Duke Energy Progress 10-Q 10 May 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information (USD $)
	3 Months Ended Mar. 31, 2010	May. 03, 2010	Jun. 30, 2009
Document and Entity Information Abstract
Entity registrant name	PROGRESS ENERGY INC
Entity central index key	0001094093
Document type	10-Q
Document period end date	2010-03-31
Amendment flag	false
Entity current reporting status	Yes
Entity voluntary filers	No
Current fiscal year end date	--12-31
Entity filer category	Large Accelerated Filer
Entity well known seasoned issuer	Yes
Entity common stock shares outstanding		287,171,852
Entity public float			$10,535,128,179
Document fiscal year focus	2,010
Document fiscal period focus	Q1

Unaudited Condensed Consolidate

Unaudited Condensed Consolidated Statements of Income (USD $)
In Millions, except Per Share data	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS of INCOME
Operating revenues	$2,535	$2,442
Operating expenses
Fuel used in electric generation	896	954
Purchased power	263	217
Operation and maintenance	480	453
Depreciation, amortization and accretion	246	280
Taxes other than on income	154	143
Other	2	2
Total operating expenses	2,041	2,049
Operating income	494	393
Other income (expense)
Interest income	2	4
Allowance for equity funds used during construction	21	39
Other, net	(5)	(1)
Total other income, net	18	42
Interest charges
Interest charges	191	179
Allowance for borrowed funds used during construction	(9)	(12)
Total interest charges, net	182	167
Income from continuing operations before income tax	330	268
Income tax expense	139	85
Income from continuing operations before cumulative effect of change in accounting principle	191	183
Discontinued operations, net of tax	1	0
Cumulative effect of change in accounting principle, net of tax	(2)	0
Net income	190	183
Net income attributable to noncontrolling interests, net of tax	0	(1)
Net income attributable to controlling interests	190	182
Average common shares outstanding - basic	284	277
Basic earnings per common share
Income from continuing operations attributable to controlling interests, net of tax	0.67	0.66
Discontinued operations attributable to controlling interests, net of tax	0	0
Net income attributable to controlling interests	0.67	0.66
Diluted earnings per common share
Income from continuing operations attributable to controlling interests, net of tax	0.67	0.66
Discontinued operations attributable to controlling interests, net of tax	0	0
Net income attributable to controlling interests	0.67	0.66
Dividends declared per common share	0.62	0.62
Amounts attributable to controlling interests
Income from continuing operations attributable to controlling interests, net of tax	189	182
Discontinued operations attributable to controlling interests, net of tax	1	0
Net income attributable to controlling interests	$190	$182

1_Unaudited Condensed Consolida

Unaudited Condensed Consolidated Balance Sheets (USD $)
In Millions	3 Months Ended Mar. 31, 2010	12 Months Ended Dec. 31, 2009
Utility plant
Utility plant in service	$29,083	$28,918
Accumulated depreciation	(11,695)	(11,576)
Utility plant in service, net	17,388	17,342
Held for future use	48	47
Construction work in progress	2,163	1,790
Nuclear fuel, net of amortization	542	554
Total utility plant, net	20,141	19,733
Current assets
Cash and cash equivalents	1,021	725
Receivables, net	826	800
Inventory	1,232	1,325
Regulatory assets	210	142
Derivative collateral posted	297	146
Income taxes receivable	15	145
Prepayments and other current assets	229	248
Total current assets	3,830	3,531
Deferred debits and other assets
Regulatory assets	2,332	2,179
Nuclear decommissioning trust funds	1,426	1,367
Miscellaneous other property and investments	428	438
Goodwill	3,655	3,655
Other assets and deferred debits	322	333
Total deferred debits and other assets	8,163	7,972
Total assets	32,134	31,236
Common stock equity
Common stock without par value, 500 million shares authorized, 287 million and 281 million shares issued and outstanding, respectively	7,085	6,873
Unearned ESOP shares (- and 1 million shares, respectively)	(4)	(12)
Accumulated other comprehensive loss	(91)	(87)
Retained earnings	2,686	2,675
Total common stock equity	9,676	9,449
Noncontrolling interests	5	6
Total equity	9,681	9,455
Preferred stock of subsidiaries	93	93
Long-term debt, affiliate	272	272
Long-term debt, net	11,662	11,779
Total capitalization	21,708	21,599
Current liabilities
Current portion of long-term debt	1,006	406
Short-term debt	0	140
Accounts payable	860	835
Interest accrued	189	206
Dividends declared	179	175
Customer deposits	309	300
Derivative liabilities	281	190
Accrued compensation and other benefits	110	167
Other current liabilities	308	239
Total current liabilities	3,242	2,658
Deferred credits and other liabilities
Noncurrent income tax liabilities	1,239	1,196
Accumulated deferred investment tax credits	115	117
Regulatory liabilities	2,574	2,510
Asset retirement obligations	1,186	1,170
Accrued pension and other benefits	1,337	1,339
Derivative liabilities	324	240
Other liabilities and deferred credits	409	407
Total deferred credits and other liabilities	7,184	6,979
Commitments and contingencies (Notes 12 and 13)
Total capitalization and liabilities	$32,134	$31,236

2_Unaudited Condensed Consolida

Unaudited Condensed Consolidated Balance Sheets (Parentheticals)
Share data in Millions	Mar. 31, 2010	Dec. 31, 2009
Balance Sheets Parentheicals Abstract
Common shares, authorized	500	500
Common shares, issued	287	281
Common shares, outstanding	287	281
ESOP shares, unearned	0	1

3_Unaudited Condensed Consolida

Unaudited Condensed Consolidated Statements of Cash Flows (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Operating activities
Net income	$190	$183
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation, amortization and accretion	285	313
Deferred income taxes and investment tax credits, net	51	(26)
Deferred fuel (credit) cost	(45)	128
Allowance for equity funds used during construction	(21)	(39)
Other adjustments to net income	63	63
Cash (used) provided by changes in operating assets and liabilities
Receivables	(32)	5
Inventory	98	(62)
Derivative collateral posted	(157)	(216)
Other assets	(17)	29
Income taxes, net	165	183
Accounts payable	31	(76)
Other liabilities	(25)	(90)
Net cash provided by operating activities	586	395
Investing activities
Gross property additions	(555)	(639)
Nuclear fuel additions	(54)	(37)
Purchases of available-for-sale securities and other investments	(1,986)	(716)
Proceeds from available-for-sale securities and other investments	1,977	706
Other investing activities	(1)	(5)
Net cash used by investing activities	(619)	(691)
Financing activities
Issuance of common stock, net	197	545
Dividends paid on common stock	(175)	(173)
Payments of short-term debt with original maturities greater than 90 days	0	(29)
Net decrease in short-term debt	(140)	(490)
Proceeds from issuance of long-term debt, net	591	1,338
Retirement of long-term debt	(100)	(400)
Other financing activities	(44)	(43)
Net cash provided by financing activities	329	748
Net increase in cash and cash equivalents	296	452
Cash and cash equivalents at beginning of period	725	180
Cash and cash equivalents at end of period	1,021	632
Significant noncash transactions
Accrued property additions	$235	$238

Organization and Summary of Sig

Organization and Summary of Significant Accounting Policies
	3 Months Ended Mar. 31, 2010
Organization Consolidation And Presentation Of Financial Statements Disclosure Abstract
Organization and Summary of Significant Accounting Policies	1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A.ORGANIZATION In this report, Progress Energy, which includes Progress Energy, Inc. holding company (the Parent) and its regulated and nonregulated subsidiaries on a consolidated basis, is at times referred to as "we," "us" or "our." When discussing Progress Energy's financial information, it necessarily includes the results of Carolina Power Light Company d/b/a Progress Energy Carolinas, Inc. (PEC) and Florida Power Corporation d/b/a Progress Energy Florida, Inc. (PEF) (collectively, the Utilities). The term "Progress Registrants" refers to each of the three separate registrants: Progress Energy, PEC and PEF. The information in these combined notes relates to each of the Progress Registrants as noted in the Index to Applicable Combined Notes to Unaudited Condensed Interim Financial Statements by Registrant. However, neither of the Utilities makes any representation as to information related solely to Progress Energy or the subsidiaries of Progress Energy other than itself. PROGRESS ENERGY The Parent is a holding company headquartered in Raleigh, N.C. As such, we are subject to regulation by the Federal Energy Regulatory Commission (FERC) under the regulatory provisions of the Public Utility Holding Company Act of 2005 (PUHCA 2005). Our reportable segments are PEC and PEF, both of which are primarily engaged in the generation, transmission, distribution and sale of electricity. The Corporate and Other segment primarily includes amounts applicable to the activities of the Parent and Progress Energy Service Company, LLC (PESC) and other miscellaneous nonregulated businesses (Corporate and Other) that do not separately meet the quantitative disclosure requirements as a reportable business segment. See Note 10 for further information about our segments. PEC PEC is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina. PEC's subsidiaries are involved in insignificant nonregulated business activities. PEC is subject to the regulatory jurisdiction of the North Carolina Utilities Commission (NCUC), Public Service Commission of South Carolina (SCPSC), the United States Nuclear Regulatory Commission (NRC) and the FERC. PEF PEF is a regulated public utility primarily engaged in the generation, transmission, distribution and sale of electricity in west central Florida. PEF is subject to the regulatory jurisdiction of the Florida Public Service Commission (FPSC), the NRC and the FERC. B.BASIS OF PRESENTATION These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for annual financial statements. The December 31, 2009 condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. Because the accompanying interim financial statements do not

New Accounting Standards

New Accounting Standards
	3 Months Ended Mar. 31, 2010
Schedule Of New Accounting Pronouncements And Changes In Accounting Principles Disclosure Abstract
New Accounting Standards	2.NEW ACCOUNTING STANDARDS Consolidations In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities." The FASB issued Accounting Standards Update (ASU) 2009-17, "Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities," which codified SFAS No. 167 in the Accounting Standards Codification (ASC). This guidance made significant changes to the model for determining who should consolidate a VIE, addressed how often this assessment should be performed, required all existing arrangements with VIEs to be evaluated, and was adopted through a cumulative-effect adjustment. This guidance was effective for us on January1, 2010. See Note 1C for information regarding our implementation of ASU 2009-17 and its impact on our and the Utilities' financial position and results of operations. Fair Value Measurement and Disclosures In January 2010, the FASB issued ASU 2010-06, "Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements," which amends ASC 820 to clarify certain existing disclosure requirements and to require a number of additional disclosures, including amounts and reasons for significant transfers between the three levels of the fair value hierarchy, and presentation of certain information in the reconciliation of recurring Level 3 measurements on a gross basis. ASU 2010-06 was effective for us on January 1, 2010, with certain disclosures effective for periods beginning January 1, 2011. The initial adoption of ASU 2010-06 resulted in additional disclosure in the notes to the financial statements but did not have an impact on our or the Utilities' financial position or results of operations.

Regulatory Matters

Regulatory Matters
	3 Months Ended Mar. 31, 2010
Regulatory Matters Disclosure Abstract
Regulatory Matters	3.REGULATORY MATTERS A.PEC RETAIL RATE MATTERS FUEL COST RECOVERY On May 6, 2010, PEC filed with the SCPSC for a decrease in the fuel rate charged to its South Carolina ratepayers. PEC is asking the SCPSC to approve a $17 million decrease in fuel rates driven by declining fuel prices. If approved, the decrease would take effect July 1, 2010, and would decrease residential electric bills by $2.73 per 1,000 kWh, or 2.7 percent, for fuel cost recovery. A hearing on the matter has been scheduled by the SCPSC for June 10, 2010. We cannot predict the outcome of this matter. DEMAND-SIDE MANAGEMENT AND ENERGY-EFFICIENCY COST RECOVERY PEC is allowed to recover the costs of demand-side management (DSM) and energy-efficiency (EE) programs through an annual DSM clause. PEC is allowed to capitalize those costs intended to produce future benefits. In addition, the NCUC has approved other forms of financial incentives to the utility for DSM and EE programs, including the recovery of net lost revenues and a performance incentive. DSM programs include, but are not limited to, any program or initiative that shifts the timing of electricity use from peak to nonpeak periods and includes load management, electricity system and operating controls, direct load control, interruptible load and electric system equipment and operating controls. EE programs include any equipment, physical or program change implemented after January 1, 2007, that results in less energy used to perform the same function. PEC has implemented a series of DSM and EE programs and will continue to pursue additional programs. These programs must be approved by the NCUC, and we cannot predict the outcome of the DSM and EE filings currently pending approval by the NCUC or whether the implemented programs will produce the expected operational and economic results. In 2008, PEC filed an application with the SCPSC to establish procedures that encourage investment in cost-effective energy-efficient technologies and energy conservation programs and approve the establishment of an annual rider to allow recovery for all costs associated with such programs, as well as the recovery of appropriate incentives for investing in such programs. The SCPSC approved PEC's application and in 2009, PEC filed its programs for approval and an application for a cost-recovery rider for PEC's DSM and EE programs. The SCPSC approved the proposed DSM and EE programs and the cost-recovery rider application, on a provisional basis pending a review of the cost-recovery rider by the South Carolina Office of Regulatory Staff. On May 3, 2010, PEC filed with the SCPSC for an increase in the DSM and EE rate charged to its South Carolina ratepayers. PEC is asking the SCPSC to approve a $3 million increase in DSM and EE rates driven by the introduction of new and the expansion of existing DSM and EE programs. If approved, the increase would take effect July 1, 2010, and would increase residential electric bills by $1.09 per 1,000 kWh, or 1.1 percent. We cannot predict the outcome of this matter. OTHER MATTERS On October 13, 2008, the NCUC issued a Certificate of Public Convenience and Necessity allowing PEC to proceed w

Equity and Comprehensive Income

Equity and Comprehensive Income
	3 Months Ended Mar. 31, 2010
Equity And Comprehensive Income Disclosure Abstract
Equity	4.EQUITY AND COMPREHENSIVE INCOME A.EARNINGS PER COMMON SHARE A reconciliation of the weighted-average number of common shares outstanding for basic and dilutive purposes follows: Three months ended March 31, (in millions) 2010 2009 Weighted-average common shares basic 284 277 Net effect of dilutive stock-based compensation plans Weighted-average shares fully dilutive 284 277 B.RECONCILIATION OF TOTAL EQUITY PROGRESS ENERGY The consolidated financial statements include the accounts of Progress Energy and its majority owned subsidiaries. Noncontrolling interests principally represent minority shareholders' proportionate share of the equity of our subsidiary, Progress Telecom Holdings LLC, and a VIE (See Note 1C). The following table presents changes in total equity for the year to date: (in millions) Total Common Stock Equity Noncontrolling Interests Total Equity Balance, December 31, 2009 $ 9,449 $ 6 $ 9,455 Net income (loss) 190 (2) 188 Other comprehensive loss (4) (4) Issuance of shares through offerings and stock- based compensation plans (See Note 4D) 220 220 Dividends paid and declared (179) (179) Other 1 1 Balance, March 31, 2010 $ 9,676 $ 5 $ 9,681 Balance, December 31, 2008 $ 8,687 $ 6 $ 8,693 Net income 182 1 183 Other comprehensive income 9 9 Issuance of shares through offerings and stock- based compensation plans (See Note 4D) 565 565 Dividends paid and declared (182) (182) Distributions to noncontrolling interest (1) (1) Balance, March 31, 2009 $ 9,261 $ 6 $ 9,267 (a) Consolidated net income of $190 million includes $2 million attributable to preferred shareholders of subsidiaries, which is not a component of total equity and is excluded from the table above. PEC The consolidated financial statements include the accounts of PEC and its majority owned subsidiaries. Noncontrolling interests principally represent minority shareholders' proportionate share of the equity of a VIE (see Note 1C). The following table presents changes in total equity for the year to date: (in millions) Total Common Stock Equity Noncontrolling Interests Total Equity Balance, December 31, 2009 $ 4,657 $ 3 $ 4,660 Net income (loss) 138 (2) 136 Issuance of shares through stock-based compensation plans 17 17 Preferred stock dividends at stated rate (1) (1) Balance, March 31, 2010 $ 4,811 $ 1 $ 4,812 Balance, December 31, 2008 $ 4,301 $ 4 $ 4,305 Net income 128 128 Issuance of shares through stock-based compensation plans 17 17 Dividends paid to parent (200) (200) Preferred stock dividends at stated rate (1) (1) Tax benefit dividend (1) (1) Balance, March 31, 2009 $ 4,244 $ 4 $ 4,248 PEF Interim disclosures of changes in equity are required if the reporting entity has less than wholly-owned subsidiaries, of which PEF has none. Therefore, an equity reconciliation for PEF has not been provided. C.COMPREHENSIVE INCOME PROGRESS ENERGY Three months ended March 31, (in millions) 2010 2009 Net income $ 190 $ 183 Other compre

Preferred Stock of Subsidiaries

Preferred Stock of Subsidiaries
	3 Months Ended Mar. 31, 2010
Preferred Stock Of Subsidiaries Disclosure Abstract
Preferred Stock	5.PREFERRED STOCK OF SUBSIDIARIES All of our preferred stock was issued by the Utilities. The preferred stock is considered temporary equity due to certain provisions that could require us to redeem the preferred stock for cash. In the event dividends payable on PEC or PEF preferred stock are in default for an amount equivalent to or exceeding four quarterly dividend payments, the holders of the preferred stock are entitled to elect a majority of PEC or PEF's respective board of directors until all accrued and unpaid dividends are paid. All classes of preferred stock are entitled to cumulative dividends with preference to the common stock dividends, are redeemable by vote of the Utilities' respective board of directors at any time, and do not have any preemptive rights. All classes of preferred stock have a liquidation preference equal to $100 per share plus any accumulated unpaid dividends except for PEF's 4.75%, $100 par value class, which does not have a liquidation preference. Each holder of PEC's preferred stock is entitled to one vote. The holders of PEF's preferred stock have no right to vote except for certain circumstances involving dividends payable on preferred stock that are in default or certain matters affecting the rights and preferences of the preferred stock.

Debt and Credit Facilities

Debt and Credit Facilities
	3 Months Ended Mar. 31, 2010
Debt And Credit Facilities Disclosure Abstract
Debt and Credit Facilities	6.DEBT AND CREDIT FACILITIES Material changes, if any, to Progress Energy's, PEC's and PEF's debt and credit facilities and financing activities since December 31, 2009, are as follows. On January 15, 2010, the Parent paid at maturity $100 million of its Series A Floating Rate Notes with proceeds from the $950 million of Senior Notes issued in November 2009. On March 25, 2010, PEF issued $250 million of 4.55% First Mortgage Bonds due 2020 and $350 million of 5.65% First Mortgage Bonds due 2040. A portion of the proceeds was used to repay the outstanding balance of PEF's notes payable to affiliated companies. We expect to use the remainder of the bond proceeds to retire the $300 million outstanding balance of PEF's 4.50% First Mortgage Bonds due June 1, 2010, and for general corporate purposes.

Fair Value Disclosures

Fair Value Disclosures
	3 Months Ended Mar. 31, 2010
Fair Value Disclosures Abstract
Fair Value Disclosures	7.FAIR VALUE DISCLOSURES A.DEBT AND INVESTMENTS PROGRESS ENERGY DEBT The carrying amount of our long-term debt, including current maturities, was $12.940 billion and $12.457 billion at March 31, 2010 and December 31, 2009, respectively. The estimated fair value of this debt, as obtained from quoted market prices for the same or similar issues, was $13.8 billion and $13.4 billion at March 31, 2010 and December 31, 2009, respectively. INVESTMENTS Certain investments in debt and equity securities that have readily determinable market values are accounted for as available-for-sale securities at fair value. Our available-for-sale securities include investments in stocks, bonds and cash equivalents held in trust funds, pursuant to NRC requirements, to fund certain costs of decommissioning the Utilities' nuclear plants as discussed in Note 4C of the 2009 Form 10-K. NDT funds are presented on the Consolidated Balance Sheets at fair value. In addition to the NDT funds, we hold other debt investments classified as available-for-sale, which are included in miscellaneous other property and investments on the Consolidated Balance Sheets at fair value. The following table summarizes our available-for-sale securities at March 31, 2010 and December 31, 2009: (in millions) Estimated Fair Value Unrealized Losses Unrealized Gains March 31, 2010 Common stock equity securities $ 892 $ (18) $ 334 Preferred stock and other equity securities 20 6 Corporate debt securities 97 5 U.S. state and municipal debt securities 123 (2) 4 U.S. and foreign government debt securities 248 (1) 7 Money market funds and other securities 86 Total $ 1,466 $ (21) $ 356 December 31, 2009 Common stock equity securities $ 839 $ (22) $ 301 Preferred stock and other equity securities 16 5 Corporate debt securities 71 (1) 5 U.S. state and municipal debt securities 118 (2) 3 U.S. and foreign government debt securities 197 (1) 8 Money market funds and other securities 161 Total $ 1,402 $ (26) $ 322 The NDT funds and other available-for-sale debt investments held in certain benefit trusts are managed by third-party investment managers who have a right to sell securities without our authorization. Net unrealized gains and losses of the NDT funds that would be recorded in earnings or other comprehensive income by a nonregulated entity are recorded as regulatory assets and liabilities pursuant to ratemaking treatment. Therefore, the preceding tables include the unrealized gains and losses for the NDT funds based on the original cost of the trust investments. All of the unrealized losses and unrealized gains for 2010 and 2009 relate to the NDT funds. There were no material unrealized losses and unrealized gains for the other available-for-sale debt securities held in benefit trusts at March 31, 2010 and December 31, 2009. The aggregate fair value of investments that related to the 2010 and 2009 unrealized losses was $202 million and $209 million, respectively. At March 31, 2010, the fair value of our available-for-sale debt securities by contractual maturity was: (in

Benefit Plans

Benefit Plans
	3 Months Ended Mar. 31, 2010
Benefit Plans Disclosure Abstract
Benefit Plans	8.BENEFIT PLANS We have noncontributory defined benefit retirement plans that provide pension benefits for substantially all full-time employees. We also have supplementary defined benefit pension plans that provide benefits to higher-level employees. In addition to pension benefits, we provide contributory other postretirement benefits (OPEB), including certain health care and life insurance benefits, for retired employees who meet specified criteria. The components of the net periodic benefit cost for the respective Progress Registrants for the three months ended March 31 were: PROGRESS ENERGY Pension Benefits Other Postretirement Benefits (in millions) 2010 2009 2010 2009 Service cost $ 12 $ 10 $ 2 $ 2 Interest cost 35 34 8 9 Expected return on plan assets (39) (35) (1) (1) Amortization of actuarial loss 12 12 1 Other amortization, net 2 2 1 1 Net periodic cost $ 22 $ 23 $ 10 $ 12 (a) Adjusted to reflect PEFs rate treatment. See Note 16B in the 2009 Form 10-K. PEC Pension Benefits Other Postretirement Benefits (in millions) 2010 2009 2010 2009 Service cost $ 5 $ 4 $ 1 $ 1 Interest cost 16 16 4 5 Expected return on plan assets (19) (17) (1) Amortization of actuarial loss 4 2 1 Other amortization, net 1 1 Net periodic cost $ 7 $ 6 $ 5 $ 6 PEF Pension Benefits Other Postretirement Benefits (in millions) 2010 2009 2010 2009 Service cost $ 5 $ 5 $ $ 1 Interest cost 15 14 3 3 Expected return on plan assets (17) (15) Amortization of actuarial loss 7 9 Other amortization, net 1 1 Net periodic cost $ 10 $ 13 $ 4 $ 5 In 2010, contributions directly to pension plan assets are expected to approximate $120 million for us, including $85 million for PEC and $35 million for PEF. An immaterial amount was contributed during the three months ended March 31, 2010. The Patient Protection and Affordable Care Act (PPACA) and the related Health Care and Education Reconciliation Act, which made various amendments to the PPACA, were enacted in March 2010. The PPACA contains a provision that changes the tax treatment related to a federal subsidy available to sponsors of retiree health benefit plans that provide a prescription drug benefit that is at least actuarially equivalent to the benefits under Medicare Part D. The subsidy is known as the Retiree Drug Subsidy (RDS). Employers are not currently taxed on the RDS payments they receive. However, as a result of the PPACA as amended, RDS payments will effectively become taxable in tax years beginning after December 31, 2012, by requiring the amount of the subsidy received to be offset against the employer's deduction for health care expenses. Under GAAP, changes in tax law are accounted for in the period of enactment. Accordingly, an additional tax expense of $22 million for us, $12 million for PEC and $10 million for PEF has been recognized during the three months ended March 31, 2010. We are still evaluating the additional impacts of the PPACA as amended; however, we do not expect the changes to have

Risk Management Activities and

Risk Management Activities and Derivative Transactions
	3 Months Ended Mar. 31, 2010
Risk Management Activities And Derivative Transactions Disclosure Abstract
Risk Management Activities And Derivative Transactions	9.RISK MANAGEMENT ACTIVITIES AND DERIVATIVE TRANSACTIONS We are exposed to various risks related to changes in market conditions. We have a risk management committee that includes senior executives from various business groups. The risk management committee is responsible for administering risk management policies and monitoring compliance with those policies by all subsidiaries. Under our risk policy, we may use a variety of instruments, including swaps, options and forward contracts, to manage exposure to fluctuations in commodity prices and interest rates. Such instruments contain credit risk if the counterparty fails to perform under the contract. We minimize such risk by performing credit and financial reviews using a combination of financial analysis and publicly available credit ratings of such counterparties. Potential nonperformance by counterparties is not expected to have a material effect on our financial position or results of operations. A.COMMODITY DERIVATIVES GENERAL Most of our physical commodity contracts are not derivatives or qualify as normal purchases or sales. Therefore, such contracts are not recorded at fair value. ECONOMIC DERIVATIVES Derivative products, primarily natural gas and oil contracts, may be entered into from time to time for economic hedging purposes. While management believes the economic hedges mitigate exposures to fluctuations in commodity prices, these instruments are not designated as hedges for accounting purposes and are monitored consistent with trading positions. The Utilities have financial derivative instruments with settlement dates through 2015 related to their exposure to price fluctuations on fuel oil and natural gas purchases. The majority of our financial hedge agreements will settle in 2010 and 2011. Substantially all of these instruments receive regulatory accounting treatment. Related unrealized gains and losses are recorded in regulatory liabilities and regulatory assets, respectively, on the Balance Sheets until the contracts are settled. After settlement of the derivatives and the fuel is consumed, any realized gains or losses are passed through the fuel cost-recovery clause. Certain hedge agreements may result in the receipt of, or posting of, derivative collateral with our counterparties, depending on the daily derivative position. Fluctuations in commodity prices that lead to our return of collateral received and/or our posting of collateral with our counterparties negatively impact our liquidity. We manage open positions with strict policies that limit our exposure to market risk and require daily reporting to management of potential financial exposures. Certain counterparties have posted or held cash collateral in support of these instruments. Progress Energy had a cash collateral asset included in derivative collateral posted of $297 million and $146 million on the Progress Energy Consolidated Balance Sheets at March 31, 2010 and December 31, 2009, respectively. At March 31, 2010, Progress Energy had 232.3 million MMBtu notional of natural gas and 46.0 million gallons notional of oil related to outstanding commodity derivative swaps that were entered into to he

Financial Information by Busine

Financial Information by Business Segment
	3 Months Ended Mar. 31, 2010
Financial Information By Business Segment Disclosure Abstract
Financial Information by Business Segment	10.FINANCIAL INFORMATION BY BUSINESS SEGMENT Our reportable segments are PEC and PEF, both of which are primarily engaged in the generation, transmission, distribution and sale of electricity in portions of North Carolina and South Carolina and in portions of Florida, respectively. These electric operations also distribute and sell electricity to other utilities, primarily on the east coast of the United States. In addition to the reportable operating segments, the Corporate and Other segment includes the operations of the Parent and PESC and other miscellaneous nonregulated businesses that do not separately meet the quantitative thresholds for disclosure as separate reportable business segments. Products and services are sold between the various reportable segments. All intersegment transactions are at cost. Income of discontinued operations is not included in the table presented below. The following information is for the three months ended March 31: Revenues Ongoing (in millions) Unaffiliated Intersegment Total Earnings (loss) Assets 2010 PEC $ 1,263 $ $ 1,263 $ 147 $ 13,843 PEF 1,270 1,270 113 13,903 Corporate and Other 2 61 63 (47) 20,378 Eliminations (61) (61) (15,990) Totals $ 2,535 $ $ 2,535 $ 213 $ 32,134 2009 PEC $ 1,178 $ $ 1,178 $ 129 PEF 1,262 1,262 91 Corporate and Other 2 65 67 (38) Eliminations (65) (65) Totals $ 2,442 $ $ 2,442 $ 182 Management uses the non-GAAP financial measure "Ongoing Earnings" as a performance measure to evaluate the results of our segments and operations. A reconciliation of consolidated Ongoing Earnings to net income attributable to controlling interests for the three months ended March 31 is as follows: (in millions) 2010 2009 Ongoing Earnings $ 213 $ 182 Tax levelization (2) (7) CVO mark-to-market (Note 9D) 7 Change in tax treatment of the Medicare Part D subsidy (Note 8) (22) Continuing income attributable to noncontrolling interests, net of tax 2 1 Income from continuing operations before cumulative effect of change in accounting principle 191 183 Discontinued operations, net of tax 1 Cumulative effect of change in accounting principle, net of tax (2) Net income attributable to noncontrolling interests, net of tax (1) Net income attributable to controlling interests $ 190 $ 182

Other Income and Other Expense

Other Income and Other Expense
	3 Months Ended Mar. 31, 2010
Other Income And Other Expense Disclosure Abstract
Other Income And Other Expense	11.OTHER INCOME AND OTHER EXPENSE Other income and expense includes interest income and other income and expense items as discussed below. Nonregulated energy and delivery services include power protection services and mass market programs such as surge protection, appliance services and area light sales, and delivery, transmission and substation work for other utilities. The components of other, net as shown on the accompanying Statements of Income were as follows: PROGRESS ENERGY Three months ended March 31, (in millions) 2010 2009 Nonregulated energy and delivery services (expense) income, net $ (1) $ 1 CVOs unrealized gain, net 7 Donations (4) (3) Other, net (6) Other, net $ (5) $ (1) PEC Three months ended March 31, (in millions) 2010 2009 Nonregulated energy and delivery services expense, net $ (4) $ (2) Donations (2) (1) Other, net (1) (4) Other, net $ (7) $ (7) PEF Three months ended March 31, (in millions) 2010 2009 Nonregulated energy and delivery services income, net $ 3 $ 3 Donations (1) (2) Other, net (1) Other, net $ 2 $

Enviromental Matters

Enviromental Matters
	3 Months Ended Mar. 31, 2010
Enviromental Matters Disclosure Abtract
Environmental Matters	12.ENVIRONMENTAL MATTERS We are subject to regulation by various federal, state and local authorities in the areas of air quality, water quality, control of toxic substances and hazardous and solid wastes, and other environmental matters. We believe that we are in substantial compliance with those environmental regulations currently applicable to our business and operations and believe we have all necessary permits to conduct such operations. Environmental laws and regulations frequently change and the ultimate costs of compliance cannot always be precisely estimated. A.Hazardous and Solid Waste The provisions of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA), authorize the United States Environmental Protection Agency (EPA) to require the cleanup of hazardous waste sites. This statute imposes retroactive joint and several liabilities. Some states, including North Carolina, South Carolina and Florida, have similar types of statutes. We are periodically notified by regulators, including the EPA and various state agencies, of our involvement or potential involvement in sites that may require investigation and/or remediation. There are presently several sites with respect to which we have been notified of our potential liability by the EPA, the state of North Carolina, the state of Florida, or potentially responsible party (PRP) groups as described below in greater detail. Various organic materials associated with the production of manufactured gas, generally referred to as coal tar, are regulated under federal and state laws. PEC and PEF are each PRPs at several manufactured gas plant (MGP) sites. We are also currently in the process of assessing potential costs and exposures at other sites. These costs are eligible for regulatory recovery through either base rates or cost-recovery clauses. Both PEC and PEF evaluate potential claims against other PRPs and insurance carriers and plan to submit claims for cost recovery where appropriate. The outcome of potential and pending claims cannot be predicted. A discussion of sites by legal entity follows. We measure our liability for environmental sites based on available evidence, including our experience in investigating and remediating environmentally impaired sites. The process often involves assessing and developing cost-sharing arrangements with other PRPs. For all sites, as assessments are developed and analyzed, we will accrue costs for the sites to the extent our liability is probable and the costs can be reasonably estimated. Because the extent of environmental impact, allocation among PRPs for all sites, remediation alternatives (which could involve either minimal or significant efforts), and concurrence of the regulatory authorities have not yet reached the stage where a reasonable estimate of the remediation costs can be made, we cannot determine the total costs that may be incurred in connection with the remediation of all sites at this time. It is probable that current estimates will change and additional losses, which could be material, may be incurred in the future. The following table contains information about accruals for

Commitments and Contingencies

Commitments and Contingencies
	3 Months Ended Mar. 31, 2010
Commitments And Contingencies Disclosure Abstract
Commitments and Contingencies	13. COMMITMENTS AND CONTINGENCIES Contingencies and significant changes to the commitments discussed in Note 22 in the 2009 Form 10-K are described below. A.PURCHASE OBLIGATIONS As part of our ordinary course of business, we and the Utilities enter into various long- and short-term contracts for fuel requirements at our generating plants. Significant changes from the commitment amounts reported in Note 22A in the 2009 Form 10-K can result from new contracts, changes in existing contracts along with the impact of fluctuations in current estimates of future market prices for those contracts that are market price indexed. In most cases, these contracts contain provisions for price adjustments, minimum purchase levels, and other financial commitments. Additional commitments for fuel and related transportation will be required to supply the Utilities' future needs. At March 31, 2010, our and the Utilities' contractual cash obligations and other commercial commitments have not changed materially from what was reported in the 2009 Form 10-K except as follows. PEC On April 14, 2010, PEC entered into a conditional agreement for firm pipeline transportation capacity to support PEC's gas supply needs for the approximate period of June 2013 through June 2033. The total cost to PEC associated with this agreement is estimated to be approximately $477 million. The agreement is subject to several conditions precedent, including various state regulatory approvals, the completion and commencement of operation of necessary related intrastate natural gas pipeline system expansions and other contractual provisions. Due to the conditions of this agreement, the estimated costs are not currently considered a fuel commitment of PEC. PEF PEF's construction obligations included in Note 22A to the 2009 Form 10-K, which were primarily comprised of contractual obligations related to the Levy EPC agreement, totaled $1.455 billion, $2.981 billion, $2.818 billion and $1.543 billion, respectively, for less than one year, one to three years, three to five years and more than five years from December 31, 2009. We executed an amendment to the Levy Engineering, Procurement, and Construction (EPC) agreement in 2010 because of schedule shifts in the Levy project (See Note 3B), and will postpone major construction activities on the project until after the NRC issues the COL, which is expected to be in late 2012 if the licensing schedule remains on track. Therefore, we will defer substantially all expenditures under the EPC agreement until the COL is received. Because we have executed an amendment to the EPC agreement and anticipate negotiating additional amendments upon receipt of the COL, we cannot currently predict the timing of when those obligations will be satisfied or the magnitude of any change. Additionally, in light of the schedule shifts, PEF may incur fees and charges related to the disposition of outstanding purchase orders on long lead time equipment for the Levy nuclear project, which may be material. We have not yet completed the disposition analysis, and, consequently, have not made final disposition decisions or renegotiated outstanding purchase orders. B

Condensed Consolidating Stateme

Condensed Consolidating Statements
	3 Months Ended Mar. 31, 2010
Condensed Consolidating Statements Disclosure Abstract
Condensed Consolidating Financials	14.CONDENSED CONSOLIDATING STATEMENTS As discussed in Note 23 in the 2009 Form 10-K, we have guaranteed certain payments of two wholly owned indirect subsidiaries, FPC Capital I (the Trust) and Florida Progress Funding Corporation (Funding Corp.). Our guarantees are joint and several, full and unconditional and are in addition to the joint and several, full and unconditional guarantees issued to the Trust and Funding Corp. by Florida Progress. Our subsidiaries have provisions restricting the payment of dividends to the Parent in certain limited circumstances and as disclosed in Note 11B in the 2009 Form 10-K, there were no restrictions on PEC's or PEF's retained earnings. The Trust is a VIE of which we are not the primary beneficiary. Separate financial statements and other disclosures concerning the Trust have not been presented because we believe that such information is not material to investors. Presented below are the condensed consolidating Statements of Income, Balance Sheets and Cash Flows as required by Rule 3-10 of Regulation S-X. In these condensed consolidating statements, the Parent column includes the financial results of the parent holding company only. The Subsidiary Guarantor column includes the consolidated financial results of Florida Progress only, which is primarily comprised of its wholly owned subsidiary PEF. The Non-guarantor Subsidiaries column includes the consolidated financial results of all non-guarantor subsidiaries, which is primarily comprised of our wholly owned subsidiary PEC. The Other column includes elimination entries for all intercompany transactions and other consolidation adjustments. Financial statements for PEC and PEF are separately presented elsewhere in this Form 10-Q. All applicable corporate expenses have been allocated appropriately among the guarantor and non-guarantor subsidiaries. The financial information may not necessarily be indicative of results of operations or financial position had the Subsidiary Guarantor or other non-guarantor subsidiaries operated as independent entities. Condensed Consolidating Statement of Income Three months ended March 31, 2010 (in millions) Parent Subsidiary Guarantor Non-Guarantor Subsidiaries Other Progress Energy, Inc. Operating revenues Operating revenues $ $ 1,272 $ 1,263 $ $ 2,535 Affiliate revenues 61 (61) Total operating revenues 1,272 1,324 (61) 2,535 Operating expenses Fuel used in electric generation 413 483 896 Purchased power 213 50 263 Operation and maintenance 3 205 329 (57) 480 Depreciation, amortization and accretion 124 122 246 Taxes other than on income 93 64 (3) 154 Other 2 2 Total operating expenses 3 1,050 1,048 (60) 2,041 Operating (loss) income (3) 222 276 (1) 494 Other income (expense) Interest income 2 1 (1) 2 Allowance for equity funds used during construction 8 13 21 Other, net (1) 3 (7) (5) Total other income (expense), net 1 11 7 (1) 18 Interest charges Interest charg