Progress Energy Issues Overview April 25, 2006 Don Cooke Sr. Environmental Coordinator

Progress EnergyIssues OverviewProgress EnergyIssues Overview

April 25, 2006

Don Cooke

Sr. Environmental Coordinator

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Progress Energy at-a-glance

Progress Energy service territory in green

3 million customers 24,500+ MW’s 72,000 primary miles of

distribution lines 9,800 miles of transmission

lines 15,300 employees $24 billion assets $8 billion revenues Fortune 250 company

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Fuel Sources

Year-End 2005

1%

46%34%

19% Coal

Nuclear

Gas/Oil

Hydro

Clean AirClean Air

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Emissions are down

Source: EPA. "Latest Findings on National Air Quality: 2003 Status and Trends."

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N.C. Clean Smokestacks Act 2002 - Clean Smokestacks Act signed into law Developed cooperatively with Gov. Easley and

legislative, regulatory, environmental and business leaders

Significantly cuts NOx and SO2 emissions from utility-owned coal-fired power plants

Technologies will also reduce mercury emissions by more than two-thirds statewide

Model for other states to improve air quality

7Source: Progress Energy’s Report to Shareholders, 2006

Clean Smokestacks Impact

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How Does a Scrubber Work?

A slurry of finely ground limestone (CaC03) is sprayed into a reaction tower, which has flue-gas flowing counter-current to the spray. The SO2 in the gas reacts with the limestone, removing 97% of the S02 and making CaS04 (gypsum).

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Emissions Control Equipment

Boiler ScrubberTower(Removes

SO2)

Flue GasFlue Gas

SCR(Removes

NOx)

Precipitator(Removes

Particulates)

Stack

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Clean Smokestacks Emissions Controls

NOx Controls 2006: Low-NOx burners - Lee 2, Sutton 2 2007: SCR - Asheville 1 2010: ROTAMIX - Lee 3

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Clean Smokestacks Emissions Controls

Sulfur Dioxide Controls (Scrubbers) 2005: Asheville 1 2006: Asheville 2 2007: Roxboro 2, Roxboro 4 2008: Roxboro 1, Roxboro 3 2009: Mayo 1 2011: Cape Fear 6 2012: Cape Fear 5, Sutton 3

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Additional Air Quality Regulations Clean Air Interstate Rule Clean Air Visibility Rule Clean Air Mercury Rule

New GenerationNew Generation

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A balanced solution

Increasing demand for electricity Commitment - and obligation - to provide reliable and

affordable electricity Cannot rely on just one approach – requires a

balanced solution Efficiency & conservation Supporting alternative energy technologies Investing in new power plants

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Electricity generation options Coal Natural gas Renewable sources Nuclear

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Planning for new electricity generation

Factors considered include: Fuel costs and availability Environmental considerations Load growth Maintenance and operation costs Construction and permitting time Regulatory environment Community support

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Coal-fired plantsAdvantages Baseload generation Plentiful fuel supply New technology reduces

emissions

Challenges Environmental issues New technology adds

additional costs and risks Fuel costs

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Natural gas-fired plantsAdvantages Fewer emissions than coal or

oil Efficient fuel source Low capital costs Construction time

Challenges Fuel volatility Fuel accessibility Limited world reserves

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Wind technologyAdvantages Plentiful resource in

certain places Renewable, domestic

and emission-free Land beneath wind

structures can be used for farming and ranching

Low operating costs

Challenges Generation may not

correspond with peak demand

Noise and sight pollution Impacts wildlife Requires extensive

amounts of land Siting difficulties

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Solar technologyAdvantages

Plentiful resource Renewable and emission-free Low operating costs

Challenges Limited generating capability High capital costs

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BiomassAdvantages Plentiful in southeastern U.S. Renewable Co-firing potential Could also address animal

waste issues

Challenges Co-firing may not work on all units Availability of some biomass

sources

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Nuclear energy

Advantages Baseload generation Low fuel costs and

adequate uranium supply No greenhouse gas or air

emissions

Challenges Capital costs Delay in permanent used

fuel repository Public acceptance

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Planning for the future

Considering new nuclear generation in Carolinas and Florida

Potentially plan to file two combined licenses (COL)s with the Nuclear Regulatory Commission by 2008

Community involvement is key COL applications do not commit company to building

plants