Progress Energy Florida Signs Contract for New, Advanced-Design Nuclear Plant

January 5, 2009

 ST. PETERSBURG, Fla., Jan. 5 /PRNewswire-FirstCall/ -- Progress Energy Florida (PEF) has signed a contract with Westinghouse Electric Company LLC and The Shaw Group Inc.'s Power Group for the engineering, procurement and construction of two nuclear units for a
proposed nuclear power plant in Levy County, Fla.
The contract provides equipment, engineering and construction
services for two 1,105-net megawatt (MWe) AP1000(TM) reactors and is the next
step in ensuring that the option of advanced, carbon-free nuclear power
remains viable for Progress Energy Florida customers. The next significant
steps in the project are to finalize joint ownership agreements and to
receive the Nuclear Regulatory Commission (NRC) schedule for review and approval
of the company's combined license application (COLA). Current plans would
be for the units to be operational in the 2016 to 2018 time frame.

A "Determination of Need" petition was unanimously approved by
the Florida Public Service Commission (PSC) in July 2008, supporting the
need to meet future energy needs in Florida with nuclear power. A second
filing, a Site Certification Application (SCA), was filed with the Florida
Department of Environmental Protection in June 2008, with a decision on the SCA
filing expected this year.

"Along with energy efficiency and alternative energy, advanced,
carbon- free nuclear power is an important part of the balanced
solution we use to meet the needs of homes and businesses that depend on us,"
said Bill Johnson, chairman, president and CEO of Progress Energy, Inc. "As we
work to address the effects of global climate change, emission-free nuclear
energy is the best large-scale means for making a positive difference."

"Our investment in state-of-the-art nuclear power is an
investment in our state's energy future," said Jeff Lyash, president and CEO of
Progress Energy Florida. "Expanding our nuclear capacity will ensure our
customers will continue to have a reliable supply of energy, while reducing
reliance on fossil fuels and helping to eliminate greenhouse gas from our
environment. This contract is a major step to implement the policy
direction set by the governor and the legislature in Florida to secure safe,
carbon-free nuclear power for our customers."

As recently announced, the company will retire the two oldest
coal-fired units at the Crystal River Energy Complex in Citrus
County after the new, advanced-design nuclear units are built in Levy County.
Doing so will reduce the company's carbon dioxide (CO2) emissions by more
than 5 million tons per year, which is the equivalent of removing more than
830,000 vehicles from Florida's roads or meeting nearly 60 percent of the
company's responsibility toward achieving Florida Governor Charlie Crist's 2025
emission-reduction target. The company is also aggressively pursuing
energy efficiency, investing in renewable-energy resources and developing
advanced transportation technologies, such as plug-in hybrid electric
vehicles, to help reduce greenhouse gas emissions.

The need for additional, carbon-free electricity in the future is
clear. Florida is the fourth-largest state and ranks third
nationally in per-capita energy consumption. Compared to 30 years ago, the average
new home today is 50 percent larger and uses 30 percent more
electricity. Since the Crystal River nuclear plant came online in the mid-1970s, the
company's customer base has more than doubled.

The cost of the two new nuclear units is based on a contract
price of $7.65 billion, plus forecasted inflation, owner costs and
contingencies. The company estimates the total cost for the two generating units to be
approximately $14 billion. This estimate includes land price, plant
components, financing costs, construction, labor, regulatory fees and
reactor fuel for two units. An additional $3 billion is estimated
for the necessary transmission equipment and about 200 miles of transmission
lines associated with the project. The final cost of the project will
depend on the completion dates, which will be determined in large part by the
NRC review schedule.

The majority of the project's costs will be invested by the
company and its shareholders and will not be recovered from customers
through rates until the plant goes in service. However, starting this month,
customers will begin paying for a portion of the costs of the project as
approved by the PSC. This cost-recovery provision will ultimately save customers
approximately $13 billion over the life of the plant by paying for the
initial stages of infrastructure improvement and the interest on the
loans to build the units as costs are incurred, rather than letting these
costs accrue and escalate until the units are in service. Florida's
nuclear cost recovery legislation implements state energy policy by saving
consumers money and providing annual oversight of all nuclear project
expenses. This approach allows Progress Energy to move forward with this important
solution to meet Florida's future energy needs with clean, carbon-free
electricity.

In addition to planning for future energy needs, additional
nuclear generation will further improve Progress Energy's fuel diversity,
which is an important aspect of providing a reliable, stable supply of
electricity for customers. Progress Energy Florida has the most diverse fuel mix
of any utility in the state, and is committed to a balanced mix of power
generation alternatives, including natural gas, coal, oil, nuclear and renewable
sources. This is the best way to continue to ensure a safe, reliable
and economical source of electricity, free from the volatile fuel prices
and supply constraints seen in recent years, particularly related to oil
and natural gas. Floridians will benefit from up to $1 billion per year in
estimated fuel cost savings once the units are in operation.

Building the new plant will generate employment for at least
3,000 people at the peak of construction. Once the units are in operation,
they will employ a minimum of 800 full-time, high-wage positions that
Governor Crist calls "green jobs," as well as an additional 1,200 indirect
jobs. The positive economic impact of a two-unit nuclear site to the state and
local communities is estimated to be hundreds of millions of dollars
annually over the planned 60-year plant life.

Progress Energy Florida purchased about 5,100 acres in southern
Levy County for the potential construction of two nuclear reactors and
other related facilities. If approved and built, the project will be among
the first nuclear plants in the country to be constructed on a new site
in more than 30 years, and it will involve development of one of the single
largest transmission infrastructure projects in Florida's history.

Progress Energy Florida has developed and implemented some of
the most innovative and aggressive energy-efficiency programs in the country.
The programs encourage customers, businesses, contractors and builders
to use electricity more wisely and to adopt renewable-energy technology.
Since 1981, Progress Energy Florida customers have saved more than $900
million in energy costs and eliminated more than 7.5 million tons of carbon
dioxide through participation in these programs. Customers may visit
http://www.savethewatts.com/ for more information and tips on how to
save energy today.

Progress Energy Florida also leads the state's utilities in using
cost- effective, renewable-energy sources within the state. The
company continually seeks cleaner, newer ways to produce energy for its customers.
Today, Progress Energy Florida's alternative and renewable projects
include multiple biomass projects, several solar photovoltaic initiatives,
residential solar thermal water heating and hydrogen fuel cell
technology.

Progress Energy Florida, a subsidiary of Progress Energy ,
provides electricity and related services to about 1.7 million customers in
Florida. The company is headquartered in St. Petersburg, Fla., and serves a
territory encompassing more than 20,000 square miles including the cities of St.
Petersburg and Clearwater, as well as the Central Florida area
surrounding Orlando. Progress Energy Florida is pursuing a balanced strategy for a
secure energy future. That balance includes aggressive energy-
efficiency programs, investments in renewable energy technologies and a
state-of-the-art electricity system. For more information about
Progress Energy, visit the company's Web site at http://www.progress-energy.com/