The contract provides equipment, engineering and construction services for two 1,105-net megawatt (MWe) AP1000 reactors and is the next step in ensuring that the option of advanced, carbon-free nuclear power remains viable for Progress Energy Florida customers.

The next significant steps in the project are to finalize joint ownership agreements and to receive the Nuclear Regulatory Commission (NRC) schedule for review and approval of the company's combined license application (COLA). Current plans would be for the units to be operational in the 2016 to 2018 time frame.

A "Determination of Need" petition was unanimously approved by the Florida Public Service Commission (PSC) in July 2008, supporting the need to meet future energy needs in Florida with nuclear power. A second filing, a Site Certification Application (SCA), was filed with the Florida Department of Environmental Protection in June 2008, with a decision on the SCA filing expected this year.

"Along with energy efficiency and alternative energy, advanced, carbon- free nuclear power is an important part of the balanced solution we use to meet the needs of homes and businesses that depend on us," said Bill Johnson, chairman, president and CEO of Progress Energy, Inc. "As we work to address the effects of global climate change, emission-free nuclear energy is the best large-scale means for making a positive difference."

"Our investment in state-of-the-art nuclear power is an investment in our state's energy future," said Jeff Lyash, president and CEO of Progress Energy Florida. "Expanding our nuclear capacity will ensure our customers will continue to have a reliable supply of energy, while reducing reliance on fossil fuels and helping to eliminate greenhouse gas from our environment. This contract is a major step to implement the policy direction set by the governor and the legislature in Florida to secure safe, carbon-free nuclear power for our customers."

As recently announced, the company will retire the two oldest coal-fired units at the Crystal River Energy Complex in Citrus County after the new, advanced-design nuclear units are built in Levy County.

Doing so will reduce the company's carbon dioxide (CO2) emissions by more than 5 million tons per year, which is the equivalent of removing more than 830,000 vehicles from Florida's roads or meeting nearly 60 percent of the company's responsibility toward achieving Florida Governor Charlie Crist's 2025 emission-reduction target.

The company is also aggressively pursuing energy efficiency, investing in renewable-energy resources and developing advanced transportation technologies, such as plug-in hybrid electric vehicles, to help reduce greenhouse gas emissions.

The need for additional, carbon-free electricity in the future is clear. Florida is the fourth-largest state and ranks third nationally in per-capita energy consumption. Compared to 30 years ago, the average new home today is 50 percent larger and uses 30 percent more electricity. Since the Crystal River nuclear plant came online in the mid-1970s, the company's customer base has more than doubled.

The cost of the two new nuclear units is based on a contract price of $7.65 billion, plus forecasted inflation, owner costs and contingencies. The company estimates the total cost for the two generating units to be approximately $14 billion.

This estimate includes land price, plant components, financing costs, construction, labor, regulatory fees and reactor fuel for two units. An additional $3 billion is estimated for the necessary transmission equipment and about 200 miles of transmission lines associated with the project. The final cost of the project will depend on the completion dates, which will be determined in large part by the NRC review schedule.

The majority of the project's costs will be invested by the company and its shareholders and will not be recovered from customers through rates until the plant goes in service. However, starting this month, customers will begin paying for a portion of the costs of the project as approved by the PSC.

This cost-recovery provision will ultimately save customers approximately $13 billion over the life of the plant by paying for the initial stages of infrastructure improvement and the interest on the loans to build the units as costs are incurred, rather than letting these costs accrue and escalate until the units are in service.

Florida's nuclear cost recovery legislation implements state energy policy by saving consumers money and providing annual oversight of all nuclear project expenses. This approach allows Progress Energy to move forward with this important solution to meet Florida's future energy needs with clean, carbon-free electricity.

In addition to planning for future energy needs, additional nuclear generation will further improve Progress Energy's fuel diversity, which is an important aspect of providing a reliable, stable supply of electricity for customers. Progress Energy Florida has the most diverse fuel mix of any utility in the state, and is committed to a balanced mix of power generation alternatives, including natural gas, coal, oil, nuclear and renewable sources.

This is the best way to continue to ensure a safe, reliable and economical source of electricity, free from the volatile fuel prices and supply constraints seen in recent years, particularly related to oil and natural gas. Floridians will benefit from up to $1 billion per year in estimated fuel cost savings once the units are in operation.

Building the new plant will generate employment for at least 3,000 people at the peak of construction. Once the units are in operation, they will employ a minimum of 800 full-time, high-wage positions that Governor Crist calls "green jobs," as well as an additional 1,200 indirect jobs.

The positive economic impact of a two-unit nuclear site to the state and local communities is estimated to be hundreds of millions of dollars annually over the planned 60-year plant life.

Progress Energy Florida purchased about 5,100 acres in southern Levy County for the potential construction of two nuclear reactors and other related facilities. If approved and built, the project will be among the first nuclear plants in the country to be constructed on a new site in more than 30 years, and it will involve development of one of the single largest transmission infrastructure projects in Florida's history.

Progress Energy Florida has developed and implemented some of the most innovative and aggressive energy-efficiency programs in the country. The programs encourage customers, businesses, contractors and builders to use electricity more wisely and to adopt renewable-energy technology.

Since 1981, Progress Energy Florida customers have saved more than $900 million in energy costs and eliminated more than 7.5 million tons of carbon dioxide through participation in these programs.

Progress Energy Florida also leads the state's utilities in using cost- effective, renewable-energy sources within the state. The company continually seeks cleaner, newer ways to produce energy for its customers. Today, Progress Energy Florida's alternative and renewable projects include multiple biomass projects, several solar photovoltaic initiatives, residential solar thermal water heating and hydrogen fuel cell technology.

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