Corporate Responsibility Letter From CEO Executive Summary Company Overview	Customers Balanced Solution for Growing Energy Demand Reliable Power Customer Satisfaction	Communities Community Investments Economic Development Supplier Diversity Stakeholder Engagement	Environment Environmental Management Global Climate Change Renewable and Alternative Energy Advanced Vehicle Technologies Air Quality Water Resources Waste Management Remediation Natural Resources Research and Development	Employees Health and Safety Engaged Employees	Shareholders Corporate Governance Ethics Program Financial Highlights	Conclusion GRI Index Safe Harbor for Forward-Looking Statements Employee Recognition

We are actively improving air quality by significantly reducing emissions from our power plants. We have been installing nitrogen oxides (NOx) emissions controls on our coal-fired power plants since 1995 to comply with federal and state requirements. Control equipment that is being installed to meet the requirements of the North Carolina Clean Smokestacks Act and federal rules, such as the Clean Air Interstate Rule (CAIR) and Clean Air Visibility Rule (CAVR), will further reduce emissions of NOx, sulfur dioxide (SO₂) and mercury.

North Carolina Clean Smokestacks Act
On June 20, 2002, North Carolina enacted the Clean Smokestacks Act, capping the state’s coal-fired power plants’ NOx and SO₂ emissions. We proactively helped develop this law with public officials, environmental organizations, citizens groups and businesses. The coalition received the U.S. Environmental Protection Agency’s Clean Air Excellence Award in 2004 for collaborative environmental policymaking.

The emissions cap means that trading to meet the limits is not allowed. By 2013, we will reduce emissions of SO₂ by 74 percent and NOx emissions by 56 percent from 2001 levels at our North Carolina coal-fired power plants. The NOx emissions targets are being achieved through a mix of combustion controls, such as low-NOx burners and over-fire air technologies, and post-combustion controls such as selective catalytic reduction and selective non-catalytic reduction technologies. The SO₂ emissions targets are being achieved through the use of flue gas desulfurization (FGD), or wet scrubber systems, and potentially dry scrubbers and furnace sorbent injection technologies as well as low-sulfur coal. The N.C. Clean Smokestacks Act has positioned us to meet the more stringent requirements of CAIR, CAVR and mercury regulations.

Federal air quality regulations
On March 10, 2005, the EPA issued the final CAIR. The rule requires significant reductions in emissions of SO₂ and NOx throughout the eastern United States, including our service areas in North Carolina, South Carolina and Florida. The CAIR sets emission limits to be met in two phases:

• NOx compliance milestones occur in 2009 and 2015
• SO₂ compliance milestones occur in 2010 and 2015

At full implementation in 2015, CAIR requires a 70 percent reduction in SO₂ emissions and a 65 percent reduction in NOx emissions from 2002 levels. CAIR utilizes a market-based cap-and-trade system that gives utilities the flexibility to trade emissions allowances to meet the emissions cap. On July 11, 2008, the D.C. Circuit Court of Appeals vacated the CAIR. However, on December 23, 2008, the Court reinstated the CAIR but remanded it to EPA to revise or replace the rule consistent with the July 2008 decision. Progress Energy is positioned to ensure compliance with CAIR.

The Clean Air Mercury Rule (CAMR), issued by the EPA on March 15, 2005, requires significant reductions in mercury emissions from coal-fired power plants. On February 8, 2008, the D.C. Circuit Court of Appeals vacated the CAMR. The EPA will be replacing the CAMR with another regulatory approach to compelling significant mercury reductions for coal-fired power plants. A considerable challenge associated with mercury emissions is continuously monitoring those emissions. We have supported several mercury-monitoring studies with EPRI, EPA and other utilities to drive the maturity, reliability and cost effectiveness of monitoring technology. We are seeing significant mercury reductions as a result of the technologies installed to reduce SO₂ and NOx.

On June 15, 2005, the EPA issued the CAVR. The rule requires states to identify facilities that began operation between 1962 and 1977 with the potential to produce emissions that affect visibility in U.S. national parks and wilderness areas. To help restore visibility in these areas, states must require these facilities to install best available retrofit technology (BART) to control their emissions.

We have several coal- and oil-fired generating units that fall under this rule, and have installed controls. We have taken an integrated approach to complying with the requirements of the CAIR, CAVR and mercury regulations, in an effort to minimize cost impacts on customers. For example, we are not planning to make major emission technology investments in the coal-fired Crystal River Units 1 and 2, because we have an agreement with the Florida Department of Environmental Protection to retire the units when the proposed new, carbon-free Levy Unit 2 Nuclear Plant completes its first fuel cycle.

Toxics Release Inventory data
Companies in many industries, including the electric utility industry, are required to report to the EPA specific amounts of certain chemicals handled or released annually. This report is known as the Toxics Release Inventory, or TRI. Our TRI data can be found at www.progress-energy.com/environment/tri.