2. Safe Harbor for Forward-Looking
Information
This document contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The
matters discussed in this document 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 document and speaks only as of the date on which such statement is made, and
we undertake 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: the impact of fluid and complex laws and regulations, including those relating to the environment and the Energy Policy Act of 2005; the anticipated future
need for additional baseload generation and associated transmission facilities in our regulated service territories and the accompanying regulatory and financial risks;
the financial resources and capital needed to comply with environmental laws and renewable energy portfolio standards and our ability to recover related eligible
p py gy p y g
costs under cost-recovery clauses or base rates; our ability to meet current and future renewable energy requirements; the inherent risks associated with the
operation of nuclear facilities, including environmental, health, regulatory and financial risks; the impact on our facilities and businesses from a terrorist attack;
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; economic fluctuations and the
corresponding impact on our customers, including downturns in the housing and consumer credit markets; 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 operation and maintenance expense
(O&M) and large construction projects; the ability of our subsidiaries to pay upstream dividends or distributions to Progress Energy; the length and severity of the
current financial market distress that began in September 2008; the ability to successfully access capital markets on favorable terms; the stability of commercial credit
markets and our access to short-term and long-term credit; the impact that increases in leverage may have on us; our ability to maintain our current credit ratings and
the impact on our financial condition and ability to meet our cash and other financial obligations in the event our credit ratings are downgraded; 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; the investment
performance of our nuclear decommissioning trust funds and the assets of our pension and benefit plans; the outcome of any ongoing or future litigation or similar
disputes and the impact of any such outcome or related settlements; and unanticipated changes in operating expenses and capital expenditures. Many of these risks
similarly impact our nonreporting subsidiaries. These and other risk factors are detailed from time to time in our filings with the United States Securities and Exchange
Commission. All such f t
C ii h factors are diffi lt t predict, contain uncertainties th t may materially affect actual results and may b b
difficult to di t ti t i ti that t i ll ff t t l lt d be beyond our control. N
d t l New f t
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 us.
These and other risk factors are detailed from time to time in our filings with the United States Securities and Exchange Commission (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 us.
For questions or comments contact:
Bob Drennan Bryan Kimzey
Vice President, Investor Relations Lead Analyst, Investor Relations
Tel: 919-546-7474 Tel: 919-546-6931
Email: bob.drennan@pgnmail.com Email: bryan.kimzey@pgnmail.com
3. Major Discussion Topics
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1. Company overview
2. Financial update
3. Regulatory update
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4. Growth strategy
5.
5 Nuclear expansion
5. Profile of who we are:
Two High-Performing Electric Utilities
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North Carolina
Progress Energy Carolinas
• 12,400 MW capacity
12 400
• Over 1.4M customers
• 2.2% cust. growth (7-yr CGR)
(7-
• $4.4B total revenue
• $12B total assets
• 5,000 employees
South
• 34,000 sq. mile service area
Carolina
• 18 plants, 82 units
Progress Energy Florida
• 9,400 MW capacity
Florida • ~1.7M customers
• 2.2% cust. growth (7-yr CGR)
2 2% t th (7-
• $4.7B total revenue
• $13B total assets
• 4,000 employees
Service Area
• 20,000 sq. mile service area
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• 14 plants, 65 units
6. Strategic Focus
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● An integrated energy company focused on
end-use electricity markets
What
●CCore b i
businesses: P Progress E
Energy
Carolinas and Progress Energy Florida
● High growth regulated markets in the
Carolinas and Florida
Where
● Access to attractive wholesale markets
● 80% regulated retail
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Target Mix
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● 20% wholesale
● Buy-and-hold stock
● Good value with modest business risk, low volatility
Investment Thesis
and dividend growth
The l
Th largest pure-play regulated electric utility in the U.S.
t l l t d l t i tilit i th U S
8. Our Long-Term Financial Objectives
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• Achieve our 4-5% EPS growth objective
• Preserve an investment grade credit rating
• Maintain dividend growth
• Keep rate increases reasonable to customers
• Fund Levy and capital investments in the rest of
the business
9. Financial Update:
Challenges/Opportunities
• Weaker than expected Florida revenues mitigated by
Wholesale
Wh l l
Cost management
• Regulatory depreciation/amortization at PEC
Received Clean Smokestacks order from NCUC
on 9/5/2008
$27M of Harris depreciation by end of 2009
• 2009-2010 capital expenditure program under review
10. Liquidity Overview *
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(in millions)
PGN Revolving Credit Facilities Debt Maturity Profile
Program Term Amount Expiration Issue 2009 2010 2011 2012
Progress Energy 5-Year $1,130 5/3/12
PGN $ -$ 100 $ 700 $ 450
Progress Energy
PEC 400 6 - 500
5-Year 450 6/28/11
Carolinas
PEF - 300 300 -
Progress Energy
450
Florida 5-Year 3/28/11
Total $ 400 $ 406 $ 1,000 $ 950
$2,030
* * As of September 30, 2008.
11. Strong Liquidity Position
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As of September 30, 2008
($ in millions)
Credit Facilities
CP / LCs Cash on Total
Expiration Commitment Drawn Outstanding Available Hand Liquidity
2012 $1,130
$1 130 -* $526 $604 $35 $638
PGN
2011 450 - - 450 145 595
PEC
2011 450 - - 450 223 673
PEF
Total $2,030 - $526 $1,504 $403 $1,907
* Recently borrowed $
$600 million under Progress Energy’s revolving credit agreement to reduce rollover risk in the commercial paper markets.
Near-Term Maturity
Planned debt issuance by February 2009 at PEC to refinance $400M
maturity on March 1, 2009
Approximately $1.9 billion of total liquidity
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12. Credit Facilities Consortium *
$ in millions
Bank Total
J.P. Morgan Chase
g $ 225.0
Bank Tokyo-Mitsubishi 200.0
Barclays Capital 190.5
Bank of America 190.0
Citigroup 180.0
180 0
Wachovia 175.5
Royal Bank of Scotland 169.0
Bank of New York Mellon 120.0
SunTrust 115.0
115 0
Morgan Stanley 100.0
Goldman Sachs 100.0
Deutsche Bank 95.0
UBS 80.0
80 0
BNP Paribas 50.0
BB&T 25.0
First Tennessee 15.0
Total $ 2,030.0
* * As of September 30, 2008.
13. Current Credit Ratings *
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Moody’s Standard & Fitch
Progress Energy Investors Poor’s Ratings
Outlook Stable Stable Stable
Corporate Credit Rating -- BBB+ BBB
Senior Unsecured Debt Baa2 BBB BBB
Commercial Paper P-2 A-2 F-2
Progress Energy Carolinas
Corporate Credit R ti
C t C dit Rating A3 BBB+
BBB A-
A
Commercial Paper P-2 A-2 F-1
Senior Secured Debt A2 A- A+
Senior Unsecured Debt A3 BBB+ A
Preferred Stock Baa2 BBB- A-
Progress Energy Florida
Corporate Credit Rating A3 BBB+ A-
Commercial Paper P-2 A-2 F-1
Senior Secured Debt A2 A- A+
Senior Unsecured Debt A3 BBB+ A
Preferred Stock
Pf dS k Baa2
B2 BBB-
BBB A-
A
FPC Capital I
Preferred Stock** Baa2 BBB- --
Progress Capital Holdings
Senior Unsecured Debt***
Debt Baa1 BBB --
* As of November 5, 2008.
** Guaranteed by Progress Energy, Inc. and Florida Progress Corporation.
*** Guaranteed by Florida Progress Corporation.
15. Carolinas Cost Recovery Filings
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• South Carolina fuel filing
PSC approved $39M increase
Effective July 1 2008
1,
• North Carolina fuel filing
Reached a proposed settlement with interveners for $275M increase
Represents a 3-year recovery ( ith i t
R t 3 (with interest) of ~$200M deferred fuel
t) f $200M d f df l
balance at July 31, 2008, plus projected fuel costs
Hearing held Sept 16; awaiting order; rates effective Dec 1, 2008
• North Carolina REPS cost recovery
Filed for ~$12M actual and projected incremental cost of compliance
Avoided costs will flow through fuel clause proceedings
Hearing held Sept 17; awaiting order; rates effective Dec 1, 2008
• North Carolina DSM/EE rider and DSDR* program
Filed for ~$42M actual and projected cost recovery
Rates ff ti Dec 1,
R t effective D 1 2008 (h i scheduled f D 17 2008)
(hearing h d l d for Dec 17,
* Distribution System Demand Response.
16. NC Clean Smokestacks Update
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$1.5B-$1.6B: current estimate
of total costs
~$700M remaining
expenditures
$813M: original estimate of
$229M balance compliance costs
into rate base
$15M amortization in Q1-08 $584M: cumulative
amortization to date
$569M – 70% of original
estimate amortized by
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12/31/07
Received favorable order from NCUC on Sept 5: PEC allowed to accrue
AFUDC above $813M; eliminates any further accelerated amortization
17. Florida Cost Recovery Filings
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• Storm damage reserve ended July 31
• 2008 mid-year fuel cost adjustment
$213M request for full recovery from Aug-Dec ’08
FPSC approved half for recovery Aug Dec ’08;
Aug-Dec 08;
remaining half in ’09
• 2009 cost recovery filings on Aug 29
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Levy nuclear Approved on Oct 14;
CR3 uprate rates effective Jan 1, 2009
Fuel
Capacity Hearings held Nov 4-6;
Environmental rates effective Jan 1, 2009
Energy conservation
18. Florida Environmental Cost Recovery
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• Environmental Cost Recovery Clause (ECRC)
Annual ECRC filing
Accrue AFUDC based on existing rate settlement
Return of
Return-of and return-on capital invested when
return on
placed-in service
Dollar-for-dollar recovery of
Related
R l t d O&M expenses
•
Emission allowances
•
• E ti t d t t l spend of $1.2B th
Estimated total d f $1 2B through 2010
h
Crystal River 4 & 5
$745M spent through September 30 2008
30,
20. Significant Rate Base Growth
Even Prior to New Nuclear
e o e uc ea
Progress Energy Carolinas¹ Progress Energy Florida²
2008 2010E
2008-2010E
2008 2010E
2008-2010E
CAGR
CAGR
18%
5% $9,000
$9,000
2001-2007 CAGR
M)
$8,000
$8 000
Retail Rate Base (x 1M)
$8,000
$8 000 5.0%
5 0%
Retail Rate Base (x 1M
$7,000
$7,000
2001-2007 CAGR
$6,000 $6,000 4.1%
B
$5,000
$5 000 $5,000
$5 000
$4,000 $4,000
$3,000 $3,000
$,
$2,000 $2,000
R
R
$1,000 $1,000
$0 $0
2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2001 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E
Retail t base
R t il rate b Clause-related
Cl ltd
(1) PEC rate base includes Clean Smokestacks Act expenditures in excess of $584M.
(2) PEF rate base excludes Levy County nuclear capital expenditures.
21. CapEx Driving Earnings Growth – On Track
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Total Cumulative Spent Expected
Major Generation Projects Project CapEx through 9/30/08 Completion Date
Carolinas
Clean Smokestacks $1.5-1.6B $986M 2013
Wayne County CT
W C t $90M $17M
$1 M Jun-09
J 09
Richmond County CCGT
$600M $45M Jun-11
(incl Transmission)
Florida
Environmental $1.2B $745M May-10
Bartow Repowering
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$690M $602M Jun-09
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(incl Transmission)
CR3 Nuclear Uprate $365M $73M Dec-11
CR3 Steam Generator
$245M $110M Dec-09
D 09
Replacement
Note: Total project capital expenditures based on current estimates and exclude AFUDC.
21
22. Allowance for Funds Used During
Construction (AFUDC)
( )
PEC capital projects lasting more than
Carolinas one month are forecast to earn 8-9%
8-
AFUDC rate.
($15M in 2007 growing to ~$35M in 2008)
PEF capital projects greater than $45
Florida million and lasting more than one year
earn an 8.848% AFUDC rate. *
($53M in 2007 growing to ~$125M in 2008)
* PEF has a base level of CWIP embedded in its rate base.
24. A Well-Established, High-Performing
Well- High-
Nuclear Generation Fleet: 4,323 MW
,
Brunswick (2 BWR units) Crystal River (1 PWR unit)
1975-1977 1977
838 MW (1)
1,875 MW (1)
91.78%
81.67%
ownership
ownership
Harris (1 PWR unit) Robinson (1 PWR unit)
1987 1971
900 MW (1)
710 MW
83.83%
100%
ownership
ownership
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(1) Facilities are jointly owned. The capacities shown include joint owners’ share.
25. Strong Case for New Nuclear in U.S.
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Federal climate policy expected in 2009-2010
Need for new baseload generating capacity
Need for fuel diversity and energy security
Nuclear is the only proven carbon-free,
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baseload option that can be delivered at scale
26. Even Stronger Nuclear Case in Florida
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Progress Energy Florida
Increasing nuclear share:
• reduces fuel costs
Purchased
• reduces price volatility Oil/Gas 32%
23%
• helps address carbon challenge
• strengthens fuel supply security
Nuclear
Coal
14%
31%
Generation Output Mix in 2007
27. Supportive Florida Legislation 2006:
Nuclear Investment Recovery
• Pre-construction and licensing
Capacity cost recovery clause (CCRC)
Costs are recovered dollar for dollar
• During construction
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AFUDC is recovered through CCRC
8.848% AFUDC rate is locked until commercial operation
Annual prudence reviews
• Completion
Base rate adjustment at in service for capital costs
in-service
ROE and capital structure based on last approved
(currently 11.75% ROE on 57.83% common equity)
• P j t cancellation cost recovery
Project ll ti t
28. Levy Nuclear Project in Florida
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Location Technology # of units Capacity (MW) In Service
Levy County
County, Westinghouse Unit 1: 2016
2 ~2,200 t t l
2 200 total
Florida AP1000 Unit 2: 2017
• 8 miles NE of our Crystal
River Energy C
Complex
• Negotiating joint ownership
with multiple parties (1)
• Negotiating engineering,
procurement & construction
(EPC) agreement with
Westinghouse and Shaw
• Site prep & pre-construction
begin ~2010/11; safety-
related construction begins
2012/13
(1) Confidentiality obligations preclude us from discussing this further until the negotiations are completed.
29. Regulatory Timeline for Levy Project
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Mar. May
y June July
y Aug.
g Sept.
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April
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2008 2010 2012/13
Need Case Filed Hearing Vote Order
Cost Recovery Filed Hearing Order
Site Certification Filed (18 month review) Issued
Combined License Filed (3 - 4 year review) Issued
31. Value Proposition:
A Superior Risk-Adjusted Return
Risk Adjusted
• Attractive dividend yield with growth commitment
• Long-term earnings growth supported by sales and rate
base growth
• Clear business model with successful execution history
• Balance sheet and credit metrics support strategy
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A solid, low-risk, long-term h ldi
lid l ikl t holding
32. Business Model for a “Pure Play”
Regulated Integrated Electric Utility
Sustain Operational Deliver Customer
Excellence Satisfaction
• Safety & environmental • Reliable service
performance Achieve Long-Term • Affordable rates
• Fleet performance Financial Objectives • Corporate citizenship
• C t performance
Cost f • Annual EPS growth ~ 4 - 5%
• Continue dividend growth
• Preserve investment-grade
credit rating
di i
• Annual TSR of 8 - 10%
(at constant P/E)
Leverage Growth Maintain Constructive
Prospects Regulation
• Organic growth • Cost recovery
• Rate base expansion • Proactive proceedings
• Balanced approach • Open communications
34. NC Recovery Clauses
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Clause Description Timeframe Recovery
Recovery of fuel costs,
Fuel portion of purchased Annual Filing $ for $
power and reagent costs
Efficiency and Recovery of qualified $ for $ (O&M),
Conservation efficiency and Annual Filing
Return on/of capital
Rider conservation costs
* Subject to final rulemaking related to the 2007 NC Energy Bill.
35. SC Recovery Clauses
Clause Description Timeframe Recovery
Recovery of fuel costs,
energy portion of
Fuel purchased power, Annual filing $ for $
emissions allowances
and reagent costs
Recovery of financing Return on capital
New Nuclear No more often
costs for pre-construction during construction
Construction than annually
and construction capital period
Note: SC law grants the Commission the authority to establish an efficiency and conservation rider.
36. FL Recovery Clauses
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Clause Description Timeframe Recovery
Recovery of the energy
component (fuel) of
Fuel Annual filing $ for $
purchased power and
fuel costs
Nuclear cost recovery
$ for $ (O&M);
Capacity Annual filing
Recovery of capacity Return of/on capital
portion of purchased
power; etc.
Recovery of qualified
Environmental $ for $ (O&M);
environmental Annual filing
(ECRC) Return of/on capital
compliance costs
Energy Recovery of efficiency
$ for $ (O&M);
Conservation and conservation Annual filing
Return of/on capital
(ECCR) program costs etc.
37. For more information about
visit our Web site at
www.progress-energy.com
and click on the “Investors” tab.
