ML18017B524

Amended Application for OL

ML18017B524
Person / Time
Site:	Harris
Issue date:	12/18/1981
From:	CAROLINA POWER & LIGHT CO.
To:
Shared Package
ML17276B799	List: ML18017B523 ML18017B524 ML20039B336
References
NUDOCS 8112220536
Download: ML18017B524 (99)

Text

BEFORE THE UNITED STATES NUCLEAR REGULATORY COMMISSION DOCKET NOS.-50-400 50-401 In the Matter of Carolina Power & Light Company APPLICATION FOR LICENSES UNDER THE ATOMIC ENERGY ACT OF 1954 AS AMENDED for SHEARON HARRIS NUCLEAR POWER PLANT (OPERATING LICENSE STAGE AMENDMENT)

8112220536 811218 PDR ADQCK 05000400 K PDR

Operating License Stage Amendment CAROLINA POWER & LIGHT COMPANY APPLICATION FOR OPERATING LICENSE General Information

1. NAME OF APPLICANTS Carolina Power & Light Company (CP&L)

North Carolina Eastern Municipal Power Agency (Power Agency)

2. ADDRESS OF APPLICANTS CP&L Power Agency 411 Fayetteville Street Mall Post Office Box 95162 Raleigh, North Carolina 27602 Raleigh, North Carolina 27625

3. DESCRIPTION OF BUSINESS OF APPLICANTS CP&L is an electric utility engaged exclusively in the generation, purchase, transmission, distribution, and sale of electric energy. The territory served by CP&L, an area of approximately 30,000 square miles, includes a substantial portion of the Coastal Plain in North Carolina extending to the Atlantic coast between the Pamlico River and the South Carolina border, the lower Piedmont section in North Carolina and in South Carolina and an area in western North Carolina in and around the City of Asheville. The estimated total population of the service area is approx-imately' million. As of October 31, 1981, the Applicant furnished electric service to approximately 750,000 customers.

CP&L's facilities in Asheville and vicinity are connected with CP&L's system in other areas served by CP&L through the facilities of Appalachian Power Company and of Duke Power Company, so that power may be transferred from or to the Asheville area through intercon-nections with such companies. There are also interconnections with the facilities of Tennessee Valley Authority, Virginia Electric and Power Company, South Carolina Electric & Gas Company, and Yadkin, Inc.

As of December 1, 1981, CP&L owned and operated eight steam electric generating plants with a net summer capability of 6,746,000 KW, four hydroelectric plants with a net'apability of 214,000 KW and internal combustion generating'nits with a net capability of 1,018,000 KW.

Two 720,000 KW fossil fueled steam electric generating units are scheduled for completion in 1983 and 1991, respectively.

Power Agency is a public body corporate and politic and an instrumentality of the State of North Carolina, incorporated under North Carolina statutes in December, 1976. Power Agency was created to plan, develop, construct, and operate generation and transmission facilities.

Power Agency has been granted all of the powers necessary or convenient to carry out such purposes. Pursuant to a Purchase, Construction, and Ownership Agreement between CP&L and Power Agency dated July 30, 1981, Power Agency is to acquire from CP&L undivided ownership interests in certain of CP&L's generating facilities, including the Harris Units. A Power Coordin-ation Agreement between CP&L and Power Agency and agreements between Power Agency and Virginia Electric and Power Company provide Power Agency with backstand services, supplemental power, and transmission services'. Power Agency has entered .into, contracts with thirty-two political'subdivisions.

Pursuant to these contracts, Power Agency is to be the sole and exclusive h

bulk power supplier for each such political subdivision in excess of any allotment of federal power from Southeastern Power Administration or of the output of any resource such political subdivision may develop and install pursuant to the contractual arrangements betwe'en Power Agency and such political subdivision. Each such political subdivision is obligated to take or pay for its entitlement share of power from any owned project, such as the Harris Units. The 'terms of said contracts are for the life of the project or so long as any of Power Agency's bonds issued to finance the pro-ject are outstanding; but not exceeding 50 years.

4. LEGAL STATUS CP&L is a public service corporation formed under the laws of North Carolina in 1926.

The names, and addresses of CP&L's directors and principal officers, all of whom are citizens of the United States, are as follows:

Directors:

Sherwood H. Smith, Jr., Chairman, Raleigh, North Carolina Daniel D. Cameron, Sr., Wilmington, North Carolina Felton J. Capel, Southern Pines, North Carolina George H. V. Cecil, Asheville, North Carolina Charles W. Coker, Jr., Hartsville, South Carolina .

William E. Graham, Jr., Raleigh, North Carolina Margaret T. Harper, Southport, North Carolina L. H. Harvin, Jr., Henderson, North Carolina Karl G. Hudson, Jr., Raleigh; North Carolina J. A. Jones, Raleigh, North Carolina Edward G. Lilly, Jr., Raleigh, North Carolina A. C. Monk, Jr., Farmville, North Carolina Horace L. Tilghman, Jr., Marion, South Carolina John F. Watlington, Jr., Winston-Salem, North Carolina Princi al Officers:

Name Position Sherwood H. Smith, Jr. Chairman/President and Chief Executive Officer J. A. Jones Vice Chairman E. E. Utley Executive Vice President Edward G. Lilly, Jr. Executive Vice President and Chief Financial Officer (Group Executive)

William E. Graham, Jr. Executive Vice President and General Counsel (Group Executive) t M. A. McDuffie Senior Vice President (Group Executive)

Wilson W. Morgan Senior Vice President (Group Executive)

W. J. Ridout, Jr. Senior Vice President (Group Executive)

James M. Davis, Jr. Senior Vice President (Group Executive)

Lynn W. Eury Senior Vice President (Group Executive)

J. L. Lancaster, Jr. Secretary L. T. Quarles Treasurer Paul S. Bradshaw Vice President and Controller The address of the foregoing principal officers of CP&L is:

Post Office Box 1551 Raleigh, North Carolina 27602 Power Agency is a body corporate and politic and an instru-mentality of the State of North Carolina created pursuant to the Joint Municipal Electric Power and Energy Act, Chapter 159B of the General Statutes of North Carolina. Power Agency's office is located at Cypress Building, Highwoods Office Center, Post Office Box 95162, Raleigh, North Carolina 27625. The names and business addresses of Power Agency's Board of Commissioners, all of whom are citizens of th'e United .,States, are as follows:

The Honorable Simon C. Sitterson, Jr.*, Chairman Kinston Mr. Peter Vandenberg*, Vice Chairman Laurinburg Mr. David R. Taylor*, Secretary-Treasurer Tarboro Mr. Ralph W. Shaw, General Manager, Mr. Lamar Hales Mr. Mark A. Suggs Town of Apex Town of Ayden Mr. Steve Weatherman Mr. Charles W. Matthews Town of Belhaven Town of Benson

Mr. Charles Stewart Mr. James P. Ricks, Jr.

Town of Clayton Town of Edenton Mr. Tommy M. Combs Hon. B., D. Kimball City of Elizabeth City Town of Enfield Mr. J. A. Wooten, Jr.* Mr. Devone Jones Town of Farmville Town of Fremont Mr. Charles O'H. Horne, Jr.* Mr. W. P. Riley City of Greenville Town of Hamilton Hon. W. D. Cox Hon. R. G. Anthony Town of Hertford Town of Hobgood Mr. Gene C. Hill Hon. Simon C. Sitterson, Jr.*

Town of Hookerton City of Kinston Mr. Edward B. Walters Mr. Peter Vandenberg~

Town of LaGrange City of Laurinburg Ms. Lois Brown Wheless Hon. Furman K. Biggs, Jr.

Town of Louisburg City of Lumberton Mr. Boyd Myers Mr. Raymond Glover City of New Bern Town of Pikeville Mr. John McNeill Mr. Ralph Mobley Town of Red Springs Town of Robersonville Hon. Frederick E. Turnage* Mr. Robert R. Collins City of Rocky Mount Town of Selma Hon. Ferd L. Harrison Mr. Earl Langley Town of Scotland Neck Town of Smithfield Mr. Jonathan Hankins Mr. David R. Taylor*

City of Southport Town of Tarboro Mr. Guy C. Hill Mr. Abbot Sawyer Town of Wake Forest City of Washington Mr. William L. Ross Mr. T. Bruce Boyette Town of Waynesville City of Wilson Mr. T. R. Shaw, Jr. Mr. E. C. Hines City of Windsor Town of Winterville

• Executive Committee Member

The applicants are not owned, controlled, or dominated by an alien, foreign"corporation or foreign government. The applicants make this application on their own behalf and are not acting as agent or representative of any other person.

5. CLASS AND PERIOD OF LICENSE APPLIED FOR AND USE TO WHICH FACILITIES WILL BE PUT The license applied for is a Class 103 Operating License pursuant to Section 103 of the Atomic Energy Act of 1954, as amended (the Act) and as defined by 10CFR50.22 for the operation of Units 1 and 2 for a period of forty (40) years.

Applicants propose to build and operate two pressurized water nuclear reactors as an integral part of a two-unit nuclear fueled steam electric generating plant to be constructed on an approximately 10,800-acre site in Wake and Chatham Counties, North Carolina. CP&L will retain exclusive responsibility for the design, construction, and operation of the Harris Units. Each unit is designed for operation at a net electrical output of approximately 900 MWe. ,The corresponding thermal rating of each reactor is 2785 MWt. The first unit constructed is scheduled for commercial operation in September, 1985 and Unit 2 in March, 1989. Details concerning the plant and its site are contained in the Final Safety Analysis Report (FSAR) constituting a part of th'is Application. The plant will be used for the commercial generation of electrical energy.

Applicants request such additional source, special nuclear, and byproduct material licenses as may be necessary or appropriate to the construction and operation of the plant, and authorization to store source, special nuclear, and byproduct material irradiated in the nuclear reactors licensed under DPR-23, DPR-62, and DPR-71 and subsequently transported to the Shearon Harris Nuclear Power Plant site.

6. FINANCIAL UALIFICATION OF APPLICANT CP&L is an established New York Stock Exchange listed cor-,

poration with capital stock and retained earnings which totaled approx-..=

imately $ 1,792,180,000 at September 30, 1981. Quarterly dividends on Common Stock have been paid in each year since 1946, the year CP&L Common Stock became publicly held. All applicable dividends on Preferred and Preference, stocks accruing since CP&L's incorporation in 1926 have been paid.

CP&L's annual report for the year ended December 31, 1980, is attached as Appendix A. A copy of a recent securities prospectus is in-cluded as Appendix B.

The funds necessary to operate and. shut down the facility will be derived from operating revenues associated with the sale of electricity produced by the plant. As a regulated public utility, CP&L has reason-able assurance that rates established to cover its cost of producing electricity will be sufficient'to cover operating and decommissioning costs.

The Joint Municipal Electric Power and Energy Act of the General Statutes of North Carolina, N.C.G.S. 159B-ll(14) authorizes joint agencies "To fix, charge and collect rents, rates, fees and charges for electric power or energy and other services, facilities and commodities sold, furnished or supplied through any project." Under the Power Coordination Agreement and the Operating and Fuel Agreement between Power Agency and CP&L, Power Agency covenants to set rates adequate to

A cover all its costs. -These obligations are embodied in the agreements between Power Agency and its Participants. No regulatory approvals are required by Power Agency in setting rates to its Participants. The Participants, as municipalities of the State of North Carolina, have authority to establish their own retail rates for service to their customers. In N.C.G.S. 159B-22, the State of North Carolina covenants and agrees that so long as any bonds of Power Agency are outstanding and unpaid, the State will not limit or alter the 'rights of any participant or of Power Agency to establish, maintain,. revise, charge, and collect electric rates to fulfill the terms of any agreement for the project.

Pursuant to its Agreements with CP&L, Power Agency will pay its proportionate share of all costs associated with the construction, operation, cancellation, or decommissioning'of the Harris Units.

Power Agency will include in its Monthly Project Power Costs, to be charged to its Participants, charges sufficient to enable Power Agency to meet its commitm'ent to bear its share of such costs. Each Participant has agreed to pay its Participants'hare of such Monthly Project Power Costs. Each Participant has undertaken a "take or pay" commitment, thereby obligating each Participant to pay its share of Monthly Project Power Costs whether or not the jointly owned facilities, including the Harris Units, are completed, operable, operating, or C

decommissioned. Power Agency will establish a reserve for the costs of decommissioning of the jointly owned units in a Decommissioning Fund established pursuant to the Bond Resolution, which is to be adopted by Power A'gency's Board of Commissioners.

Financial Information concernin'g Power Agency is included as Appendix C,

0 The cost of decommissioning each unit in 1978 dollars is estimated to fall within the range of $ 42.1 million for immediate dismantlement to $ 51.8 million for safe storage with deferred dis-mantling, depending on the method-selected at the end of the useful life of each unit.

7. REGULATORY AGENCIES AND MEDIA CP&L's retail rates and services in North Carolina are subject to the regulatory jurisdiction of the North Carolina Utilities Commission, Dobbs Building, 430 N. Salisbury Street, Raleigh, North Carolina 27602.

CP&L's retail rates and services in South Carolina are subject to the regulatory jurisdiction of South Carolina Public Service Commission, P. 0.

Drawer '11649, Columbia, South Carolina 29211.

CP&L's wholesale rates and services are subject to the regulatory jurisdiction of the Federal Energy Regulatory Commission, Washington, D.C.

Power Agency is subject to the jurisdiction of the Local Government Commission of North Carolina, a division of the Department of State Treasurer which supervises the issuance of bonded indebtedness of all North Carolina units of local government, public authorities, and power agencies, and provides assistance in the area of fiscal management.

The following is a listing of the newspapers of general circu-lation in the Applicants'- service area which are considered appropriate to give reasonable notice of the application to those persons who might have a potential interest in the facilities operated by the Applicants:

Citizen Times Asheville, North Carolina Courier Tribune Asheboro, North Carolina Daily Record Dunn, North Carolina Daily Advance Elizabeth City, North Carolina Fayetteville Observer Fayetteville, North Carolina Fayetteville Times Fayetteville, North Carolina

Daily Reflector Greenville, North Carolina News-Argus Goldsboro, North Carolina Henderson Dispatch Henderson, North Carolina Daily News Jacksonville, North Carolina Kinston Daily Free Press Kinston, North Carolina Robesonian Lumberton, North Carolina Sun Journal New Bern, North Carolina News and Observer Raleigh, North Carolina Raleigh Times Raleigh, North Carolina Richmond County Journal Rockingham, North Carolina Evening Telegram Rocky Mount, North Carolina Sanford Herald Sanford, North Carolina Halifax County This Week Scotland Neck, North Carolina Daily News Washington, North Carolina Star-News Wilmington, North Carolina Daily Times Wilson, North Carolina F1orence Morning News Florence, South Carolina Sumter Daily Item Sumter, South Carolina Virginian Pilot Norfolk, Virginia (serving Northeastern North Carolina)

8. COMMUNICATIONS CP&L will be solely responsible for communications with NRC related to this application for Harris Unit Nos. 1 and 2. Accordingly, all communications to CP&L or Power Agency pertaining to this Application for Harris Unit Nos. 1 and 2 shall be sent to:

J. A. Jones, Vice Chairman Carolina Power & Light Company Post Office Box 1551 Raleigh, North Carolina 27602 In addition, it is requested that one copy of each communication be sent to:

Charles D. Barham, Jr.

Vice President and Senior Counsel Carolina Power 6 Light Company Post Office Box 1551 Raleigh, North Carolina 27602 and George F. Trowbridge Shaw, Pittman, Potts, and Trowbridge 1800 M Street, N.W.

Washington, D.C. ,20036 CAROLINA POWER & LIGHT COMPANY BY:

J A. J nes, e Chairman Sworn to and subscribed before me this 18th day of December, 1981.

0'11IIIIIIJ/i Notary Public My commission expires: Oct. 4, 1986 0

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NORTH CAROLINA EASTERN MUN&gPNp~g&EQO AGENCY <IIIIII>~

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Assistant Secretary-Treasurer Sworn to and subscribed before me this 18th day of DecembgggrtkQQ.lg 0%

My commission expires: Oct. 4, 1986 Notary Public -: ~g AR y

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1 Highlights of 1980 Percent 1980 I 979 Change Operating Revenues S1,075,604,000 S 925,910,000 16.2 Net Income S 161,388,000 S 153,244,000 5.3 Number Shares of Common Stock Outstanding (Year End) 51,208,000 41,386,000 23.7 Earnings per Average Common Share Outstanding Cash Dividends Paid per Common Share S

S 2.73' 2.16 S

'.06 2.02

( I 0.8) 6.9 Dividends Paid (Common and Preferred) S 130,432,000 S I 09,530,000 I 9. I Kilowatt-Hour Sales (Thousands) 30,282,000 S 28,668,000 5.6 System Capability Including Purchases (Kilowatts) 8,053,000 7,456,000 8.0 Maximum Hourly Load (Kilowatts) 6,139,000 5,907,000 3.9 Total UtilityPlant (Including Nuclear Fuel) S4,709,449,000 S4,102,975,000 I 4.8 Construction Expenditures S 629,093,000 S 605,696,000 3.9 Customers (Year End) 742,000 725,000 23 Employees (Year End) 6,522 6,247 4.4

'Reduced by $ .48 due to delayed Impact on revenues for certain l980 fuel costs ISee Note 7 to Financial Statemertsl.

Operating Revenue Dollar Source (Millions of Dollarsl Use 32C Residential customers Fuel 38C S342.2 $ 4 I 1.2 Deferred fuel expense and credits (2C)

O IS 19.5)

+r h w'p ompensat on to nvestors or use of their funds I interest, 8c fry ~ preferred and preference 28C Industrial customers S296.7 stock, 2c. common stock, 6c) 16C S172.2 Taxes 15C S I 55,9 18C Commercial customers Depreciation and amortization S88.7 Wages and employee benefits'96.8 I 9C., Wholesale customers a n enance excep cmp oyee S202.4 wa c $ 76.I t cropcraungcxpcnses

,( 7C Ot er e ectrlc operating revenues S38.9 rc ase ntcrc an e ower,net Total: S I,075.6 Total: S I,075.6

'Does not Include s46209 000 of wages and employee benefits for company employees that was charged to construction and other accounts.

. The Chairman's.Message Fellow Shareholders:

During 1980, our Company's energy sales necessary to seek to provide new generation in a rose 5.6 percent and our operating revenues, timely, efficient and economical manner.

helped by rate increases, gained 16.2 percent to Our 1980 construction expenditures of $ 629

$ 1.076 billion. Net income increased 5.3 percent million were less than the $ 694 million budgeted and earnings per share of common were $ 2.73 as because of the mid.-year changes in the compared to $ 3.06 in 1979. construction program. The 1981 construction Earnings were adversely affected by the budget is $ 594 million and, for the three years summer's higher fuel costs, which will not be fully 1981-83, we estimate construction expenditures recovered until mid-1981. Unrecovered fuel will total $ 1.8 billion.

expenses at year-end amounted to 48 cents per share. We had no under-recovery of fuel costs at the end of 1979. Financing To help underwrite our 1980 construction Dividends Increased program, the Company raised a total of $ 476 million from outside sources. A listing of major Effective with the August payment, the 1980 financing arrangements is found on page 7.

directors increased the quarterly dividend from One of our more challenging tasks is to raise 52 to 56 cents per share, or to an annual dividend 'large amounts of capital on reasonable terms to rate of $ 2.24. It is the Company's objective to build the new facilities that will be necessary achieve levels of performance that will continue provide adequate, dependable service.

to permit regular dividend increases. recognize that this can be accomplished only A new peak for the system was established we achieve prices that fully cover all of our in August when customers required 6,139,000 expenses, including a reasonable rate of return kilowatts, a gain of nearly 4 percent over the 1979 that will allow periodic dividend increases. Thus, peak. Early in 1981 during record cold weather, a we have vigorously sought to adjust our prices to still higher peak was set when customer demand cover rising costs.

reached 6,402,000 kilowatts.

Rate Increases Construction Program Revised During 1980 we received two retail rate In June the Directors approved changes in increases in North Carolina totaling over 17 the construction program, which delayed the percent, which will add about $ 115 million to operating dates for four nuclear generating units annual revenues. In South Carolina we requested and one coal-fired unit. Under the revised plan, a retail rate increase of 19.44 percent, which the next units to come into service are a 720,000- would provide $ 27.5 million in additional annual kilowatt, coal-fired unit at the Mayo plant in 1983 revenues. We are now collecting, subject to and the first 900,000-kilowatt unit of the Harris refund pending a final decision by the S.C. Public nuclear plant in 1985. The complete construction Service Commission, almost all of the requested schedule is shown on page 7 of this report. increase. The Commission decision is expected Our 10-year load forecast adopted in in the spring.

December indicates that system peak demand is Pending hearings by the Federal Energy expected to grow at an annual rate of 3.6 percent, Regulatory Commission, the Company in August and we have continuing load forecast studies placed into effect under bond a wholesale ra underway. Capital availability on reasonable increase of 17.22 percent. The revised rates terms is a necessity for our program. We will designed to produce added annual revenues continue to adjust construction plans as $ 30.8 million, based on a 1980 test year.

Shenvood H. Smith. Ir. New Generating Unit Completed Chairman/President The fourth unit of our coal-burning Roxboro plant was declared commercial in Septemberata rated capacity of 650,000 kilowatts. The unit raises the Company's summer generating capability to 7,978,000 kilowatts.

A four-year study by the National Academy of Sciences says that "coal and nuclear power are the only large-scale alternatives to oil and gas in the near term.... A balanced combination of coal-and nuclear-generated electricity is preferable, on environmental and economic grounds, to the predominance of either."

97 Percent of Generation from Coal and Nuclear As the nation seeks to decrease its dependence on foreign oil, our Company has a desirable fuel mix. During i 980, coal provided 69 percent of the electricity for our system and nuclear 28 percent. The output of our nuclear plants was less than during the previous two years, because of extended outages of the two nuclear units at Brunswick for refueling and government-required modifications. We expect that during i 98i nuclear fuel will provide about 36 percent of our generation.

Unavailability of the Brunswick nuclear plant during the summer months, when customer usage was high, necessitated the use of more expensive fossil fuels and the purchase of power from neighboring systems. This caused our fuel expense to be unusually high and resulted in the under-recovery of fuel

/ expenses at year-end.

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Cooling Towers Not Required at Brunswick Our long struggle to avoid building cooling towers at our Brunswick plant was successfully resolved. The Company, the state of North

Carolina and the Environmental Protection important is the elimination of unneces Agency reached an agreement in October that governmental rules and regulations that drive u will save our customers more than $ 550 million costs and fuel inflation.

over the life of the plant. As a capital-intensive, regulated utility, w Exhaustive independent studies initiated have a vital concern in all of these matters. In the by the Company provided evidence that the interest of our customers and our shareholders cooling towers were not necessary to protect we must communicate to governmental official adequately the aquatic life in the vicinity of the and elected representatives the urgency. o plant. As part of the agreement, we will make action on these issues to permit adequate energy modifications to the plant's cooling system that supplies for the future.

will result iri costs of about $ 9 million per year as compared to the $ 40 million annual expense that cooling towers would have imposed. It is with deep regret that we note the deat of Shearon Harris, former President and Chairma National Decisions Needed of our Board, on August 28 following an extende We continue to believe that for this country illness. During the I970s, when he served a to have an adequate, dependable,'affordable chairman of the Edison Electric Institute and th energy supply, it must make greater use of its coal Electric Power Research Institute, and later a and uranium resources. For this to happen, it is chairman of the Chamber of Commerce of the essential that national decisions be made with United States, he'was an outstanding spokesman respect to storage and reprocessing of spent for the electric industry and the busines nuclear fuel and the disposal of high-level community.

radioactive waste. The time required to license At CPGL, we are proud of our record and construct plants must be shortened. These responding to challenge. With the dedicatioi problems remain largely political rather than our 6,522 employees and the continued supp technological. of our I 25,642 shareholders, to whom we exten Similarly, this nation must find the willpower our deep appreciation, we are confident that w .

and self-discipline to control inflation. It is can continue to manage successfully th imperative that we have fiscal and monetary challenges ahead.

policies that encourage personal savings and the formation of new capital with which to modernize Respectfully submitted for the Board of and expand our productive capacity. Also Directors.

Sherwood H. Smith, ir.

Chairman/President March 2. l98I

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Year in Review Energy Sales 3 I, I 979), resulting in a reduction (aft Energy'sales increased 5.6 percent in income taxes) in net income I980 as compared with a 2.4 percent approximately S22.4 million an increase in I979. The higher rate of earnings per share of S.48 for I 980.

Electric operating Revenues growth was due primarily to extreme The Company has received regul (Millions of Dollars) summer and winter weather. tory approval to recover the costs f Sales to residential customers fuel and purchased power through lul l,200 showed the greatest gain, 9.4 percent, I 98 I.

!,076 while commercial sales increased 7.5 ~ a 23.7 percent increase in oth l,000 percent and sales for resale, 73 operation expenses and a 27.4 perce 926 percent. Industrial sales increased 1.9 903 increase in maintenance, which ref le 808 percent. increases in prices, costs resulting fro 800 nuclear regulatory requirements, and 687 greater amount of property in servic 600 Operating Revenues Operating revenues increased I6.2 ~a S20.I million increase in n percent to SI,076 million. This repre- purchased and interchanged pow 400 sented an increase of SI49.7 million expense, reflecting the reduce over )979. Of this revenue increase, availability of nuclear generatio 200 $ 49.8 million was attributable to during high summer usage, whic 76 77 78 79 80 general rate increases effective in I 980, resulted in increased energy purchase S50 million to increased fuel charge from other utilities.

billings and the remainder to increased energy sales. Net Income and Earn Net income for I980was SI6I mii Operating Expenses up 53 percent from )979. Earnings p share were $ 2.73, as compared wit Operating expenses increased I9.6 S3.06 in l979, because of higher cost percent, or $ 148 million, to a total of especially the under-recovered fu

$ 903 million. costs. The annual dividend paid wa S2.16 per share. Effective with th Significant changes included: August I, I980, dividend payment, th Net Income

~ a 35 percent, or SI06.5 million, dividend rate was increased to 56cent a quarter or S2.24 on an annual basis (Millions of Dollars) increase 'in fuel expense, compared I80 with an I I.l percent, or $ 30.4 million, I6 I increase in I 979. This increase reflected I 33 a 2(.9 percent increase in fossil Price Ranges and Dividends l50 l43 generation and a I7.l percent reduc- Paid Per Share 120 tion in nuclear generation. Greater use Common Stock of fossil plants was necessary because of extended outages for refueling and (Composite Transactions-Reported Prices) 90 government-required modifications of nuclear plants. During 1980, the Dividend average unit price of fossil fuels burned f979 High Low Paid increased I 4.9 percent. First Quarter 22vs 2I'/s .49 30 Second Quarter 22 I 8'/i .49

~ a decrease of S8.5 million in I 980 in Third Quarter 22 191/s .52 76 77 78 79 80 the net provision for customer fuel Fourth Quarter 20'/s I 7'/s .52 credits, together with a $ 9.2 million deferred fuel credit, which offset somewhat the increase in current fuel expense not matched with Increased 1980 High Low Dlv'irst fuel charge billings. Unrecovered costs Quarter I4'/s for fuel and purchased power at Second Quarter 2 I s/s I 6'/i .52 December 3l, I980, totaled approxi-mately S44 million (none at December Third Quarter Fourth Quarter 22 I9s/i f6'56 I9 .56

Construction ~ In December, an agreement to Construction expenditures of $ 629 increase borrowing under the Euro-illion in 1980 included $ 512 million pean term loan agreement by which an generating facilities, $ 46 million for additional $ 80 million was obtained In January 1981. Common Stock nsmission, and $ 71 million for stribution and general facilities. The Company's capitalization at I Dollars)

In 1980, the Company generated year's end was $ 3,407,953,000, consist-ernally $ 218 million of capital, of ing of 45.9 percent in first mortgage 3.50 ich depreciation and amortization bonds, 36.2 percent In common equfty, 5.06 3.00 ovided $ 126 million, retained earn- 13.5 percent in preferred and prefer-2.6 l os totaled $ 22 million, and deferred ence stock, and 4.4 percent in other 2.50 ome taxes and investment taxcredit long-term debt. 2 f6 2 02 ovlded $ 70 million, ~ 3 The Company is continuing to I 87 2.00 I 72 discuss with certain North Carolina I 66 municipal electric systems the feasi- I.50 Financing bility of selling to them an undivided l.00 To underwrite the construction ownership interest in some of its ogramv the Company entered into generating units. The Company would e following'ajpr financing arrange- continue to operate any units involved ents: and to supply supplemental power 76 77 78 79 80

~ in February, a private placement of requirements to the municipal systems.

i33385 3sesr 31.355 4VAI aksll 0,000 shares of Preferred Stock A, eries for $ 18 million. 'Average Shares Outstanding ebrualy, an issue of 4.5 million Revised Load Forecast iln thousands)

"Reduced by SA8 due of common stock for net A revised load forecast, adopted in to delayed fuel bllllngs.

oceeds of $ 73.4 million. December, projects a 3.6 percent

~ in April, an issue of $ 125 million of growth rate for peak demand for the I-lEamlngs Per Share st mortgage bonds, 14tr8% Series due next 10 years, as compared to a 4.5 0 Dividends Paid Per Share percent growth rate in the November 2ril I, 1987. 1979 forecast.

~ in June, the sale of $ 45 million term As a result of an anticipated Construction Expenditures an notes due 1986-1987, pursuant to reduction in load growth rate, and to e European term loan agreement. (Millions of Dollars) reduce the amount of new capital

~ in September, an issue of 400,000 required, the Company in June 1980 tares of Serial Preferred Stock, $ 11.16 modified the construction program.

ries for net proceeds of$ 39.6million. The proposed in-service dates for 636

~ in September, a private placement several generating units were delayed. 6o6 594 600

'75,000 shares of Preferred Stock A, Mayo 2 was moved from 1985 to 1990, 565

).00 Series for $ 17.5 million. Harris I from 1984 to 1985, Harris 2 from

~ in October, $ 20.5 million from the 1987 to 1988, Harris 4 from 1989 to 1992 400 suance of pollution control revenue and Harris 3 from 1991 to 1994.

ands by the Wake (N.C.) County 2llution Control Financing Authority Construction Schedule 14.8 million) and the New Hanover In-Service l.C.) County Pollution Control Financ- Unit Capacity Type Date ig Authority ($ 5.7 million). The Mayo I 720 MW Coal l983 ustees retained for future Company Harris I 900 MW Nuclear l 985 79 80 8I 82 83 Harris 2 900 MW Nuclear 1988

e $ 35.5 million remaining from a $ 56 Mayo 2 720 MW Coal l990 illion bond sale. The Company, at the Harris 4 900 MW Nuclear 1992 lme time; issued $ 56 million of its Harris 3 900 MW Nuclear l 994 0 Proiected

/4% first mortgage bonds, due October

. as collateral security to the The Company continually reviews its ies. load forecast and adjusts the construc-

~ n November, an issue of 4 million tion schedule as necessary to reflect

'>ares of common stock for net changes in load growth and capital oceeds of $ 70.8 million. availability.

New Facilities The Company reached a settlement and four hydroelectric plants, with the state of North Carolina and the percent.

The fourth unit at the Company's Environmental Protection Agency (EPA) In 1980, coal provided about 6<

Roxboro plant was declared in com- whereby EPA will-no longer require the mercial operation at 650,000 kilowatts percent of the electric generation Company to construct cooling towers at nuclear contributed about 28 percent In September 1980. Total investment in its Brunswick plant. The permit unit at year end was approximately 'he water power about 2 percent and oi requires the Company to make about I percent. The fuel cost t~

$ 209 million. modifications to the present cooling generate a kilowatt-hour for nuclea Construction progressed on the system estimated to cost between $ 15 plants was 0.4 cents; for coal-fire<

1,440,000-kilowatt, coal-fired Mayo million and $ 20 million. If the Company plants, 1.6 cents; and for oil-fired I.C generating plant in Person County, N.C. had been required to complete the turbines, 7 cents.

Boiler erection continued and the main cooling towers, construction costswere dam was completed during 1980. The Coal consumption reached a recon estimated at $ 118 million. Settlement first generating unit is scheduled to of this issue allowed the North Carolina high in 1980 when the Company burne~

begin operation in 1983 and the second 9.2 million tons. The average delivere~

Environmental Management Commis-in 1990. sion (NCEMC) to renew the permit price of coal in 1980 was $ 39.08 per toe an increase of 13 percent over 1979.

Work continued during the year on authorizing water discharges from the the Shearon Harris nuclear power plant Brunswick plant.

near Raleigh. The first of the 900,000- As a condition of the particulate Peak Loads kilowatt units was about 37 percent matter variance granted CPGL by the In 1980, the annual peak for th~

complete at year end and is scheduled NCEMC in 1979, the Company contin- system occurred on August 5, whe~

to begin operation in 1985. The second ued an extensive precipitator testing customer demand reached a record o unit was about 3 percent complete and program documenting the range of 6,139,000 kilowatts, a 3.9 percen is scheduled for operation In 1988. outlet emissions "experienced by each increase over the previous year's peal Impoundment of water began in of its coal-fired generating units in A record for energy used in one da December for the 4,100-acre reservoir North Carolina. This information willbe also established on August 5 that will supply make-up water to the assembled for presentation to the customers used 121,112,000 ki plant's closed-cycle cooling system. NCEMC.in early 1982, when final hours.

Transmission lines authorized for emissions standards will be estab-construction in 1981 and following lished for each of the generating units. System Reliability years include 238 miles of 500,000-volt CPGL continued its participation a.

line, 456 miles of 230,000-volt line and one of 27 utilities in the Southeasterj 88 mlles of 115,000-volt line. Operations Electric Reliability Council (SERC) an<

The Company's total system energy in the seven-member, Virginia-Caroll requirements for 1980 were 32.2 billion nas Reliability Group (VACAR). Thi Environmental Matters kilowatt-hours. System load factor was Company has 32 interconnections witl The Company spent $ 46.2 million 59.7 percent, compared with 58.6 neighboring systems. Maintaining an~

during 1980 for environmental protec- percent in 1979. improving system reliability for mern tion, including about $ 18.2 million for The addition of the Roxboro 4 ber systems is the principal purpose c air quality control and $ 24.7 million for generating unit during 1980, with a both groups.

water quality control. An investment of capacity of 650,000 kilowatts, increased about $ 5.1 million was required for system generating capacity to 7,978,000 additional generating capacity to Nuclear Fuel Supply and Storage kilowatts. Total system capability, support this equipment. including firm long-term contract The Company has on hand or ha In 1981 the Company projects an

~

purchases from other utilities, in- contracted for all nuclear fuel service expenditure of $ 52 million for similar creased to 8,053,000 kilowatts. to operate Robinson 2 through 198',

environmental protection measures. Brunswick I through 1988, Brunswick Since 1968, the Company has invested Seven coal-fired generating plants through 1987, Harris I through 1986 anl about $ 359 million for facilities to make up about 56 percent of the Harris 2 thro'ugh 1989. The Company i protect the environment. At the end of system generating capacity; three making provisions to continue to store 1980, $ 62 million per year was required nuclear units account for 28 percent; 33 on an interim basis, spent fuel, penc for the operation and use of these internal combustion (I.C.) turbine ing the establishment of governmer facilities. generators, that bum oil, 13 percent; storage facilities.

Fuel Expense (All fuels as burnedl (Cents Per Million BTUI l40 It is very much in the national Utilities Commission for an approxi- l25 terest, however, for the country to mate S56 million increase in retail l20 ove forward with the reprocessing of electric rates. Effective April I, 1980, uclear fuel and the establishment of S43.4 million of this request was lot 92 IOO ermanent high-level, waste storage approved. In May 1980, the Company as 90 cilities. filed a rate increase request of 13.9 80 percent, or S91.3 million, for the North Modlficatlons to Nuclear Units Carolina retail jurisdiction. In Decem-Requirements issued by the Nuclear ber, the North Carolina Utilities Commission approved a 10.78 percent, egulatory Commission and recom- 40 endations made by the Company's or S71.8 million, increase effective December I I, 1980.

nternal study team related to the 20 76 77 78 79 80 hree Mlle Island incident (and other During March 1980, the Company nuclear safety concerns) led to a filed a request with the South Carolina iumber of changes at the Brunswick Public Service Commission to increase ind Robinson nuclear plants during retail rates in South Carolina by 19.4 980. Additional modifications are percent. The request, if granted in full ~

Total Utility Plant planned over the next two years, would result in S27.5 million in (Millions of Dollars) ncluding additional instrumentatlon, additional annual revenues. In April lualificatlon of electrical equipment, 1980, S I 3.6 million of this increase was 4 7P9 5,000 nd upgrading the Company's emer- placed into effect, and in January 1981

ency response capabilities. The essentially all of the balance became 4, 103 4,000

ompany spent about S9 million effective, subject to refund. Hearings 3,442 hrough the end of 1980, with addition- were held in November and December 3,005 enditures of S14 million antici- 1980, and a final order is expected in 2.760 3,000 for 1981 to meet new safety

~ early 1981.

for nuclear power plants. 2,000 In December 1979, an initial examin-er's decision was issued concerning Insurance for Nuclear Accidents wholesale rates that were in effect l,000 Under the Price-Anderson Act. total under bond from December 29, 1977, to lability for a nuclear incident ls limited August 18, 1980. In January 1981, the o S560 million. The Company Is 'Company reached agreement with its 76 77 78 79 80 nsured by conventional insurance wholesale customers that resulted in a drools that provide financial protection refund of about S29.5 million (including or SI60 million of this total. The interest) of the revenue collected. The emaining liability Is assumed primarily agreement relates only to the period Service Area Peak Load ty companies operating nuclear units, specified and has no effect on ind the Company's prorated maximum wholesale rates since August 18, 1980. IThousands of Kilowatts) iability is S15 million per Incident. The refund was made from money set 7,000 aside in a reserve fund and did not 6,402 affect previously reported earnings.

Rates 5 5Q9 5,605 5,907 6,000 About 63 percent of the Company's On April 18, 1980, the Company filed

,ales are regulated by the North an application for an annual wholesale

arolina Utilities Commission, 15 rate increase of S30.8 million above the percent by the South Carolina Public level requested in 1977. The Federal 4,000 Iervice Commission and 22 percent by Energy Regulatory Commission (FERC) he Federal Energy Regulatory Com- allowed the rates to become effective 3,000 nission. August 18, 1980, subject to refund with interest, awaiting a final FERC decision. 2,000 In August 1979, the Company filed a Hearings are expected to begin in the equest with the North Carolina spring of 1981. 76 77 78 79 80 l,000 Cl Summer I i

t a Following Winter

After July I, I 979, under North showed, however, that time-of-d Carolina law, funds invested by utilities were not cost beneficial for a 'ates in construction work for new plants and residential customers. The Compan Average Annual other facilities could be included in the has filed voluntary time-of-day rates fc Kilowatt-Hour Sales rate base upon which a rate of return is residential service in keeping with th to Resldentlal Customers allowed. Both of the rate increases North carolina commission's Decetr granted during I980 by the North ber I 980 retail rate order.

l6.000 Carolina Utilities Commission included construction work Investment in the 14,000 I 2.558 rate base.

12,048 12 I I,785 I2.000 I I,407 Research and Developmen I0,000 Research and development activI Legislation Affectin Rates ties emphasize both local and nation 8.000 The U.S. Congress passed in I 978 the programs.

Public Utilities Regulatory Policies Act CPGL is a participating member 6.000 (PURPA). This legislation is designed to the Electric Power Research institut 4,000 encourage energy conservation, effi- (EPRI), sponsored by the cient utility operations and equitable nation'ower suppliers. The purpose of EP 2.000 distribution of costs among customer is to develop improved technologies t 76 77 78 79 80 classes. Under the act, state regulatory meet both present and future d commissions must consider various mands for electricity.

ratemaklng and service policy stand- The Company also participates in th ards, most of which have previously North Carolina Alternative Energ been evaluated by the Company and Corporation, a non-profit organiza o Energy Sales by Classes the commissions. Hearings on these funded by the state's electric su Within Service Area matters were held during 1980, and the (Millions of Kilowatt-Hours) The corporation conducts rese.

orders issued to date have found the such areas as energy managemen 35,000 Company in compliance with the conservation and alternate energ PURPA standards. sources.

30,282 30.000 99328 668 27,256 27 In l980, the EPRI budget of $ 26 25.915 25,000 million funded research in areas suc Rate Experiments as fusion, solar and geothermal powe 20.000 A residential rate demonstration conversion of coal Into synthetic liqui project on peak-load pricing was and gaseous fuels; energy storage; fue I 5,000 cells; air and water quality contro,,

completed in August I980. The study was conducted In cooperation with the nuclear safety; improved performance I0.000 North Carolina Utilities Commission and reliability of power plants; an~

5,000 and the U.S. Department of Energy. The improved efficiency in the transmissio data was analyzed to determine and distribution of electricity.

0 76 77 78 79 80 whether time-of-day rates would be A project in the EPRI dlstributiot cost beneficial to residential customers research program, involving testing anI and the Company. evaluation of two-way communication 0 Resldentlal The Research Triangle Institute, the systems. was completed in 1980. Thi, Commission's primary consultant on project has confirmed the potential fo C3 Commercial the project, reported that CPGL creating a reliable and high-qualit Cl Industrial customers on the experimental time- communications system using powe R Covemment of-day rates tended to use less line carrier and microelectronics-base~

8 Sale for Resale electricity during most peak hours as technology. Systems using this tech compared with customers on existing nology are expected to play a majo residential rates. At the time of system role in automating distribution func peak, usage patterns of both customer tions such as load managemen groups were about the same. The study reactive power dispatching, servic

estoration and meter reading. CPGL industrial and institutional areas tries in the Company's service area as played a substantial role in the through seminars and exhibits. announced capital expenditures total-evelopment of this technology and ing S753 million. The new and as served as a host utility for the expanded industries are expected to esting and evaluation of these provide an estimated 10,000 new job systems. opportunities, with an annual payroll of Customers $ 120 million.

In local research and development, At year-end. CPGL served 742,000 the Company sponsored energy and retail customers, a 2.3 percent increase load management research, environ- over 1979. Customers with all-electric mental studies, and research to facilities represented 30.6 percent. of Wholesale mprove the performance and reliabil- residential units, 24.4 percent of CPGL provides electricity for resale ty of power plants. commercial and 12.3 percent of to 18 electric membership corpora-industrial units. More than half the new tions, 25 municipalities and two residential customers were all-electric. privately owned utilities. In 1980, these Load Manage'ment wholesale customers accounted for 6.8 billion kilowatt-hours, or 22.5 percent A two-year study to evaluate the of CPGL's total sales.

.ffects of remotely controlling air Residential

onditioners, involving 200 customers In 1980, the Company's 632,200 n Florence, S.C., was completed during residential customers represented 85.2

,he year. The data collected will help percent of CPGL's total customers and Customer Relations

he Company assess the benefits of 31.8 percent of operating revenues. Energy conservation and load arge-scale control systems for load Average annual consumption- per management continued to be the main nanagement. customer increased 6.6 percent, from emphasis of the Company's customer program to remotely control 11,785 kilowatt-hours in 1979 to 12,558 relations program.

c water heaters was begun in the in 1980. The average annual residential gh area in June. At the end of 980, 1

bill increased from $ 480.84 in 1979 to The Common Sense Program, focus-

>pproximately 3,600 customers were $ 546.11 in 1980. ing on homes, apartments and manu-

>articipating.< An evaluation will be factured homes, resulted in the

onducted during 1981 to determine completion of more than 6,482 energy-

he desirability of expanding the efficient Common Sense dwelling Commercial units.

irogram to other areas in the service

erritory. Commercial customers totaled about 104,000, an increase of approxi-The Company participated in energy mately 1,800 over 1979. They repre- The Company also continued its management expositions in both North sented 14 percent of the Company's program -of-offering-information about "arolina and South Carolina during the customers and produced 18.2 percent government assistance programs to

~ear. In May the Company co-spon- of operating revenues. In 1980, average help low-income families meet their

ored an Energy Expo in Columbia, S.C., annual usage by commercial customers energy bills.

ln conjunction with the state's electric increased slightly, from 44,356kilowatt-

uppliers, professional engineering hours in 1979 to 46,997 kilowatt-hours Project Communicate, CPGL's con-groups, the University of South Carolina in 1980. tinuing customer contact program, snd Clemson University. reached more than 68,000 people In September, Energy Management individually and 30,825 through group

=xposition III (EME Ililwas held at the presentations.

Industrial kaleigh Civic Center. EME III was CPGL had 3,794 industrial customers

ponsored by the Company in coopera- Continuing emphasis was placed on at the end of 1980, an increase of 169

ion with North Carolina State Univer- conversion of mercury-vapor area and over the previous year. Energy usage in

ity and the Energy Division of the State street lighting fixtures to more efficient the industrial area increased by 1.9 if North Carolina. Both expositions, percent over 1979, to nearly9.8 billion high-pressure, sodium-vapor lighting vhich drew about 3,000 people, were units. In 1980, 11,500 high-pressure, kilowatt-hours.

3esigned to increase energy conserva- sodium-vapor lighting units were

io awareness in the commercial, In 1980, new and expanded indus- installed or converted.

Management Changes Smith Named Chairman In May, Sherwood H. Smith, Jr. was elected chairman of the board of directors. Mr. Smith has served as president since 1976, and was named chief executive officer in September 1979. He joined the Company in 1965 as associate general counsel.

Mr. Smith serves in a number of industry-related positions, including chairman of the American Nuclear Energy Council and vice chairman of Sherwood H. Smith, lr.

the Policy Committee on Government Chairman/President Affairs of the Edison Electric Institute.

New ONcers Elected During the year, the directors elected two senior vice presidents, five vice presidents and two division vice presidents.

Named senior vice presidents were James M. Davis, Jr., group executive for fuel and materials management; and Lynn W. Eury, group executive for power supply.

Mr. Davis joined CPGL in 1965, serving as manager of the rates and service practices department before being named vice president and group executive in 1979. Mr. Eury, a 22-year veteran with the Company, served in a number of engineering positions before being named head of system operations and maintenance in 1972.

He was elected a vice president in 1979 Charles D. Barham, lr. Norris L, Edge and promoted to group executive in May 1980.

Named vice presidents were: Paul S.

Bradshaw, R.A. Watson, Charles D. Paul S. Bradshaw Barham, Jr., Norris L. Edge and Jack B.

McCirt.

Mr. Bradshaw has served as control-ler and chief accounting officer since 1976. He joined the Company in 1962.

Mr. Watson has been with CPGL since 1969 and was named manager of the fuel department in 1977.

Mr. Barham, an attorney, joined the Company on January I 1981, as senior

~

counsel and head of the Company's legal department. He served as associate general counsel for CPGL for E. Charles Dyson

seven years before entering private practice in I974.

Mr. Edge, who joined the Company in 1955, has been manager of the rates and service practices department since I 979.

Mr. McGirt has been involved in power plant operations since joining the Company in J952. He became head of a newly formed fossil operations department in I 979.

E. Charles Dyson and Russell H. Lee were elected division vice presidents.

Mr. Dyson joined the Company in I 959 and has been western division general James M. Davis, Jr. manager in Asheville since l976. Mr.

Lee came to CPGL in I962 and was named eastern division general man-ager in Wilmington in I978.

Lynn W. Eury I tt 1

William E. Graham, Jr.

R.A. Watson Graham Named a Director In September, William E. Graham, jr.,

senior vice president and general Jack B. McGlrt counsel, was elected to the board of directors.

A native of North Carolina, Mr.

Graham received both his under-graduate and law degrees from the University of North Carolina. He joined CPGL in I973 as vice president and senior counsel after serving four years as a judge of the North Carolina Court of Appeals. He became general counsel in I974, and was named senior vice president and group executive for legal, regulatory and communications in I976.

Russell H. Lee

Employees Achievement award and, for the fourth At the end of I 980, there were The Company had 6,522 employees consecutive year, the Frequency Rate l03,662 holders of common stock, at the end of I980. This increase of 4.4 Safety award. I4,699 holders of preferred stock and In addition, the Company received 7,28I holders of preference stock. In percent over I 979 reflects normal growth. the Award of Honor and the first place addition, several thousand share-award for utilities from the National holders own shares held by CPGL is an equal opportunity Safety Council and two awards for investment trusts or nom'inees.

banks,'rokers, employer. Affirmative Action plans, achievement in accident .prevention which are updated annually, include About 43 percent of our shareholders from the North Carolina Department of live in the two Carolinas. The largest employment goals, outreach recruit- Labor.

ment efforts, active involvement in beneficial shareholder of record at the community action programs and end of I 980 held less than I percent of adherence to appropriate regulatory the shares outstanding.

guidelines. Current plans are available Ownership More than 82 percent of the shares for review at corporate headquarters, Primarily as a result of selling two outstanding were represented in division personnel offices, and district issues of common stock totaling 8.5 person or by proxy at the l980 annual and generating plant offices through- million shares, the number of shares meeting.

out the system. and shareholders increased substan-tially during I 980.

More than I 5,000 shareholders were Dividend Reinvestment Plan Employee Development added during the year, and the number On lune I, the Company's Dividend During l980, nearly 3,900 employees of shares outstanding increased from Reinvestment Plan was amended 46,773,547 in I 979 to 57,350,398 in I 980. shareholders to reinvest com-to'llow participated in developmental training I4 and educational programs provided by mon, preferred or preference divi-the Organizational and Management dends in additional shares of CPGL Development staff. New programs common stock at 97 percent o included stress management, work Distribution of Stock Ownership market value. By making optiona measurement, power plant supervision (Common, Preferred and Preference payments, shareholders also and interpersonal communications. Stock Combined) purchase additional shares at 97 Through a cooperative effortwith North percent of the market value. A new Carolina State University and the provision allows shareholders to Shareholders reinvest dividends on a portion of their University of North Carolina at Wilming-ton, credit courses were offered on site Number Percent shares and to receive cash dividends at the Brunswick plant. The Carolinas 53,844 43 on the remainder.

Elsewhere 7I 798 57 There was a significant increase in the number of participants in the plan, safety Totals I 25,642 I 00 with 20,82l shareholders participating CPGL employees continue to main- at year end compared with I 2,348 at the tain one of the best safety programs in end of I979.

the nation. For the eighth consecutive Shares The program is administered by year, the Company earned the South- Number Percent North Carolina National Bank (NCNB),

eastern Electric Exchange award for the and any questions regarding participa-safest working utility in its size The Carolinas 14,453,832 25 tion should be directed to NCNB, category. The Edison Electric Institute Elsewhere 42896566 75 Dividend Reinvestment Department, presented CPGL with the Safety Totals 57.350,398 I 00 Charlotte, N.C. 28255.

CPSL Service Area At the end of I 980, CPGLwas Total population of the area is Service to customers is provided by providing electric service to 742,000 estimated to be nearly 3 million. This more than 6.500 employees through 5 customers in an area of 30,000 square territory is comparable in size to the division, 10 district, 42 area offices and miles almost half of North Carolina combined areas of Connecticut, Massa- I 3 generating plants.

and about one-fourth of South Carolina. chusetts, Rhode Island, New Jersey and New Hampshire. It includes part of the Mountain and Piedmont regions, but is largely in the Coastal Plains section.

WALTERS PLANT TILLERY PLANT MARSHALL PLANT BLEWETT PLANT ASHEVILLE PLANT ROXBORO PLANT MAYO PLANT SITE

~~LEE PLANT IL HENDERSON NC ALEIG g A HEVILL CHARLOTTE

~ 'ANFORO GOLOSBORO 0 0UTHE PINES JACKSONVILLE g SC WILMINGTON g FLORENCE COLUMBIA SUTTON PLANT BRUNSWICK PLANT WEATHERSPOON PLANT HARRIS PLANT SITE I~

CAPE FEAR PLANT ROBINSON PLANT DARLINRTDN PLANT

~ District Offices Cenerating Plants: Q Nuclear Q Hydro 0 FossilTurbine I.C.

Fossil Q'Fossil and Nuclear O Nuclear Site 9 Site

Financial Section Management Report l7 Management's Comments on Results of Operations The management of Carolina Power 6 Light Company and Financial Condition is responsible for the information and representations contained in the financial statements and other sections of 20 Statements of Income/Statements of Retained Earnings this Annual Report. The financial statements are prepared 2I Statements of Source and Use of Financial Resources in conformity with generally accepted accounting 22 Balance Sheets principles and are consistent with other information in this 24 Schedules of Capitalization report.

The Company has designed and maintains a system of 26 Notes to Financial Statements internal accounting controls to ensure the reliability of the 30 Auditors'pinion/Summary of Quarterly financial statements and to provide reasonable assurance Earnings Data that assets are safeguarded. This system is augmented by 3I Supplemental Inflation Adjusted Data written policies and guidelines and a strong program of 34 Statistical Review internal audit.

The Board of Directors pursues its oversight role for financial reporting and accounting through its audit committee. This committee, which is comprised entirely of outside directors, meets periodically with management and the internal auditors to review the work of each and to monitor the discharge by each of its responsibilities. The audit committee also meets periodically with the independent auditors, who have free access to the committee without management present, to discuss auditing, internal accounting control and financial reporting matters.

The independent auditors, Deloitte Haskins 6 Sel are engaged to express an opinion of the Compan financial statements. Their opinion is based on procedures believed by them to be sufficient to provide reasonable assurance that the financial statements are not misleading and do not contain material errors.

Ag,g~p.

Edward G. Ulfy, Ir. Paul S. Bradshaw Chief Financial Officer Chief Accountlnf, Officer

Management's Comments on Results of Operations and Financial Condition These comments are designed to analyze and discuss Carolina retail revenue billings in 1980 (related to the lower in greater detail the Financial Statements on pages 20-30 levels of fuel. expense in 1979). Unrecovered and deferred and the Statistical Review on pages 34-35. They should be fuel costs increased by S9.2 million in 1980, applicable to considered in conjunction with the data appearing there. South Carolina retail operations that will be billed in 1981.

(See Note 7 to Financial Statements concerning an additional $ 44 million of higher 1980 fuel costs, applicable RESULTS OF OPERATIONS to North Carolina retail operations that will be reflected in Operating revenues increased for the following 1981 revenue billings.)

During 1979, because of the better match of revenues reasons:

'eneral Rate Increases Fuel Cost Adlustrnent Base Rate and fuel expense, the provisions for deferred fuel costs and customer fuel credits was reduced to a net credit of Period Total Since l 977 Billings Charges, Etc. S569,000. This compares with a net expense of$ 15.4 million Iln Mllllonsl for 1978, when lower-than-normal fuel costs were Total operating experienced, which were subsequently reflected in lower revenues: 1979 revenues.

I 980 S I,075.6 S49.8 S I 30.0 8895.8 Other operation and maintenance expenses I 979 925.9 80.0 845.9 increased 25.2 percent in 1980 and 15.8 percent in 1979.

I978 903 4 72. I 83 I.3 During 1980, scheduled refueling and maintenance Increased outages were extended for all three nuclear units to revenues: perform safety modifications. testing and maintenance.

49.8 50.0 49.9 I 980 149.7 partially in response to new requirements and concerns I 979 22.5 7.9 I 4.6 following the Three Mile Island nuclear plant accident.

During 1980, total expenses exclusive of fuel, applicable to nergy sales increased by 5.6 percent in 1980 and 2.4 the nuclear units, increased $ 30.3 million over 1979.

cent in 1979. During 1980, warmer-than-normal summer Included in these costs are the continuing effects of ather and a cold early winter combined to increase inflation, and more stringent operating practices and customer deman'ds for energy, offsetting conservation by regulatory requirements. The increase for 1979 reflects customers and the effects of the economic slow-down on expenses associated with the scheduled refueling and industrial and larger commercial customers (see Statistical inspection outages for all three nuclear units in 1979 as Review: Load Data Electric Energy Sales). During 1980. compared with one in 1978.

rate increases were placed into effect for all jurisdictions. Depreciation and amortization for 1980 reflects a $ 6.7, The increases are estimated to increase total annual million credit for reduced wholesale depreciation rates revenues by $ 155.5 million, based on a 1979 level of sales. (see Note I to Financial Statements). Of this amount, S4.6 The fuel cost adjustment billings reflect a recovery during million applies to years prior to 1980. Depreciation and 1980 of a portion of the significantly higher fuel costs amortization expense in 1980 and 1979 reflect S2.4 million incurred in 1980. However, the effect on revenues of most of for amortization of canceled project costs (see Note 6 to the increased fuel costs, applicable to retail operations, is Financial .Statements). Taxes other than on Income delayed until 1981 (see Note 7 to Financial Statements). increased in both 1980 and 1979, primarily because of Fuel for generation expense increased in 1980 by 35 increases in revenue and property-based taxes. Income percent and reflects a 14.9 percent increase in the average tax expense for 1980 and 1979 reflects the decrease in net unit cost of fossil fuel burned. Furthermore, fossil-fueled income excluding AFUDC on equity funds.

generation increased by 21.9 percent to make up for a 17.1 Other Income increased 29.8 percent in 1980 and 47.3 percent decrease in nuclear generation attributable percent in 1979. Increased investment in construction work primarily to the prolonged outages of the nuclear units in progress, principally at the Harris and Mayo plant sites, discussed below. Purchased and interchanged power in contributed significantly to the increase in allowance for 1980 also increased significantly for this same reason. equity funds used during construction of S17.9 million, or Fuel expense in 1979 increased by II.I percent, 29.5 percent, in 1980 and $ 20.5 million, or 50.6 percent, in primarily because of reduced nuclear generation (22.2 1979. Higher cost rates for AFUDC (see Note I to Financial percent less) and increased fossil generation (24.2 percent Statements) in 1980 and 1979 also increased this item of more). The reduced nuclear generation for 1979 was due income. Inclusion of construction expenditures in the primarily to scheduled refueling and maintenance outages North Carolina retail rate base effective April I, 1980, or all three nuclear units as compared with only one unit in reduced AFUDC on equity funds during 1980 by $ 3.9

8. (Nuclear fuel is less than one-fourth as expensive as million.

1.) Net Interest charges increased 15.8 percent in 1980 Deferred fuel costs and provision for customer fuel and 15 percent in 1979, reflecting principally the greater credits, net, for 1980 reflects principally the carry-over from amounts of debt outstanding and higher interest rates for 1979 of $ 11.4 million of credits to match reduced North both long- and short-term debt (see Schedules of

Capitalization). The increased credit for AFUDC on income (and before AFUDC on equity funds), which borrowed funds of $ 28.9 million in I 980 and S I 3. I million in decreased by SI 0 million in I 979 and $ 9.8 million in (980.

l979 reflect increased investment in construction work in The reduction in depreciation and amortization a.

progress and a higher borrowed-funds AFUDC rate. This internal source in I980 relates to an adjustment of was offset somewhat in 1980 by a reduction of $ 3.4 million million, ref lectinganFERCdepreciation decision(see N because of construction investment in the rate base. I to Financial Statements). Deferred income taxes ~

Net Income and earnings: in summary, earnings for attributable to AFUDC on borrowed funds are reflected as a l980 were adversely affected by unrecovered fuel costs, reduction in the cost of gross property additions and as a higher levels of operation and maintenance expenses reduction in internally generated capital. (Thus, the (especially related to the three nuclear generating units), construction program is charged only with the net after-tax inflation and other cost increases not reflected in approved cost of borrowed funds used during construction.) This revenue levels. Earnings per share of common stock were decrease in internal funds reflects the greater amounts of further affected by a I3.8 percent increase in average AFUDC on borrowed funds.

shares outstanding, primarily as a result of the public sale When )980 rate increases are fully reflected, the and issuance during I980 of 8.5 million additional shares. Company expects internal generation of funds to improve.

Earnings for (980 were favorably affected by the hot The reduction in internally generated funds during I979 summer and cold winter weather, which increased energy and )980 is primarily the result of unprecedented levels of sales and revenues, and by rate increase revenues (see inflation, greatly expanded nuclear generating plant Note 7 to Financial Statements). operation and maintenance costs, regulatory lag. and Earnings for l979, as compared with )978, were inadequate rate-of-return levels. The FERC and NCUC, and adversely affected by: (I) milder weather, (2) increased SCPSC to some extent, have adopted ratemaking operating expenses as a result of the scheduled refueling procedures that allow recognition of the latest available of all three nuclear units as compared with one unit in l 978, actual cost data in a rate proceeding. It appears that these and (3) generally increased operating expenses and capital commissions are moving in a positive direction with regard costs not fully offset by operating economies, increased to rates of return on common equity. Furthermore, the energy sales or rate increase revenues. Company expects to file necessary rate increase applications in all jurisdictions to cover increased costs resulting from inflation and regulatory requirements. This CAPITAL RESOURCES AND LIQUIDITY should result in increased net income and increased Capital requirements for I978-1980 were met as deferred tax items. At December 3), )980, the Company follows: had earned, but not used, investment tax credits total' Total 1980 1979 1978 I 03 million.

(In Millions) The relative amounts ofcapital obtained from extern Internally. less dividends S 680.6 S I 84.1 8235.4 S 261.1 sources has been as follows:

External (financings) sources 1,187.1 476.3 5 14.9 195.9 Total S1.867.7 8660.4 8750.3 S457.0 1980 1979 1978 and utilized as follows: First mortgage bonds 31.9% 49.)% 50.6%

Cross property additions. Common and preferred stocks 50.9 13.3 46.5 including nuclear fuel SI,802.4 8674.9 S650.2 8477.3 Unsecured term loans 9,4 2.9 Retirement of long-tenn debt 175.1 20.4 76.0 Nuclear fuel financing arrangements 6.0 18.0 78.7 Working capital increase Short. term transactions 1.8 16.7 2.9 (decrease). etc. (99.0) Total 100.0% 100.0% 100.0%

Total" SI.867.7 S660.4 S750.3 S457.0 The increase (decrease) in internal generation of capital During )980. the Company sold relatively fewer first funds, as compared to the preceding year, is as follows: mortgage bonds. The Company's ability to issue additional bonds under the mortgage increased by S23).8 million to 1980, 1979 SI.3 billion, at December 3I, )980, based on unfunded (In Millionsl property additions and retired bonds. At the end of )980, Net income S 8.1 S 10.5 trustees held S59.I million of the proceeds from pollution Dividends (27.2) 113.9) control bond financings in )979 and )980. The trustees will Deferred tax Items (income taxes and investment tax credits) (16.3) (23.81 release such proceeds to the Company as the Company Depreciation and amortization (1.7) 7.5 incurs and certifies costs to the trustees.

Deferred income taxes credited to The Company sold S45 million in I980 of unsecured property accounts (14.2) (6.0) European term loan notes, and in December I 980 arranged S(51.3) S(25.7) for an additional $ 80 million to be drawn on january 22, l98I, due half in I987 and the remainder in (988.

The revolving nuclear fuel financing arrangeme The increase in net income failed to keep pace with the provide for the financing of up to a maximum contin increase in dividends, primarily because the rate of return outstanding amount of SIOO million.

on average common equity decreased from I 2.9 percent in The Company's ability to issue additional shares of 1978, to 12.3 percent in I979, to I I.i percent in )980. The preferred stock is subject to a Charter earnings test under deferred tax items are a direct function of pre-tax net which, at present, the Company could issue reasonable

amoants of additional preferred stock. The 8 million and the needs of the Company at the time. The Company authorized, but unissued, preference stock shares are not presently estimates that it will need external funds totaling bject to an earnings test. approximately $ 446 million in 1982 and $ 305 million in Two underwritten public offerings ofcommon stock, a 1983.

otal of 8.5 million shares, yielded $ 143.9 million and sales Short-term liquidity: Customer receivables on the of preferred stock produced $ 74.7 million. These stock books at year-end represent an average of less than 20 days issues improved the capitalization ratio for equity capital billings. The depreciation and deferred tax component of from 48.7 percent at the end of 1979 to 49.7 percent at current revenues and the continued strong demand for December 31, 1980 (see Statistical Review-Percent of Total electricity from our customers provide a substantial cash Capitalization), despite inadequate earnings for 1980 that margin for current operations. At December 31, 1980, $ 8.1 resulted in a less-than-normal increase in retained million of deferred fuel costs on the balance sheet, plus earnings. another estimated $ 44 million of 1981 revenues (which will reflect the higher level of fuel costs incurred by the Projected capital requirements for the next three Company in 1980), have been approved and are expected years include: to be realized by July 31 1981 (see Note 7 to Financial

~

Statements). The issuance on January 22 1981, of an

~

Total I98I l982 l983 additional $ 80 million of European term loans provided an iln Millions) influx of cash to meet some of the maturing current Construction expenditures SI.795 S594 S636 S565 liabilities.

Nuclear fuel expenditures 254 7I 80 103 The $ 29.5 million of accounts payable to customers for Long-term debt retirements I 40 39 62 39 refund of revenues was paid out on January 8, 1981. A Total S2. I 89 S704 S778 S707 portion of construction contract retentions, totaling approximately $ 16 million, was disbursed in January 1981.

and the $ 20 million, 2ria% Series first mortgage bonds were 1

These estimated amounts are subject to change as paid at maturity on February 2, 1981.

The Company had unused bank lines ofcredit totaling conditions change: the estimated rates of general inflation,

$ 206 million at year-end, a substantial portion of which the degree of customer conservation, the use of load management techniques, the availability of capital on was not immediately needed to back outstanding 19 reasonable terms, regulatory requirements, specific cost commercial paper or demand notes, which together

'reases and general economic conditions. totaled $ 96.2 million at year-end.

The Company presently estimates that it will require IMPACTS OF INFLATION proximately $ 308 million from external sources during 1981 (in addition to the $ 80 million in January from the See Supplemental Inflation Adjusted Data on pp. 31-European term loan transaction) and plans to issue long- 33 for the estimated effects of changing prices on income, term securities. The amount and timing of the sales of on the basis prescribed by the Financial Accounting securities will depend primarily upon market conditions Standards Board.

Carolina Power 6 Light Company Statements of Income For the Years Ended December 3I, 1980 1979 1978 Iln Thousands except Earnings per Sharel Operating Revenues (Notes 6 and 7) . 8 I 075 604 8 925 910 8 903 OperatIng Expenses:

Operation:

Fuel for generation .. 411,191 304,680 274,262 Deferred fuel costs and provision for customer fuel credits, net (19,544) (569) 15,408 Purchased and interchanged power, net .......... 20,690 603 (86)

Other 146,472 118,430 100,452 Maintenance 100,006 78,475 69,627 Depreciation and amortization (Note I) ............. 88,701 88,396 80,356 Taxes other than on income 80,209 70,796 68,314 Income tax expense (Note 5) . 75 693 94642 124 888 Total operating expenses ........... 903 418 755 453 733 221 Operating Income 172 186 170 457 170 217 Other Income:

Allowance for equity funds used during construction . 78,814 60,867 40,4 I I Income tax credits (expense) (Note 5) .............. 1,863 2,8I I (109)

Other, net 4 366 I 858 4 203 Total other income......... 85 043 65 536 44 505 Income Before Interest Charges 257 229 235 993 214 722 Interest Charges:

Long-term debt . 148,206 I I I~ I 59 92,738 20 Other 15,773 10,810 5.349 Allowance for borrowed funds used during construction-credit ~68 1381 (39 220( (26 I Net interest charges 95 841 82 749 7(

Net Income 161,388 153,244 142,743 Preferred and Preference Stock Dividend Requirements . 34 641 28 263 26926 Earnings for Common Stock . 8 126 747 8 124 981 S 115 817 Average Common Shares Outstanding 46 471 40 841, 37 355 Earnings Per Common Share (Note 7) S 273 S 3.06 S 3. IO See notes to financial statements.

Statements of Retained Earnings For the Years Ended December 31 ~

1980 1979 1978 un Thousands)

Balance at Beginning of Year S 289,768 S 249,249 S 205,116 Net Income 161 388 153 244 142 743 Total 451 156 402 493 347 859 Deduct:

Cash dividends declared:

Preferred and Preference Stock, at stated rates (Note I) 35.757 28,263 26,926 Common Stock (at annual rate of S2.20 a share in 1980, S2.05 in 1979 and S 1.90 in 1978) . 104 865 84 066 71 511 Total cash dividends declared ........... 140,622 112,329 Capital stock expense ......... 715 396 98,4'12 Total deductions . 14( 337 725 98 61 Balance at End of Year 8 309819 8 289 768 8 249 249 See notes to financial statements.

Carolina Power 6 Light Company Statements of Source and Use of Financial Resources For the Years Ended December 31, 1980 1979'in thousandsi 1978'urce of Financial Resources:

Current resources provided from operations:

Net income, . $ 161,388 S I 53,244 $ 142,743 Items not requiring (providing) current resources:

Depreciation and amortization 125,944 127,673 120,213 Noncurrent deferred income taxes, net ...... ~ 78,101 62,202 75,889 Investment tax credit adjustments, net ....... (8,264) 23,899 34,013 Equity funds portion of AFUDC .............. ~78 814) ~60 867 ~40 411)

Total current resources provided from operations 278,355 306,151 ",

332,447 Other resources provided-Additions to plant accounts representing capitalization of equity portion, less deferred income taxes on borrowed funds portion of AFUDC . 45 264 41 565 27064 Total resources provided from operations and other . 323 619 347716 359 511 Fina ncings:

First mortgage bonds 152,022 252,448 99,110 Preferred stock . 74,724 49,756 Common stock - Public offerings ............... 143,895 79,516 t

Common stock - Plans (SPSP. ADRP, and ESOP-Note 3) . 23,933 18,746 11,654 Unsecured term loans 45,000 15,000 Nuclear fuel trust and lease obligations ........ 28.374 92,819 Decrease in temporary cash investments plus increase in short-term notes payable .... 8 367 86 150 5 673 Total resources provided from financings ... 476 315 514 919 195 953 Total . $ 799 934 $ 862 635 $ 555 464 Use of Flnandal Resources:

Cross property additions, excluding nuclear fuel" ... $ 627,499 $ 605,197 $ 402,710 Nuclear fuel additions" . 47,398 45,044 74,637 Dividends for the year 139,506 112,329 98,437 Repayment of first mortgage bonds ................ 64,030 78.654 Repayment of nuclear fuel obligations.............. 20,415 12,011 Prior year's reserve for possible refund of revenues .. 23,853 Net increase (decrease) in the following working capital components:

Cash on deposit with trustee (36,822)

Accounts receivable, net 9,548 13,461 (1,360)

Material and supplies 17,186 10,190 2,748 Deferred fuel costs and liability for customer fuel credits, net . 19,544 569 (15,408)

Accounts payable (69,269) (17,167) (40,037)

Reserve for possible refund of revenues ... ~.... 14,876 13.293 (35,962)

Other, net (40,066) 11,789 (5,373)

Miscellaneous. net 13 297 ~811)) 9 387 Total $ 799 934 $ 862 635 $ 555 464 4Reclasslfied to conform to current presentation.

"Includes amounts capitalized as allowance for funds used during construction, net of related deferred income taxes.

See notes to financial statements.

Carolina Power 6 Light Company Balance Sheets December 3 I, 1980 and l979 ASSETS 1980 l979 Iln Thousands)

Electric Utility Plant:

Electric utility plant other than nuclear fuel:

In s'ervice S2,864,435 $ 2,546,294 Held for future use 10,036 9,17I Construction work in progress 1,616,513 1.327,3 I I Total 4,490,984 3,882,776 Less accumulated depreciation 627,408 562,178 Net 3,863,576 3.320.598 Nuclear fuel 218,466 220. I 99 Less accumulated amortization 106,598 117.492 Net 111,868 102,707 Electric utility plant, net 3,975,444 3,423,305 Other Property and Investments:

22 Investment in coal-mining subsidiaries (Note 2) 7,263 8,211 Other 15,879 Total 23,142 Current Assets Cash 4,331 6,024 Accounts receivable, net (1979 includes S9.75I,000 of refundable income taxes) 62,837 53,289 Materials and supplies:

Fuel 84,122 79,8 I 6 Other 33,371 20,491 Deferred fuel cost 8,086 Current portion of deferred income taxes 14,600 I9,270 Prepayments, etc. 5.836 2,509 Total current assets 213,183 I8 I,399 Deferred Debits:

Unamortized debt expense . 3,059 2,283 Other deferred debits (Notes 2 and 6) 26,779 22.831 Total deferred debits 29,838 25,I 14 Total S4,241,607 S3,647,913 See notes to financial statements.

Carolina Power 6 Light Company Balance Sheets December 31, 1980 and 1979 LIABILITIES 1980 1979 Iln Thousands)

Capitalization (see Schedules of Capitalization):

Common stock . S 923,549 S 755,382 Retained earnings 309,819 289,768 Preference'tock 47,900 47,900 Preferred stock redemption not required 238,118 238,118 Preferred stock redemption required ........... 175,100 100,000 Long-term debt (excluding current maturities), net 1,674,409 1.480.136 Total capitalization (excluding current maturities of long-term debt) 3,368,895 2,911,304 Current Liabilities:

Long-term debt due within one year 39,058 27,554 Notes payable:

Bank demand notes 43,571 39,656 Other . 52,629 48,178 Accounts payable:

Construction contract retentions 33,417 8,218 Other 107,132 63,517 Customers refund of revenues (Note 6) 29,476 29,021 Reserve for refund of revenues (Note 6) .... 7,794 22,670 Liability for customer fuel credits 1,070 11,423 Customers deposits 5,377 5,031 Taxes accrued 33,643 14,946 Interest accrued . 32,693 27,379 Dividends declared 45,344 35.154 Other 7,113 5,736 Total current liabilities 438,317 338,483 Deferred Credits and Reserves:

Accumulated deferred income taxes 307,626 263,074 Accumulated deferred investment tax credits 120,776 129,040 Other 5,993 6,012 Total deferred credits and reserves 434,395 398,126 Commitments and Contingencies (Notes 2 and 6)

Total S4,241,607 S3.647.913 See notes to financial statements.

Carolina Power 6 Light Company Schedules of Ca italization December 3 I, 1980 and l979 1980 1979 (In Thousands)

COMMON STOCK EQUITY (Note 3):

Common stock. without par value-Authorlzed, 100.000.000 shares: outstanding 51.208.139 shares at December 31, 1980;and authorized, 60,000,000 shares; outstanding 41,386.288 shares at December 31. 1979 S 923,549 S 755.382 Retained earnings. limited In payment as dividends under certain circumstances under the Company's charter, however. none restricted at December 31. 1980 309,819 289.768 Total common stock equity 81,233368 S1,045,150 PREFERENCE AND PREFERRED STOCK, without par value, "

cumulative (Note 3): At December 31 1980

~

Redemption Shares Price Outstanding Preference stock. authorized 10,000.000 shares (Entitled to 825 a share plus accumu-lated dividends in the event of liquidation, in preference only to Common Stock)-

S2.675 Series A S 26.50 2.000.000 9 47 960 S 47.900 24 Preferred stock(a)-redemption not required:

S5 Preferred Stock Authorized, 300.000 shares Sl 10.00 237,259 8 24,376 S 24 Serial Preferred Stock (bh S4.20 Series .. 102.00 100,000 10,000 10.000 5.44 Series .. 103.00 250.000 25,000 25.0M 9.10 Series .. 103.00 300.000 30,MO 30.0M 7.95 Series .. 107.00 350.000 35,000 35.000 7.72 Series .. 107.00 500.000 49,425 49,425 8.48 Series .. 108.00 650.000 64,317 64.317 Total preferred stock-redemption not requIred 2.387,259 S 238,118 S 238.118 Preferred stock (a)-redemption required (c)

Serial Preferred Stock Ib)

SII.I6 Series ................. SI I I. 16 400,000 8 39,600 Preferred Stock A. authorized. 5.000,000 shares:

S7.45 Series ............. ~ ~ ~ ~ ~ 110.00 500,000 50,000 50.000 8.75 Serles ..........-"" ~" 108.75 500.000 50,000 S

50.000 9.25 Series ................. ~ 109.00 180,000 18,000 9.00 Series (c) 175,000 17,500 Total preferred stock redemption required . 1.755.000 8 175,100 S 100.000 (a) Entitled to SIOO a share plus accumulated dividends in the event of l(quldation.

(b) Authorized, 20.000,000 shares In total (10.000.000 shares at December 31 1979).~

(c) Minimum sinking fund requirements (at SIOO per share plus accumulated dividends) commence in 1984 for the S7.45 Series. at 20.000 shares per year; in 1985 for the S8.75 Series at 20,000 shares per year and increasing In 2000 to 40,000 shares annually; In 1986 for the Sl 1.16 Series at 12.000 shares per yean and In 1990. for the S9.00 Series. all 175.000 shares are to be redeemed. With respect to the S9.25 Series. the Company must offer to redeem annually, on March I of each year beginning In 1988, any or all shares outstanding. Minimum sinking fund requirements for the next five years aggregate: 1984. S2.000.000 and 1985. $ 4.000.000.

1980 1979 (ln Thousands)

LONG-TERM DEBT (a):

First mortgage bonds-principal amou nts 2VA Series. due 1981 15,000 $ 15,000 3VA Series. due 1982 20,000 20.000 I I 5 Series. due 1984 67,346 67.346 14VA Series. due 1987 125,000 4VA Series. due 1988,. 20,000 20,000 4VA Series. due 1990 25,000 25,000 4'/A Series, due 1991 25,000 25,000 4Vi% Series. due 1994 30,000 30,000 5EA Series. due 1996 30,000 30.000 6Vi% Series. due 1997 40,000 40,000 6'/A Series, due 1998 40,000 40.000 8'/A Series. due 2000 40,000 40,000 8i/A Series. due 2000 50,000 50,000 7VA Series. due 2001 65,000 65,000 7t/A Series. due 2001 70,000 70.000 7i/A Series. due 2002 100,000 100.000 7VA Series. due 2003 100,000 100,000 8'M Series. due 2003 100,000 100.000 9VA Series. due 2004 125,000 125,000 8'M Series. due 2007 100,000 100.000 9VA Series. due 2008 100,000 100,000 25 IOVi% Series. due 2009 125,000 125,000 12VA Series. due 2009 100,000 100,000 Pollution Control:

Series A. 8%. due 2001-2009 37,887 30,543 (Principal amounts less cash hei d by Trustee: 1980. $ 25,113; 1979. $ 32.4/7)

Series B. 7i/i%. due 10-1-83 16,010 (Principal amounts less cash hei d by Trustee totaling $ 33,990)

Series C. 7Vi%, due 10-1-83 6,000 Total first mortgage bonds-principal amounts 1,572,243 1,417,889 Other long-term debt:

Nuclear fuel trust obligations(variable rates: 20.86% average effective Interest cost at 12-31-80; 14.83% at 12-31-79) 42,940(a) 40.539 Nuclear fuel lease obligation (variable rate: 16.5% effective interest cost at 12-31-80: 15.25'L at 12-31-79) . 45,827(a) 40,269 European term loans due 1986-1987 (variable interest rate of 23.75% at 12-31-80) . 45,000(b) 10% term loan due 9-18-82 15,000 15.000 Miscellaneous promissory notes . 300 269 Total long-term debt principal amounts 1,721310 1,513,966 Unamortized discount and premium, net (7,843) (6.276)

Total Iong-term debt, Including current maturities 1,713,467 1,507,690 Less long-term debt due within one year:

2VA Series due 2-1-81 15,000 Nuclear fuel trust obligations 8,115 9.309 Nuclear fuel lease obligation 15,943 18,245 Total long-term debt. excluding current maturltles ... $ 1,674,409 $ 1,480,136 Total Capitalization (excluding current maturities of Iong. term debt) $ 3,368,895 $ 2.911.304 (a) Long-term debt maturitles for the next five years. Including estimated amounts under continuous nuclear fuel financing arrangements for which repayments of present obligations are based on energy produced, are:

1981 1982 1983 1984 1985 First Mortgage Bonds $ 15,000 $ 20.000 $ 22.010 $ 67.346 Term loans 15.000 Nuclear fuel 24,058 26.610 16.857 13.508 $ 6.190 Totals $ 39,058 $ 61,610 $ 38,867 $ 80,854 $ 6.190 (b) Refunded on )anuary 22, 1981, with the issuance and sale of $ 125,000,000 new European term loans. maturing in 1987-1988 with similar variable Interest rate provisions.

See notes to financial statements.

Notes to Financial Statements I. Summary of Significant Accounting Policies costs, is computed on the unit of production method and System of Accounts. The accounting records of the charged to fuel expense. Nuclear fuel amortization charges Company are maintained as prescribed in uniform systems include $ 9,043,000 in 1980, $ 10,516,000 in 1979 and of accounts of the Federal Energy Regulatory Commission $ 15,955,000 in 1978 for the estimated costs of perpetual (FERC) and the regulatory commissions of North Carolina storage of spent nuclear fuel.

and South Carolina. Revenues. Customers'eters are read and bills are Electric UtilityPlant. The cost of additions, including rendered on a cycle basis. Revenues are recorded when replacements of units of property and betterments, is billed, as is the customary practice in the industry.

charged to utility plant. Maintenance and repairs of Deferred Fuel Costs. Pursuant to regulatory property, and replacements and renewals of items commission orders with respect to the recovery of fuel determined to be less than units of property, are charged costs for South Carolina retail operations, the Company is to maintenance expense. The cost of units of property deferring the difference between fuel costs Incurred and replaced or renewed, or otherwise retired, plus removal or the related billings and periodically adjusts rates to reflect disposal costs. less salvage, is charged to accumulated these and other pertinent factors.

depreciation. Electric utility plant, other than nuclear fuel, Customer Fuel Credits. For North Carolina retail is subject to the lien of the Company's mortgage. Nuclear operations and all wholesale operations, monthly revenue fuel is pledged, or subject to be pledged, as collateral for billings to customers include a fuel adjustment charge to nuclear fuel financing arrangements. cover fuel costs for the current billing month, based on Allowance for Funds Used During Construction actual fuel costs in certain prior periods. Such billings can (AFUDC). As prescribed in regulatory uniform systems of and do vary significantly from the actual fuel costs of the accounts, an allowance for the cost of borrowed and equity billing month, principally because of seasonal customer funds used to finance electric utilityplant construction, less usage factors and the relative level of output from nuclear applicable income taxes," is charged to cost of plant. generating units.

26 Regulatory authorities consider the inclusion of these The Company accrues additional fuel costs in months recognized costs as appropriate for the purpose of when actual fuel costs are less than annual average fuel establishing rates for the Company's utility charges to costs, and defers fuel costs in months when actual f customers over the service lives of the property. However, costs are more than average annual fuel costs. Th certain construction-work-in-progress expenditures are accruals and deferrals are reversed in those future mon included in the rate base for ratemaking purposes and for which the current month's costs are a billing AFUDC is not capitalized (charged to the cost of plant) on determinant. However";deferrals are recorded only to the such expenditures. The equity portion of AFUDC is extent of accumulated accruals. This practice, which has credited to other income, the borrowed funds portion is been reviewed and approved by the North Carolina credited to interest charges and the deferred. income tax Utilities Commission (NCUC), improves the matching of provision is charged to other income. The composite, net- fuel costs and revenues. The liability for customer fuel of-tax AFUDC rate was approximately 8.2 percent in 1980, credits at the end of a period represents the excess of 7.6 percent in 1979 and 7.5 percent in 1978 with semi- estimated average fuel costs (based on the succeeding annual compounding. twelve months) over corresponding estimated amounts for Depreciation and Amortization. Depreciation of fuel charges to be billed to customers during the periods utility plant (other than nuclear fuel) for financial reporting that actual fuel costs will be billing determinants.

purposes is computed on the straight-line method based Income Taxes. Deferred income tax provisions are on estimated remaining useful lives, adjusted for recorded only to the extent such amounts are allowed for estimated net salvage or disposal costs, and charged ratemaking purposes. Comprehensive interperiod income principally to depreciation expense. Depreciation tax allocation has been observed, beginning in 1976, for all provisions, as a percent of average depreciable property significant timing differences. In compliance with other than nuclear fuel approximated 3.4 percent in 1980,

~

regulatory accounting, income taxes are allocated between 3.6 percent in 1979 and 3.5 percent in 1978. Depreciation Operating Income and Other Income, principally with rates are reviewed periodicallyand changes in estimates respect to interest charges related to construction work in (including the costs to dismantle or decontaminate nuclear progress. The Company and its subsidiaries file generating plants) are made as appropriate, on a consolidated federal income tax returns. Income taxes are prospective basis. allocated among the companies based upon the ratios of Allowable depreciation rates for'wholesale rate- . their respective "separate tax liabilities" to the making purposes, pursuant to FERC Order in Docket No. consolidated tax liability. See Note 5 with respect to certain ER76-495, are different from those regularly used by the other income tax information.

Company and allowed by other ratemaking jurisdictions; 'nvestment Tax Credits. Investment tax credits ar therefore, in 1980 the Company reduced its depreciation being amortized over the service lives of the prope<

provisions solely applicable to wholesale operations by Preferred and Preference Dividends. Preferred a

$ 6,700,000 of which $ 4,590,000 is applicable to prior years. preference dividends declared and charged to retained Amortization of nuclear fuel costs (1980, $ 34,843,000; earnings include amounts applicable to the first quarter of 1979, $ 37,536,000; 1978, $ 38.250,000). including disposal the following year, except for the Preferred Stock A series,

which dividends are wholly applicable to the year in which During 1980, the Company purchased $ 25,195,000 of coal declared. from LC and MC. The excess of cost of production over the Retirement Plan. The Company has a noncontributory fair market value (as defined by the NCUC) totaled retirement plan for all full-time employees and is funding $ 5,810,000 at December 31, 1980, and is included in Other Deferred Debits on the Balance Sheet. These costs are the costs accrued under the plan. Retirement plan costs for 1980, 1979 and 1978 were approximately $ 7,763,000, recoverable through customer revenues in the future to the

$ 8,200,000 and $ 6,267,000, respectively. At January I, 1980, extent that cost of production is less than fair market value.

the date of the latest actuarial valuation, the actuarial present value of vested accrued benefits was $ 39,111,000 and the actuarial present value of nonvested accrued Capital Stock Issued and Reserved benefits was $ 6,481,000. The market value of assets Capital stock shares have been issued as follows, available for benefits at january I, 1980, was $ 46,966,000. representing the total changes in the respective accounts The assumed rate of return used in determining the in the periods indicated:

actuarial present value of accrued benefits is 10 percent.

Other Policies. Other property and investments are stated principally at cost, less accumulated depreciation I 980 I 979 f978 where applicable, except for investments in subsidiaries iln Thousands) that are accounted for on the equity basis. Temporary cash Common stock:

investments are stated at cost, approximating market Public offerings 8,500 3.500 SPSP 463 350 272 value. Materials and supplies inventories are stated at ADRP 733 273 l9I average cost. The Company maintains an allowance for ESOP I 26 309 72 doubtful accounts receivable (1980, $ 1,740,000; 1979, Other .......... 80

$ 1,660,000). Bond premium, discount and expense are Total 9~822 932 4. I I 5 amortized over the life of the related debt. 27 Investment in Coal-Mining Subsidiaries Preferred stock-redem tlon re ulred:

Under agreements with Pickands Mather 6 Co. (PM)

Preferred Stock A:

a firm engaged in owning, operating and managing mineral properties S8.75 Series two subsidiaries, Leslie Coal Mining Company S9.25 Series 180 (LC) and Mcinnes Coal Mining Company (MC), have been S9.00 Series I75 formed (owned 80 percent by the Company and 20 percent Serial Preferred Stock-SI I. I6 Series 400 by PM). The subsidiaries are developing two adjacent, deep coal mines in Pike County, Kentucky, each capable of Total 755 500 producing one million tons of clean coal per year over about 25 years. The LC mine, which was completed and declared in commercial operation in August 1979, At December 31, 1980, 586,369 shares ofcommon stock produced 626,000 tons of coal in 1979, and 507,000 tons in were reserved for issuance under the Stock Purchase-1980. During 1980, the MC mine produced 54,000 tons of Savings Program for Employees (SPSP), 147,484 shares coal as its development progressed. under the Automatic Dividend Reinvestment Plan (ADRP)

Significant aspects of LC and MC's financial position and 717,670 shares under the Employee Stock Ownership are summarized as follows (in thousands): Plan (ESOP). Effective January 16. 1981, the Company reserved an additional 5,000,000 shares for issuance under December 31 the ADRP.

f980 f979 Total assets (excluding leased assets) 5~96 977 S7932I 4. Notes Payable and Lines of Credit At December 31, 1980, the Company had firm, unused Notes Payable S82,000 S6 I.000 lines of credit with various financial institutions totaling

$ 205,940,000 (at December 31, 1979, $ 201,365,000)

Cost of assets financed by leasing including necessary amounts to back up outstanding arrangement ................... 8~33 600 S33,635 commercial paper and demand notes. In connection with these lines of credit, the Company is required to maintain The Company has guaranteed the obligations of LC average compensating balances in various banks d MC under the terms of loan agreements and a lease- ($ 2,020,000 at December 31, 1980, and $ 6,814,000 at ncing arrangement. The Company has further agreed to December 31, 1979) and pay commitment fees

.duse MC to complete its mine by December 31 1984. The~

(approximately $ 75,000 per month at December 31, 1980, Company and PM have entered into coal purchase and $ 56,000 per month at December 31, 1979). Such lines of contracts for 80 percent and 20 percent, respectively, of credit are periodically reviewed, at which time they may be production at prices sufficient to meet all costs. renewed or canceled.

5. Income Taxes The provisions for income tax expense are composed of the following:

Year Ended December 31, 1980 1979 1978 (Dollars In Thousands)

Included In Operating Expenses:

Currently payable taxes-Federal $ 39,506 825,873 $ 54.462 State 4,814 7.294 11.622 Deferred taxes, net-Federal 34.793 33.823 22,739

-State 4,805 4.176 3.057 Investment tax credit adjustments. net ~(8 225) 23.476 33,008 Total ~75 693 94,642 124.888 Included In Other Income:

Reduction in currently payable taxes-Federal . (40, 137) (31,017) (21,685)

State (4,861) l3.659) (2.257)

De/erred taxes-Federal 38,162 28,123 20,776 State 5,012 3.319 2.270 Investment tax credit adjustments. net 139) 423 1.005 Total ~1863) 12.811) 109 28 Total Income tax expense ~$ 73 830 S91.831 8 1 24.997 Provisions for net deferred Income taxes relate to the following:

Differences between book depreciation and amortization and tax deductions for property costs:

Prewperational tax deductions Initial deferral:

Allowance for borrowed funds capitalized 833,550 S I 9.303 SI 3.347 Taxes and other costs capitalized. etc. 5,930 6.729 5,602 Accelerated depreciation and other property cost differences. net . 40;471 33.403 33.194 Provision for possible refund of revenues (6,756) 6.348 I5.862)

Provision for customer (uel credits. net 5,098 1,147 (6.771)

Deferred fuel costs. net 4.523 (618) (1,033)

Utilization of subsidiaries'ax losses 1,717, 3.988 3,706 Canceled project costs (1,242) (1.242) 6,212 Miscellaneous other timing differences. net (519) 383 447 Total provisions for deferred Income taxes. net 882,772 869.441 848.842 A reconciliation of the Company's effective Income tax rate (computed by dividing total Income tax expense by pre-tax Income) to the statutory federal Income tax rate follows:

Effective income tax rate 31.4% 37.5% 46.7%

The effect of Including AFUDC on equity funds In pre-tax Income 15.8 12.4 Effective Income tax rate, excluding AFUDC on equity funds from pre-tax income 47.2 49.9 State income taxes. net of federal Income tax benefit . (3.4) (3.3) 13.4)

Other dl(ferences. net 22 (0.6) (3.6)

Statutory federal Income tax rate 46.0% 46.0't 48.0%

At December 31, 1980, the Company had generated Company currently would be subject to a maximum but not utilized investment tax credits totaling retrospective premium assessment of approximately S45 approximately S103 million (Including $ 16 million of ESOP million in the event losses at insured facilities exceed credits), of which $ 49 million expire in 1986 and S54 million premiums, reserves, re-insurance and other NML expire in 1987. resources. which are at present more than SI75 million.

The Company's public liability for a nuclear incident is

b. Commitments and Contingencies insured up to the maximum limit on public liabilityclaims It is estimated the Company's construction program pursuant to the Price-Anderson Act, which is S560 million for 1981 through 1983, excluding nuclear fuel, will cost for each occurrence, through the conventional insurance approximately $ 1.8 billion; and nuclear fuel expenditures pools and through United States Government indemnity. In are estimated to total S254 million. At December 31, 1980, the event that public liability claims from an insured minimum firm commitments for construction aggregated nuclear incident exceed the primary financial protection approximately $ 932 million plus approximately S229 provided by the insurance pools, which Is currently $ 160 million for initial and replacement nuclear fuel. In addition, million, the Company would be subject to a pro rata the Company has a contract with the U.S. Department of assessment of up to a maximum of $ 15 million with respect Energy for nuclear fuel enrichment requirements through to any single nuclear incident and an aggregate maximum une 30, 2002, which is cancelable without penalty upon five of $ 30 million within any calendar year.

ears written notice. Payments for enrichment services are There are certain claims pending against the anticipated to approximate $ 219 million during the next Company. In the opinion of the Company, liabilities, if any, ive years, after December 31, 1980. The above estimates arising from these claims would not have a material effect nclude provisions for price escalation. on the financial position or results of operation of the Estimated rental commitments for unrecorded capital Company.

eases at December 31, 1980, are approximately (in On january 8, 1981 the Company paid to its wholesale

~ 29 housands): customers S23.545.000. the amount collected for a rate ICT increase for the period from December 29, 1977, to August ble Generators Other Total 18, 1980, in excess of amounts that would have been collected under final revised rates pursuant to a settlement

-. I 98 I S 3.800 S 3300 S 7, I 00 3.400 7.200 agreement, which has been submitted to the FERC for I982 3.800 I 983 3.800 3.400 7.200 approval, together with accumulated interest totalling 1984 3.800 3.400 7.200 S5,931,000. Adequate provisions for possible refund of I985 3,800 3.400 7.200 revenues and interest had been previously recorded.

Thereafter 53.000 86. I 00 139. I 00 Operating revenues include $ 9,242,000 billed South To'tais S72.000 S I 03.000 S I 75,000 Carolina retail customers, which remains subject to refund at December 31 1980. These increased revenues are the

~

Minimum rental commitments at December 31, 1980, result of an interim rate increase of SI 3,700,000 annually under operating leases are not material with respect to the that the Company placed into effect on April 14, 1980 (which Company's financial position. is part of an application for a permanent rate increase of

$ 27,500,000, based on a December 31, 1979 test year and is Had the capital leases been recorded on the Company's books at December 31, 1980, approximately S72 presently pending final determination).

million (S71 million at December 31, 1979) would have been Effective August 18, 1980, the Company placed into added to total assets and to total liabilities. The difference effect a rate increase for wholesale operations that is between imputed depreciation and interest expense for estimated to increase revenues by S26 million annually hese capital lease properties and actual recorded rent after provisions for possible refund. Through December 31, expense is not material. 1980, $ 8.954,000 had been included in operating revenues Under the terms of the lease for the internal and $ 4,332,000 excluded from revenues and placed into a reserve for possible refund.

ombustion turbine (ICT) generators. the Company, under ertain cIrcumstances. may be required to purchase the It is expected that the effects of the difference CT's from the lessor. The lease for the Company's general between any refunds finally required and the accumulated ffice has an initial term expiring in 2013 with renewal and provisions for such refunds will be accounted for in the purchase options. The Company is responsible for period of final determination and will not have a material xpenses in connection with most of the leased properties, effect on net income of that period.

Iuding insurance, taxes and maintenance. In December 1978. the Company canceled plans for The Company is a member of Nuclear Mutual Limited construction of two nuclear generating units scheduled for i L), established to provide insurance coverage against service in 1989 and 1991. Total costs incurred for the units property damage to insureds'uclear generating facilities. were S12.154.000, and amortization is over a five-year he Company is insured thereunder for S375 million at its period beginning lanuaty I 1979, pursuant to regulatory

~

runswick plant and S150 million at its Robinson plant. The authorizations. At December 31, 1980, the remaining

unamortized balance, included in Other Deferred Debits.

is S7,286,000 ($ 9,801,000 at December 31, 1979). Auditors'pinion On january 20, 1981 the Company received a permit for

~

its Brunswick nuclear plant for continued operation of the present once-through cooling system, with modifications.

Such permit will not require completion and use of the cooling towers originally mandated as a condition of the NRC's operating license for the plant. The Company expects to To the Board of Directors and Shareholders amortize approximately S15 million accumulated of Carolina Power 6 Light Company:

construction costs on the uncompleted cooling towers as an operating expense over a five-year period pursuant to We have examined the balance sheets and the schedules authorizations, which will be sought from regulatory of capitalization of Carolina Power 6 Light Company as of authorities. December 31 1980 and 1979 and the related statements

~

of income, retained earnings and source and use of

7. Rate Increase Matters financial resources for each of the three years in the period ended December 31, 1980. Our examinations were made in Operating revenues for 1980 include an increase of accordance with generally accepted auditing standards S49,773,000 over amounts reflected in prior years attributable to general rate increases placed into effect in and, accordingly, included such tests of the accounting records and such other auditing procedures as we con-1980 after adjusting such amounts downward by S4,332,000 sidered necessary in the circumstances.

to reflect a possible refund of revenues. Also included in revenues representing increased fuel cost adjustment In our opinion, such financial statements present fairly billings above the base cost of fuel (as defined for each the financial position of the Company at December 31, 1980 ratemaking jurisdiction) is $ 130,043,000 in 1980, S80,027,000 and 1979 and the results of its operations and the source in 1979 and S72,096,000 in 1978. and use of its financial resources for each of the thr'ee During the summer of 1980, the Company experienced years in the period ended December 31 1980, in con-

~

30 significantly higher-than-normal fuel costs. Customer formity with generally accepted accounting principles revenues for wholesale operations reflected such higher applied on a consistent basis.

costs with a two-month lag. For South Carolina retail operations, customer revenues are being affected over a six-month period beginning October I, 1980; and related deferred fuel cost accounting resulted in a current asset on the balance sheet, which totaled S8,086,000 at December 31 ~ 1980. However, for North Carolina retail operations, customer revenues are being impacted over an eight- Raleigh, North Carolina month period beginning with December I, 1980, billings; February 12, 1981 and, pursuant to the Company's accounting practices for customer fuel credits, net deferred fuel cost amounts that totaled S44,041,000 are not reflected on the balance sheet at December 31, 1980, representing a reduction (after income taxes) in net income and earnings per share of approximately $ 22,355,000 and $ .48 per share, respectively.

The NCUC has denied the request to make the collections subject to refund. The matter is presently before the North Carolina Court of Appeals.

Summary of Quarterly Earnings Data (Unaudited)

Earnings per In the opinion of the Company, all adjustments Quarter Operating Operating Net Common (consisting of only normal recurring accruals) necessary to a Ended Revenues Income Income Share fair statement of such amounts for such periods have been made. Quarterly data normally varies seasonally with Iln Millions, Except Earnings per Common Share) temperature variations, the timing of rate increases, and March 31. 1980 ... S258.9 S52.1 S49.4 S0.95 the scheduled down-time and maintenance of electric June 30, 1980 228.3 37.8 36.2 0.60 generating units, especially nuclear-fueled units.

September 30. 1980 300.4 22.9 20.4 0.25 December 31, 1980 288.0 59.4 55,4 0.92 March 31, 1979 ... 235.2 47.6 44.1 0.92 June 30. 1979 206.7 32.1 28.2 0.53 September 30. 1979 258.8 54.8 49.8 1.05 December 31, 1979 225.1 35.9 31.2 0.57

Supplemental Inflation Adjusted Data (Unaudited)

The data, as reported in the primary financial Under ratemaking practices established by regulatory statements, are based on actual, nominal, historical costs. commissions, the Company can recover through revenues However, during periods of significant changes in general only the original cost (historical cost/nominal dollars) price levels, that nominal dollar information becomes depreciation. Therefore, the increase in the dollar amount distorted and fails to reflect real economic costs or value. for the cost of plant (stated in either historical The conventional basis does not account for the event of cost/constant dollars or current cost) over the original cost inflation, i.e., variations over time in the purchasing power is deemed not presently recoverable and, therefore, must or value of the dollar. In an effort to provide financial be reflected as a "reduction in assets to net recoverable information about the effects of changing price levels, the cost."

Financial Accounting Standards Board issued Statement To further reflect the economics of regulation, the No. 33, Financial Reporting and Changing Prices, in reduction in asset "cost" is offset to the extent that the September (979. This statement requires most larger plant is financed from sources that have a fixed, or companies to disclose (among other things) certain contractual, rate of return and claim against assets of the significant historical cost data in constant dollars Company. Under present ratemaking practices, the represented by the average level during the year of the Company can recover through revenues the contractual Consumer Price Index for all Urban Consumers (CPI-U) and rate of return for such capital and, therefore, is able to 3I current cost information concerning the measurement of effectively recover the inflation impact (purchasing power ets and the expiration of asset values. gain or loss) on such capital to the extent reflected in the annual cost rate. Any holding gain associated. with such capital (monetary liabilities) is, therefore, not realizable The constant dollar information on the following pages and is an offset against the "reduction in assets to net reflects the nominal historical costs and prices restated by recoverable cost." The treatment given herein to the a'pplying the CPI-U in conformity with Statement No. 33. holding gains on monetary liabilities recognizes that prices charged by the Company are designed to recover for such capital no more than any inflation costs factored into the The current cost information on the following pages contractual annual cost rate. Thus, the purchasing power reflects changes in specific prices of plant from the date the adjustment to the tangible assets, which is not realizable plant was acquired to the present and differs from constant and is written off, as well as the increased operating dollar amounts to the extent that specific prices have expenses, results in no financial loss to the owners of the increased more or less rapidly than prices in general. The Company (the common shareholders) to the extent of the current cost of property, plant and equipment, which leveraged financing.

, includes land, land rights, intangible plant, property held for future use and construction work in progress, represents This information should be viewed as an estimate of the estimated cost of replacing existing plant assets and the approximate effects of inflation, rather than a precise was determined primarily by indexing the surviving plant measure.

by the Handy-Whitman Index of Public UtilityConstruction The statement of income, adjusted for changing prices Costs. The current cost of nuclear fuel was determined by as presented on page 32, reflects adjustments only with recent invoice prices. The current year's provision for respect to electric utility plant-the area of the Company depreciation and amortization was determined by applying most affected by inflation. Allother items are considered to the Company's depreciation and amortization rates to the have been effectively transacted at average I980 price indexed current cost amounts. levels and, therefore, do not require adjustment.

Statement of Income from Continuing Operations Adjusted for Changing Prices for the Year Ended December 31, 1980 As Constant Current Reported Dollar Cost in the Average Average Primary I980 I980 Statements Dollars Dollars (Thousands of Dollars)

Operating revenues 8 I 075 604 SI 075 604 81 075 604 Operating expenses:

Operation and maintenance:

Fuel for generation . 4I I, I9I 420,490 4 I8.75 I Other 247,624 248,0 I 2 247,930 Depreciation and amortization 88,70 I I 63,966 176,370 Taxes other than on income 80,209 80,209 80,209 Income tax expense 75 693 75 693 75 693 Total operating expenses 903 418 988 370 998 953 Operating Income I 72,186 87,234 76,65 I Other income net 85043 85043 85 043 32 Income before Interest charges 257,229 I 72,277 (6I,694 Net interest charges 95841 95841 95841 Income from continuing operations (excluding reduction to net recoverable cost) 8 161 388 8 76 436' 65 853 Other adjustments to reflect the effects of changing prices:

Increase in specific prices (current costi of property, plant and equipment held during the year" S 529,222 Reduction in assets to net recoverable cost 8~351 9751 (232.542)

Effect of increase in general price level (638 072)

Excess of increase in general price level over increase in specific prices after reduction to net recoverable cost 8 (341392)

Adjustment for purchasing power loss by net monetary liabilities 8 304730 S 304730

'Including the reduction In assets to net recoverable cost, the loss from continuing operations would have been 8275,539 llnciuding SI74.525 applicable to electric utility plant under construction).

"At December 3I. I980, current cost of property. plant and equipment. net of accumulated depreciation, was S6,008.21I, while historical cost or net cost recoverable through depreciation was S3.975,444.

Five Year Comparison of Selected Financial Data Adjusted for Effects of Changing Prices Year Ended December 31, 1980 I 979 1978 1977 1976 (In 'millions of average 1980 dollars, except for per share amounts)

Operating revenues . S1,075.6 S 1,051.1 S I, I 4 I. I S I,099.1 $ 995.0 Historical cost Information adjusted for general inflation:

Income from continuing operations (excluding reduction in assets to net recoverable cost) S 76.4 S 106. I Income from continuing operations per common share (after preferred stock dividend requirements and excluding reduction in assets to net recoverable cost) S .90 S 1.82 Net assets at year-end at net 33 recoverable cost S I, I 78.0 S I, I 22.0 ent cost Information:

Income from continuing operations (excluding reduction in assets to net recoverable cost) S 65.9 S 93.5 Income from continuing operations per common share (after preferred stock dividend requirements and excluding reduction in assets to net recoverable cost) S .67 S I.50 Net assets at year-end at net recoverable cost S 1,178.0 S I, I 22.0 General Information:

Adjustment for purchasing power loss by net monetary liabilities . S 304.7 S 309.2 Cash dividends declared per common share S 220 S 233 S 240 S 238 S 245 I,

Market price per common share at year-end S 17.31 S 20.53 S 26.15 S 3 I. I 6 S 34. I 6 CPI-U average 246.8 217.4 I 95.4 181.5 170.5 year-end 258.4 229.9 202.9 186. I 74.3

Carolina Power 6 Light Company Statistical Review Dollars In Thousands except per share amountsl 1980 1979 1978 1977 1976 1975 Balance Sheet Data (End of Period)

Total Utility Plant other than Nuclear Fuel .... 84 490 984 3.882,776 3,286,303 2.912,235 2.685.746 2.489.107 71 Construction Work In Progress 81 616 513 1,327.311 896.126 622,409 775981 643.069 208, 44 Total Nuclear Fuel 8 218 466 220 199 155 418 92,494 74 646 59,893 ~379 Net Utility Plant other than Nuclear Fuel 85 863 576 3 320 598 2.802.044 2 496 798 2,332,890 2 192 681 819, 44 Total Assets 84 241 607 3 647,913 3 135.847 2.763.554 2 547.028 2,394 614 884. 51 Capitalization Common stock and retained earnings ...... S 1,233,368 1,045.150 985.774 850.298 809,197 712,837 260, 54 Preference stock 47,900 47,900 47,900 47.900 47.900 47.900 Preferred stock Redemption not required . 238,118 238.118 238.118 238,118 238.118 238,118 89 76

-Redemption required 175,100 100,000 50,000 50,000 50.000 18788'81.

50,000 First mortgage bonds. 1,564,400 1.411,613 1.222,527 1.201,354 1,103,289 1.105,050 398 27 long. term debt net'ther 149 067 96,077 133 90 175 50 204 34 Total 83 407 953 858 '.938 2 544 452 2,387.760 2.248,679 2,204,109 748,091 Noncurrent Deferred Income Taxes .......... S 307,626 263.074 220,174 157.632 118,016 69.377 21, II Deferred Investment Tax Credits 120 776 129 040 105 141 71 128 46897 4. 74 Total 8 420 402 392.114 325,315 228,760 164,913 88,165 26. 85 Ratio of Accumulated Depreciation to Utility Plant In Service 21.9 22.1 20.3 18.1 18.5 16.1 Percent of Total Capitalization Common stock and retained earnings ...... 36.2 35.6 38.7 35.6 36.0 32.3 3.

Preference stock 1.4 1.6 1.9 2.0 2.1 2.2 Preferred stock Redemption not required . 7.0 8.1 9.4 10.0 10.6 10.8 I Redemption required 5.1 3,4 1.9 2.1 2.2 2.3 First mortgage bonds, 45.9 48.0 48.1 50.3 49,1 50.1 long-term debt . 4.4 net'ther 3.3 2.3 34 Total 100.0 100.0 100 0 100 0 100.0 100.0 100.0 Ratio of Bonds to Net Utility Plant Other than Nuclear Fuel 40.5 42.5 43.6 48.1 47.3 50.4 Summary Results of Operations Operating Revenues 81 075 604 92 5 910 903 438 808 275 687 385 595.892 204, 46 Operating Expenses Operation and maintenance 658,815 501.619 459,663 423,542 352,603 365,137 122, 27 Depreciation and amortization 88,701 88,396 80.356 71 ~ 140 62.385 46,648 19. 76 Taxes-other than on Income 80,209 70,796 68,314 60,606 52,856 46.087 19, 53 Income tax expense 75 693 94 642 124.888 97,044 82.961 36 387 8,289 Total operating expenses 903 418 755.453 733,221 652.332 550.805 494,259 169.245 Operating Income 172,186 170,457 170,217 155.943 136.580 101,633 35.601 AFUDC. Net of Deferred Income Taxes ..... 113,398 80,785 53.173 42.982 48,802 59,957 10.505 Other Income-Income Tax Credit ......... 35,417 22,113 13,237 11.498 14,586 19,734 2.709 Other Income (Deductions)-Net .......... 4,366 1,858 4,203 2,919 469 1,020 133 Total Interest Charges ~163 9791 (121.969) (98,087) 192 3071 (89,429) (90,173) 123,957 Net Income .................. 161,388 153,244 142.743 121,035 111,008 92.171 24,825 Preferred and preference stock dividend requirements 34 641 28 263 26,926 26,926 26,926 25,752 4,699 Earnings for Common Stock 126,747 124.981 115,817 94,109 84.082 66.419 20.126 Dividends declared on common stock 104 865 84,066 71 511 63,274 56 760 46,173 19,013 Earnings Invested in the Business ......... 8 21 882 40,915 44,306 30,835 27.322 20,246 1,113 Earnings Per Share Weighted Average 8 273 3.06 3.10 2.61 2.52 2.36 1.56 Return on Average Common Stock Equity 11.09 12.30 12.93 11.34 11.34 10.62 8.64 Times Earned-Fixed charges'.................. 2.31 2.79 3.39 3.09 2.92 2.28 2.25 Fixed charges and preferred and preference dividend requirements' 1.80 2.10 2.34 2.11 1.99 1.68 1.82 Common Stock Data Shares Outstanding (000's) Year-end 51,208 41.386 40,454 36,340 35.890 32.693 13,986 Average .. 46,471 40,841 37.355 36,097 33.385 28.109 12.934 Book Value per Share at Year-end S 24.02 25.19 24.30 23.32 22.47 21.72 18.65 Dividends Declared per Share S 220 2.05 1.90 1.75 1.69 1.60 1.46 Payout percent 80.6 67.0 61.3 67.0 67.1 67.8 61 Number of Shareholders at Year-end 103,662 87,817 84,645 74,741 73.775 69,199

'Includes current maturitles of long. term debt.

2For purposes of this ratio, earnings represent net income plus Income taxes and fixed charges; fixed charges represent interest charges plus an imputed interest factor portion of rentals.

>For purposes of this ratio. earnings represent net income plus Income taxes and fixed charges; dividends represent preferred and preference dividend requirements multiplied by the ratio ol that Income before income taxes bears to net income.

1w

~ 'I 1980~197 1978 1977 1996 I 7 I 70 venue (Thousands)

Residential S 342,239 293.575 292.309 263.126 221.531 191.349 75.990 Commercial 195,436 171,715 166.867 146,097 123.624 110.700 40.981 Industrial Textile . 106,747 98.657 94,414 89.782 78.634 69.290 21,174 Industrial-Other . 189.995 168,653 155.511 135.383 114,534 96.581 28.889 Government and Municipal 30,403 29.484 31.020 27,674 23.227 20.825 8.573 Sales for Resale . 202 560 155.828 155.925 134.626 109.514 93.980 25.794 Total Electricity Sales Within Service Area 1,067,180 917.912 896.046 796.688 671.064 582.725 201.401 Nonterrltorlal Electricity Sales 3,066 9.530 7.485 1,225 Miscellaneous Revenues 8 424 7,998 7,392 8.521 6.791 5.683 2.220 Total Operating Revenues 01 075 604 925.910 903.438 808.275 687,385 595.893 204.846 o d Data Electric Energy Sales (Millionsh Residential .. Kwh 7,870 7,195 7.208 6.999 6,491 6.152 4.634 Commercial 4,935 4.590 4.503 4.280 4.016 3.798 2.693 Industrial Textile . 3,699 3.719 3.589 3.752 3.788 3.452 2.639 Industrial-Other . 6,092 5.890 5,424 5,i52 4.971 4.381 2,985 Government and Municipal 864 917 963 959 914 904 833 Sales for Resale 6 822 6357 6,306 6,114 5.735 5.370 3.518 Total Energy Safes Within Service Area 30,282 28.668 27.993 27.256 25.915 24.057 17.302 Nonterritorial 61 261 61 246 Total Electric Energy Sales 30,282 28,668 27,993 27.317 26.176 24.118 17.548 Company Uses. Losses and Unaccounted For . 1 901 1.632 1.709 1.684 1.528 1.700 1.248 Total Energy Requirements .. Kwh 32 183 30.300 29.702 29.001 27.704 25.818 18,796 Energy Supply (Millionsh'lectric Generated-Steam-Fossil . Kwh 22,299 18,336 14.591 17.598 18.989 18.374 16.311 Generated-Steam-Nuclear 8,955 10.802 13.891 9.895 7.383 5.591 3 Generated-Hydro 680 1,019 716 732 756 947 623 Generated-Other Fuel 224 146 294 406 130 31 315 Purchased and interchanged-Net 25 13) 210 370 446 875 '1,544 Total Energy Supply .. Kwh 32,183 30,300 29.702 29.001 27.704 25.818 18.796 Peak Demand of Firm Load (000's):

Within Service Area . . KW 6.139 5.907 5.605 5,597 5.121 5.060 3,484 Nonterritorlal 62 38 Total Peak Demand . KI9 6 139 5.907 5.597 5,183 5.098 3,484 Total Capability at Year End'000's):

Fossil Fuel Plants KW 5,519 4,869 4,869 4,869 4.869 4,835 2.967 Nuclear Plants 2,245 2.245 2.245 2.245 1,455 1.455 Hydro Plants 214 214 214 214 214 214 214 Purchased 75 128 128 128 228 228 212 Total Capability . KW 8.053 7.456 7.456 7.456 6.766 6.732 3.393 7ilscellaneous Customers at Year End Residential 632,209 617393 601.947 585.821 575.019 560,954 478.914 Other 109 424 107.624 106.212 103.731 101.937 99.574 86.511 Total 741 633 725.017 708.159 689,552 676.956 660,528 565.425 Average Revenue Per KWH Residential 4.35 4.08 4.06 3.76 3.41 3,11 1.64 Commercial 3.96 3.74 3.71 3.41 2.91 1.52 Industrial 3.03 2.78 2.77 2.53 2.21 2.12 .89 Total Energy Sales Within Service Area 3.52 3.20 3.20 2.92 2.59 2.45 1.16 Residential Average Annual Energy Use Kwh 12,558 11,785 12,113 12.048 11,407 11.094 9.794 Average Annual Bill . S 546.11 480.84 491.22 452.97 389.32 345.04 I'60.62 Steam Electric Generating Plant Fossil Fuel Average Annual Heat Rate IBTU Per Net KtVH) . 10,!90 9.996 10,167 10,008 9.980 9,951 9,785 Average Cost Per Million BTU . .Cents 158.9 139.4 135.3 118.2 108.4 1190 41.2 Average Cost Per Million BTU All Fuels . Cents 124.9 100.8 90.4 92.2 84.9 94.6 42.1 Nuclear Fuel 35.7 35.4 40.3 40.3 24.9 21.6 Annual Load Factor. Service Area Load 59.7 58,6 60.5 59.0 61.0 58.1 60.8 Represents peak capability. based on summer peak conditions and assuming all units are available for operation.

Directors At January I, l981 Year shown ln parenthesis Indicates beginning of service as a director Sherwood H. Smith, Jr. Felton J. Capel Charles W. Coker, Jr.

Chairman/President President. President.

of the Company Century Associates of North Carolina. Sonoco Products Com Raleigh. N.C. (I97() Southern Pines, N.C. II972) Hartsville, S.C. (1975)

IJ I 4

r. ~~/

36 Daniel D. Cameron, Sr. Geo rge H. V. Cecil Chairman/President. Pres Ident. Biltmore Dairy Farms. Inc..

Atlantic Telecasting Corporation. Ashe ville. N.C. I I 976)

Wilmlngton, N.C. (I 970)

J. A. Jones L. H. Harvln, Jr. Senior Executive Vice President A. C. Monk, Jr.

Chairman o( the Executive Committee and Chief Operating President and Treasur of Rose's Stores. Inc.. Officer of the Company. A. C.Monk andCompa Henderson. N.C. (I958) Raleigh. N.C. (I97I) Farmville, N. C. (I976) 4.

Karl G. Hudson, Jr. Edward G. Lllly, Jr.

Executive Vice President Senior Vice President and General Manager, and Chief Financial Officer Hudson-Belk Company, of the Company, Raleigh, N.C. ((967) Raleigh, N.C. (I97I)

Officers At January I~ f98I Sherwood H. Smith, Jr. M. A. McDuNe William B. Klncald Margaret T. Harper Chairman/President of the Company Senior Vice President Vice Presfdent Owner. Stevens Agency. A. Jones (Group Executive)

J. Jack B. McGlrt Southport, N.C. (I 975) Senior Executive Vice President and Wilson W. Morgan Vice President Chief Operating Officer Senior Vlcc President (Group Executive)

Albert L Morris, Ir.

E. E. Utley Vice President Executive Vice President W. J. Rldout, Jr. Sheldon D. Smith James M. Davis, Jr. Senior Vice President Vice Preslden)

Senior Vice Presfdent (Group Executive)

Earl F. Stephenson (Croup Executive) Charles D. Barham, Ir. Vice President Lynn W. Eury Vice President and Senior Counsel R. A. Watson Senior Vice President Vice President (Group Executive) Samuel Behrends, Jr.

Vice President I. L. Lancaster, Jr.

William E. Graham, Jr.

Secretary Senfor Vice President and Paul S. Bradshaw General Counsel Vice President and Controller Robert M. Williams (Croup Executive) Assistant Secretary Norris L. Edge Edward G. Lllly, Jr. Vice President L T. Quarles Senfor Vice President and Treasurer Thomas S. Elleman Chief Financial Officer Vice President Cllfton D. Mann (Group Executive) Assfstant Controller B. J. Furr Vice President P. W. Howe Vice President I

aham, Ir.

r ice President eneral Counsel John F. Watllngton, Jr. Division Officers Chairman of the Company, Executive Committee gh, N.C (I9eO) E. Wilson Craig W. Burt Grant of the Wachovla Corporation Vice President-Northern Division Vice Presfdent-Central Division and Wachovla Bank 6 Trust Company. N,A., E. Charles Dyson Russell H. Lee Winston-Salem, N.C. (1970) Vice President-Western Division Vice President-Eastern Division C. Joseph Turner Vice President-Southern Division Committees of the Board Executive Committee Committee on Financial Audit Sherwood H. Smith, Jr.. Chm. and Corporate Performance I, A. Jones L H. Harvln, Jr.. Chm.

Edward G. Lllly, Jr. Daniel D. Cameron. Sr.

William E. Graham. Ir. Felton J. Capel A. C. Monk, Jr.

Committee on Personnel, Horace L Tiighman, Jr.

Executive Development and Compensation Committee on Forecasting, John F. Watllngton, Ir., Chm. System Development Felton J. Capel and Finance Charles W. Coker, Ir. Karl C. Hudson, Jr., Chm.

Margaret T. Harper Daniel D. Cameron. Sr.

ice L Tllghman, Jr. George H. V. Cecil Nominating Committee Horace L Tllghman. Jr.

and Investments, John F. Watllngton, Jr., Chm. John F. Watllngton. Jr.

( I 961 )

L H. Harvln, Jr.

Karl G. Hudson, Ir.

CABAL Carolina Power 6 Light Company P.O. Box l55I. Raleigh. N.C 27602 CORRECTED ADDRESS REQUESTE D

Appendix B PROSP E CTU S 3 g 000 g 000 Shares

.Carolina Power a Light Company Common Stock (Without Par Value)

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COM-MISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSES Price to Underwriting Proceeds to Purchasers Discounts{l) Company{2)

Per Share.... $ 20.15 .22 $ 19.93 Total . . . . . . $ 60,450,000 $ 660,000 $ 59,790g000 (1) The Company has agreed to indemnify the Underwriter against certain civil liabilities, including liabili-ties under the Securities Act of 1933.

(2) Before deduction of expenses payable by the Company estimated at $ 90,000.

+

The shares of Common Stock are being offered by the Underwriter when, as and if issued by the Company and accepted by the Underwriter, and subject to.the approval of certain legal matters by i'ts counsel and by counsel, for the Company. It is expected that delivery of the Common Stock Stock will be made in New York City on or about November, 24, 1981.

JEFFERIES &

COMPANY'N'he date of this Prospectus is November 17, 1981.

IN CONNECTION 'WI'TH'HIS OFFERING j'" 'THE UNDERWRITER MAY OVER ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON~STOCK~ OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.

SUCH TRANSACTIONS MAY>BE>'EFFECTED.">ON'THE NEW YORK OR PACIFIC STOCK EXCHANGES~ ANY OTHER EXCHANGE ON WHICH SUCH STOCK HAS BEEN ADMITTED TO TRADING PRIVILEGES'N THE OVER-THE-COUNTER MA'RKET'R"OTHERWISE'

'<<""SUCH STABILIZINGi ONCE'COMMENCEDiMAY BE'DISCONTINUED""AT'*'A'NY-"TIME .

'No 'dealer, 'salesmanor other person'as-been authorized to give any .information or to make any represen-

.tation not contained in, this Prospectus and, if made, such information or representation must not be relied given or upon as" having been auth'orized by Carolina Power & Light Company (Company) or the Underwriter. This Prospectus does not constitute, an offer to sell or a solicitation of an offer to buy any of the securities offered hereby in any jurisdiction to any person to whom it is unlawful to make such offer in such jurisdiction. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date hereof.

AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934 and in =

accordance therewith files reports and other the Securities and Exchange Commission. Certain information'ith information, as of particular dates, concerning the Company's directors and officers, their remuneration and any material interest of such -persons in transactions with the Company is disclosed, in proxy statements distributed to stockholders

'and filed with 'the Commission. Such reports, proxy state-ments and other information may,be .inspected and copied't the public reference facilitie's maintained~by the Commission't Room '6101, 1100 L Street, N.W., Washington, D. C.;,Room 1228, Everett McKinley Dirksen Building, 219 South

Dearborn,

Street; Chicago, -Ill.; Room 1100, Federal Building, 26 Federal Plaza, New York,'.Y.; and Suite 1710, Tishman Building, 10960 Wilshire Boulevard, Los Angeles, Calif.

and can be inspe'cted at the-office of the Commission at

' <<3 <<

Suite 788, 1375 Peachtree Street, N.E. < Atlanta, Ga. Copies of such material can also be obtained at prescribed rates from the Public Reference Section of, the Commission at its principal office at 500 North Capitol Street, N.W., Washington, D. C. 20549. The Company's Common Stock is listed on the New York and Pacific Stock Exchanges, where reports, proxy material and other information concerning the Company may also be inspected.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Securities and Exchange Commission are incorporated by reference in this Prospectus!

(1) Annual Report on Form 10<<K for the year ended December 31, 1980.

(2) Proxy Statement, dated April 8, 1981, for the 1981 annual meeting of shareholders.

(3) Quarterly Reports on Form 10<<Q for the quarters ended March 31, 1981, June 30, 1 981 g and September 3 0, 1 9 8'l ~

(4) Form 8 dated May 8, 1981 amending Form 10<<Q for the quarter ended March 31, 1981.

(5) Prospectus dated April 29, 1981 relating to the sale of 400,000 shares of Serial Preferred Stock, $ 14.00 Series.

All reports and other documents filed by the Company pursuant to Sections 13 or 14 of the Securities Exchange Act of 1934 after the date of this Prospectus and prior to the termination of the offering made by this Prospectus shall be deemed to be .incorporated by reference in this Prospectus and to be made a part hereof from the date of filing of such reports and documents.

The Company will provide without charge to each person to whom a copy of this Prospectus has been delivered, on the written request of any such person, a copy of any or all of the documents referred to above which have been or may be incorporated in this Prospectus by reference, other than exhibits to such documents. Written requests for copies of 'such documents should be addressed to Edward. G.

, Lilly, Jr., Executive Vice Presidentg Carolina Power & Light Company, 411 Fayetteville Street, Raleigh, North Carolina 27602

,SELECTED INFORMATION The f'ollowing"material, which is presented herein solely to furnish limited introductory informa'tion regard'ing "" "

the Company and. the offering, has been selected from or is based upon the detailed information and financial statements appearing in the documents incorporated herein by reference or elsewhere in this Prospectus, is qualified in its entirety by reference thereto and, therefore, should be'read together therewith.

THE OFFERING Security Offered 3,000,000 shares of Common Stock (New Common Stock)

Shares Estimated to be Outstanding after Offering 55 i 744 i 035 Use of Proceeds Financing of construction program Lz.sted . New York and Pacific Stock Exchanges (Symbol: CPL) 1981 Price Range (through November 16, 1981) $ 20 3/4 $ 16 3/4 Closing Price on November'6, 1981 on the New York Stock Exchange $ 20 1/8 Indicated Current Annual Dividend Rate- $ 2.40 CAROLINA POWER 6 LIGHT COMPANY Busxness - . Generation, transmission, distribution and sale of electricity Service Area Portions of North Carolina and South Carolina comprising approximately 30,000 square miles Approximately 750,000 4

Customers .

Installed Summer Generating Capability (in kilowatts). 7~978g000 Sources of Generation during 1981 (estimated) 70.0% coal, 28.0% nuclear, 'l.5% hydro, 0.5% No. 2 fuel oil

SELECTED INFORMATION CONTINUED SELECTED FINANCIAL INH)RMhTEON

{Millions, except per share amunts)

Twelve Rmths Year Ended December 31, Ended September 30, 1976 1977 1978 1979 1980{a) 19&1(a)

Operating Revenues'. $ 687.4 $ 808.3 $ 903 4 $ 925.9 $1 i075.6 $ 1 &316.2 Net InccsB ~ ~ ~ ~ ~ ~ $ 111.0 $ 121.0 $ 142.7 $ 153.2 $ 161.4 $ 210 8 Earnings for Carman Stock e ~ ~ ~ ~ ~ ~ ~ $ 84.1 $ 94. 1 $ 115.8 $ 125.0 $ 126.7 '-'-

$ 169.5 Average Caomon Shares Outstand lng 0 ~ ~ ~ ~ 33.4 36.1 37 4 40.8 46 5 51.4 Earnings Per Canaan e o ~ ~ ~ ~ ~ ~ ~ ~

$ 2.52 $ 2.61 $ 3.10 $ 3.06 $ 2.73 $ 3.30 ends Declared Per n Share, ~ ~ ~ ~ $ 1 69 $ 1.75 $ 1.90 $ 2.05 $ 2.20 $ 2.28

{a) Earnings for the twelve months ended September 30, 1981 were favorably influenced by a mismatch of fuel costs and fuel revenue recoveries resulting in an increase in net income and .earnings per common share of approximately $ 10 million and 19 cents, respectively. .Under-recovered fuel costs not deferred on the Company's books totaled $ 40.7 million at September 30, 1981, compared to $ 59.4 million at September 30, 1980. For 1980 a mismatch between fuel costs and revenues decreased earnings per-share by $ .48.

SELECTED INFORMATION CONCLUDED CAPITALIZATXQN '

except percentages) -'Millions, As of Se tember 30, 1981 Actual Ba tao Ir Iong-term Debt(b)

Preferred Stock-

.. ~ ~ $ 1 ~921.1; 51.7S $ 1 i921.11 Redemption, Required 214.7 5.8 214 7 57 Preferred Stock-

'l. Redemption, Not Required ~ ~ ~ ~ ~ ~ ~ ~ 238.1 6.4 238.'i 6 3

", . Preference Stock ~ ~ 47.9 1 3 47 9 1 3 Ccmmn Stock Equity . ~ ~ 1 i291.5 34.8 1 351.2 35.8 Kbtal Capitalization ~ ~ ~37~I3. III0.04 773.0 100.04 t

Short-term debt.(other than $ 130 million of Short-Term Debt Expected to. be 'Refinanced) 'is estimated to'otal $'130 million immediately before issuance of the New Common Stock and $ 75 million after application of the proceeds from the sale of the New Common Stock.

(a) Adjusted to reflect the'roposed sale of the New Common Stock.

(b),'Including $ 12,369,000 of Nuclear Fuel Obligations due within one year, .$ 15 million principal amount of term

loan= due September 1982 and -$ 130 million principal amount of Short-Term Debt Expected,to be, Refinanced.

I II 'I F tl THE COMPANY Carolina Power 6 Light Company is a public service corporation formed under the laws of North Carolina in 1926, and is engaged in the generation, transmission, distribution and 'sale of electricity in portions of North Carolina and South Carolina. The principal executive offices of the Company are located at 411 Fayetteville Street, Raleigh, North Carolina 27602, telephone 919-836-'6111.

1 APPLICATION OF PROCEEDS The net proceeds (estimated at $ 59,700,000) from the sale of the New Common Stock will be used for the repayment of a portion of short-term borrowings incurred primarily for the construction of new facilities, and for other general corporate purposes. Short'-'erm borrowings (other than $ 130 million of Short-Term Debt Expected to be Refinanced) are anticipated to approximate $ 130 million immediately prior to the delivery of the New Common Stock.

The Company anticipates investing the proceeds not 'immedi-ately required for the above purposes in short-term money market instruments.

COMMON STOCK PRICE RANGE AND DIVIDENDS The Common Stock is listed on the New York and Pacific Stock Exchanges. The high and low sales prices per share for the periods indicated, as reported in The Wall Street"Journal (as New York Stock Exchange transactions through January 23, 1976, and" thereafter as composite transactions), and the dividends paid per share, were as follows:

Price Ran e Dividends

~Hi h Low Quarterl Annual 1976 . ~ . ~ ~ ~ $ 24 1/2 $ 17 5/8 $1 66 1977 ~ ~ . . . 25 3/8 21 1/2 1 72 1978 . . ~ . ~ 23 7/8 19 7/8 1 87 1979 First Quarter 22 1/2 21 3/8 $ .49 Second Quarter 22 18 1/4 .49 Third Quarter 22 19 7/8 .52 Fourth Quarter 20 1/8 17 3/8 .52 2 02 1980 First Quarter 19 1/8 14 7/8 .52 Second Quarter 21 3/4 16 1/4 ~ 52 Third Quarter 22 19 .56 Fourth Quarter 'l9 3/4 16 1/2 56 2. 16 1981 First Quarter 18 3/8 16 7/8 .56 Second Quarter 20 3/4 16 3/4 .56 Third Quarter 20 17 7/8 .60 Fourth Quarter (through November 16) 20 1/2 17 7/8 .60 2.32 The reported last sale on November 16, 1981 on the New York Stock Exchange was $ 20 1/8 per share. The book value of the Common Stock as of September 30, 1981 was

$ 24.45 per share.

The Company has paid quarterly dividends on its Common Stock in every quarter since the Company's Common Stock became publicly held in 1946.

The Company,has an Automatic Dividend Reinvestment Plan (Plan) whereby the holders of shares, of the Company's Preferred, Preference and Common Stock may automatically have their cash dividends invested in new issue shares of the Company's Common Stock. In addition, holders of such stocks may make optional cash payments (up to $ 2,000 per month) to be invested in the Company's Common Stock under the Plan.

The price of Common Stock purchased under the Plan is equal to 978 of the average of the high and low sale prices for the Common St'ock (on the composite tape as reported in The Wall Street Journal) on the day on which the Common Stock is purchased.

In October 1981 the Company initiated a Customer Stock Ownership Plan pursuant to which customers of the Company may purchase Common Stock on a monthly basis at 97%

of the average of the high and low sale prices for the Common Stock (on the composite tape as reported in The Wall Street Journal) on the day on which the Common Stock is purchased. The Company has reserved 2,000,000 shares of Common Stock for sales pursuant to the Customer Stock Ownership Plan. The Company anticipates that such sales of Common Stock will commence in January 1982.

ADDITIONAL INFORMATION The following material is presented herein to update information contained in the Company's documents incorporated by reference herein (see "Incorportion of Certain Documents by Reference" ) and, therefore, should be read together therewith.

Construction and Financing Program To finance the Company's 1981 capital requirements of $ 584 million, the Company has issued and sold Preferred Stock and Common Stock providing aggregate gross proceeds'to the Company of approximately $ 65.4 million. In addition, the Company has raised approximately $ 225.6 million as follows: (i) $ 15.6 million from the proceeds of pollution control revenue bonds sold in 1980, (ii) $ 80 million of term loans and (iii) be Refinanced.

$ 130 million of Short-Term Debt Expected to The Company anticipates that after the application of the proceeds from the sale of the New Common Stock the external capital requirements of the Company for the remainder of 1981 will be approximately $ 30 million,

which will come from short-term borrowings. The balance of the Company's 1981 capital reqQirements is expected to come from internally generated funds.

As of September 30, 1981 the Company had expended approximately $ 354 million of the amount estimated for its 1981 capital requirements.

The Company is currently considering the cancel-lation or further deferral of Harris Units No. 3 and No. 4 as a result of the high cost of capital, increasing construc-tion costs, and a reduction in the projected growth of customer demand. The Company's intensified load management program has been designed to reduce significantly the Company's peak demand in the 1990's when Harris Units No. 3 and No. 4 are presently scheduled to be placed in service.

As of September 30, 1981 the Company had expended approxi-mately $ 150'million on Harris Units No. 3 and No. 4. See "Retail Rate Matters".

The Company has entered into an agreement with the North Carolina Municipal Power Agency Number 3 (Agency),

composed of the majority of the North Carolina municipal wholesale customers of the Company and Virginia Electric and Power Company. The Agency will acquire, subject to regula-tory approval, undivided- interests, ranging between 12.9%

and 18.4%, in .the Company's Brunswick Units No. 1 and No. 2 and Roxboro Unit No. 4 as well as the Harris and Mayo Plants now under construction. The Company will continue to operate the units and provide transmission services, back-stand serv'ices and supplemental power as required to provide Agency participants with electric power. Under some, but not all cases, the Company's First Mortgage and Deed of Trust could require the Company to retire a pro rata portion of, each series of its outstanding first mortgage bonds, except Pollution Control Series A, B, and C, with the proceeds of such a sale; Whether such a retirement would be

'required will depend upon various factors including the timing of the disposition and the nature and amount of the consideration received and whether such disposition is madeto or'rdered by a governmental authority.

Recent Financial Information For the twelve months ended October 31, 1981, operating"'revenues, net income, earnings for Common Stock and earnings per 'Common'hare were $ 1,318,187,000,

)

$ 208,998,000,'167,214,000, and $ 3.22, respectively.,These amounts are unaudited but in'he opinion of the Company include all adjustments (consisting of only normal recurring accruals) necessary to a fair statement of such amounts.

These amounts reflect $ 43,638,000 of revenues billed subject to refund with interest pending -final regulatory determina-..

tions. An additional $ 12,887,000, which is not included in the above amount, was billed subject to refund with interest and has been set aside in a reserve account- for possible refund.

l Earnings for=the twelve months ended October 31, 1981 were favorably influenced by a mismatch of fuel costs and fuel revenue recoveries resulting in an increase in net, income and earnings per common -share of approximately $ 5.8 million and 11 cents, respectively. Under-recovered fuel costs not deferred on the Company's books totaled $ 40.7 million at October 31, 1981, compared with $ 52.0 million at October 31, 1980.

Retail Rate Matters In May 1981, the Company filed .a request with the North Carolina Utilities Commission (NCUC) for a general rate increase of 16.4 percent which, if granted, would increase retail rates by approximately $ 151 million annually.

Hearings were completed in November 1981. 'he Company anticipates an NCUC decision in December 1981.

In October 1981, the NCUC issued an order approving the Company's expenditures of approximately $ 80 million for the cost of fuel incurred in the four month period ending August 31, 1981 and authorized the collection of rates reflecting such expenditures during the twelve month period commencing December 1, 1981. Normally such rates would have been collected during the four month period commencing December 1, 1981; The NCUC order, stated that it had spread the collection of such rates over the longer period to, reduce the impact of the'igher rate on the Company's

customers.

The Company'iled, a request with the'South Carolina Public Service Commission for,a'"general rate increase of 22 "

percent,'which if .gianted,'would inciease retail rates'y approximately'40 mi'llion'n'nually.'h'is inciease is'eing=.

colle'cted,und'er'bond'ubject 'to'efund with interest at 9 " .'"

percent. Heaii'ngs are anticipated'or- March'982.

-1 2-The Company has announced an intensified conserva-tion and load management program designed to reduce peak demand by an additional 900 MW by 1995. This effort includes offering loans to Company customers at percent interest to 6

install insulation and a'rogram of direct control of air conditioners and water heaters. The Company's overall goal is to reduce the projected 1995 summer peak demand by 1750 MWo The NCUC has announced an investigation and independent management examination of the Company focusing on plant performance and power production at all Company facilities. This investigation "and examination is expected to be completed in the -summer of 1982. In addition the Public Staff o'f the NCUC has announced its intent to investi-gate the performance of the Company's Brunswick Plant.

Th'e Company is unable to=predict the outcome of the above matters.

Wholesale Rate Matters In June 1981, the Company filed a request with the Federal Energy Regulatory Commission (FERC) for a general rate increase of 15.7 percent which, if granted, would increase wholesale electric rates by approximately $ 35 million annually. By order issued August 11, 1981, the FERC suspended the effective date of the proposed increase until January 1982 and set the matter for hearing. The Company is unable to predict the outcome of this matter.

Environmental Matters The Environmental Protection Agency (EPA) has recently approved a State Implementation Plan revision which eliminated the requirement that the Company's coal-burning facilities reduce visible emission limitations to 20 percent opacity., As a result of this approval, the federal and state visible emission limitations will remain at 40 percent opacity for coal-burning faci.'lities.

The Roxboro Unit No. 4 boiler manufacturer has installed new burners on the "A" boiler of that unit.

Preliminary results indicate that the new burners comply with the nitrogen, oxide (NO ) emissio'n limitations. The"B" Company is presently installing similar burners on the boiler and making additional modifications "to achieve the warranted steam temperatures for that un'it. The North

Carolina Division of Environmental Management has notified the Company that continuous NO monitors must be installed by December 1-, 1981 and formally notified the Company that the Roxboro Unit No. 4 is not in compliance with federal and s tate NO requirements. The Company has'equested deferral of the iKstallation of the monitors until after all pending plant modifications to correct steam temperatures and NOx problems have been completed.

EPA-has objected to the State of North Carolina's draft National Pollutant Dischaige-Elimination System (NPDES) permit for Mayo Units No. 1 and No. 2. Zf the EPA persists in its position and prevails, or if the State fails to modify other permit provisions which the Company has excepted to, additional treatment costs, undetermined at this time, could be required as a result of limitations on discharges from the 'ash.pond at the units. Zn the event a final permit is not issued by mid-1982, initial operation of plant (presently scheduled for 1983) may be delayed. 'he The Company has requested a hearing to challenge the thermal limitations in the NPDES permit for the Roxboro Steam Electric Plant. These limitations are now being informaLLy reviewed by the North Carolina Division of Environmental Management based on the Company's recent submittal of the Hyco Reservoir Environmental Report (1979-1980). The Company feels that data contained in this report support modifications of the thermal limitations in the permits in a manner which will allow the continued operation of Units Nos. 1 and 2 utilizing "once through" cooling water without seasonal .load limitations. However, should the current permit conditions remain in effect without modifi-cation, Roxboro Units Nos. 1 and 2 could be require8 to operate at reduced output during portions of the summer or additional expenditures could be required to modify the existing plant cooling system.

The North Carolina Environmental Management Com-mission granted the Company's existing coal-fired generating units a three-year vaiiance (through June 30, 1982) from the otherwise applicable particulate emission limitations and established alternate limits to be in effect while outlet emission tes'ting was conducted to gather data 'for use in determining the particulate emission limits to be applicable subsequent to June 30, 1982;- Particulate emissi'on data that 4

-1 4-has been, gathered supports a revision in the particulate emission standard. It is expected that the North Carolina Environmental Management Commission will institute a rule-making proceeding to consider changes in this standard. If.

not, the Company intends to petition for .a variance.

While the outcome of the above matters is uncer-tain the Company does not believe their resolution will have any material adverse effect on the financial position or results of operations of the Company.

Nuclear Matters The Company's Robinson Unit No. 2 has experienced damage to steam generator tubes resulting in leaks which have required outages for inspection and plugging of tubes.

Recent, inspections indicate, that tube deterioration has progressed at higher rates than expected. Analysis of the tube degradation data indicates that the rate of degradation may be slowed significantly by operating at reduced temperatures in the steam generator hot leg. At this time, operation at the lower temperature requires power reductions up to 50 percent, although operation at higher power levels is possible if necessary to meet system load. The Company intends to continue operating this unit for the remainder of its current fuel cycle on the basis of lower temperatures.

After hydrostatic testing and control syst'm changes are made to support continued operations at reduced temperatures but higher power levels, the Company anticipates operating at a load of about 75 percent. The Company presently plans to re-place the Robinson steam generators but because of the lead time associated with such major items of equipment, replacement will not be possible until 1984 or 1985. The unit will have to be shut down for- approximately one year to replace-the steam generators and associated equipment. The cost of the change is currently estimated to be $ 100 million to $ 200 million, exclusive of replacement power costs.

The Nuclear Regulatory Commission (NRC) has asked Company and other utilities who ownpressurized water

.'he reactors, such as the Company.'s Robinson Unit.No. 2, for information on the ability of, the reactor pressure, vessels to withstand the;.effects of thermal shock. Thermal. shock is-a 'condition which results .from .the introduction of cold water into a hot, pressurized reactor vessel. If the

fracture toughness of the vessel has been reduced by exten-sive irradiation, cracking could result from thermal shock.

The NRC believes that older reactor pressure vessels can withstand thermal shock at the present time, but feels that continued operation at full power could reduce the vessel toughness to unacceptable levels before retirement of'hese plants. The NRC staff 'believes a long lead time will be necessary to plan and implement corrective measures and that additional'steps should be taken now. The Company's initial findings indicate there is no need for immediate concern although it is undertaking long-tean analyses.

The .Company's Brunswick Unit No. 1 was removed from service in April 1981 and was to be returned to service in July. As the unit was being brought on line, problems were encountered in the turbine lubricating oil system and the unit had to be shut down. Subsequent in-spection revealed varying degrees of damage to the turbine bearings which had to be repaired. The damage has been attributed to foreign material in the turbine oil. The turbine lube oil system has been thoroughly flushed and cleaned to ensure removal of this material. The unit was returned to service in September.

The Company has been required by'he NRC to modify the augmented off gas system at its Brunswick Plant by, December 1983. -The system provides supplemental decon-.

tamination of radioactive gases from the plant's condenser.

The Company also plans to replace the condenser tubes in the Brunswick units to reduce the potential for tube leaks which interfere with the chemistry limits in the primary systems.

This work will also require extended outage for the units.

V The Company projects that approximately 51 unit outage weeks will be required on. its Brunswick units-,to perform these modifications and accommodate other planned maintenance and refueling work during, 1982, .1983 and the first part of 1984 at a cost of approximately $ 50 million.

lf additional requirements are imposed or the NRC does not, concur in. the Company's proposed scheduling of additional work, the'equired outage time will be increased.

it ted ~ =~

The Company , has subm

. emergency respons e plans a nd impl erne nt ing, procedures for. the Brunswick and Robinson Nuclear Pl ants to the NRC in compliance with revi sed federal

-1 6-I regulations. Revised emergency plans piepared by the State of South Carolina and the State of North'Carolina have also submitted to the NRC and the Federal Emergency Manage- 'een ment Agency. Joint emergency preparedness exercises with North and South Carolina have been conducted recently for the Brunswick and Robinson Nuclear Plants, respectively.

The Company's emergency preparedness program will be evaluat-ed by the NRC no later than April 1, 1982.

deficient If the NRCcorrect-finds any of the plans and the deficiency is not ed within four months, the NRC can suspend plant operation or take other enforcement action. The Company has been required by the NRC to provide an emergency notification system by February 1, 1982 in the area within a 10 mile radius of the Company's Brunswick and Robinson Plants. The Company anticipates meeting this date; however, if this date is not met and an extension is not granted, the NRC may suspend'lant operations or take other enforcement action.

The NRC and the United States Court of Appeals for the District of Columbia Circuit have denied an industry request for a stay of NRC's fire protection regulations.

The Company has pending before the NRC a petition for relief from a portion of the substantive requirements of the regulations and exemption from the deadlines imposed by the schedule.

The Company has petitioned for hearings on pending NRC orders which require environmental qualification of electrical equipment in the Company's nuclear units by June 30, 1982. In a separate proceeding, the NRC staff has recommended that, the deadline-be extended.

'The Company was notified in September 1981 of a proposed $ 40,000 fine for violation of NRC radiation control requirements at Brunswick Unit No. 2.- An employee working on the water purification system received a radiation ex-,

posure in excess of NRC quarterly limits'but below the. level considered harmful. The Company has paid $ 35,000 of the fine and requested clarification of that portion of the notice of violation l represented by the .remaining $ 5,000.

The Company may incur increased construction and operating expenditures,,as,,a result of each'f the foregoing matters and, in the event""that the"NRC 'should order the shutdownof any of the. Company',s nuclear units, system power resoui'cets could;,'become iiiadee'quawte'."'

Nuclear Fuel"Supply, The nuclear fuel cycle requires the mining and milling of uranium ore to provide uranium concentrate (U308)f the conversion of U 0 to uranium hexafloride (UF ), en-richment of the UF aIId fabrication of the enrich$ d uranium into fuel assemblils. The Company has on hand or has con-tracted for raw materials and services for its Robinson, Brunswick and Harris Units through the years shown below:

Estimated Raw Materials and Services in-service Unit Date Uranium Conversion Enrichment Fabrication Robinson No e 2 ~ ~ ~ ~ ~ ~ 1987 1986 2002 1986 Brunswick Harris L

Brunswick Noe 1 ~ ~ ~ ~ ~

2 ~~~~~

1987 1987 1986 1986 2002 2002 1985 1988 Harris Harris L

Noe L 2 1 ~ ~ ~ ~ ~ ~ ~ ~

~ ~ ~ ~~ ~ ~~

1985 1988 1987 1986 1986 1986 2002 2002 1985 1988 Harris L 3 4

~ ~ ~ ~ ~ ~ ~ ~

~~ ~ ~ ~ ~~ ~

1994 1992 2002 2002 1994 1992

• In commercial operation.

These contracts are expected to supply the necessary nuclear fuel to operate Robinson Unit No. 2 through 1987, Brunswick Unit No. 1 through 1986, Brunswick Unit No. 2 through 1987, Harris Unit No. 1 through 1986 and Harris Unit No. 2 through 1989. The Company expects to meet its U 0 through the years shown above from invent5r$ on -'equirements hand 'andamounts received 'under c'ontract.'-Additional suppli'es of U'0 are available'at prices prevailing in the ura'nium mkraet ($ 23.50'er pound in August 1981); 'he Company does not expect to have difficulty obtaining U308 for years later than those shown above.

DESCRIPTION OF COMMONSTOCK The Company's authorized;;capital stock,"consists of Common Stock, Preferred Stock ancl Prefeie'nce Stock. "'The"'

Preferred Stock ranks prior to the Preference Stock, and the

Common Stock, and the Preference Stock ranks'prioi to the Common Stock, as to dividends and liquidation rights.

The, following is a summary of certain rights and privileges of the Common Stock of the Company. The summary does not purport, to be complete,'and reference is made to Article Fourth of the Company's Restated Charter (Charter),

incorporated by reference as, an exhibit to the Registration Statement, for complete statements. The following state-ments are qualified in their entirety by such reference.

Reference is also made to the laws of North Carolina.

Dividend Rights: The Common Stock is entitled to all dividends after full provisions for Preferred Stock and Preference Stock dividends. The Charter contains provisions limiting the amount of dividends or distri-butions which the Company may pay or make on its Common Stock (i) unless at least a 25 percent ratio oZ Common "Stock and surplus to total capitalization is maintained if (ii) there is a failure to pay dividends on any Preferred Stock or Preference Stock (aggregate annual

'r requirements $ 44,605,000) or to meet sinking fund payments on the Preferred Stock. So long as any of the present series of First Mortgage Bonds is outstanding, the payment of Common Stock dividends is restricted to aggregate net income available therefor (after dividends on all Preferred Stock outstanding) since December 31, 1948, plus $ 3,000,000.

No portion of retained earnings is restricted as of the date hereof. There are no defaults in the payment of dividends on any of the outstanding Preferred Stock or Preference Stock.

Voting Rights (Non-Cumulative Voting): Except with respect to Preferred Stock A, each share of Preferred .

Stock and, each share of Common Stock is entitled to, one

vote on all matters. Since the holders of such shares do not, have. cumulative voting rights, the holders of more than" 50 "percent'*f 'th' ";shares, voting, can elect all the Company's 'directors, "and .in:.such'vent the. holders .

of the'iemainin'g'shares-.voting ":,(less.;than,.;50 percent) ,

elect any directors.

of the Preferred If and when dividends Stock;.shall<

payablen be in default in an

.'annot any amount equivalent to four full quarterly payments or more per" share, and thereafter until all arrears have been paid, holders of -Preferred Stock,:voting as a class, shall be.

entitled:to elect -the smallest, number of directors necessary to constitute a'majority of the'Board. of'Directors, and holders of Common Stock, voting as a class, shall have the right,,subject to prior rights of holders of, Preference Stock'o elect the remaining directors. If and when, .

div'idends payable on the"Preference, Stock;shall be. in default in an'amount equivalen't to six full quarterly,,

payment's or more per share, thereafter;until,all ar'reais have been paid,'holders.'of Preference Stock, voting's a class, shall be entitled,,subject to the prior rights "of the Preferred Stock, to elect two .directors.

4g H 1 p

'.Liquidation Rights: . The,.Preferred:Stock is entitled, in liquidation, in preference to,the Preference Stock 'arid the Common- Stock,;to $ 100 per share or, -for Preferred Stock issued 'after'une 1,,1980, the li'quidation, value f'ixed by the Board of'irectors, plus in .each, case accumulated unpaid dividends. Each series of Preference Stock is ent'itled, in liquidation, in,,preference to the Common Stock, to the amount per share fixed at the time o' issuance thereof and accumulated unpaid dividends. The of the Common Stock are entitled, to share, ratabl'y, 'holders in the distribution of all remaining assets.

Pre-emptive Rights: The holders of Common Stock have no pre-emptive r'ights to purchase additional shares of Common Stock.

A Miscellaneous: Upon the issue and sale. of the New Common Stock as contemplated in the Prospectus,. such shares will be -fully paid and nonassessable.

l

0 I'a

~ / ')

The transfer -agents for the .,Common. Stock; are,"

Wachovia'=Bank'nd Trust Company., 'N..A., Winston-Salem,'. Noith Trust. Company,.New York,,New York.

Carolina, and Bradford sly'NDERWRITER 1

'efferies & Company, Inc. (Underwriter) has agreed, subject to the terms and conditions of,the Underwriting Agreement, to purchase from the Company the 3,000,000 shares of the New'Common Stock offered hereby.

I The Underwriting Agreement provides that the Underwriter shall place the New Common Stock offered 'hereby with investors, including but not limited.to, pension, funds, pooled investment accounts and other institutional, investors at, the Price to Purchasers shown on the front cover of this Prospectus. As a condition t'o the sale of the New Common Stock by the Company, it may be required that certain of such investors or their trustee or advisor, as the case may be, provide written assurances satisfactory to the Company and the Underwriter, and to their-respective counsel, that (a) if a trustee or advisor, the trustee or advisor has discretionary authority over the investments and sales by such institutional investors, (b) they shall not cause any of the shares of New Common Stock placed with such institu-tional investors to be sold in violation of the registration provisions of the Securities Act of 1933 and comparable provisions of state securities statutes and (c) the Company has no obligation to prepare or furnish any registration.

statement or any copies of any prospectus in connection with any resale of the'hares of the New Common Stock.

EXPERTS AND LEGALITY 1

The balance sheets, schedules of capitalization and the related statements of income, retained earnings and 'source and -use of financial resources included- or incorporated by reference in -the:Company's latest, Annual, Report on Form 10-K, incorporated herein by reference, have been examined by Deloitte Haskins & Sells, independent certified public accountants, as stated in their opinions

appearing or incorporated by reference therein. The state-ments made as to matters of law and legal conclusions under "Additional Information-Retail Rate Increases" in the Company's Prospectus, dated April 29, 1981, incorporated herein by reference, under "Additional Information-Retail Rate Matters" and "Description of Common Stock" in this Prospectus and under "Item 1. Business" in the Company's latest Annual Report on Form 10-K, incorporated herein by reference, have been reviewed by William E. Graham, Jr.,

Esq., Executive Vice President and General Counsel for the Company. All of such statements are set forth in reliaace upon the opinions of said firm and individual, respectively, as experts, as expressed in their opinions with respect thereto.

The legality of the securities offered hereby will be passed upon for the Company by Reid & Priest, 40 Wall Street, New York, New York, counsel to the Company, and for the Underwriter by Morgan, Lewis 8 Bockius, 611 West Sixth Street, Los Angeles, California. Said firms may rely as to all matters of North Carolina law on the opinion of William E. Graham, Jr., Esq., Executive Vice President and General Counsel of the Company, Raleigh, North Carolina and as to all matters of South Carolina law on the opinion of Paulling a James, Darlington, South Carolina. As of October 9, 1981, William E. Graham, Jr., Esq., owned 3,101 shares of the Company's Common Stock. Members of his family owned 2,766 additional shares as to which Mr. Graham disclaims beneficial ownership. Mr. Graham is acquiring additional shares of Common Stock at regular intervals as a participant in the Company's Stock Purchase-Savings Program for Employees, the Employee Stock Ownership Plan and the Automatic Dividend Reinvestment Plan.

The-information relative'o the estimates of coal reserves appearing in the Company's latest Annual Report on Form 10-K, incorporated herein, by reference, has, as therein stated, been reviewed and verified by Paul Weir Company Incorporated, Chicago, Illinois, independent mining consul-tants and engineers, and has been incorporated herein by reference in reliance upon such review.

CONTENTS 3,000,000 Shares Pacae Available Information Incorporation of Certain Docu-ments by Reference Carolina Power.a Light Company Selected Information The Company Common Stock Application of Proceeds Common Stock Price Range and Dividends. (Without Par Value)

Additional Information Description of Common Stock o ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 18 Underwriter. 20 PROSPECTUS' Experts and Legality . 20 No dealer, salesman or other person has been authorized to give any JEFFERIES & COMPANY i INC information or to make any representa-tion not,contained in this Prospectus, in connection with the offer contained in this Prospectus, and, if given or made, such information or representation must not be relied upon as having been authorized by the Company or the Under-writer. This Prospectus is not an offer to sell, or a solicitation of an offer to buy, by the Underwriter in any state in which it is unlawful for such Underwriter to make such an offer or solicitation.

Neither the delivery of this Prospectus November 17, 1981 nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date hereof.

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Appendix C AUDITED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 JUNE 31, 1981 PREPARED BY: Ernst 6 Whinney

'0 NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 RALEIGH, NORTH CAROLINA Officers Chairman - Simon C. Sitterson, Jr. - Kinston Vice-Chairman Peter G. Vandenberg - Laurinburg Secretary-Treasurer David R. Taylor Tarboro.

Board of Commissioners R. G. Anthony Hobgood Furman K. Biggs, Jr. Lumberton T. Bruce Boyette Wilson Tommy M. Combs Elizabeth City Russ Conner New Bern W. D. Cox Hertford Robie G. Dunn Benson Raymond Glover Pikeville Lamar Hales Apex Jonathan Hankins Southport Ferd L. Harrison Scotland Neck Guy G. Hill Wake Forest E. C. Hines Winterville Charles O'H. Horne, Jr. Greenville Devone Jones Fremont D. R. Jones Washington B. D. Kimball Enfield Earl Langley Smith field John McNeill Red Springs Ralph Mobley Robersonville W. Everette Prince Selma James P. Ricks, Jr. Edenton W. P. Riley Hamilton William L. Ross Waynesville T. R. Shaw, Jr. Windsor Charles Stewart Clayton Mark A. Suggs Ayden Harry S. Taylor, Jr. Hookerton Frederick E. Turnage Rocky Mount Ralph M. Wallace Belhaven Edward B. Walters LaGrange Lois Brown Wheless Louisburg J. A. Wooten, Jr. Farmville General Manager - Ralph W. Shaw

'0 Audited Financial Statements and Other Financial Information NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 June 30, 1981 Audited Financial Statements I

Accountants Report.

Balance Sheets ~ ~ ~ ~ ~ ~ 2 Statements of Revenues and Expenses and Changes in Fund Balance. 3 Statements of Changes in Financial Position. 4 Notes to Financial Statements. 5 Other Financial Information Accountants'eport on Other Financial Information . 7 Comparison of Actual Revenues and Expenses with Budget ~ ~ ~ - ~ ~ ~ 8 Details of Management Services Expenses. 9

Ernst &,Whinney 1100 Branch Banking &, Trust Building Raleigh, North Carolina 27601 919/833-7301 Officers and Board of Commissioners North Carolina Municipal Power Agency Number 3 Raleigh, North Carolina We have examined the balance sheets of North Carolina Municipal Power Agency Number 3 as of June 30, 1981 and 1980, and the related statements of revenues and expenses and changes in fund balances, and statements of changes in financial position for the years then ended. Our examinations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.

In our opinion, the financial statements referred to above present fairly the financial position of North Carolina Municipal Power Agency Number 3 at June '30, 1981 and 1982, and the results of its operations and the changes in its financial position for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.

Raleigh, North Carolina August 12, 1981

BALANCE SHEETS NORTH CAROLINA MUNICIPAL POMER AGENCY NUMBER 3 June 30 1981 1980 ASSETS Cash $ 22,180 $ 4,036 Short-term investments 10,717 52,959

$ 32,897 $ 56,995 LIABILITIES AND FUND BALANCE Accounts payable $ 398,071 $ 30>172 COMMITMENTS Note B Fund balance (deficit) (365,174) 26,823 32,897 $ 56,995 See notes to financial statements STATEMENTS OF REVENUES AND EXPENSES AND CHANGES IN FUND BALANCE NORTH CAROLINA MUNICIPAL'POWER AGENCY NUMBER 3 Year Ended June 30 1981 =

1980 Revenues:

Membership dues $ 589,877 $ 404,870 Investment revenue 9,111 7,502 TOTAL REVENUES 598,988 412,372 Expenses:

Outside consultants:

Legal 246,695 81,898 Engineering 524,121 223,326 770,816 305,224 Administrative 220,169 87,157 TOTAL EXPENSES 990,985 392,381 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES (391,997) 19,991 Fund balance at beginning of year 26,823 6,832 FUND BALANCE (DEFICIT) AT END OF YEAR $ (365,174) $ 26,823 See notes to financial statements

STATEMENTS OF CHANGES IN FINANCIAL POSITION NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 Year Ended June 30 1981 1980 SOURCES (USES) OF WORKING CAPITAL Excess (deficiency) of revenues over expenses $ (391,997) $ 19,991 INCREASE (DECREASE) IN WORKING CAPITAL $ (391,997) $ 19,991 COMPONENTS OF INCREASE (DECREASE) IN WORKING CAPITAL Cash 18,144 $ (22,992)

Investments (42,242) 52,959 Accounts Pay able (367,899) (17,543)

Prepaid Dues 7,567 INCREASE (DECREASE) IN WORKING CAPITAL $ (391,997) $ 19,991 See notes to financial statements

NOTES TO FINANCIAL STATEMENTS

~ NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 NOTE A--SIGNIFICANT ACCOUNTING POLICIES agency organized and existing pursuant to Chapter 159B of the General Statutes of North Carolina, to enable municipal electric systems through the organization of the Agency, to finance, build, and operate generation and transmission projects. The Agency is composed of 22 of the 23 municipal systems served directly by Carolina Power & Light Company and 14 of the 16 municipal systems served by power generated by Virginia Electric and Power Company.

Revenues: The members are assessed annual dues in order to fund the studies of various potential alternatives to their power supply needs.

Revenues are recorded on an accrual basis as assessed.

Investments: Investments which consist of short-term federal securities are stated at cost which .approximates market value, at the balance sheet date.

NOTE B COMMITMENTS The Agency has entered into a contract with ElectriCities of North Carolina whereby ElectriCities provides to the Agency, at actual cost, management services as necessary to conduct business. The term of this agreement is for a period continuing to and including December 31, 1984, and shall be automatically renewed for successive periods of 3 years thereafter until terminated by one year's written notice by either party to the end of any contract year.

The Agency has entered into an agreement with North Carolina Municipal Power Agency Number 1 to share costs equally of systems being currently developed for Agency 1. The development of the business systems is of benefit to both Agency 1 and Agency 3. The agreement provides that Agency 1 will bear the costs until such time as Agency 3 issues electric revenue bonds and at that time, Agency 3 shall pay the costs from the proceeds of the sale of the bonds. In the event Agency 3 does not issue bonds, Agency 1 shall not be entitled to any reimbursement for the costs.

NOTES TO FINANCIAL STATEMENTS Continued NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 NOTE B COMMITMENTS--Continued North Carolina Municipal Power Agency Number 3 has successfully concluded negotiations with Carolina Power & Light Company to acquire an undivided ownership interest in certain fossil and nuclear generating units, including existing units and units under construction. On'uly 30, 1981, the Board of Commissioners recommended that the Project Power Sales Agreements and Supplemental Power Sales Agreements be approved and executed by each of its members. These agreements between the Agency and any member municipality electing to participate establish the terms by which the municipalities purchase their bulk power requirements from, the Agency. If proper approval is obtained from the members, North Carolina Power Agency Number 3 will issue bonds to obtain the capital needed to acquire the undivided ownership interest in'he generating plants. The results of the decisions of the members are not known at this time.

0 Ernst AWhinney 1100 Branch Banking & Trust Building Raleigh, North Carolina 27601 919/833-7301 Officers and Board of Commissioners North Carolina Municipal Power Agency Number 3 Raleigh, North Carolina The audited financial statements of theAgency and our report thereon are presented in the preceding section of this report. The information presented hereinafter is for purposes of additional analysis and is not required for a fair presentation of the financial position, results of operations, changes in financial position or changes in fund balance of the Agency. Such information has been subjected to the auditing procedures applied in our examination of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.

Raleigh, North Carolina August 12, 1981

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tCOMPARISON OF ACTUAL REVENUES AND EXPENSES WITH BUDGET

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NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 Year Ended June 30 1981 Budget Actual REVENUES Membership dues $ 578,600 $ 589,877 Investment revenue 6,000 9,111 TOTAL REVENUES 584,600 5985988 EXPENSES Outside consultants:

Legal 120,000 246,695 Engineering 275,000 524,121 TOTAL OUTSIDE CONSULTANTS 395,000 770,816 Administrative:

Travel and expenses Board of Commissioners 85050 5,569 Copies 403 Printing 403 Dues and subscriptions 242 196 Audit and accounting 700 5,808 Insurance 200 170 Miscellaneous 322 7 Management services 169,280 208,419.

TOTAL ADMINISTRATIVE 179, 600 220, 169 Contingency 10,000 0>>

TOTAL EXPENSES'84,600 990,985 EXCESS OF EXPENSES OVER REVENUES $ $ 391,997

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DETAILS OF MANAGEMENT SERVICES EXPENSES NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 Year Ended June 30 1981 1980 Salaries $ 117,169 853 $ 648

.Employee benefits 16,125 7$ 628 Travel and expenses 21,436 5$ 910 Recruitment and relocation 9,067 '. Staff development 3,052 264 Equipment and. furniture purchases 12,741 642 Rent 12,730 2,526 Telephone 4,481 1,429 Copies 4,364 1,438 Office supplies 2,962 489 Dues and subscriptions 975 119 Postage 820 479 Vehicle operation and maintenance 733 217 Equipment and maintenance contracts 614 71 Insurance 219 357 Contingency '0 4,695

Printing 83 Writer-consultant fee 53 Miscellaneous 931 1,085 h

, TOTAL MANAGEMENT SERVICES EXPENSES S208$ 419 $ 81$ 133

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