Progress Energy, Inc. Equity Incentive
      Plan, Amended and Restated effective January 1, 2007 (filed as Exhibit
      10c(5) to Annual Report on Form 10-K for the year ended December 31, 2006,
      as filed with the SEC on March 1, 2007, File No. 1-3382, No. 1-15929, and
      No. 1-3274).                                                                                                                                                                                                  
|+*10c(4)  | Amended and Restated Broad-Based Performance
      Share Sub-Plan, Exhibit B to the 2002 Progress Energy, Inc. Equity
      Incentive Plan, effective January 1, 2007 (filed as Exhibit 10c(6) to
      Annual Report on Form 10-K for the year ended December 31, 2006, as filed
      with the SEC on March 1, 2007, File No. 1-3382, No. 1-15929, and No.
      1-3274).                                                                                                                                   
|+*10c(5)  | Amended and Restated Executive and Key
      Manager Performance Share Sub-Plan, Exhibit A to the 2002 Progress Energy,
      Inc. Equity Incentive Plan (effective January 1, 2007) (filed as Exhibit
      10c(7) to Annual Report on Form 10-K for the year ended December 31, 2006,
      as filed with the SEC on March 1, 2007, File No. 1-3382, No. 1-15929, and
      No. 1-3274).                                                                                                                    
|+*10c(6)  | Progress Energy, Inc. 2007 Equity Incentive
      Plan (filed as Exhibit C to Form DEF 14A, as filed with the SEC on March
      30, 2007, File No. 1-15929).                                                                                                                                                                                                                                                                                                                                                 
|+*10c(7)  | Executive and Key Manager 2007 Performance
      Share Sub-Plan, Exhibit A to the 2007 Equity Incentive Plan, effective
      January 1, 2007 (filed as Exhibit 10.1 to Current Report on Form 8-K dated
      July 16, 2007, File No. 1-15929, No. 1-3382 and No. 1-3274).                                                                                                                                                                                                                                   
|+*10c(8)  | Form of Progress Energy, Inc. Restricted
      Stock Agreement pursuant to the 2002 Progress Energy Inc. Equity Incentive
      Plan, as amended July 2002 (filed as Exhibit 10c(18) to Annual Report on
      Form 10-K for the year ended December 31, 2004, as filed with the SEC on
      March 16, 2005, File No. 1-3382 and 1-15929).                                                                                                                                                                   
|+*10c(9)  | Form of Employment Agreement dated May 8,
      2007 between (i) Progress Energy Service Company, LLC and Robert McGehee,
      John R. McArthur and Peter M. Scott III; (ii) PEC and Lloyd M. Yates,
      Fredrick N. Day IV, Paula M. Sims, William D. Johnson and Clayton S.
      Hinnant; and (iii) PEF and Jeffrey A. Corbett and Jeffrey J. Lyash (filed
      as Exhibit 10 to Quarterly Report on Form 10-Q for the period ended March
      31, 2007, File No. 1-15929, No. 1-3382 and No. 1-3274).
|+*10c(10) | Form of Employment Agreement between
      Progress Energy Service Company, LLC and Mark F. Mulhern dated September
      18, 2007 (filed as Exhibit 10 to Quarterly Report on Form 10-Q for the
      period ended March 31, 2007, File No. 1-15929, No. 1-3382 and No.
      1-3274).                                                                                                                                                                                                                       
|+*10c(11) | Amendment, dated August 5, 2005, to
      Employment Agreement between Progress Energy Service Company, LLC and
      Peter M. Scott III (filed as Exhibit 10 to Quarterly Report on Form 10-Q
      for the period ended June 30, 2005, File No. 1-15929, 1-3382 and
      1-3274).                                                                                                                                                                                                                          

68

---



|Number    | Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                
|--------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|+*10c(12) | Form of Executive Permanent Life Insurance
      Agreement (filed as Exhibit 10c(23) to Annual Report on Form 10-K for the
      year ended December 31, 2006, as filed with the SEC on March 1, 2007, File
      No. 1-3382, No. 1-15929, and No. 1-3274).                                                                                                                                                            
|+*10c(13) | Form of Executive and Key Manager 2008
      Performance Share Sub-Plan (filed as Exhibit 10(a) to Quarterly Report on
      Form 10-Q for the period ended March 31, 2008, File No. 1-15929, 1-3382
      and 1-3274).                                                                                                                                                                                                
|+*10c(14) | Progress Energy, Inc. 2009 Executive
      Incentive Plan, effective March 17, 2009 (filed as Exhibit D to Form DEF
      14A, as filed with the SEC on March 31, 2009, File No.
  1-15929).                                                                                                                                                                                                                           
|+*10c(15) | Employment Agreement Term Sheet for William
      D. Johnson in connection with the Agreement and Plan of Merger, dated as
      of January 8, 2011, by and among Duke Energy Corporation, Diamond
      Acquisition Corporation and Progress Energy, Inc. (Exhibit C to the
      Agreement and Plan of Merger filed as Exhibit 2.1 to the Current Report on
      Form 8-K, dated January 8, 2011, File No. 1-15929).
|+*10c(16) | Form of Letter Agreement, dated January 8,
      2011, executed by certain officers of Progress Energy, Inc., waiving
      certain rights under Progress Energy, Inc.s Management Change-in-Control
      Plan and their employment agreements (filed as Exhibit 10.1 to the Current
      Report on Form 8-K dated January 8, 2011, File No. 1-15929).                                                              
|+*10c(17) | Deferred Compensation Plan for Key
      Management Employees of Progress Energy, Inc., amended and restated
      effective July 13, 2011 (filed as Exhibit 10(a) to Quarterly Report on
      Form 10-Q for the period ended September 30, 2011, File No. 1-15929,
      1-3382 and 1-3274).                                                                                                                         
|+*10c(18) | Executive and Key Manager 2009 Performance
      Share Sub-Plan, Exhibit A to 2007 Equity Incentive Plan, amended and
      restated effective July 12, 2011 (filed as Exhibit 10(b) to Quarterly
      Report on Form 10-Q for the period ended September 30, 2011, File No.
      1-15929, 1-3382 and 1-3274.                                                                                                        
|+*10c(19) | Amended Management Incentive Compensation
      Plan of Progress Energy, Inc., amended and restated effective July 12,
      2011 (filed as Exhibit 10(c) to Quarterly Report on Form 10-Q for the
      period ended September 30, 2011, File No. 1-15929, 1-3382 and
      1-3274).                                                                                                                                  
|+*10c(20) | Progress Energy, Inc. Management
      Change-in-Control Plan, amended and restated effective July 13, 2011
      (filed as Exhibit 10(d) to Quarterly Report on Form 10-Q for the period
      ended September 30, 2011, File No. 1-15929, 1-3382 and
  1-3274).                                                                                                                                                      
|+*10c(21) | Progress Energy, Inc. Amended and Restated
      Management Deferred Compensation Plan, revised and restated effective July
      12, 2011 (filed as Exhibit 10(e) to Quarterly Report on Form 10-Q for the
      period ended September 30, 2011, File No. 1-15929, 1-3382 and
      1-3274).                                                                                                                         
|+*10c(22) | Progress Energy, Inc. Non-Employee Director
      Deferred Compensation Plan, amended and restated effective July 13, 2011
      (filed as Exhibit 10(f) to Quarterly Report on Form 10-Q for the period
      ended September 30, 2011, File No. 1-15929, 1-3382 and
  1-3274).                                                                                                                                       
|+*10c(23) | Progress Energy, Inc. Non-Employee Director
      Stock Unit Plan, amended and restated effective July 13, 2011 (filed as
      Exhibit 10(g) to Quarterly Report on Form 10-Q for the period ended
      September 30, 2011, File No. 1-15929, 1-3382 and 1-3274).                                                                                                                                                    
|+*10c(24) | Amended and Restated Progress Energy, Inc.
      Restoration Retirement Plan, amended and restated effective July 13, 2011
      (filed as Exhibit 10(h) to Quarterly Report on Form 10-Q for the period
      ended September 30, 2011, File No. 1-15929, 1-3382 and
  1-3274).                                                                                                                                       
|+*10c(25) | Amended and Restated Supplemental Senior
      Executive Retirement Plan of Progress Energy, Inc., amended and
      restated effective July 13, 2011 (filed as Exhibit
      10(i) to Quarterly Report on Form 10-Q for the period ended September
      30, 2011, File No. 1-15929, 1-3382 and 1-3274).                                                                                                              
|+10c(26) | Form of Progress Energy, Inc. Restricted
      Stock Unit Award Agreement (Graded Vesting), effective September 15, 2011.                                                                                                                                                                                                                                                                                              
|+10c(27) | Form of Progress Energy, Inc. Restricted
      Stock Unit Award Agreement (Cliff Vesting), effective September 15, 2011.                                                                                                                                                                                                                                                                                               
|+10c(28) | First Amendment to the Progress Energy, Inc.
      Amended and Restated Management Deferred Compensation Plan, effective
      December 14, 2011.                                                                                                                                                                                                                                                                      
|+10c(29) | First Amendment to the Progress Energy, Inc.
      Amended Management Incentive Compensation Plan, effective December 14,
      2011.                                                                                                                                                                                                                                                                                  

69

---



|Number  | Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*10d(1) | Precedent and Related Agreements among Florida Power Corporation
      d/b/a Progress Energy Florida, Inc. (PEF), Southern Natural Gas Company,
      Florida Gas Transmission Company (FGT), and BG LNG Services, LLC (BG),
      including:a) Precedent Agreement by and between Southern Natural Gas
      Company and PEF, dated December 2, 2004;b) Gas Sale and Purchase
      Contract between BG and PEF, dated December 1, 2004;c) Interim Firm
      Transportation Service Agreement by and between FGT and PEF, dated
      December 2, 2004;d) Letter Agreement between FGT and PEF, dated
      December 2, 2004 and Firm Transportation Service Agreement by and between
      FGT and PEF to be entered into upon satisfaction of certain conditions
      precedent;e) Discount Agreement between FGT and PEF, dated December 2,
      2004;f) Amendment to Gas Sale and Purchase Contract between BG and
      PEF, dated January 28, 2005; andg) Letter Agreement between FGT and
      PEF, dated January 31, 2005, (filed as Exhibit 10.1 to Current Report on
      Form 8-K/A filed March 15, 2005). (Confidential treatment has been
      requested for portions of this exhibit. These portions have been omitted
      from the above-referenced Current Report and submitted separately to the
      SEC.)
|*10d(2) | Engineering, Procurement and Construction Agreement, dated as of
      December 31, 2008, between Florida Power Corporation d/b/a/ Progress
      Energy Florida, Inc., as owner, and a consortium consisting of
      Westinghouse Electric Company LLC and Stone & Webster, Inc., as
      contractor, for a two-unit AP1000 Nuclear Power Plant (filed as Exhibit
      10.1 to Current Report on Form 8-K filed on March 2, 2009). (The
      Registrants have requested confidential treatment for certain portions of
      this exhibit pursuant to an application for confidential treatment
      submitted to the SEC. These portions have been omitted from the
      above-referenced Current Report and submitted separately to the
      SEC.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|*12(a)  | Computation of Ratio of Earnings to Fixed Charges (filed as Exhibit
      12(a) to Annual Report on Form 10-K for the year ended December 31, 2011,
      as filed with the SEC on February 29, 2012, File No. 1-15929, 1-3382 and
      1-3274).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|*21     | Subsidiaries of Progress Energy, Inc (filed as Exhibit 21 to Annual
      Report on Form 10-K for the year ended December 31, 2011, as filed with
      the SEC on February 29, 2012, File No. 1-15929, 1-3382 and
    1-3274).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|23      | Consent of Deloitte & Touche LLP (filed as Exhibit 23 to Annual
      Report on Form 10-K for the year ended December 31, 2011, as filed with
      the SEC on February 29, 2012, File No. 1-15929, 1-3382 and
    1-3274).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|31(a)  | 302
      Certification of Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|31(b)  | 302
      Certification of Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|31(c)   | 302
      Certification of Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|31(d)   | 302
      Certification of Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|99.1    | Policies and Procedures for the Review, Approval or Ratification of
      Related Person Transactions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

| | * |  | Incorporated herein by reference as indicated.                                                                                                                                            
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  |  | Filed
      as an exhibit to Annual Report on Form 10-K for the year ended December
      31, 2011, as filed with the SEC on February 29, 2012, File No. 1-15929,
      1-3382 and 1-3274.
| | + |  | Management
      contract or compensation plan or arrangement required to be filed as an
      exhibit to this report pursuant to Item 14(c) of Form
  10-K.                              

70

---