March 6, 2008

By Mark Mulhern, Chief Financial Officer

I know that many Progress Energy employees are understandably interested in the recent decline of our stock price. From Feb. 24 through March 6, our stock price declined 13.3 percent. As you can see in the table (below), many of our neighboring utilities experienced similar sell-offs. During this same time period, the Dow Jones Industrial Average is down 9.8 percent and the S&P 500 is down 11.5 percent.

The decline in the price of Progress Energy's stock is due to a number of factors, including:

• The overall sell-off of stocks. The recent sell-off reflects a general lack of confidence in the overall financial markets. Although the federal government has taken steps to address the financial crisis, results from these actions will take time. Most economists feel that the stock market will continue to experience volatility until the latter part of 2009 or into 2010.
  
  
• Concern over the possibility that utilities (including Progress Energy) may decide to cut their dividends. One of the most attractive aspects of utility stocks through the years has been the stability of dividends. Recently, a few electric utilities have cut their dividends in response to financial constraints. That has led to concern on Wall Street that other utilities might cut dividends, and that apprehension has contributed to the recent sell-off of utility stocks. This is a concern among some investors despite the fact that in December 2008, Progress Energy increased the dividend for the 21st year in a row, and we recognize that our shareholders value the dividend as a primary component of the total shareholder return proposition.
  
  
• The Obama Administration's budget. Wall Street has not responded favorably to the White House budget proposal, which includes significant changes in energy policy. The changes would increase energy costs for utilities and their customers significantly.

Employees should keep in mind that Progress Energy's financial situation remains strong. Our share price decline is related to overall market issues and not any specific concern about or action by Progress Energy. The company's senior executives and Treasury Department are constantly monitoring the financial markets, and will continue to take steps necessary to effectively manage the company during this challenging economic period. We're also working with legislators, regulators and others to ensure that as our nation moves forward with policy changes, it does so with clear, achievable goals and realistic expectations, as well as a full appreciation for the implications of our actions.

The volatile markets are a reminder that all investors must stay informed, diversify their investments and, most important, fully understand the nature and risks of their investments. Fidelity Investments and The Vanguard Group, the administrators of Progress Energy's 401(k) and savings plans, have provided resources to help employees gain a better understanding of the current state of the financial markets and how it may affect their investments offered in these plans. In addition to these related resources, both Fidelity and Vanguard Web sites contain additional information that may be helpful to employees.

Employees throughout the company have done a good job so far to control costs and manage through these turbulent times. We need to focus on what we can influence and not get distracted by the negative sentiment in our economy. The economy experiences cycles and this is clearly a challenging period, but we are fortunate to work for a strong company with a bright future. Let's continue to work together and stay focused on safety, operational excellence and meeting our financial commitments. Thank you for all you're doing each day to build a strong future for Progress Energy.

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