Progress Energy Carolinas Lloyd Yates President & CEO Progress Energy Carolinas Progress Energy Carolinas
Di Discussion Topics i T i � Overview � 2008 Accomplishments � Results & Outlook � Results & Outlook � Performance and Operations � Major Capital Projects Review M j C it l P j t R i � Legislative and Regulatory Environment � 2009 Initiatives 2
PEC PEC – Operations Overview O ti O i Progress Energy Carolinas • 12,400 MW capacity 12 400 MW it • ~1.5M customers • 2% cust. growth (8-yr. CGR) • $4.4B total revenue • $13.2B assets $ • 6,000 employees • 34,000 sq. mile service area • 18 plants, 82 units Service Area 3
PEC PEC – 2008 Accomplishments 2008 A li h t Financial Performance Financial Performance • Achieved $531M in net income Operational Excellence Operational Excellence •Implemented cost management efforts across the utility •Top decile safety performance •Successful start up of two scrubbers at Roxboro p •Launched new Fleet Alignment Model in our Nuclear Generation Group •Completion of SERC Compliance Audit with no non-compliances Growth Growth •Signed long-term contract with NC Electric Membership Corporation (NCEMC) 4
PEC PEC – 2008 Accomplishments (cont.) 2008 A li h t ( t ) Customer Satisfaction • Achieved ranking of #1 in the South and #2 Nationally for Business Customer Satisfaction and #3 in the South for Residential Customer Satisfaction in J.D. Power Study Regulatory and Legislative •Successfully executed amortization strategy and NC and SC fuel filings while developing a positive relationship with large industrial fili hil d l i iti l ti hi ith l i d t i l customers •Transmission rate case successfully settled and OATT formula rates implemented implemented •Developed scenario-based Integrated Resource Plan that included DSM, EE and Renewables 5
PEC PEC – Results and Outlook R lt d O tl k 2008 2008 MWH Sales 2008 MWH Sales Class Class Base Revenue* Base Revenue* MWHs MWHs (percent of total) Residential 1,166,395 17,081,010 Commercial 747,382 13,926,093 Industrial 413,491 11,314,661 Governmental Governmental 64,310 64,310 1,465,082 1,465,082 24% 24% 25% 25% Total Retail 2,391,578 43,786,846 Wholesale/Other 310,314 14,328,971 Total System 2,701,892 58,115,817 19% Balanced customer base 29% � Strong performance in 2008 � g given the financial and 3% 3% economic environment Commercial Industrial Opportunities and challenges in � Governmental Residential each customer class Wholesale/Other * $ in 000’s 6
PEC PEC – Residential Outlook R id ti l O tl k Residential Overview and O tl Outlook k 2008 MWH Sales (percent of total) Largest single customer class � Recent migration trends Recent migration trends � � 24% 25% impacting growth forecast Favorable geography and � 19% opportunities expected to opportunities expected to 29% continue to drive future growth Focused management to limit 3% � uncollectibles/write offs uncollectibles/write-offs Commercial Industrial Customer growth and usage � trends factored into forecast Governmental Residential Wholesale/Other 7
PEC – Residential Growth and Usage PEC R id ti l G th d U Residential Growth and Usage (billing cycle data ‐ weather adjusted) 15 30000 14.5 25000 14 Residential customer 13.5 20000 13 MWHs per 12.5 15000 Customers 12 10000 11.5 11 5000 10.5 10 0 8
PEC PEC – CIG Outlook CIG O tl k Commercial, Industrial and 2008 MWH Sales 2008 MWH Sales G t l (CIG) O i d Governmental (CIG) Overview and (percent of total) Outlook 2 nd half of 2008 showed signs that � commercial and industrial sectors in commercial and industrial sectors in 24% 24% 25% the Carolinas are not immune to the national recession 19% Expect increasing net base revenue p g � 29% 29% growth into 2010/2011, primarily in commercial and governmental Military expansion and growth in � 3% 3% service territory with minimal BRAC C implications Commercial Industrial Overall industrial steadily declining Governmental Residential � and becoming smaller share of and becoming smaller share of Wholesale/Other overall portfolio 9
PEC PEC – CIG Outlook (continued) CIG O tl k ( ti d) Industrial Analysis % of total Industrial MWHs % of total Industrial MWHs Chemicals now largest segment � Industry Classification 2004 Growth 2008 and continues to expand � PET production growth � PET production growth 22 5% 22.5% 16 9% 16.9% SIC 22 - TEXTILES SIC 22 TEXTILES Food segment growth 20.5% 24.9% SIC 28 - CHEMICALS � 10.5% 9.6% SIC 26 - PAPER PRODUCTS Textiles less than 17% of overall � SIC 33/34 SIC 33/34 - PRIMARY & FAB. PRIMARY & FAB 8.8% 9.2% MWH sales and continues to METALS decline 6.9% 8.6% SIC 20 - FOOD 5.6% 5.3% SIC 30 - RUBBER & PLASTICS Construction related segments g � ALL OTHER SIC CODES impacted by recession 25.2% 25.5% COMBINED* Successful economic � development efforts development efforts * Other SIC codes include SIC 24 – Lumber, SIC 32 – Stone/Clay/Glass, SIC 36 – Electrical Mach., SIC 37 – Trans. Equip., SIC 35 – Non-Elec. Mach., SIC 25 – Furniture, SIC 23 – Apparel, SIC 27 – Printing & Publishing and SIC OM. 10
PEC – Term Wholesale Outlook PEC T Wh l l O tl k Wholesale Overview and Outlook 2008 MWH Sales 2008 MWH Sales Factors into the overall PEC growth � (percent of total) strategy Recent contract signed with � 25% 25% NCEMC for 2013-2032 24% � Strengthens relationship and allows for improved long-term 19% planning opportunities planning opportunities 29% 29% Largest term wholesale customers � include NCEMC, Power Agency 3% and Fayetteville Commercial Industrial Marginal opportunities for excess � Governmental Residential generation sales primarily into PJM market Wholesale/Other 11
PEC PEC – Performance and Operations P f d O ti � Coal fleet � Transmission and Distribution Distribution � Top decile in key metrics � Top quartile reliability � Nuclear fleet � Excellent operating p g � Strong safety record St f t d record � Record setting year in � High level of customer 2008 satisfaction satisfaction Strong cost management across the enterprise driven by efficiency and productivity driven by efficiency and productivity 12
PGN B l PGN Balanced Solution Strategy d S l ti St t 13
PEC B l PEC Balanced Solution Strategy d S l ti St t • 1,000 incremental MWs announced Energy • Significant component of the resource plan Efficiency • 4 programs approved by the NCUC in 2008 • SAS and Sutton solar projects online Alternative Alternative • Announced contract for 1 MW solar near Asheville Announced contract for 1 MW solar near Asheville • Coastal Carolina Clean Power – 25 MW biomass Energy • Well positioned to meet REPS requirements • COLA filed for 2 additional units at Harris site State-of-the- • Richmond CC online in 2011 Art Plants • Fast start CTs in 2012 • Fossil fleet environmental retrofits on target • Fossil fleet environmental retrofits on target 14
PEC PEC - Major Capital Projects Major Capital Projects (in millions) Capital Expenditures * Estimated Balance to Balance to Project Description Recovery Method Completion Spend 2008A 2009E 2010E 2011E Date Environmental Recovered through PEC Environmental Compliance $115 $85 $150 $120 $45 2013 CSA to $584M; rate Equipment base thereafter Wayne 157 MW CT $70 $15 - - - 2009 Rate base County 600 MW CCGT & Richmond County $65 $220 $250 $65 - 2011 Rate base Transmission 3 CT's Fast Start CTs - - $15 $45 $90 2012 Rate base totaling129 MW Distribution System DSM/EE Rider PEC Smart Grid PEC Smart Grid Demand Response Demand Response $10 $10 $50 $50 $55 $55 $45 $45 $50 $50 2012 2012 ( (pending approval) di l) (DSDR) Program Harris (HNP) and HNP: 2015 Nuclear Uprates Robinson (RNP) $20 $50 $90 $25 $145 Rate base RNP: 2010 Plants PEC Subtotal $280 $420 $560 $300 $330 % of Total PEC Capital Expenditures ~35% ~50% ~50% ~35% N/A * Totals are net of joint owner and exclude AFUDC, nuclear fuel, nuclear decommissioning trust funding, and potential nuclear construction.
PEC PEC - Constructive Regulatory Environment C t ti R l t E i t � Execution of NC amortization strategy � Successful NC and SC fuel filings � Approval of request to terminate accelerated Harris amortization and defer depreciation on environmental control facilities until next rate case in SC � Settlement of transmission rate case and OATT rates � Settlement of transmission rate case and OATT rates implemented � Completion of SERC Compliance Audit with no non- compliances li � Development of scenario-based IRP including demand-side management, energy efficiency and renewables management, energy efficiency and renewables � Commission turnover 16
PEC PEC – Key 2009 Initiatives K 2009 I iti ti ● Cost management and Continuous Business Excellence ● Cost management and Continuous Business Excellence (CBE) ● Cash flow and capital management ● Integrated scenario-based resource plan ● Execute wholesale strategy ● Environmental compliance ● Renewables, energy efficiency & DSM plan execution and gy y p compliance ● Emerging technology: PHEV, Battery Storage, Smart Grid 17
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