Carolina Power & Light Will Acquire North Carolina Natural Gas Corp.

Carolina Power & Light (CP&L) has entered into a definitive agreement to acquire North Carolina Natural Gas Corp. (NCNG) through a stock-for-stock transaction. CP&L will add NCNG's natural gas and propane products into its portfolio of electricity, energy services and technology products and services.

This acquisition is part of CP&L's plan to become a total energy provider for customers in its region, which is continuously growing. The company's objective is to provide a full array of energy-related services to all of our current customers and to expand our market reach. CP&L will seek a disciplined strategy and acquire companies that offer profitable synergies with its own, like NCNG.

"We have plans for significant additions of gas-fired power plants in the next 10 years to meet our customers' needs. Access to a competitively priced gas supply is integral to our long-term strategy," according to CP&L President and CEO William Cavanaugh. "To better serve our customers, we plan to create a larger regional platform from which to expand our energy-related products and services throughout the Carolinas and beyond. The ability to offer reasonably priced natural gas to our customers has been a strategic priority for CP&L, and our acquisition of NCNG advances that strategy."

CP&L's generation expansion plans include more than 600 megawatts in Wayne County, which is currently a NCNG service area, on the site of the existing Lee Steam Electric Plant. It will include four gas-fired combustion-turbine generators, and is scheduled to be on line in mid-2000. The additional generation in Wayne County and elsewhere in North Carolina is needed to accommodate the area's ongoing growth in population and usage, to increase reserve capacity in the Southeast and to support CP&L's strategy for additional sales in the wholesale energy market.

NCNG will be operated as a wholly owned subsidiary of CP&L. NCNG Chairman and Chief Executive Officer Calvin Wells said he believes the combination is a great opportunity for customers, employees and shareholders of both companies. Wells will remain CEO of the subsidiary and will report directly to Cavanaugh and participate on the CP&L senior management committee.

A transition plan is currently being developed to guide the integration of NCNG employees, facilities and customer services into CP&L. The change is not expected to have an immediate effect on the way customers currently do business with either company, although the integration is expected to provide opportunities for some consolidation of customer service functions in the future. Both companies' retail rates are regulated by the N.C. Utilities Commission and would not be affected by the acquisition.

NCNG (Fayetteville, NC) provides natural gas, propane and related services to more than 173,000 customers located in 86 towns and cities and on four municipal gas distribution systems in south-central and eastern North Carolina.

CP&L (Raleigh, NC) maintains 16 power plants and more than 60,000 miles of power lines in providing service to nearly 1.2 million customers in central and eastern North Carolina, the Asheville area and the Pee Dee Region of South Carolina.