Text

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)
	v • d • e

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 411 Fayetteville Street Mall Raleigh, North Carolina 27602 Power Agency Post Office Box 95162

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.

J.

A. Jones E. E. Utley Edward G. Lilly, Jr.

Chairman/President and Chief Executive Officer Vice Chairman Executive Vice President Executive Vice President and Chief Financial Officer (Group Executive)

William E.

Graham, Jr.

M. A. McDuffie Wilson W. Morgan W. J. Ridout, Jr.

James M. Davis, Jr.

Lynn W. Eury J. L. Lancaster, Jr.

L. T. Quarles Paul S.

Bradshaw Executive Vice President and General Counsel (Group Executive) t Senior Vice President (Group Executive)

Senior Vice President (Group Executive)

Secretary Treasurer 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 Town of Apex Mr. Mark A. Suggs Town of Ayden Mr. Steve Weatherman Town of Belhaven Mr. Charles W. Matthews Town of Benson

Mr. Charles Stewart Town of Clayton Mr. James P. Ricks, Jr.

Town of Edenton Mr. Tommy M.

Combs City of Elizabeth City Hon.

B., D. Kimball Town of Enfield Mr. J.

A. Wooten, Jr.*

Town of Farmville Mr. Devone Jones Town of Fremont Mr. Charles O'H. Horne, Jr.*

City of Greenville Mr.

W. P. Riley Town of Hamilton Hon.

W. D.

Cox Town of Hertford Hon.

R.

G. Anthony Town of Hobgood Mr. Gene C. Hill Town of Hookerton Hon.

Simon C. Sitterson, Jr.*

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

City of Laurinburg Ms. Lois Brown Wheless Town of Louisburg Hon.

Furman K. Biggs, Jr.

City of Lumberton Mr. Boyd Myers City of New Bern Mr. Raymond Glover Town of Pikeville Mr. John McNeill Town of Red Springs Mr. Ralph Mobley Town of Robersonville Hon. Frederick E. Turnage*

City of Rocky Mount Mr. Robert R. Collins Town of Selma Hon. Ferd L. Harrison Town of Scotland Neck Mr. Earl Langley Town of Smithfield Mr. Jonathan Hankins City of Southport Mr. David R. Taylor*

Town of Tarboro Mr. Guy C. Hill Town of Wake Forest Mr. Abbot Sawyer City of Washington Mr. William L. Ross Town of Waynesville Mr. T. Bruce Boyette City of Wilson Mr. T. R.

Shaw, Jr.

City of Windsor Mr. E.

C. Hines 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 UALIFICATIONOF 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 fulfillthe 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, C including the Harris Units, are completed,

operable, operating, or 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 Courier Tribune Daily Record Daily Advance Fayetteville Observer Fayetteville Times Asheville, North Carolina

Asheboro, North Carolina Dunn, North Carolina Elizabeth City, North Carolina Fayetteville, North Carolina Fayetteville, North Carolina

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

Florence, South Carolina

Sumter, South Carolina 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 My commission expires:

Oct. 4, 1986 Sworn to and subscribed before me this 18th day of December, 1981.

0'11IIIIIIJ/i Notary Public

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NORTH CAROLINA EASTERN MUN&gPNp~g&EQO AGENCY

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Assistant Secretary-Treasurer My commission expires:

Oct. 4, 1986 Sworn to and subscribed before me this 18th day of DecembgggrtkQQ.

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1 Highlights of 1980 1980 Percent 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 ofCommon Stock Outstanding (Year End)

Earnings per Average Common Share Outstanding Cash Dividends Paid per Common Share Dividends Paid (Common and Preferred)

Kilowatt-HourSales (Thousands)

System Capability Including Purchases (Kilowatts) 51,208,000 41,386,000 23.7 S

2.73'

'.06

( I0.8)

S 2.16 S

2.02 6.9 S

130,432,000 S

I 09,530,000 I 9. I 30,282,000 S

28,668,000 5.6 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)

Construction Expenditures Customers (Year End)

Employees (Year End)

S 629,093,000 S

605,696,000 3.9 742,000 725,000 23 6,522 6,247 4.4 S4,709,449,000 S4,102,975,000 I4.8

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

Operating Revenue Dollar Source (Millionsof Dollarsl Use 32C Residential customers S342.2 28C Industrial customers S296.7

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O h w'p Fuel

$ 4 I 1.2 Deferred fuel expense and credits IS 19.5) ompensat on to nvestors or use of their funds Iinterest, 8c preferred and preference stock, 2c. common stock, 6c)

S172.2 38C (2C) 16C Taxes S I55,9 15C 18C I 9C.,

Wholesale customers S202.4 Total: S I,075.6 Commercial customers

,(

Ot er e ectrlc operating revenues S38.9 Depreciation and amortization S88.7 Wages and employee benefits'96.8 a n enance excep cmp oyee wa c

$76.I t cropcraungcxpcnses 7C rc ase ntcrc an e ower,net 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 rose 5.6 percent and our operating revenues, helped by rate increases, gained 16.2 percent to

$ 1.076 billion. Net income increased 5.3 percent and earnings per share ofcommon were $2.73 as compared to $3.06 in 1979.

Earnings were adversely affected by the summer's higher fuel costs, which willnot be fully recovered until mid-1981.

Unrecovered fuel expenses at year-end amounted to 48 cents per share. We had no under-recovery of fuel costs at the end of 1979.

Dividends Increased Effective with the August

payment, the directors increased the quarterly dividend from 52 to 56 cents per share, or to an annual dividend rate of $2.24. It is the Company's objective to achieve levels of performance that willcontinue to permit regular dividend increases.

A new peak for the system was established in August when customers required 6,139,000 kilowatts, a gain of nearly 4 percent over the 1979 peak. Early in 1981 during record cold weather, a still higher peak was set when customer demand reached 6,402,000 kilowatts.

Construction Program Revised In June the Directors approved changes in the construction program, which delayed the operating dates for four nuclear generating units and one coal-fired unit. Under the revised plan, the next units to come into service are a 720,000-kilowatt, coal-fired unit at the Mayo plant in 1983 and the first 900,000-kilowatt unit of the Harris nuclear plant in 1985. The complete construction schedule is shown on page 7 of this report.

Our 10-year load forecast adopted in December indicates that system peak demand is expected to grow at an annual rate of3.6 percent, and we have continuing load forecast studies underway.

Capital availability on reasonable terms is a necessity for our program.

We will continue to adjust construction plans as necessary to seek to provide new generation in a timely, efficient and economical manner.

Our 1980 construction expenditures of $629 millionwere less than the $694 millionbudgeted because of the mid.-year changes in the construction program.

The 1981 construction budget is $594 million and, for the three years 1981-83, we estimate construction expenditures will total $ 1.8 billion.

Financing To help underwrite our 1980 construction program, the Company raised a total of $476 million from outside sources.

A listing of major 1980 financing arrangements is found on page 7.

One of our more challenging tasks is to raise

'large amounts of capital on reasonable terms to build the new facilities that willbe necessary provide

adequate, dependable service.

recognize that this can be accomplished only we achieve prices that fully cover all of our

expenses, including a reasonable rate of return that willallow periodic dividend increases. Thus, we have vigorously sought to adjust our prices to cover rising costs.

Rate Increases During 1980 we received two retail rate increases in North Carolina totaling over 17 percent, which will add about

$ 115 million to annual revenues. In South Carolina we requested a retail rate increase of 19.44 percent, which would provide $27.5 million in additional annual revenues.

We are now collecting, subject to refund pending a final decision by the S.C. Public Service Commission, almost all ofthe requested increase. The Commission decision is expected in the spring.

Pending hearings by the Federal Energy Regulatory Commission, the Company in August placed into effect under bond a wholesale ra increase of 17.22 percent. The revised rates designed to produce added annual revenues

$30.8 million, based on a 1980 test year.

Shenvood H. Smith. Ir.

Chairman/President New Generating Unit Completed 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 ofcoal-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 willprovide 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

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expenses at year-end.

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4'.

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 Agency reached an agreement in October that will save our customers more than $550 million over the life of the plant.

Exhaustive independent studies initiated by the Company provided evidence that the cooling towers were not necessary to protect adequately the aquatic life in the vicinity of the plant. As part of the agreement, we will make modifications to the plant's cooling system that willresult iri costs ofabout $9 million per year as compared to the $40 millionannual expense that cooling towers would have imposed.

National Decisions Needed We continue to believe that for this country to have an adequate, dependable,'affordable energy supply, itmust make greater use of its coal and uranium resources.

For this to happen, it is essential that national decisions be made with respect to storage and reprocessing of spent nuclear fuel and the disposal of high-level radioactive waste. The time required to license and construct plants must be shortened. These problems remain largely political rather than technological.

Similarly, this nation must find the willpower and self-discipline to control inflation. It is imperative that we have fiscal and monetary policies that encourage personal savings and the formation of new capital with which to modernize and expand our productive capacity.

Also important is the elimination of unneces governmental rules and regulations that drive u costs and fuel inflation.

As a capital-intensive, regulated utility, w have a vital concern in all of these matters. In the interest of our customers and our shareholders we must communicate to governmental official and elected representatives the urgency.

o action on these issues to permit adequate energy supplies for the future.

It is with deep regret that we note the deat of Shearon Harris, former President and Chairma of our Board, on August 28 followingan extende illness.

During the I970s, when he served a

chairman of the Edison Electric Institute and th Electric Power Research Institute, and later a chairman of the Chamber of Commerce of the United States, he'was an outstanding spokesman for the electric industry and the busines community.

At CPGL, we are proud of our record responding to challenge. With the dedicatioi our 6,522 employees and the continued supp of our I 25,642 shareholders, to whom we exten our deep appreciation, we are confident that w.

can continue to manage successfully th challenges ahead.

Respectfully submitted for the Board of Directors.

Sherwood H. Smith, ir.

Chairman/President March 2. l98I

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Year in Review l,200 l,000 800 600 400 200 I80 l50 120 90 30

!,076 687 808 903 926 76 77 78 79 80 Net Income (Millionsof Dollars) l43 I 33 I6 I 76 77 78 79 80 Electric operating Revenues (Millionsof Dollars)

Energy Sales Energy'sales increased 5.6 percent in I980 as compared with a 2.4 percent increase in I979. The higher rate of growth was due primarily to extreme summer and winter weather.

Sales to residential customers showed the greatest gain, 9.4 percent, while commercial sales increased 7.5 percent and sales for

resale, 73 percent. Industrial sales increased 1.9 percent.

Operating Revenues Operating revenues increased I6.2 percent to SI,076 million. This repre-sented an increase of SI49.7 million over

)979. Of this revenue

increase,

$49.8 million was attributable to general rate increases effective in I 980, S50 million to increased fuel charge billings and the remainder to increased energy sales.

Operating Expenses Operating expenses increased I9.6 percent, or $ 148 million, to a total of

$903 million.

Significant changes included:

~ a 35 percent, or SI06.5 million, increase 'in fuel expense, compared with an I I.l percent, or $30.4 million, increase in I979. This increase reflected a

2(.9 percent increase in fossil generation and a I7.l percent reduc-tion in nuclear generation. Greater use of fossil plants was necessary because of extended outages for refueling and government-required modifications of nuclear plants.

During 1980, the average unit price offossil fuels burned increased I 4.9 percent.

~ a decrease of S8.5 millionin I980 in the net provision for customer fuel

credits, together with a $9.2 million deferred fuel

credit, which offset somewhat the increase in current fuel expense not matched with Increased fuel charge billings. Unrecovered costs for fuel and purchased power at December 3l, I980, totaled approxi-mately S44 million (none at December 3 I, I 979), resulting in a reduction (aft income taxes) in net income approximately S22.4 million an earnings per share of S.48 for I 980.

The Company has received regul tory approval to recover the costs f fuel and purchased power through lul I98 I.

~ a 23.7 percent increase in oth operation expenses and a 27.4 perce increase in maintenance, which refle increases in prices, costs resulting fro nuclear regulatory requirements, and greater amount of property in servic

~ a S20.I million increase in n purchased and interchanged pow

expense, reflecting the reduce availability of nuclear generatio during high summer

usage, whic resulted in increased energy purchase from other utilities.

Price Ranges and Dividends Paid Per Share Common Stock (Composite Transactions-Reported Prices)

Dividend f979 High Low Paid First Quarter Second Quarter Third Quarter Fourth Quarter 22vs 2I'/s

.49 22 I8'/i

.49 22 191/s

.52 20'/s I 7'/s

.52 1980 High Low Dlv'irst Quarter Second Quarter Third Quarter Fourth Quarter I4'/s 2 I s/s I6'/i

.52 22 I9

.56 I9s/i f6'56 Net Income and Earn Net income for I980was SI6I mii up 53 percent from )979. Earnings p share were

$2.73, as compared wit S3.06 in l979, because of higher cost especially the under-recovered fu costs. The annual dividend paid wa S2.16 per share.

Effective with th August I, I980, dividend payment, th dividend rate was increased to 56cent a quarter or S2.24 on an annual basis

Construction Construction expenditures of $629 illion in 1980 included $512 million generating facilities, $46 million for nsmission, and

$71 million for stribution and general facilities.

In

1980, the Company generated ernally

$218 million of capital, of ich depreciation and amortization ovided $ 126 million, retained earn-os totaled $ 22 million, and deferred ome taxes and investment taxcredit ovlded $70 million,

~

3 Financing To underwrite the construction ogramv the Company entered into e following'ajpr financing arrange-ents:

~ in February, a private placement of 0,000 shares of Preferred Stock A, eries for $ 18 million.

ebrualy, an issue of 4.5 million of common stock for net oceeds of $73.4 million.

~ in April,an issue of $ 125 millionof st mortgage bonds, 14tr8% Series due 2ril I, 1987.

~ in June, the sale of $45 millionterm an notes due 1986-1987, pursuant to e European term loan agreement.

~ in September, an issue of 400,000 tares of Serial Preferred Stock, $ 11.16 ries for net proceeds of$39.6million.

~ in September, a private placement

'75,000 shares of Preferred Stock A,

).00 Series for $ 17.5 million.

~ in October, $20.5 million from the suance of pollution control revenue ands by the Wake (N.C.)

County 2llution Control Financing Authority 14.8 million) and the New Hanover l.C.) County Pollution Control Financ-ig Authority ($ 5.7 million). The ustees retained for future Company

e $35.5 million remaining from a $56 illionbond sale. The Company, at the lme time; issued

$56 million of its

/4% first mortgage bonds, due October

. as collateral security to the ies.

~ n November, an issue of 4 million

'>ares of common stock for net oceeds of $70.8 million.

Revised Load Forecast A revised load forecast, adopted in

December, projects a

3.6 percent growth rate for peak demand for the next 10 years, as compared to a 4.5 percent growth rate in the November 1979 forecast.

As a

result of an anticipated reduction in load growth rate, and to reduce the amount of new capital required, the Company in June 1980 modified the construction program.

The proposed in-service dates for several generating units were delayed.

Mayo 2 was moved from 1985 to 1990, Harris I from 1984 to 1985, Harris 2 from 1987 to 1988, Harris 4 from 1989 to 1992 and Harris 3 from 1991 to 1994.

Unit Mayo I Harris I Harris 2 Mayo 2 Harris 4 Harris 3 Construction Schedule In-Service Type Date Coal l983 Nuclear l985 Nuclear 1988 Coal l990 Nuclear 1992 Nuclear l994 Capacity 720 MW 900 MW 900 MW 720 MW 900 MW 900 MW The Company continually reviews its load forecast and adjusts the construc-tion schedule as necessary to reflect changes in load growth and capital availability.

~ In

December, an agreement to increase borrowing under the Euro-pean term loan agreement by which an additional $80 millionwas obtained In January 1981.

The Company's capitalization at year's end was $3,407,953,000, consist-ing of 45.9 percent in first mortgage bonds, 36.2 percent In common equfty, 13.5 percent in preferred and prefer-ence stock, and 4.4 percent in other long-term debt.

The Company is continuing to discuss with certain North Carolina municipal electric systems the feasi-bility of selling to them an undivided ownership interest in some of its generating units. The Company would continue to operate any units involved and to supply supplemental power requirements to the municipal systems.

Common Stock IDollars)

I 66 2.6 l I 72 I 87 5.06 2 02 2 f6 3.50 3.00 2.50 2.00 I.50 l.00

'Average Shares Outstanding iln thousands)

"Reduced by SA8 due to delayed fuel bllllngs.

I-lEamlngs Per Share 0 Dividends Paid Per Share Construction Expenditures (Millionsof Dollars) 6o6 594 636 600 565 400 79 80 8I 82 83 0 Proiected 76 77 78 79 80 i33385 3sesr 31.355 4VAI aksll

New Facilities The fourth unit at the Company's Roxboro plant was declared in com-mercial operation at 650,000 kilowatts In September 1980. Total investment in

'he unit at year end was approximately

$209 million.

Construction progressed on the 1,440,000-kilowatt, coal-fired Mayo generating plant in Person County, N.C.

Boiler erection continued and the main dam was completed during 1980. The first generating unit is scheduled to begin operation in 1983 and the second in 1990.

Work continued during the year on the Shearon Harris nuclear power plant near Raleigh. The first of the 900,000-kilowatt units was about 37 percent complete at year end and is scheduled to begin operation in 1985. The second unit was about 3 percent complete and is scheduled for operation In 1988.

Impoundment of water began in December for the 4,100-acre reservoir that will supply make-up water to the plant's closed-cycle cooling system.

Transmission lines authorized for construction in 1981 and following years include 238 miles of 500,000-volt line, 456 miles of 230,000-volt line and 88 mlles of 115,000-volt line.

Environmental Matters The Company spent

$46.2 million during 1980 for environmental protec-tion, including about $ 18.2 million for air quality control and $24.7 million for water quality control. An investment of about

$ 5.1 million was required for additional generating capacity to support this equipment.

In 1981

~ the Company projects an expenditure of $52 million for similar environmental protection measures.

Since 1968, the Company has invested about

$359 million for facilities to protect the environment. At the end of 1980, $62 millionper year was required for the operation and use of these facilities.

The Company reached a settlement with the state of North Carolina and the Environmental Protection Agency (EPA) whereby EPA will-nolonger require the Company to construct cooling towers at its Brunswick plant.

The permit requires the Company to make modifications to the present cooling system estimated to cost between

$ 15 millionand $20 million.Ifthe Company had been required to complete the cooling towers, construction costswere estimated at $ 118 million. Settlement of this issue allowed the North Carolina Environmental Management Commis-sion (NCEMC) to renew the permit authorizing water discharges from the Brunswick plant.

As a condition of the particulate matter variance granted CPGL by the NCEMC in 1979, the Company contin-ued an extensive precipitator testing program documenting the range of outlet emissions "experienced by each of its coal-fired generating units in North Carolina. This information willbe assembled for presentation to the NCEMC.in early

1982, when final emissions standards will be estab-lished for each of the generating units.

Operations The Company's total system energy requirements for 1980 were 32.2 billion kilowatt-hours. System load factor was 59.7

percent, compared with 58.6 percent in 1979.

The addition of the Roxboro 4

generating unit during 1980, with a capacity of 650,000 kilowatts, increased system generating capacity to 7,978,000 kilowatts.

Total system capability, including firm long-term contract purchases from other utilities, in-creased to 8,053,000 kilowatts.

Seven coal-fired generating plants make up about 56 percent of the system generating capacity; three nuclear units account for 28 percent; 33 internal combustion (I.C.) turbine generators, that bum oil, 13 percent; and four hydroelectric

plants, percent.

In

1980, coal provided about 6<

percent of the electric generation nuclear contributed about 28 percent water power about 2 percent and oi about I

percent.

The fuel cost t~

generate a kilowatt-hour for nuclea plants was 0.4 cents; for coal-fire<

plants, 1.6 cents; and for oil-fired I.C turbines, 7 cents.

Coal consumption reached a recon high in 1980 when the Company burne~

9.2 million tons. The average delivere~

price of coal in 1980 was $39.08 per toe an increase of 13 percent over 1979.

Peak Loads In 1980, the annual peak for th~

system occurred on August 5, whe~

customer demand reached a record o 6,139,000 kilowatts, a

3.9 percen increase over the previous year's peal A record for energy used in one da also established on August 5

customers used 121,112,000 ki hours.

System Reliability CPGL continued its participation a.

one of 27 utilities in the Southeasterj Electric Reliability Council (SERC) an<

in the seven-member, Virginia-Caroll nas Reliability Group (VACAR). Thi Company has 32 interconnections witl neighboring systems. Maintaining an~

improving system reliability for mern ber systems is the principal purpose c both groups.

Nuclear Fuel Supply and Storage The Company has on hand or ha contracted for all nuclear fuel service to operate Robinson 2 through 198',

Brunswick I through 1988, Brunswick through 1987, Harris I through 1986 anl Harris 2 thro'ugh 1989. The Company i

making provisions to continue to store on an interim basis, spent fuel, penc ing the establishment of governmer storage facilities.

Fuel Expense (All fuels as burnedl (Cents Per MillionBTUI It is very much in the national

terest, however, for the country to ove forward with the reprocessing of uclear fuel and the establishment of ermanent high-level, waste storage cilities.

Modlficatlons to Nuclear Units Requirements issued by the Nuclear egulatory Commission and recom-endations made by the Company's nternal study team related to the hree Mlle Island incident (and other nuclear safety concerns) led to a

iumber of changes at the Brunswick ind Robinson nuclear plants during 980.

Additional modifications are planned over the next two

years, ncluding additional instrumentatlon, lualificatlon of electrical equipment, nd upgrading the Company's emer-

ency response capabilities.

The

ompany spent about S9 million hrough the end of 1980, with addition-enditures of S14 million antici-for 1981

~ to meet new safety for nuclear power plants.

Insurance for Nuclear Accidents Under the Price-Anderson Act. total labilityfor a nuclear incident ls limited o

S560 million. The Company Is nsured by conventional insurance drools that provide financial protection or SI60 million of this total.

The emaining liability Is assumed primarily ty companies operating nuclear units, ind the Company's prorated maximum iability is S15 million per Incident.

Rates About 63 percent of the Company's

,ales are regulated by the North

arolina Utilities Commission, 15 percent by the South Carolina Public Iervice Commission and 22 percent by he Federal Energy Regulatory Com-nission.

In August 1979, the Company filed a equest with the North Carolina Utilities Commission for an approxi-mate S56 million increase in retail electric rates.

Effective April I, 1980, S43.4 million of this request was approved.

In May 1980, the Company filed a rate increase request of 13.9 percent, or S91.3 million, for the North Carolina retail jurisdiction. In Decem-ber, the North Carolina Utilities Commission approved a 10.78 percent, or S71.8 million, increase effective December I I, 1980.

During March 1980, the Company filed a request with the South Carolina Public Service Commission to increase retail rates in South Carolina by 19.4 percent. The request, ifgranted in full~

would result in S27.5 million in additional annual revenues.

In April 1980, S I 3.6 million of this increase was placed into effect, and in January 1981 essentially all of the balance became effective, subject to refund. Hearings were held in November and December 1980, and a final order is expected in early 1981.

In December 1979, an initial examin-er's decision was issued concerning wholesale rates that were in effect under bond from December 29, 1977, to August 18, 1980. In January 1981, the

'Company reached agreement with its wholesale customers that resulted in a refund of about S29.5 million(including interest) of the revenue collected. The agreement relates only to the period specified and has no effect on wholesale rates since August 18, 1980.

The refund was made from money set aside in a reserve fund and did not affect previously reported earnings.

On April 18, 1980, the Company filed an application for an annual wholesale rate increase of S30.8 millionabove the level requested in 1977. The Federal Energy Regulatory Commission (FERC) allowed the rates to become effective August 18, 1980, subject to refund with interest, awaiting a final FERC decision.

Hearings are expected to begin in the spring of 1981.

as 92 90 lot l25 l40 l20 IOO 80 40 Total UtilityPlant (Millions of Dollars) 2.760 3,005 3,442 4, 103 4 7P9 5,000 4,000 3,000 2,000 l,000 76 77 78 79 80 Service Area Peak Load IThousands of Kilowatts) 5 5Q9 5,605 5,907 6,402 7,000 6,000 4,000 3,000 2,000 76 77 78 79 80 l,000 20 76 77 78 79 80 Cl Summer i

a Following Winter I

t

Average Annual Kilowatt-Hour Sales to Resldentlal Customers l6.000 14,000 12,048 12 I2.558 I I,785 I2.000 I I,407 I0,000 8.000 6.000 4,000 2.000 76 77 78 79 80 Energy Sales by Classes Within Service Area (Millionsof Kilowatt-Hours) 35,000 30,282 30.000 27,256 27 99328 668 25.915 25,000 20.000 I 5,000 I0.000 5,000 0

76 77 78 79 80 0 Resldentlal C3 Commercial Cl Industrial R Covemment 8 Sale for Resale After July I,

I 979, under North Carolina law, funds invested by utilities in construction work for new plants and other facilities could be included in the rate base upon which a rate of return is allowed.

Both of the rate increases granted during I980 by the North Carolina UtilitiesCommission included construction work Investment in the rate base.

Legislation Affectin Rates The U.S. Congress passed in I 978 the Public Utilities Regulatory Policies Act (PURPA). This legislation is designed to encourage energy conservation, effi-cient utility operations and equitable distribution of costs among customer classes. Under the act, state regulatory commissions must consider various ratemaklng and service policy stand-

ards, most of which have previously been evaluated by the Company and the commissions.

Hearings on these matters were held during 1980, and the orders issued to date have found the Company in compliance with the PURPA standards.

Rate Experiments A residential rate demonstration project on peak-load pricing was completed in August I980. The study was conducted In cooperation with the North Carolina Utilities Commission and the U.S. Department of Energy. The data was analyzed to determine whether time-of-day rates would be cost beneficial to residential customers and the Company.

The Research Triangle Institute, the Commission's primary consultant on the project, reported that CPGL customers on the experimental time-of-day rates tended to use less electricity during most peak hours as compared with customers on existing residential rates. At the time of system peak, usage patterns of both customer groups were about the same. The study

showed, however, that time-of-d

'ates were not cost beneficial for a residential customers.

The Compan has filed voluntary time-of-day rates fc residential service in keeping with th North carolina commission's Decetr ber I 980 retail rate order.

Research and Developmen Research and development activI ties emphasize both local and nation programs.

CPGL is a participating member the Electric Power Research institut (EPRI),

sponsored by the nation'ower suppliers. The purpose of EP is to develop improved technologies t meet both present and future d

mands for electricity.

The Company also participates in th North Carolina Alternative Energ Corporation, a non-profit organiza o

funded by the state's electric su The corporation conducts rese.

such areas as energy managemen conservation and alternate energ sources.

In l980, the EPRI budget of $26 million funded research in areas suc as fusion, solar and geothermal powe conversion of coal Into synthetic liqui and gaseous fuels; energy storage; fue cells; air and water quality contro,,

nuclear safety; improved performance and reliability of power plants; an~

improved efficiency in the transmissio and distribution of electricity.

A project in the EPRI dlstributiot research program, involvingtesting anI evaluation of two-way communication systems. was completed in 1980. Thi, project has confirmed the potential fo creating a reliable and high-qualit communications system using powe line carrier and microelectronics-base~

technology.

Systems using this tech nology are expected to play a majo role in automating distribution func tions such as load managemen reactive power dispatching, servic

estoration and meter reading. CPGL as played a substantial role in the evelopment of this technology and as served as a host utility for the esting and evaluation of these systems.

In local research and development, the Company sponsored energy and load management

research, environ-mental

studies, and research to mprove the performance and reliabil-ty of power plants.

Load Manage'ment A two-year study to evaluate the

.ffects of remotely controlling air

onditioners, involving 200 customers n Florence, S.C., was completed during

,he year. The data collected will help

he Company assess the benefits of arge-scale control systems for load nanagement.

program to remotely control c water heaters was begun in the gh area in June. Atthe end of 1 980,

>pproximately 3,600 customers were

>articipating.< An evaluation will be

onducted during 1981 to determine

he desirability of expanding the irogram to other areas in the service

erritory.

The Company participated in energy management expositions in both North "arolina and South Carolina during the

~ear.

In May the Company co-spon-

ored an Energy Expo in Columbia, S.C.,

ln conjunction with the state's electric

uppliers, professional engineering groups, the University ofSouth Carolina snd Clemson University.

In September, Energy Management

=xposition III (EME Ililwas held at the kaleigh Civic Center.

EME III was

ponsored by the Company in coopera-

ion with North Carolina State Univer-

ityand the Energy Division ofthe State if North Carolina.

Both expositions, vhich drew about 3,000 people, were 3esigned to increase energy conserva-

io awareness in the commercial, industrial and institutional areas through seminars and exhibits.

Customers At year-end.

CPGL served 742,000 retail customers, a 2.3 percent increase over 1979. Customers with all-electric facilities represented 30.6 percent. of residential

units, 24.4 percent of commercial and 12.3 percent of industrial units. More than half the new residential customers were all-electric.

Residential In

1980, the Company's 632,200 residential customers represented 85.2 percent of CPGL's total customers and 31.8 percent of operating revenues.

Average annual consumption-per customer increased 6.6 percent, from 11,785 kilowatt-hours in 1979 to 12,558 in 1980. The average annual residential bill increased from $480.84 in 1979 to

$546.11 in 1980.

Commercial Commercial customers totaled about 104,000, an increase of approxi-mately 1,800 over 1979. They repre-sented 14 percent of the Company's customers and produced 18.2 percent of operating revenues.

In 1980, average annual usage by commercial customers increased slightly, from 44,356kilowatt-hours in 1979 to 46,997 kilowatt-hours in 1980.

Industrial CPGL had 3,794 industrial customers at the end of 1980, an increase of 169 over the previous year. Energy usage in the industrial area increased by 1.9 percent over 1979, to nearly9.8 billion kilowatt-hours.

In 1980, new and expanded indus-tries in the Company's service area announced capital expenditures total-ing S753 million. The new and expanded industries are expected to provide an estimated 10,000 new job opportunities, with an annual payroll of

$ 120 million.

Wholesale CPGL provides electricity for resale to 18 electric membership corpora-

tions, 25 municipalities and two privately owned utilities. In 1980, these wholesale customers accounted for 6.8 billion kilowatt-hours, or 22.5 percent of CPGL's total sales.

Customer Relations Energy conservation and load management continued to be the main emphasis of the Company's customer relations program.

The Common Sense Program, focus-ing on homes, apartments and manu-factured

homes, resulted in the completion of more than 6,482 energy-efficient Common Sense dwelling units.

The Company also continued its program -of-offering-information about government assistance programs to help low-income families meet their energy bills.

Project Communicate, CPGL's con-tinuing customer contact

program, reached more than 68,000 people individually and 30,825 through group presentations.

Continuing emphasis was placed on conversion of mercury-vapor area and street lighting fixtures to more efficient high-pressure, sodium-vapor lighting units.

In

1980, 11,500 high-pressure, sodium-vapor lighting units were 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 the Policy Committee on Government Affairs of the Edison Electric Institute.

Sherwood H. Smith, lr.

Chairman/President 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 and promoted to group executive in May 1980.

Named vice presidents were: Paul S.

Bradshaw, R.A.

Watson, Charles D.

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 Charles D. Barham, lr.

Paul S. Bradshaw Norris L, Edge E. Charles Dyson

James M. Davis, Jr.

Lynn W. Eury 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 manager in Asheville since l976. Mr.

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

I tt 1

Jack B. McGlrt R.A. Watson William E. Graham, Jr.

Graham Named a Director In September, William E. Graham, jr.,

senior vice president and general 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 ofthe 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 The Company had 6,522 employees at the end of I980. This increase of 4.4 percent over I 979 reflects normal growth.

CPGL is an equal opportunity employer.

Affirmative Action

plans, which are updated annually, include employment

goals, outreach recruit-ment

efforts, active involvement in community action programs and adherence to appropriate regulatory guidelines. Current plans are available for review at corporate headquarters, division personnel offices, and district and generating plant offices through-out the system.

Employee Development During l980, nearly 3,900 employees participated in developmental training I 4 and educational programs provided by the Organizational and Management Development staff.

New programs included stress management, work measurement, power plant supervision and interpersonal communications.

Through a cooperative effortwith North Carolina State University and the University of North Carolina at Wilming-ton, credit courses were offered on site at the Brunswick plant.

safety CPGL employees continue to main-tain one of the best safety programs in the nation. For the eighth consecutive year, the Company earned the South-eastern Electric Exchange award forthe safest working utility in its size category. The Edison Electric Institute presented CPGL with the Safety Achievement award and, for the fourth consecutive year, the Frequency Rate Safety award.

In addition, the Company received the Award of Honor and the first place award for utilities from the National Safety Council and two awards for achievement in accident.prevention from the North Carolina Department of Labor.

Distribution of Stock Ownership (Common, Preferred and Preference Stock Combined)

The Carolinas Elsewhere Totals Shareholders Number Percent 53,844 43 7I 798 57 I 25,642 I 00 The Carolinas Elsewhere Totals Shares Number Percent 14,453,832 25 42896566 75 57.350,398 I00 Ownership Primarily as a result of selling two issues of common stock totaling 8.5 million shares, the number of shares and shareholders increased substan-tially during I 980.

More than I 5,000 shareholders were added during the year, and the number of shares outstanding increased from 46,773,547 in I 979 to 57,350,398 in I 980.

At the end of I 980, there were l03,662 holders of common

stock, I4,699 holders of preferred stock and 7,28I holders of preference stock. In

addition, several thousand share-holders own shares held by banks,'rokers, investment trusts or nom'inees.

About 43 percent ofour shareholders live in the two Carolinas. The largest beneficial shareholder of record at the end of I 980 held less than I percent of the shares outstanding.

More than 82 percent of the shares outstanding were represented in person or by proxy at the l980 annual meeting.

Dividend Reinvestment Plan On lune I, the Company's Dividend Reinvestment Plan was amended to'llow shareholders to reinvest com-

mon, preferred or preference divi-dends in additional shares of CPGL common stock at 97 percent o

market value. By making optiona

payments, shareholders also purchase additional shares at 97 percent of the market value. A new provision allows shareholders to reinvest dividends on a portion oftheir shares and to receive cash dividends on the remainder.

There was a significant increase in the number of participants in the plan, with 20,82l shareholders participating at year end compared with I 2,348 at the end of I979.

The program is administered by North Carolina National Bank (NCNB),

and any questions regarding participa-tion should be directed to

NCNB, Dividend Reinvestment Department, Charlotte, N.C. 28255.

CPSL Service Area Atthe end of I 980, CPGLwas providing electric service to 742,000 customers in an area of 30,000 square milesalmost half of North Carolina and about one-fourth ofSouth Carolina.

Total population of the area is estimated to be nearly 3 million. This territory is comparable in size to the combined areas of Connecticut, Massa-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.

Service to customers is provided by more than 6.500 employees through 5 division, 10 district, 42 area offices and I 3 generating plants.

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

~~LEE PLANT IL HENDERSON A HEVILL NC CHARLOTTE 0

ALEIG g

~

'ANFORO 0UTHE PINES GOLOSBORO JACKSONVILLEg SC FLORENCE WILMINGTONg COLUMBIA SUTTON PLANT BRUNSWICK PLANT WEATHERSPOON PLANT HARRIS PLANT SITE

CAPE FEAR PLANT ROBINSON PLANT I~DARLINRTDN PLANT

~ District Offices Cenerating Plants:

Q Nuclear Q Hydro 0 I.C. Turbine Fossil Q'Fossil and Nuclear O Nuclear Site 9 Fossil Site

Financial Section Management Report l7 Management's Comments on Results of Operations and Financial Condition 20 Statements of Income/Statements of Retained Earnings 2I Statements of Source and Use of Financial Resources 22 Balance Sheets 24 Schedules of Capitalization 26 Notes to Financial Statements 30 Auditors'pinion/Summary of Quarterly Earnings Data 3I Supplemental Inflation Adjusted Data 34 Statistical Review The management of Carolina Power 6 Light Company is responsible for the information and representations contained in the financial statements and other sections of this Annual Report. The financial statements are prepared in conformity with generally accepted accounting principles and are consistent with other information in this report.

The Company has designed and maintains a system of internal accounting controls to ensure the reliabilityof the financial statements and to provide reasonable assurance that assets are safeguarded.

This system is augmented by written policies and guidelines and a strong program of 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.

Chief Financial Officer Paul S. Bradshaw Chief Accountlnf, Officer

Management's Comments on Results of Operations and Financial Condition These comments are designed to analyze and discuss in greater detail the Financial Statements on pages 20-30 and the Statistical Review on pages 34-35. They should be considered in conjunction with the data appearing there.

Total operating revenues:

I980 I979 I978 Increased revenues:

I980 I979 S I,075.6 925.9 903 4 S49.8 149.7 49.8 22.5 S I 30.0 80.0

72. I 50.0 7.9 8895.8 845.9 83 I.3 49.9 I4.6 nergy sales increased by 5.6 percent in 1980 and 2.4 cent in 1979. During 1980, warmer-than-normal summer ather and a cold early winter combined to increase customer deman'ds for energy, offsetting conservation by customers and the effects of the economic slow-down on industrial and larger commercial customers (see Statistical Review: Load DataElectric Energy Sales). During 1980.

rate increases were placed into effect for all jurisdictions.

The increases are estimated to increase total annual revenues by $ 155.5 million, based on a 1979 level ofsales.

The fuel cost adjustment billings reflect a recovery during 1980 of a portion of the significantly higher fuel costs incurred in 1980. However, the effect on revenues ofmost of the increased fuel costs, applicable to retail operations, is delayed until 1981 (see Note 7 to Financial Statements).

Fuel for generation expense increased in 1980 by 35 percent and reflects a 14.9 percent increase in the average unit cost of fossil fuel burned. Furthermore, fossil-fueled generation increased by 21.9 percent to make up for a 17.1 percent decrease in nuclear generation attributable primarily to the prolonged outages of the nuclear units discussed below. Purchased and interchanged power in 1980 also increased significantly for this same reason.

Fuel expense in 1979 increased by II.I percent, primarily because of reduced nuclear generation (22.2 percent less) and increased fossil generation (24.2 percent more). The reduced nuclear generation for 1979 was due primarily to scheduled refueling and maintenance outages or all three nuclear units as compared with only one unit in

8. (Nuclear fuel is less than one-fourth as expensive as 1.)

Deferred fuel costs and provision for customer fuel credits, net, for 1980 reflects principallythe carry-over from 1979 of $ 11.4 million of credits to match reduced North RESULTS OF OPERATIONS Operating revenues increased for the following reasons: 'eneral Rate Fuel Cost Increases Adlustrnent Base Rate Period Total Since l977 Billings Charges, Etc.

Iln Mllllonsl Carolina retail revenue billings in 1980 (related to the lower levels of fuel. expense in 1979). Unrecovered and deferred fuel costs increased by S9.2 million in 1980, applicable to South Carolina retail operations that willbe billed in 1981.

(See Note 7 to Financial Statements concerning an additional $44 million of higher 1980 fuel costs, applicable to North Carolina retail operations that willbe reflected in 1981 revenue billings.)

During 1979, because of the better match of revenues and fuel expense, the provisions fordeferred fuel costs and customer fuel credits was reduced to a net credit of S569,000. This compares with a net expense of$ 15.4 million for

1978, when lower-than-normal fuel costs were experienced, which were subsequently reflected in lower 1979 revenues.

Other operation and maintenance expenses increased 25.2 percent in 1980 and 15.8 percent in 1979.

During

1980, scheduled refueling and maintenance outages were extended for all three nuclear units to perform safety modifications. testing and maintenance.

partially in response to new requirements and concerns following the Three Mile Island nuclear plant accident.

During 1980, total expenses exclusive of fuel, applicable to the nuclear

units, increased

$30.3 million over 1979.

Included in these costs are the continuing effects of inflation, and more stringent operating practices and regulatory requirements.

The increase for 1979 reflects expenses associated with the scheduled refueling and inspection outages for all three nuclear units in 1979 as compared with one in 1978.

Depreciation and amortization for 1980 reflects a $6.7, million credit for reduced wholesale depreciation rates (see Note I to Financial Statements). Of this amount, S4.6 million applies to years prior to 1980. Depreciation and amortization expense in 1980 and 1979 reflect S2.4 million for amortization of canceled project costs (see Note 6 to Financial.Statements).

Taxes other than on Income increased in both 1980 and 1979, primarily because of increases in revenue and property-based taxes. Income tax expense for 1980 and 1979 reflects the decrease in net income excluding AFUDC on equity funds.

Other Income increased 29.8 percent in 1980 and 47.3 percent in 1979. Increased investment in construction work in progress, principally at the Harris and Mayo plant sites, contributed significantly to the increase in allowance for equity funds used during construction of S17.9 million, or 29.5 percent, in 1980 and $20.5 million, or 50.6 percent, in 1979. Higher cost rates for AFUDC (see Note I to Financial Statements) in 1980 and 1979 also increased this item of income.

Inclusion of construction expenditures in the North Carolina retail rate base effective April I, 1980, reduced AFUDC on equity funds during 1980 by $3.9 million.

Net Interest charges increased 15.8 percent in 1980 and 15 percent in 1979, reflecting principally the greater amounts of debt outstanding and higher interest rates for both long-and short-term debt (see Schedules of

Capitalization).

The increased credit for AFUDC on borrowed funds of $28.9 million in I980 and S I 3. I millionin l979 reflect increased investment in construction work in progress and a higher borrowed-funds AFUDC rate. This was offset somewhat in 1980 by a reduction of $3.4 million because of construction investment in the rate base.

Net Income and earnings:

in summary, earnings for l980 were adversely affected by unrecovered fuel costs, higher levels of operation and maintenance expenses (especially related to the three nuclear generating units),

inflation and other cost increases not reflected in approved revenue levels. Earnings per share of common stock were further affected by a I3.8 percent increase in average shares outstanding, primarily as a result of the public sale and issuance during I980 of 8.5 million additional shares.

Earnings for (980 were favorably affected by the hot summer and cold winter weather, which increased energy sales and revenues, and by rate increase revenues (see Note 7 to Financial Statements).

Earnings for l979, as compared with

)978, were adversely affected by: (I) milder weather, (2) increased operating expenses as a result of the scheduled refueling of all three nuclear units as compared with one unit in l 978, and (3) generally increased operating expenses and capital costs not fully offset by operating economies, increased energy sales or rate increase revenues.

CAPITALRESOURCES AND LIQUIDITY Capital requirements for I978-1980 were met as follows:

Total 1980 1979 1978 income (and before AFUDC on equity funds),

which decreased by SI 0 million in I 979 and $9.8 million in (980.

The reduction in depreciation and amortization a.

internal source in I980 relates to an adjustment of million,reflectinganFERCdepreciation decision(see N

I to Financial Statements).

Deferred income taxes

~

attributable to AFUDCon borrowed funds are reflected as a reduction in the cost of gross property additions and as a reduction in internally generated capital.

(Thus, the construction program is charged only with the net after-tax cost of borrowed funds used during construction.) This decrease in internal funds reflects the greater amounts of AFUDC on borrowed funds.

When

)980 rate increases are fully reflected, the Company expects internal generation of funds to improve.

The reduction in internally generated funds during I979 and )980 is primarilythe result of unprecedented levels of inflation, greatly expanded nuclear generating plant operation and maintenance

costs, regulatory lag. and inadequate rate-of-return levels. The FERC and NCUC, and SCPSC to some

extent, have adopted ratemaking procedures that allow recognition of the latest available actual cost data in a rate proceeding. Itappears that these commissions are moving in a positive direction with regard to rates of return on common equity. Furthermore, the Company expects to file necessary rate increase applications in all jurisdictions to cover increased costs resulting from inflation and regulatory requirements. This should result in increased net income and increased deferred tax items. At December 3), )980, the Company had earned, but not used, investment tax credits total' I 03 million.

Internally. less dividends S

680.6 External (financings) sources 1,187.1 Total S1.867.7 (In Millions)

S I 84.1 8235.4 476.3 5 14.9 8660.4 8750.3 S 261.1 195.9 S457.0 The relative amounts ofcapital obtained from extern sources has been as follows:

1980 1979 1978 and utilized as follows:

Cross property additions.

including nuclear fuel Retirement of long-tenn debt Working capital increase (decrease).

etc.

Total" 175.1 20.4 76.0 78.7 SI.867.7 S660.4 S750.3 (99.0)

S457.0 SI,802.4 8674.9 S650.2 8477.3 First mortgage bonds Common and preferred stocks Unsecured term loans Nuclear fuel financing arrangements Short. term transactions Total 31.9%

50.9 9,4 6.0 1.8 100.0%

49.)%

50.6%

13.3 46.5 2.9 18.0 16.7 2.9 100.0%

100.0%

The increase (decrease) in internal generation of capital funds, as compared to the preceding year, is as follows:

Net income Dividends Deferred tax Items (income taxes and investment tax credits)

Depreciation and amortization Deferred income taxes credited to property accounts

1980, 1979 (In Millionsl S

8.1 S 10.5 (27.2) 113.9)

(16.3)

(1.7)

(14.2)

S(51.3)

(23.81 7.5 (6.0)

S(25.7)

The increase in net income failed to keep pace with the increase in dividends, primarily because the rate of return on average common equity decreased from I 2.9 percent in 1978, to 12.3 percent in I979, to I I.i percent in )980. The deferred tax items are a direct function of pre-tax net During )980. the Company sold relatively fewer first mortgage bonds. The Company's abilityto issue additional bonds under the mortgage increased by S23).8 million to SI.3 billion, at December 3I, )980, based on unfunded property additions and retired bonds. At the end of )980, trustees held S59.I million of the proceeds from pollution control bond financings in )979 and )980. The trustees will release such proceeds to the Company as the Company incurs and certifies costs to the trustees.

The Company sold S45 million in I980 of unsecured European term loan notes, and in December I980 arranged 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 provide for the financing of up to a maximum contin outstanding amount of SIOO million.

The Company's ability to issue additional shares of preferred stock is subject to a Charter earnings test under which, at present, the Company could issue reasonable

amoants of additional preferred stock.

The 8 million authorized, but unissued, preference stock shares are not bject to an earnings test.

Two underwritten public offerings ofcommon stock, a otal of 8.5 million shares, yielded $ 143.9 millionand sales of preferred stock produced

$74.7 million. These stock issues improved the capitalization ratio for equity capital from 48.7 percent at the end of 1979 to 49.7 percent at December 31, 1980 (see Statistical Review-Percent of Total Capitalization), despite inadequate earnings for 1980 that resulted in a

less-than-normal increase in retained earnings.

Projected capital requirements for the next three years include:

Construction expenditures Nuclear fuel expenditures Long-term debt retirements Total Total I98I l982 l983 iln Millions)

S594 S636 S565 7I 80 103 39 62 39 S704 S778 S707 SI.795 254 I40 S2. I 89 1

These estimated amounts are subject to change as conditions change: the estimated rates ofgeneral inflation, the degree of customer conservation, the use of load management techniques, the availability of capital on reasonable terms, regulatory requirements, specific cost

'reases and general economic conditions.

The Company presently estimates that it will require proximately $308 million from external sources during 1981 (in addition to the $80 million in January from the European term loan transaction) and plans to issue long-term securities.

The amount and timing of the sales of securities will depend primarily upon market conditions and the needs of the Company at the time. The Company presently estimates that itwillneed external funds totaling approximately

$446 million in 1982 and

$305 million in 1983.

Short-term liquidity: Customer receivables on the books at year-end represent an average ofless than 20 days billings. The depreciation and deferred tax component of current revenues and the continued strong demand for electricity from our customers provide a substantial cash margin for current operations. At December 31, 1980, $8.1 million of deferred fuel costs on the balance sheet, plus another estimated $ 44 millionof 1981 revenues (which will reflect the higher level of fuel costs incurred by the Company in 1980), have been approved and are expected to be realized by July 31

~

1981 (see Note 7 to Financial Statements).

The issuance on January 22 ~

1981, of an additional $80 millionof European term loans provided an influx of cash to meet some of the maturing current liabilities.

The $29.5 millionof accounts payable to customers for refund of revenues was paid out on January 8, 1981. A portion of construction contract retentions, totaling approximately $ 16 million, was disbursed in January 1981.

and the $20 million, 2ria% Series first mortgage bonds were paid at maturity on February 2, 1981.

The Company had unused bank lines ofcredit totaling

$206 million at year-end, a substantial portion of which was not immediately needed to back outstanding 19 commercial paper or demand

notes, which together totaled $96.2 million at year-end.

IMPACTS OF INFLATION See Supplemental Inflation Adjusted Data on pp. 31-33 for the estimated effects of changing prices on income, on the basis prescribed by the Financial Accounting Standards Board.

Carolina Power 6 Light Company Statements of Income For the Years Ended December 3I, 20 Operating Revenues (Notes 6 and 7)

OperatIng Expenses:

Operation:

Fuel for generation..

Deferred fuel costs and provision for customer fuel credits, net Purchased and interchanged power, net..........

Other Maintenance Depreciation and amortization (Note I).............

Taxes other than on income Income tax expense (Note 5)

Total operating expenses...........

Operating Income Other Income:

Allowance for equity funds used during construction Income tax credits (expense) (Note 5)..............

Other, net Total other income.........

Income Before Interest Charges Interest Charges:

Long-term debt Other Allowance for borrowed funds used during construction-credit Net interest charges Net Income Preferred and Preference Stock Dividend Requirements Earnings for Common Stock 411,191 (19,544) 20,690 146,472 100,006 88,701 80,209 75 693 903 418 172 186 304,680 (569) 603 118,430 78,475 88,396 70,796 94642 755 453 170 457 274,262 15,408 (86) 100,452 69,627 80,356 68,314 124 888 733 221 170 217 78,814 1,863 4 366 85 043 257 229 60,867 2,8I I I 858 65 536 235 993 40,4 I I (109) 4 203 44 505 214 722 148,206 15,773

~68 1381 95 841 161,388 34 641 8

126 747 I I I ~ I 59 10,810 (39 220(

82 749 153,244 28 263 8

124 981 92,738 5.349 (26 I

7(

142,743 26926 S

115 817 1980 1979 1978 Iln Thousands except Earnings per Sharel 8 I 075 604 8

925 910 8

903 Average Common Shares Outstanding Earnings Per Common Share (Note 7)

See notes to financial statements.

46 471 S

273 40 841, 37 355 S

3.06 S

3. IO Statements of Retained Earnings For the Years Ended December 31

~

1980 1979 1978 Balance at Beginning of Year Net Income Total Deduct:

S 289,768 161 388 451 156 un Thousands)

S 249,249 153 244 402 493 S

205,116 142 743 347 859 Cash dividends declared:

Preferred and Preference Stock, at stated rates (Note I)

Common Stock (at annual rate of S2.20 a share in 1980, S2.05 in 1979 and S 1.90 in 1978)

Total cash dividends declared...........

Capital stock expense.........

Total deductions Balance at End of Year See notes to financial statements.

35.757 104 865 140,622 715 14( 337 8 309819 28,263 84 066 112,329 396 26,926 71 511 98,4'12 725 98 61 8

289 768 8

249 249

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, Items not requiring (providing) current resources:

Depreciation and amortization Noncurrent deferred income taxes, net......

~

Investment tax credit adjustments, net.......

Equity funds portion of AFUDC..............

Total current resources provided from operations Other resources provided-Additions to plant accounts representing capitalization of equity portion, less deferred income taxes on borrowed funds portion of AFUDC.

Total resources provided from operations and other Fina ncings:

First mortgage bonds Preferred stock Common stock - Public offerings...............

Common stock - Plans (SPSP. ADRP, and ESOP-Note 3)

Unsecured term loans t

Nuclear fuel trust and lease obligations........

Decrease in temporary cash investments plus increase in short-term notes payable....

Total resources provided from financings...

Total

$ 161,388 125,944 78,101 (8,264)

~78 814) 278,355 45 264 323 619 152,022 74,724 143,895 23,933 45,000 28.374 8 367 476 315

$799 934 S I 53,244

$ 142,743 127,673 62,202 23,899

~60 867 120,213 75,889 34,013

~40 411) 41 565 27064 347716 359 511 252,448 49,756 18,746 15,000 92,819 99,110 79,516 11,654 86 150 514 919

$862 635 5 673 195 953

$ 555 464 306,151 332,447 Use of Flnandal Resources:

Cross property additions, excluding nuclear fuel"...

Nuclear fuel additions" Dividends for the year Repayment of first mortgage bonds................

Repayment of nuclear fuel obligations..............

Prior year's reserve for possible refund of revenues..

Net increase (decrease) in the following working capital components:

Cash on deposit with trustee Accounts receivable, net Material and supplies Deferred fuel costs and liabilityfor customer fuel credits, net Accounts payable Reserve for possible refund of revenues... ~....

Other, net Miscellaneous. net Total

$627,499 47,398 139,506 20,415 9,548 17,186 19,544 (69,269) 14,876 (40,066) 13 297

$799 934

$605,197 45,044 112,329 64,030 12,011 13,461 10,190 569 (17,167) 13.293 11,789

~811))

$862 635

$402,710 74,637 98,437 78.654 23,853 (36,822)

(1,360) 2,748 (15,408)

(40,037)

(35,962)

(5,373) 9 387

$ 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 Iln Thousands) l979 Electric UtilityPlant:

Electric utilityplant other than nuclear fuel:

In s'ervice Held for future use Construction work in progress Total Less accumulated depreciation Net Nuclear fuel Less accumulated amortization Net Electric utility plant, net S2,864,435 10,036 1,616,513 4,490,984 627,408 3,863,576 218,466 106,598 111,868 3,975,444

$2,546,294 9,17I 1.327,3 I I 3,882,776 562,178 3.320.598 220. I99 117.492 102,707 3,423,305 22 Other Property and Investments:

Investment in coal-mining subsidiaries (Note 2)

Other Total 7,263 15,879 23,142 8,211 Current Assets Cash Accounts receivable, net (1979 includes S9.75I,000 of refundable income taxes)

Materials and supplies:

Fuel Other Deferred fuel cost Current portion of deferred income taxes Prepayments, etc.

Total current assets 4,331 62,837 84,122 33,371 8,086 14,600 5.836 213,183 6,024 53,289 79,8 I 6 20,491 I9,270 2,509 I 8 I,399 Deferred Debits:

Unamortized debt expense Other deferred debits (Notes 2 and 6)

Total deferred debits 3,059 26,779 29,838 2,283 22.831 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 Iln Thousands) 1979 Capitalization (see Schedules of Capitalization):

Common stock Retained earnings Preference'tock Preferred stockredemption not required Preferred stockredemption required...........

Long-term debt (excluding current maturities), net Total capitalization (excluding current maturities of long-term debt)

S 923,549 309,819 47,900 238,118 175,100 1,674,409 3,368,895 S

755,382 289,768 47,900 238,118 100,000 1.480.136 2,911,304 Current Liabilities:

Long-term debt due within one year Notes payable:

Bank demand notes Other Accounts payable:

Construction contract retentions Other Customers refund of revenues (Note 6)

Reserve for refund of revenues (Note 6)....

Liabilityfor customer fuel credits Customers deposits Taxes accrued Interest accrued Dividends declared Other Total current liabilities 39,058 43,571 52,629 33,417 107,132 29,476 7,794 1,070 5,377 33,643 32,693 45,344 7,113 438,317 27,554 39,656 48,178 8,218 63,517 29,021 22,670 11,423 5,031 14,946 27,379 35.154 5,736 338,483 Deferred Credits and Reserves:

Accumulated deferred income taxes Accumulated deferred investment tax credits Other Total deferred credits and reserves 307,626 120,776 5,993 434,395 263,074 129,040 6,012 398,126 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 (In Thousands) 1979 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 Retained earnings. limited In payment as dividends under certain circumstances under the Company's charter, however. none restricted at December 31. 1980 Total common stock equity S

923,549 309,819 81,233368 S

755.382 289.768 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)-

24 S2.675 Series A S 26.50 2.000.000 9

47 960 S

47.900 Preferred stock(a)-redemption not required:

S5 Preferred StockAuthorized, 300.000 shares Sl 10.00 237,259 8

24,376 S

24 Serial Preferred Stock (bh S4.20 Series 5.44 Series..

9.10 Series..

7.95 Series..

7.72 Series..

8.48 Series..

Total preferred stock-redemption not requIred 102.00 103.00 103.00 107.00 107.00 108.00 100,000 250.000 300.000 350.000 500.000 650.000 2.387,259 10,000 25,000 30,MO 35,000 49,425 64,317 S

238,118 10.000 25.0M 30.0M 35.000 49,425 64.317 S

238.118 Preferred stock (a)-redemption required (c)

Serial Preferred Stock Ib)

SII.I6 Series.................

Preferred Stock A. authorized. 5.000,000 shares:

S7.45 Series.............

~

8.75 Serles..........-"" ~"

9.25 Series.................

~

9.00 Series Total preferred stockredemption required SI I I. 16 110.00 108.75 109.00 (c) 400,000 500,000 500.000 180,000 175,000 1.755.000 8

39,600 50,000 50,000 18,000 17,500 8

175,100 S

50.000 50.000 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 (ln Thousands) 1979 LONG-TERM DEBT (a):

First mortgage bonds-principal amou 2VA Series. due 1981 3VA Series. due 1982 I I 5 Series. due 1984 14VA Series. due 1987 4VA Series. due 1988,.

4VA Series. due 1990 4'/A Series, due 1991 4Vi% Series. due 1994 5EA Series. due 1996 6Vi% Series. due 1997 6'/A Series, due 1998 8'/A Series. due 2000 8i/A Series. due 2000 7VA Series. due 2001 7t/A Series. due 2001 7i/A Series. due 2002 7VA Series. due 2003 8'M Series. due 2003 9VA Series. due 2004 8'M Series. due 2007 9VA Series. due 2008 IOVi% Series. due 2009 12VA Series. due 2009 Pollution Control:

Series A. 8%. due 2001-2009 (Principal amounts less cash hei Series B. 7i/i%. due 10-1-83 (Principal amounts less cash hei Series C. 7Vi%, due 10-1-83 nts d by Trustee:

1980. $25,113; 1979. $32.4/7) d by Trustee totaling $33,990) 15,000 20,000 67,346 125,000 20,000 25,000 25,000 30,000 30,000 40,000 40,000 40,000 50,000 65,000 70,000 100,000 100,000 100,000 125,000 100,000 100,000 125,000 100,000 37,887 16,010 6,000 15,000 20.000 67.346 20,000 25,000 25,000 30,000 30.000 40,000 40.000 40,000 50,000 65,000 70.000 100.000 100,000 100.000 125,000 100.000 100,000 125,000 100,000 30,543 25 Total first mortgage bonds-principal amounts 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)

Nuclear fuel lease obligation (variable rate:

16.5% effective interest cost at 12-31-80: 15.25'L at 12-31-79)

European term loans due 1986-1987 (variable interest rate of 23.75% at 12-31-80) 10% term loan due 9-18-82 Miscellaneous promissory notes Total long-term debt principal amounts Unamortized discount and premium, net Total Iong-term debt, Including current maturities Less long-term debt due within one year:

2VA Series due 2-1-81 Nuclear fuel trust obligations Nuclear fuel lease obligation Total long-term debt. excluding current maturltles...

Total Capitalization (excluding current maturities of Iong.term debt) 1,572,243 42,940(a) 45,827(a) 45,000(b) 15,000 300 1,721310 (7,843) 1,713,467 15,000 8,115 15,943

$ 1,674,409

$3,368,895 1,417,889 40.539 40,269 15.000 269 1,513,966 (6.276) 1,507,690 9.309 18,245

$ 1,480,136

$2.911.304 First Mortgage Bonds Term loans Nuclear fuel Totals

$ 15,000 24,058

$39,058 (a) Long-term debt maturitles for the next five years. Including estimated which repayments of present obligations are based on energy produced, are:

1981 1982

$20.000 15.000 26.610

$61,610 1983

$22.010 16.857

$38,867 1984

$67.346 13.508

$80,854 1985

$6.190

$6.190 amounts under continuous nuclear fuel financing arrangements for (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 26 I.

Summary of Significant Accounting Policies System of Accounts. The accounting records of the Company are maintained as prescribed in uniform systems of accounts of the Federal Energy Regulatory Commission (FERC) and the regulatory commissions of North Carolina and South Carolina.

Electric UtilityPlant. The cost of additions, including replacements of units of property and betterments, is charged to utility plant.

Maintenance and repairs of

property, and replacements and renewals of items determined to be less than units of property, are charged to maintenance expense.

The cost of units of property replaced or renewed, or otherwise retired, plus removal or disposal costs.

less salvage, is charged to accumulated depreciation. Electric utilityplant, other than nuclear fuel, is subject to the lien of the Company's mortgage. Nuclear fuel is pledged, or subject to be pledged, as collateral for nuclear fuel financing arrangements.

Allowance for Funds Used During Construction (AFUDC). As prescribed in regulatory uniform systems of accounts, an allowance for the cost of borrowed and equity funds used to finance electric utilityplant construction, less applicable income taxes," is charged to cost of plant.

Regulatory authorities consider the inclusion of these recognized costs as appropriate for the purpose of establishing rates for the Company's utility charges to customers over the service lives of the property. However, certain construction-work-in-progress expenditures are included in the rate base for ratemaking purposes and AFUDC is not capitalized (charged to the cost of plant) on such expenditures.

The equity portion of AFUDC is credited to other income, the borrowed funds portion is credited to interest charges and the deferred. income tax provision is charged to other income. The composite, net-of-tax AFUDC rate was approximately 8.2 percent in 1980, 7.6 percent in 1979 and 7.5 percent in 1978 with semi-annual compounding.

Depreciation and Amortization.

Depreciation of utilityplant (other than nuclear fuel) for financial reporting purposes is computed on the straight-line method based on estimated remaining useful lives, adjusted for estimated net salvage or disposal

costs, and charged principally to depreciation expense.

Depreciation provisions, as a percent of average depreciable property other than nuclear fuel ~ approximated 3.4 percent in 1980, 3.6 percent in 1979 and 3.5 percent in 1978. Depreciation rates are reviewed periodicallyand changes in estimates (including the costs to dismantle or decontaminate nuclear generating plants) are made as appropriate, on a

prospective basis.

Allowable depreciation rates for'wholesale rate-making purposes, pursuant to FERC Order in Docket No.

ER76-495, are different from those regularly used by the Company and allowed by other ratemaking jurisdictions; therefore, in 1980 the Company reduced its depreciation provisions solely applicable to wholesale operations by

$6,700,000 of which $4,590,000 is applicable to prior years.

Amortization of nuclear fuel costs (1980, $34,843,000;

1979,

$37,536,000; 1978, $38.250,000).

including disposal costs, is computed on the unit of production method and charged to fuel expense. Nuclear fuel amortization charges include

$9,043,000 in

1980,

$ 10,516,000 in 1979 and

$ 15,955,000 in 1978 for the estimated costs of perpetual storage of spent nuclear fuel.

Revenues. Customers'eters are read and bills are rendered on a cycle basis. Revenues are recorded when billed, as is the customary practice in the industry.

Deferred Fuel Costs.

Pursuant to regulatory commission orders with respect to the recovery of fuel costs for South Carolina retail operations, the Company is deferring the difference between fuel costs Incurred and the related billings and periodically adjusts rates to reflect these and other pertinent factors.

Customer Fuel Credits.

For North Carolina retail operations and all wholesale operations, monthly revenue billings to customers include a fuel adjustment charge to cover fuel costs for the current billing month, based on actual fuel costs in certain prior periods. Such billings can and do vary significantly from the actual fuel costs of the billing month, principally because of seasonal customer usage factors and the relative level of output from nuclear generating units.

The Company accrues additional fuel costs in months when actual fuel costs are less than annual average fuel costs, and defers fuel costs in months when actual f costs are more than average annual fuel costs.

Th accruals and deferrals are reversed in those future mon for which the current month's costs are a

billing determinant. However";deferrals are recorded only to the extent of accumulated accruals. This practice, which has been reviewed and approved by the North Carolina Utilities Commission (NCUC), improves the matching of fuel costs and revenues.

The liability for customer fuel credits at the end of a period represents the excess of estimated average fuel costs (based on the succeeding twelve months) over corresponding estimated amounts for fuel charges to be billed to customers during the periods that actual fuel costs will be billing determinants.

Income Taxes.

Deferred income tax provisions are recorded only to the extent such amounts are allowed for ratemaking purposes. Comprehensive interperiod income tax allocation has been observed, beginning in 1976, forall significant timing differences.

In compliance with regulatory accounting, income taxes are allocated between Operating Income and Other Income, principally with respect to interest charges related to construction work in progress.

The Company and its subsidiaries file consolidated federal income tax returns. Income taxes are allocated among the companies based upon the ratios of

. their respective "separate tax liabilities" to the consolidated tax liability.See Note 5 with respect to certain other income tax information.

'nvestment Tax Credits. Investment tax credits ar being amortized over the service lives of the prope<

Preferred and Preference Dividends. Preferred a preference dividends declared and charged to retained earnings include amounts applicable to the first quarter of the followingyear, except for the Preferred Stock A series,

which dividends are whollyapplicable to the year in which declared.

Retirement Plan. The Company has a noncontributory retirement plan for all full-time employees and is funding the costs accrued under the plan. Retirement plan costs for

1980, 1979 and 1978 were approximately

$7,763,000,

$8,200,000 and $6,267,000, respectively. At January I, 1980, 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 benefits was

$6,481,000.

The market value of assets available for benefits at january I, 1980, was $46,966,000.

The assumed rate of return used in determining the actuarial present value of accrued benefits is 10 percent.

Other Policies. Other property and investments are stated principally at cost, less accumulated depreciation where applicable, except for investments in subsidiaries that are accounted for on the equity basis. Temporary cash investments are stated at cost, approximating market value. Materials and supplies inventories are stated at average cost. The Company maintains an allowance for doubtful accounts receivable (1980,

$ 1,740,000;

1979,

$ 1,660,000).

Bond premium, discount and expense are amortized over the life of the related debt.'.

Capital Stock Issued and Reserved Capital stock shares have been issued as

follows, representing the total changes in the respective accounts in the periods indicated:

Common stock:

I980 I979 f978 iln Thousands)

Public offerings SPSP ADRP ESOP Other..........

Total 8,500 463 733 I26 9~822 350 273 309 932 3.500 272 l9I 72 80

4. I I 5 During 1980, the Company purchased

$25,195,000 ofcoal from LC and MC. The excess of cost of production over the fair market value (as defined by the NCUC) totaled

$5,810,000 at December 31, 1980, and is included in Other Deferred Debits on the Balance Sheet. These costs are recoverable through customer revenues in the future to the extent that cost of production is less than fairmarket value.

27 Investment in Coal-Mining Subsidiaries Under agreements with Pickands Mather 6 Co. (PM) a firm engaged in owning, operating and managing mineral properties two subsidiaries, Leslie Coal MiningCompany (LC) and Mcinnes Coal Mining Company (MC), have been formed (owned 80 percent by the Company and 20 percent by PM). The subsidiaries are developing two adjacent, deep coal mines in Pike County, Kentucky, each capable of 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, produced 626,000 tons of coal in 1979, and 507,000 tons in 1980. During 1980, the MC mine produced 54,000 tons of coal as its development progressed.

Significant aspects of LC and MC's financial position are summarized as follows (in thousands):

December 31 Preferred stock-redem tlon re ulred:

Preferred Stock A:

S8.75 Series S9.25 Series S9.00 Series Serial Preferred Stock-SI I.I6 Series Total 180 I75 400 755 500 At December 31, 1980, 586,369 shares ofcommon stock were reserved for issuance under the Stock Purchase-Savings Program for Employees (SPSP),

147,484 shares under the Automatic Dividend Reinvestment Plan (ADRP) and 717,670 shares under the Employee Stock Ownership Plan (ESOP).

Effective January 16.

1981, the Company reserved an additional 5,000,000 shares for issuance under the ADRP.

f980 f979 Total assets (excluding leased assets)

Notes Payable 5~96 977 S82,000 S7932I S6 I.000 Cost of assets financed by leasing arrangement...................

8~33 600 S33,635 The Company has guaranteed the obligations of LC d MC under the terms of loan agreements and a lease-ncing arrangement. The Company has further agreed to

.duse MC to complete its mine by December 31

~ 1984. The Company and PM have entered into coal purchase contracts for 80 percent and 20 percent, respectively, of production at prices sufficient to meet all costs.

4.

Notes Payable and Lines of Credit At December 31, 1980, the Company had firm, unused lines of credit with various financial institutions totaling

$ 205,940,000 (at December 31,

1979,

$201,365,000) including necessary amounts to back up outstanding commercial paper and demand notes. In connection with these lines of credit, the Company is required to maintain average compensating balances in various banks

($2,020,000 at December 31,

1980, and

$6,814,000 at December 31, 1979) and pay commitment fees (approximately $75,000 per month at December 31, 1980, and $56,000 per month at December 31, 1979). Such lines of credit are periodically reviewed, at which time they may be renewed or canceled.

5.

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

1980 Year Ended December 31, 1979 (Dollars In Thousands) 1978 Included In Operating Expenses:

Currently payable taxes-Federal State Deferred taxes, net-Federal

-State Investment tax credit adjustments. net Total

$39,506 4,814 34.793 4,805

~(8 225)

~75 693 825,873 7.294 33.823 4.176 23.476 94,642

$54.462 11.622 22,739 3.057 33,008 124.888 28 Included In Other Income:

Reduction in currently payable taxes-Federal State De/erred taxes-Federal State Investment tax credit adjustments.

net Total Total Income tax expense (40, 137)

(4,861) 38,162 5,012 139)

~1863)

~$73 830 (31,017) l3.659) 28,123 3.319 423 12.811)

S91.831 (21,685)

(2.257) 20,776 2.270 1.005 109 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 Taxes and other costs capitalized. etc.

Accelerated depreciation and other property cost differences. net Provision for possible refund of revenues Provision for customer (uel credits. net Deferred fuel costs. net Utilization of subsidiaries'ax losses Canceled project costs Miscellaneous other timing differences. net Total provisions for deferred Income taxes. net 833,550 5,930 40;471 (6,756) 5,098 4.523 1,717, (1,242)

(519) 882,772 S I 9.303 6.729 33.403 6.348 1,147 (618) 3.988 (1.242) 383 869.441 SI 3.347 5,602 33.194 I5.862)

(6.771)

(1,033) 3,706 6,212 447 848.842 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 The effect of Including AFUDC on equity funds In pre-tax Income Effective Income tax rate, excluding AFUDC on equity funds from pre-tax income State income taxes. net of federal Income tax benefit Other dl(ferences. net Statutory federal Income tax rate 31.4%

15.8 47.2 (3.4) 22 46.0%

37.5%

12.4 49.9 (3.3)

(0.6) 46.0't 46.7%

13.4)

(3.6) 48.0%

At December 31, 1980, the Company had generated but not utilized investment tax credits totaling approximately S103 million(Including $ 16 million of ESOP credits), ofwhich $49 millionexpire in 1986 and S54 million expire in 1987.

b.

Commitments and Contingencies It is estimated the Company's construction program for 1981 through 1983, excluding nuclear fuel, will cost approximately $ 1.8 billion; and nuclear fuel expenditures are estimated to total S254 million. At December 31, 1980, minimum firm commitments for construction aggregated approximately

$932 million plus approximately S229 millionfor initialand replacement nuclear fuel. In addition, the Company has a contract with the U.S. Department of Energy for nuclear fuel enrichment requirements through une 30, 2002, which is cancelable without penalty upon five ears written notice. Payments for enrichment services are anticipated to approximate

$219 million during the next ive years, after December 31, 1980. The above estimates nclude provisions for price escalation.

Estimated rental commitments for unrecorded capital eases at December 31,

1980, are approximately (in housands):

ble

-. I 98 I I982 I 983 1984 I985 Thereafter To'tais ICT Generators S 3.800 3.800 3.800 3.800 3,800 53.000 S72.000 Other S

3300 3.400 3.400 3.400 3.400

86. I00 S I03.000 Total S

7, I00 7.200 7.200 7.200 7.200 139. I00 S I 75,000 Minimum rental commitments at December 31,

1980, under operating leases are not material with respect to the Company's financial position.

Had the capital leases been recorded on the Company's books at December 31, 1980, approximately S72 million(S71 millionat December 31, 1979) would have been added to total assets and to total liabilities.The difference between imputed depreciation and interest expense for hese capital lease properties and actual recorded rent expense is not material.

Under the terms of the lease for the internal ombustion turbine (ICT) generators. the Company, under ertain cIrcumstances.

may be required to purchase the CT's from the lessor. The lease for the Company's general ffice has an initial term expiring in 2013 with renewal and purchase options.

The Company is responsible for xpenses in connection with most ofthe leased properties, Iuding insurance, taxes and maintenance.

The Company is a member of Nuclear Mutual Limited i

L), established to provide insurance coverage against property damage to insureds'uclear generating facilities.

he Company is insured thereunder for S375 million at its runswick plant and S150 millionat its Robinson plant. The Company currently would be subject to a

maximum retrospective premium assessment of approximately S45 million in the event losses at insured facilities exceed

premiums, reserves, re-insurance and other NML resources. which are at present more than SI75 million.

The Company's public liabilityfor a nuclear incident is insured up to the maximum limiton public liabilityclaims pursuant to the Price-Anderson Act, which is S560 million for each occurrence, through the conventional insurance pools and through United States Government indemnity. In the event that public liability claims from an insured nuclear incident exceed the primary financial protection provided by the insurance pools, which Is currently $ 160 million, the Company would be subject to a pro rata assessment of up to a maximum of $ 15 millionwith respect to any single nuclear incident and an aggregate maximum of $30 million within any calendar year.

There are certain claims pending against the Company. In the opinion of the Company, liabilities, ifany, arising from these claims would not have a material effect on the financial position or results of operation of the Company.

On january 8, 1981

~ the Company paid to its wholesale customers S23.545.000.

the amount collected for a rate increase for the period from December 29, 1977, to August 18, 1980, in excess of amounts that would have been collected under final revised rates pursuant to a settlement agreement, which has been submitted to the FERC for

approval, together with accumulated interest totalling S5,931,000.

Adequate provisions for possible refund of revenues and interest had been previously recorded.

Operating revenues include $9,242,000 billed South Carolina retail customers, which remains subject to refund at December 31

~ 1980. These increased revenues are the result of an interim rate increase of SI 3,700,000 annually that the Company placed into effect on April 14, 1980 (which is part of an application for a permanent rate increase of

$27,500,000, based on a December 31, 1979 test year and is presently pending final determination).

Effective August 18, 1980, the Company placed into effect a rate increase for wholesale operations that is estimated to increase revenues by S26 million annually after provisions for possible refund. Through December 31, 1980, $8.954,000 had been included in operating revenues and $4,332,000 excluded from revenues and placed into a reserve for possible refund.

It is expected that the effects of the difference between any refunds finallyrequired and the accumulated provisions for such refunds will be accounted for in the period of final determination and will not have a material effect on net income of that period.

In December 1978. the Company canceled plans for construction of two nuclear generating units scheduled for service in 1989 and 1991. Total costs incurred for the units were S12.154.000, and amortization is over a five-year period beginning lanuaty I ~ 1979, pursuant to regulatory authorizations.

At December 31,

1980, the remaining 29

unamortized balance, included in Other Deferred Debits.

is S7,286,000

($9,801,000 at December 31, 1979).

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 willnot require completion and use ofthe cooling towers originally mandated as a condition of the NRC's operating license for the plant. The Company expects to amortize approximately S15 million accumulated construction costs on the uncompleted cooling towers as an operating expense over a five-year period pursuant to authorizations, which will be sought from regulatory authorities.

7.

Rate Increase Matters Operating revenues for 1980 include an increase of S49,773,000 over amounts reflected in prior years attributable to general rate increases placed into effect in 1980 after adjusting such amounts downward by S4,332,000 to reflect a possible refund of revenues. Also included in revenues representing increased fuel cost adjustment billings above the base cost of fuel (as defined for each ratemaking jurisdiction) is $ 130,043,000 in 1980, S80,027,000 in 1979 and S72,096,000 in 1978.

During the summer of 1980, the Company experienced 30 significantly higher-than-normal fuel costs.

Customer revenues for wholesale operations reflected such higher 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-month period beginning with December I, 1980, billings; 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.

Auditors'pinion To the Board of Directors and Shareholders of Carolina Power 6 Light Company:

We have examined the balance sheets and the schedules of capitalization of Carolina Power 6 Light Company as of December 31

~ 1980 and 1979 and the related statements of income, retained earnings and source and use of financial resources for each of the three years in the period ended December 31, 1980. 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 con-sidered necessary in the circumstances.

In our opinion, such financial statements present fairly the financial position ofthe Company at December 31, 1980 and 1979 and the results of its operations and the source and use of its financial resources for each of the thr'ee years in the period ended December 31

~ 1980, in con-formity with generally accepted accounting principles applied on a consistent basis.

Raleigh, North Carolina February 12, 1981 Summary of Quarterly Earnings Data (Unaudited)

Quarter Ended March 31. 1980...

June 30, 1980 September

30. 1980 December 31, 1980 March 31, 1979...

June 30. 1979 September

30. 1979 December 31, 1979 Earnings per Operating Operating Net Common Revenues Income Income Share Iln Millions, Except Earnings per Common Share)

S258.9 S52.1 S49.4 S0.95 228.3 37.8 36.2 0.60 300.4 22.9 20.4 0.25 288.0 59.4 55,4 0.92 235.2 47.6 44.1 0.92 206.7 32.1 28.2 0.53 258.8 54.8 49.8 1.05 225.1 35.9 31.2 0.57 In the opinion of the

Company, all adjustments (consisting of only normal recurring accruals) necessary to a fair statement ofsuch amounts forsuch periods have been made.

Quarterly data normally varies seasonally with temperature variations, the timing of rate increases, and the scheduled down-time and maintenance of electric generating units, especially nuclear-fueled units.

Supplemental Inflation Adjusted Data (Unaudited)

The

data, as reported in the primary financial statements, are based on actual, nominal, historical costs.

However, during periods of significant changes in general price levels, that nominal dollar information becomes distorted and fails to reflect real economic costs or value.

The conventional basis does not account for the event of inflation, i.e., variations over time in the purchasing power or value of the dollar. In an effort to provide financial information about the effects of changing price levels, the Financial Accounting Standards Board issued Statement No.

33, Financial Reporting and Changing

Prices, in September (979. This statement requires most larger companies to disclose (among other things) certain significant historical cost data in constant dollars represented by the average level during the year of the Consumer Price Index forall Urban Consumers (CPI-U) and current cost information concerning the measurement of ets and the expiration of asset values.

The constant dollar information on the followingpages reflects the nominal historical costs and prices restated by a'pplying the CPI-U in conformity with Statement No. 33.

The current cost information on the following pages reflects changes in specific prices of plant from the date the plant was acquired to the present and differs from constant dollar amounts to the extent that specific prices have increased more or less rapidly than prices in general. The current cost of property, plant and equipment, which

, includes land, land rights, intangible plant, property held forfuture use and construction work in progress, represents the estimated cost of replacing existing plant assets and was determined primarily by indexing the surviving plant by the Handy-Whitman Index of Public UtilityConstruction Costs. The current cost of nuclear fuel was determined by recent invoice prices. The current year's provision for depreciation and amortization was determined by applying the Company's depreciation and amortization rates to the indexed current cost amounts.

Under ratemaking practices established by regulatory commissions, the Company can recover through revenues only the original cost (historical cost/nominal dollars) depreciation. Therefore, the increase in the dollar amount for the cost of plant (stated in either historical cost/constant dollars or current cost) over the original cost is deemed not presently recoverable and, therefore, must be reflected as a "reduction in assets to net recoverable cost."

To further reflect the economics of regulation, the reduction in asset "cost" is offset to the extent that the plant is financed from sources that have a fixed, or contractual, rate of return and claim against assets of the Company.

Under present ratemaking practices, the Company can recover through revenues the contractual rate of return for such capital and, therefore, is able to 3I effectively recover the inflation impact (purchasing power 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 and is an offset against the "reduction in assets to net recoverable cost." The treatment given herein to the 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 contractual annual cost rate. Thus, the purchasing power adjustment to the tangible assets, which is not realizable and is written off, as well as the increased operating

expenses, results in no financial loss to the owners of the Company (the common shareholders) to the extent of the leveraged financing.

This information should be viewed as an estimate of the approximate effects of inflation, rather than a precise measure.

The statement of income, adjusted for changing prices as presented on page 32, reflects adjustments only with respect to electric utilityplant-the area of the Company most affected by inflation. Allother items are considered to have been effectively transacted at average I980 price levels and, therefore, do not require adjustment.

Statement of Income from Continuing Operations Adjusted for Changing Prices for the Year Ended December 31, 1980 Operating revenues Operating expenses:

Operation and maintenance:

Fuel for generation Other Depreciation and amortization Taxes other than on income Income tax expense Total operating expenses As Reported in the Primary Statements 8 I 075 604 4I I,I9I 247,624 88,70 I 80,209 75 693 903 418 420,490 248,0 I 2 I 63,966 80,209 75 693 988 370 4 I8.75 I 247,930 176,370 80,209 75 693 998 953 Constant Current Dollar Cost Average Average I980 I980 Dollars Dollars (Thousands of Dollars)

SI 075 604 81 075 604 Operating Income Other income net 32 Income before Interest charges Net interest charges Income from continuing operations (excluding reduction to net recoverable cost)

I 72,186 85043 257,229 95841 87,234 85043 I 72,277 95841 76,65 I 85 043 (6I,694 95841 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" Reduction in assets to net recoverable cost Effect of increase in general price level Excess of increase in general price level over increase in specific prices after reduction to net recoverable cost Adjustment for purchasing power loss by net monetary liabilities S

529,222 8~351 9751 (232.542)

(638 072) 8 (341392) 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 utilityplant 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 1980 Year Ended December 31, I 979 1978 1977 1976 Operating revenues Historical cost Information adjusted for general inflation:

Income from continuing operations (excluding reduction in assets to net recoverable cost)

Income from continuing operations per common share (after preferred stock dividend requirements and excluding reduction in assets to net recoverable cost)

Net assets at year-end at net recoverable cost ent cost Information:

Income from continuing operations (excluding reduction in assets to net recoverable cost)

Income from continuing operations per common share (after preferred stock dividend requirements and excluding reduction in assets to net recoverable cost)

Net assets at year-end at net recoverable cost General Information:

Adjustment for purchasing power loss by net monetary liabilities Cash dividends declared per common share Market price per common share at year-end CPI-Uaverage year-end (In 'millions of average 1980 dollars, except for per share amounts)

S1,075.6 S 1,051.1 S I, I 4 I. I S I,099.1

$995.0 S

76.4 S

106. I S

.90 S

1.82 S I, I 78.0 S I, I 22.0 S

65.9 S

93.5 S

.67 S

I.50 S 1,178.0 S I, I 22.0 S

17.31 246.8 258.4 S

20.53 217.4 229.9 S

26.15 S

3 I. I 6 S

34. I 6 I 95.4 181.5 170.5 202.9 186.I,I 74.3 S 304.7 S

309.2 S

220 S

233 S

240 S

238 S

245 33

Carolina Power 6 Light Company Statistical Review Dollars In Thousands except per share amountsl 1980 1979 1978 1977 1976 1975 34 Balance Sheet Data (End of Period)

Total UtilityPlant other than Nuclear Fuel....

Construction Work In Progress Total Nuclear Fuel Net UtilityPlant other than Nuclear Fuel Total Assets Capitalization Common stock and retained earnings......

Preference stock Preferred stockRedemption not required

-Redemption required First mortgage bonds.

net'ther long.term debt Total Noncurrent Deferred Income Taxes..........

Deferred Investment Tax Credits Total Ratio of Accumulated Depreciation to UtilityPlant In Service Percent of Total Capitalization Common stock and retained earnings......

Preference stock Preferred stockRedemption not required Redemption required First mortgage bonds, net'ther long-term debt Total Ratio of Bonds to Net Utility Plant Other than Nuclear Fuel Summary Results of Operations Operating Revenues Operating Expenses Operation and maintenance Depreciation and amortization Taxes-other than on Income Income tax expense Total operating expenses Operating Income AFUDC. Net of Deferred Income Taxes.....

Other Income-Income Tax Credit.........

Other Income (Deductions)-Net..........

Total Interest Charges Net Income..................

Preferred and preference stock dividend requirements Earnings for Common Stock Dividends declared on common stock Earnings Invested in the Business.........

84 490 984 81 616 513 8

218 466 85 863 576 84 241 607 S 1,233,368 47,900 238,118 175,100 1,564,400 149 067 83 407 953 S

307,626 120 776 8

420 402 21.9 36.2 1.4 7.0 5.1 45.9 4.4 100.0 40.5 81 075 604 658,815 88,701 80,209 75 693 903 418 172,186 113,398 35,417 4,366

~163 9791 161,388 34 641 126,747 104 865 8

21 882 3.882,776 1,327.311 220 199 3 320 598 3 647,913 1,045.150 47,900 238.118 100,000 1.411,613 96,077

'.938 858 263.074 129 040 392.114 22.1 35.6 1.6 8.1 3,4 48.0 3.3 100.0 42.5 92 5 910 501.619 88,396 70,796 94 642 755.453 170,457 80,785 22,113 1,858 (121.969) 153,244 28 263 124.981 84,066 40,915 3,286,303 896.126 155 418 2.802.044 3 135.847 2.912,235 622,409 92,494 2 496 798 2.763.554 985.774 47,900 238.118 50,000 1.222,527 133 2 544 452 220,174 105 141 325,315 850.298 47.900 238,118 50,000 1.201,354 90 2,387.760 157.632 71 128 228,760 20.3 38.7 1.9 9.4 1.9 48.1 18.1 35.6 2.0 10.0 2.1 50.3 100 0 100 0 43.6 48.1 459,663 80.356 68,314 124.888 423,542 71

~ 140 60,606 97,044 733,221 652.332 170,217 53.173 13,237 4,203 (98,087) 142.743 26,926 115,817 71 511 44,306 155.943 42.982 11.498 2,919 192 3071 121,035 26,926 94,109 63,274 30,835 903 438 808 275 2.685.746 775981 74 646 2,332,890 2 547.028 2.489.107 643.069 59,893 2 192 681 2,394 614 809,197 47.900 238.118 50.000 1,103,289 175 712,837 47.900 238,118 50,000 1.105,050 50 204 164,913 88,165 18.5 36.0 2.1 10.6 2.2 49,1 100.0 16.1 32.3 2.2 10.8 2.3 50.1 2.3 100.0 47.3 50.4 687 385 595.892 352,603 62.385 52,856 82.961 550.805 136.580 48,802 14,586 469 (89,429) 111,008 365,137 46,648 46.087 36 387 494,259 101,633 59,957 19,734 1,020 (90,173) 92.171 26,926 25,752 84.082 56 760 27.322 66.419 46,173 20,246 2.248,679 2,204,109 118,016 69.377 46897 18788'81.

208, 9

819, 884.

71 44

~37 44 51

260, 89 398 54 76 27 34 748,091 21, II

4. 74

26. 85 3.

I 100.0 204, 46 122, 27

19. 76 19, 53 8,289 169.245 35.601 10.505 2.709 133 123,957 24,825 4,699 20.126 19,013 1,113 Earnings Per Share Weighted Average Return on Average Common Stock Equity Times Earned-Fixed charges'..................

Fixed charges and preferred and preference dividend requirements' 8

273 11.09 2.31 1.80 3.06 12.30 2.79 2.10 3.10 12.93 3.39 2.61 11.34 3.09 2.34 2.11 2.52 11.34 2.92 1.99 2.36 10.62 2.28 1.68 1.56 8.64 2.25 1.82 Common Stock Data Shares Outstanding (000's)Year-end Average..

Book Value per Share at Year-end Dividends Declared per Share Payout percent Number of Shareholders at Year-end 51,208 46,471 S

24.02 S

220 80.6 103,662 41.386 40,841 25.19 2.05 67.0 87,817 40,454 37.355 24.30 1.90 61.3 84,645 36,340 36,097 23.32 1.75 67.0 74,741 35.890 33.385 22.47 1.69 67.1 73.775 32.693 28.109 21.72 1.60 67.8 69,199 13,986 12.934 18.65 1.46 61

'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 Commercial IndustrialTextile Industrial-Other Government and Municipal Sales for Resale Total Electricity Sales Within Service Area Nonterrltorlal Electricity Sales Miscellaneous Revenues Total Operating Revenues o d Data S

342,239 195,436 106,747 189.995 30,403 202 560 1,067,180 8 424 01 075 604 293.575 171,715 98.657 168,653 29.484 155.828 917.912 7,998 925.910 292.309 166.867 94,414 155.511 31.020 155.925 263.126 146,097 89.782 135.383 27,674 134.626 221.531 123.624 78.634 114,534 23.227 109.514 796.688 3,066 8.521 896.046 671.064 9.530 6.791 7,392 903.438 808.275 687,385 191.349 110.700 69.290 96.581 20.825 93.980 75.990 40.981 21,174 28.889 8.573 25.794 582.725 201.401 7.485 1,225 5.683 2.220 595.893 204.846 Electric Energy Sales (Millionsh Residential Commercial IndustrialTextile.

Industrial-Other Government and Municipal Sales for Resale Total Energy Safes Within Service Area Nonterritorial Total Electric Energy Sales Company Uses. Losses and Unaccounted For Total Energy Requirements

'lectric Energy Supply (Millionsh Generated-Steam-Fossil Generated-Steam-Nuclear Generated-Hydro Generated-Other Fuel Purchased and interchanged-Net Total Energy Supply

.. Kwh 7,870 4,935 3,699 6,092 864 6 822 30,282 7,195 4.590 3.719 5.890 917 6357 28.668 7.208 4.503 3.589 5,424 963 6,306 27.993 1 901

.. Kwh 32 183 1.632 1.709 30.300 29.702

. Kwh 22,299 8,955 680 224 25 18,336 10.802 1,019 146 13) 14.591 13.891 716 294 210

.. Kwh 32,183 30,300 29.702 30,282 28,668 27,993 6.999 4.280 3.752 5,i52 959 6,114 27.256 61 27.317 1.684 29.001 17.598 9.895 732 406 370 29.001 6,491 4.016 3.788 4.971 914 5.735 25.915 261 26.176 1.528 27.704 18.989 7.383 756 130 446 27.704 6.152 3.798 3.452 4.381 904 5.370 24.057 61 24.118 1.700 25.818 18.374 5.591 947 31 875 25.818 4.634 2.693 2.639 2,985 833 3.518 17.302 246 17.548 1.248 18,796 16.311 3

623 315

'1,544 18.796 Peak Demand of Firm Load (000's):

Within Service Area Nonterritorlal Total Peak Demand

. KW 6.139 5.907

. KI9 6 139 5.907 5.605 5,597 5.597 5.121 62 5,183 5.060 38 5.098 3,484 3,484 Total Capability at Year End'000's):

Fossil Fuel Plants Nuclear Plants Hydro Plants Purchased Total Capability 7ilscellaneous Customers at Year End KW 5,519 2,245 214 75

. KW 8.053 4,869 2.245 214 128 7.456 4,869 2.245 214 128 7.456 4,869 2.245 214 128 7.456 4.869 1,455 214 228 6.766 4,835 1.455 214 228 6.732 2.967 214 212 3.393 Residential Other Total 632,209 617393 601.947 109 424 107.624 106.212 741 633 725.017 708.159 585.821 103.731 689,552 575.019 560,954 101.937 99.574 676.956 660,528 478.914 86.511 565.425 Average Revenue Per KWH Residential Commercial Industrial Total Energy Sales Within Service Area Residential Average Annual Energy Use Average Annual Bill.

Steam Electric Generating Plant Fossil Fuel Average Annual Heat Rate IBTU Per Net KtVH).

Average Cost Per Million BTU Average Cost Per Million BTU All Fuels Nuclear Fuel Annual Load Factor. Service Area Load

.Cents

. Cents 10,!90 158.9 124.9 35.7 59.7 4.35 3.96 3.03 3.52 Kwh 12,558 S

546.11 4.08 3.74 2.78 3.20 11,785 480.84 9.996 139.4 100.8 35.4 58,6 4.06 3.71 2.77 3.20 12,113 491.22 10,167 135.3 90.4 40.3 60.5 3.76 3.41 2.53 2.92 12.048 452.97 10,008 118.2 92.2 40.3 59.0 3.41 2.21 2.59 11,407 389.32 9.980 108.4 84.9 24.9 61.0 3,11 2.91 2.12 2.45 11.094 345.04 9,951 1190 94.6 21.6 58.1 1.64 1.52

.89 1.16 9.794 I'60.62 9,785 41.2 42.1 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.

Chairman/President of the Company Raleigh. N.C. (I97()

Felton J. Capel President.

Century Associates of North Carolina.

Southern Pines, N.C. II972)

Charles W. Coker, Jr.

President.

Sonoco Products Com Hartsville, S.C. (1975)

IJ I

4

r. ~~/

36 rge H. V. Cecil Ident. Biltmore Dairy Farms. Inc..

ville. N.C. I I976)

L. H. Harvln, Jr.

Chairman o( the Executive Committee of Rose's Stores. Inc..

Henderson.

N.C. (I958)

A. C. Monk, Jr.

President and Treasur A. C.Monk andCompa Farmville, N. C. (I976)

Daniel D. Cameron, Sr.

Geo Chairman/President.

Pres Atlantic Telecasting Corporation.

Ashe Wilmlngton, N.C. (I970)

J. A. Jones Senior Executive Vice President and Chief Operating Officer of the Company.

Raleigh. N.C. (I97I) 4.

Karl G. Hudson, Jr.

Executive Vice President and General Manager, Hudson-Belk Company, Raleigh, N.C. ((967)

Edward G. Lllly,Jr.

Senior Vice President and Chief Financial Officer of the Company, Raleigh, N.C. (I97I)

Officers At January I ~ f98I Margaret T. Harper Owner. Stevens Agency.

Southport, N.C. (I975)

Sherwood H. Smith, Jr.

Chairman/President of the Company J. A. Jones Senior Executive Vice President and Chief Operating Officer E. E. Utley Executive Vice President James M. Davis, Jr.

Senior Vice Presfdent (Croup Executive)

Lynn W. Eury Senior Vice President (Group Executive)

William E. Graham, Jr.

Senfor Vice President and General Counsel (Croup Executive)

Edward G. Lllly,Jr.

Senfor Vice President and Chief Financial Officer (Group Executive)

M. A. McDuNe Senior Vice President (Group Executive)

Wilson W. Morgan Senior Vlcc President (Group Executive)

W. J. Rldout, Jr.

Senior Vice President (Group Executive)

Charles D. Barham, Ir.

Vice President and Senior Counsel Samuel Behrends, Jr.

Vice President Paul S. Bradshaw Vice President and Controller Norris L. Edge Vice President Thomas S. Elleman Vice President B. J. Furr Vice President P. W. Howe Vice President William B. Klncald Vice Presfdent Jack B. McGlrt Vice President Albert L Morris, Ir.

Vice President Sheldon D. Smith Vice Preslden)

Earl F. Stephenson Vice President R. A. Watson Vice President I. L. Lancaster, Jr.

Secretary Robert M. Williams Assistant Secretary L T. Quarles Treasurer Cllfton D. Mann Assfstant Controller Iaham, Ir.

r ice President eneral Counsel

Company, gh, N.C (I9eO)

John F. Watllngton, Jr.

Chairman of the Executive Committee of the Wachovla Corporation and Wachovla Bank 6 Trust Company. N,A.,

Winston-Salem, N.C. (1970)

Division Officers E. Wilson Craig Vice President-Northern Division E. Charles Dyson Vice President-Western Division W. Burt Grant Vice Presfdent-Central Division Russell H. Lee Vice President-Eastern Division C. Joseph Turner Vice President-Southern Division Committees of the Board ice L Tllghman, Jr.

and Investments,

( I 961

)

Executive Committee Sherwood H. Smith, Jr.. Chm.

I, A. Jones Edward G. Lllly,Jr.

William E. Graham. Ir.

Committee on Personnel, Executive Development and Compensation John F. Watllngton, Ir., Chm.

Felton J. Capel Charles W. Coker, Ir.

Margaret T. Harper Nominating Committee John F. Watllngton, Jr., Chm.

L H. Harvln, Jr.

Karl G. Hudson, Ir.

Committee on Financial Audit and Corporate Performance L H. Harvln, Jr.. Chm.

Daniel D. Cameron. Sr.

Felton J. Capel A. C. Monk, Jr.

Horace L Tiighman, Jr.

Committee on Forecasting, System Development and Finance Karl C. Hudson, Jr., Chm.

Daniel D. Cameron. Sr.

George H. V. Cecil Horace L Tllghman. Jr.

John F. Watllngton. Jr.

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 Purchasers Underwriting Discounts{l)

Proceeds to 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 given or

made, such information or representation must not be relied 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 information'ith the Securities and Exchange Commission.

Certain 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 9 8 1 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 Shares Estimated to be Outstanding after Offering Use of Proceeds Lz.sted 1981 Price Range (through November 16, 1981)

Closing Price on November'6, 1981 on the New York Stock Exchange Indicated Current Annual Dividend Rate-3,000,000 shares of Common Stock (New Common Stock) 55 i744 i035 Financing of construction program New York and Pacific Stock Exchanges (Symbol:

CPL)

$ 20 3/4 $ 16 3/4

$ 20 1/8

$ 2.40 CAROLINA POWER 6 LIGHT COMPANY Busxness Service Area 4

Customers Installed Summer Generating Capability (in kilowatts).

Sources of Generation during 1981 (estimated)

Generation, transmission, distribution and sale of electricity Portions of North Carolina and South Carolina comprising approximately 30,000 square miles

. Approximately 750,000 7~978g000 70.0% coal, 28.0% nuclear,

'l.5% hydro, 0.5% No.

2 fuel oil

SELECTED INFORMATION CONTINUED Year Ended December 31, 1976 1977 1978 1979 SELECTED FINANCIAL INH)RMhTEON

{Millions, except per share amunts) 1980{a)

Twelve Rmths Ended September 30, 19&1(a)

Operating Revenues'.

Net InccsB

~

Earnings for Carman Stock e

~

Average Caomon Shares Outstand lng 0

~

Earnings Per Canaan e

o

~

ends Declared Per n Share,

~

$687.4

$111.0

$84.1 33.4

~

$2.52

$ 1 69

$808.3

$121.0

$94. 1 36.1

$2.61

$1.75

$903 4

$142.7

$925.9

$153.2 37 4

$3.10

$ 1.90 40.8

$3.06

$2.05

$115.8

$125.0

$ 1 i075.6

$161.4

$126.7 46 5

$2.73

$2.20

$ 1 &316.2

$210 8

'-'- $169.5 51.4

$3.30

$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'

-'Millions, except percentages)

As of Se tember 30, 1981 Ir

". Iong-term Debt(b)..

Preferred Stock-Redemption, Required Preferred Stock-

'l. Redemption, Not Required

~

. Preference Stock Ccmmn Stock Equity.

Kbtal Capitalization

~

Actual

$ 1 ~921.1; 214.7 Batao 51.7S 5.8 238.1 47.9 1 i291.5 6.4 1 3 34.8

~37~I3.

III0.04

$ 1 i921.11 214 7 238.'i 47 9 1 351.2 773.0 57 6 3 1 3 35.8 100.04 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 1976

~

$ 24 1/2 1977

~

25 3/8 1978

~

23 7/8 1979 Low

$ 17 5/8 21 1/2 19 7/8 Quarterl Annual

$ 1 66 1

72 1

87 First Quarter Second Quarter Third Quarter Fourth Quarter 1980 22 1/2 22 22 20 1/8 21 3/8

$.49 18 1/4

.49 19 7/8

.52 17 3/8

.52 2 02 First Quarter Second Quarter Third Quarter Fourth Quarter 1981 First Quarter Second Quarter Third Quarter Fourth Quarter (through November 16) 19 1/8 21 3/4 22

'l9 3/4 18 3/8 20 3/4 20 20 1/2 14 7/8 16 1/4 19 16 1/2 16 7/8 16 3/4 17 7/8 17 7/8

.52

~ 52

.56 56

.56

.60

2. 16 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) $ 130 million of Short-Term Debt Expected to be Refinanced.

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 6 percent interest to 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 Company is presently installing similar burners on the "B" 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

'he plant (presently scheduled for 1983) may be delayed.

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

.'he Company and other utilities who ownpressurized water

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.

~ =~

The

. Company

, has subm itted emergency respons e plans a nd implerne nting, procedures for. the Brunswick and Robinson Nuclear Plants to the NRC in compliance with revised federal

-1 6-I regulations.

Revised emergency plans piepared by the State of South Carolina and the State of North'Carolina have also

'een submitted to the NRC and the Federal Emergency Manage-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.

If the NRC finds any of the plans deficient and the deficiency is not correct-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 represented by the.remaining

$ 5,000.

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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:

Unit Estimated in-service Date Raw Materials and Services Uranium Conversion Enrichment Fabrication Harris Harris Harris Harris Noe 1

~ ~ ~ ~ ~ ~ ~ ~

L 2

~ ~ ~ ~ ~ ~ ~ ~

L 3

~ ~ ~ ~ ~ ~ ~ ~

L 4

~ ~ ~ ~ ~ ~ ~ ~

Robinson No e 2

~ ~ ~ ~ ~ ~

Brunswick Noe 1

~ ~ ~ ~ ~

Brunswick L 2

~ ~ ~ ~ ~

1985 1988 1994 1992 1987 1987 1987 1987 1986 1986 1986 1986 1986 1986 2002 2002 2002 2002 2002 2002 2002 1986 1985 1988 1985 1988 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

-'equirements through the years shown above from invent5r$

on 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

'r (ii) if there is a failure to pay dividends on any Preferred Stock or Preference Stock (aggregate annual 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),

.'annot elect any directors.

If and when dividends payablen any of the Preferred Stock;.shall< be in default in an 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.

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'.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

'holders of the Common Stock are entitled, to share, ratabl'y, 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.

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

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

Carolina, and Bradford Trust. Company,.New York,,New York.

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.

D LEGALITY EXPERTS AN 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 Pacae 3,000,000 Shares Available Information Incorporation of Certain Docu-ments by Reference Selected Information The Company Application of Proceeds Carolina Power.a Light Company Common Stock Common Stock Price Range and Dividends.

(Without Par Value)

Additional Information Description of Common Stock o

~

Underwriter.

Experts and Legality.

18 20 20 PROSPECTUS' No dealer, salesman or other person has been authorized to give any 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 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.

JEFFERIES

& COMPANYi INC November 17, 1981

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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 Furman K. Biggs, Jr.

T. Bruce Boyette Tommy M. Combs Russ Conner W. D. Cox Robie G.

Dunn Raymond Glover Lamar Hales Jonathan Hankins Ferd L. Harrison Guy G. Hill E. C. Hines Charles O'H. Horne, Jr.

Devone Jones D. R. Jones B. D. Kimball Earl Langley John McNeill Ralph Mobley W. Everette Prince James P. Ricks, Jr.

W. P. Riley William L. Ross T. R.

Shaw, Jr.

Charles Stewart Mark A. Suggs Harry S. Taylor, Jr.

Frederick E. Turnage Ralph M. Wallace Edward B. Walters Lois Brown Wheless J. A. Wooten, Jr.

Hobgood Lumberton Wilson Elizabeth City New Bern Hertford Benson Pikeville Apex Southport Scotland Neck Wake Forest Winterville Greenville Fremont Washington Enfield Smithfield Red Springs Robersonville Selma Edenton Hamilton Waynesville Windsor Clayton Ayden Hookerton Rocky Mount Belhaven LaGrange Louisburg Farmville General Manager - Ralph W.

Shaw

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Audited Financial Statements and Other Financial Information NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 June 30, 1981 Audited Financial Statements Accountants Report.

I Balance Sheets

~

2 Statements of Revenues and Expenses and Changes in Fund Balance.

3 Statements of Changes in Financial Position.

Notes to Financial Statements.

4 5

Other Financial Information Accountants'eport on Other Financial Information Comparison of Actual Revenues and Expenses with Budget 7

~

- ~

~

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 ASSETS Cash Short-term investments June 30 1981 1980

$ 22,180

$ 4,036 10,717 52,959

$ 32,897

$56,995 LIABILITIESAND FUND BALANCE Accounts payable COMMITMENTSNote B

Fund balance (deficit)

$398,071

$ 30>172 (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 Investment revenue

$ 589,877 9,111 TOTAL REVENUES 598,988

$404,870 7,502 412,372 Expenses:

Outside consultants:

Legal Engineering 246,695 524,121 81,898 223,326 770,816 305,224 Administrative 220,169 87,157 TOTAL EXPENSES EXCESS (DEFICIENCY) OF REVENUES OVER EXPENSES Fund balance at beginning of year 990,985 392,381 (391,997) 19,991 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 SOURCES (USES)

OF WORKING CAPITAL Excess (deficiency) of revenues over expenses Year Ended June 30 1981 1980

$ (391,997)

$ 19,991 18,144

$ (22,992)

(42,242) 52,959 able (367,899)

(17,543) 7,567 INCREASE (DECREASE)

IN WORKING CAPITAL

$ (391,997)

$ 19,991 INCREASE (DECREASE) IN WORKING CAPITAL

$ (391,997)

$ 19,991 COMPONENTS OF INCREASE (DECREASE) IN WORKING CAPITAL Cash Investments Accounts Pay Prepaid Dues 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 STATEMENTSContinued NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 NOTE BCOMMITMENTS--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

~ NORTH CAROLINA MUNICIPAL POWER AGENCY NUMBER 3 Year Ended June 30 1981 Budget Actual REVENUES Membership dues Investment revenue

$578,600 6,000 TOTAL REVENUES 584,600

$589,877 9,111 5985988 EXPENSES Outside consultants:

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

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

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

.Employee benefits Travel and expenses Recruitment and relocation Staff development Equipment and. furniture purchases Rent Telephone Copies Office supplies Dues and subscriptions Postage Vehicle operation and maintenance Equipment and maintenance contracts Insurance Contingency

Printing Writer-consultant fee Miscellaneous h

$ 117,169 16,125 21,436 9,067 3,052 12,741 12,730 4,481 4,364 2,962 975 820 733 614 219 '0 931 853 $ 648 7$ 628 5$ 910 264 642 2,526 1,429 1,438 489 119 479 217 71 357 4,695 83 53 1,085

, TOTAL MANAGEMENT SERVICES EXPENSES S208$ 419

$ 81$ 133

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ML18017B524

Text

Dearborn,

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