PWC Signs Nine-Year Power Supply Agreement with CP&L
Expects $160 Million in Savings, City to Receive $5 Million for
Vision Plan

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The Public Works Commission of the city of Fayetteville, NC, voted March 27 to accept a nine-year deal with CP&L, a Progress Energy company [NYSE: PGN], to supply electricity to the municipal utility.

The agreement becomes effective in July, 2003 and PWC expects to realize a $160 million savings in total power costs over the nine years of the contract.

“The savings and benefits of this contract are huge to the Public Works Commission, the city of Fayetteville, and our ratepayers. PWC can assure our customers reasonable electric rates during the life of this agreement,” said Robert “Sandy” Saunders, PWC chairman. “The staff has been very diligent in the process of securing a new power agreement. The electric industry has gone through many changes since the process began several years ago and the Board feels this is an excellent time to enter into this contract.”

In the 2001 fiscal year, PWC’s total annual power costs exceeded $100 million. Last year, PWC purchased 2.2 billion kilowatt hours (kwh). Under the existing contract, PWC’s projected total power costs through 2012 were estimated to be $1.2 billion. The new contract projects a 13.3% savings or total power costs of $1.05 billion.

In addition to the projected savings, CP&L has committed to make $5 million in contributions over the life of the contract to the city’s economic development efforts. The contributions will be designated to the 3,000-acre downtown vision plan.

“This is yet another great achievement for the city of Fayetteville and especially for its utility, the PWC. This agreement will have long-term benefits for our ratepayers and for our economic development efforts within our city,” Mayor Marshall B. Pitts Jr. said. “I appreciate the efforts of PWC and city staff to make this happen,” he said.

Currently, PWC operates the Butler-Warner Generation Plant under a long-term agreement with CP&L, which terminates on June 30, 2004. The current plan would have automatically renewed until 2009 without a statement of intention by PWC. In 1999, PWC announced it would end the contract and began negotiations for a new power supply agreement given the projected rise in power costs over the next five to 10 years. Under the new agreement announced Wednesday, the last year of the current contract has been renegotiated.

"We are very pleased to continue CP&L's long-standing, successful relationship with PWC and the City of Fayetteville," said William Cavanaugh, chairman, president and CEO, Progress Energy, parent company of CP&L. "We are looking forward to continuing to provide reliable and affordable electricity to PWC and the City of Fayetteville."

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