Exhibit 10(c)28




March 31, 2004





Mr. William Cavanaugh III
1109 Tazwell Place
Raleigh, NC  27612

Dear Bill:

This letter will confirm the  discussions we have recently had  concerning  your
upcoming retirement as Chief Executive Officer on March 1, 2004, and as Chairman
of the Board at the May 12 Annual Meeting of Shareholders.  As agreed,  you will
be  available  to provide  various  services to the Company  after May 12, 2004.
These  services  will be as  requested  by,  and  performed  under  the  general
direction of, Progress  Energy's Chief Executive  Officer,  as agreed to by you.
The  compensation  for such services will be as approved by the Chief  Executive
Officer.

The  Company  will  continue  to provide  you with the  following  services  and
benefits:  a home alarm and security  service,  a company network  telephone and
facsimile  equipment at your  residences,  a personal  computer,  and a cellular
telephone.  The Company will provide you with financial planning for three years
following your retirement and will provide financial planning for Mrs. Cavanaugh
for one year after your death (if you  predecease  her).  The Company  will also
continue to provide appropriate office and secretarial  support.  These services
and appropriate office  accommodations will be supplied until you attain the age
of 75.  After such time,  if  services  or  accommodations  of any kind might be
appropriate,  the matter will be determined at that time by the Chief  Executive
Officer.

In addition,  the Company will  reimburse  you for your  reasonable  expenses in
connection  with your  upcoming  service  for one term as  Chairman of the World
Association  of  Nuclear  Operations  (WANO).  We  understand  that your term as
Chairman  of WANO will  commence  this year and will be a  two-year  commitment.
Reasonable  expenses will include the cost of a security  detail in those places
where  security would be  appropriate.  The need for security will be determined
after  consultation  with  Progress  Energy  Corporate  Security  and the  Chief
Executive Officer or his designee. You should review your travel and other plans
and expenditures concerning WANO in advance with the Chief Executive Officer.

I look forward to our continued association.

Sincerely,

/s/ Robert B. McGehee

Attachment

Agreed: /s/ William Cavanaugh III      Approved: /s/ Charles W. Coker
        -------------------------                --------------------
        William Cavanaugh III                    Charles W. Coker