Progress Energy Carolinas Asks for Fuel Factor Increase in South Carolina

Reflecting continued high prices for coal, natural gas and other fuel used to produce electricity, Progress Energy Carolinas today filed to increase the fuel rate charged to its South Carolina customers. The proposed increase is significantly less than the rise in fuel charges in mid-2005.

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Progress Energy Carolinas is asking the S.C. Public Service Commission to approve a $27 million increase in the fuel component of its rates. The company requested the change to recoup under-recovered fuel costs and to meet expected future fuel costs. If approved, the increase would take effect July 1.

If approved, the average increase would be 3.9 percent for residential customers. This translates into a $3.55 per month increase for a residential electric bill, based on usage of 1,000 kilowatt-hours (from $91.49 currently to $95.04). The average commercial bill would increase by 4.5 percent, and the average industrial customer's bill would increase by 6.5 percent.

The fuel portion of the company's rates is adjusted annually by the Public Service Commission to reflect the actual cost of fuel the utility uses to produce electricity to meet customer electricity demand. By law, Progress Energy does not make a profit from the fuel charge. The other major component of the rates, the base rate, has not increased in 16 years.

"While Progress Energy cannot control the global economic factors that largely determine the price of fuels, we do control how efficiently we operate power plants on behalf of customers. And we're doing all we can to keep overall costs for our customers as low as possible while ensuring a stable and reliable supply of electricity," said Emerson Gower, vice president of Progress Energy Carolina's Southern Region, which includes all of the company's South Carolina service area.

The primary cause of the increase is the continued high cost of coal and natural gas needed to run Progress Energy's generating plants. Market prices of energy commodities have increased significantly in recent months. The market price of natural gas has almost tripled in less than four years; coal market prices have doubled since 2003, and the market price of oil has almost tripled since late 2001.

Progress Energy's power plants have been recognized nationally for sustained reliable and efficient performance. In 2005, the H.B. Robinson Nuclear Plant near Hartsville and the Harris Nuclear Plant near Raleigh, N.C., set production records. The Robinson Plant also was recognized for 10 years of consistently high performance by an industry group. And the Electric Utility Cost Group recognized several Progress Energy coal-fired power plants as among the best-performing facilities in the nation. That performance, coupled with the company's diversity of power plant resources, has helped to keep fuel expenses as low as possible for customers.

In some other parts of the country, dependence on single fuel sources and other issues have led to proposed consumer price increases in excess of 50 percent. Even with Progress Energy's proposed increase, the average price of electricity for its customers in South Carolina would still be below the national average.

In the commission-approved settlement agreement from the fuel case in 2005, the company agreed to recoup under-recovered expenses from 2004-2005 over a longer period in South Carolina. The settlement helped to lessen the impact on customers in the 2005 increase. However, since prices have remained high, the settlement translates to a larger amount to be recovered in 2006.

"We understand that any increase in a customer bill has an impact on our neighbors," Gower said. "We're doing all we can to operate efficiently, and we encourage our customers to learn more about how they can save on their own energy bills."

Customers can save up to 20 percent on their energy costs by making simple changes at home. Cleaning air filters, adjusting the thermostat and sealing windows and doors can result in noticeable savings. For more energy-efficiency tips, visit the company's Web site at http://www.progress-energy.com/save.

Progress Energy Carolinas is a subsidiary of Progress Energy . Headquartered in Raleigh, N.C., Progress Energy is a Fortune 250 diversified energy company with more than 24,500 megawatts of generation capacity and $11 billion in annual revenues. The company's holdings include two electric utilities serving approximately 3 million customers in North Carolina, South Carolina, and Florida. Progress Energy also includes nonregulated operations covering merchant generation, energy marketing and natural gas exploration. Progress Energy was the 2005 recipient of the prestigious J.D. Power and Associates Founder's Award for dedication, commitment and sustained improvement in customer service. For more information about Progress Energy, visit the company's Web site at http://www.progress-energy.com/.

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Progress Energy

CONTACT: Corporate Communications of Progress Energy 24-Hour Media Line,+1-919-877-(NEWS) 6397

Web site: http://www.progress-energy.com/    http://www.progress-energy.com/save