Progress Energy adjusting capex in response to denied rate increase

By Jennifer Lanning Drey

Portland, Ore., Jan. 19 - Progress Energy, Inc. is re-evaluating and adjusting its capital-investment plans in Florida based on the Florida Public Service Commission's decision to deny the company's requested base rate increase for subsidiary Florida Power Corp., Bill Johnson, chief executive officer of Progress Energy, said during a company conference call held Tuesday.

The CEO also said the company has been in contact with the three ratings agencies following the commission's decision, and all three are considering increasing the company's risk profile based on the increased regulatory risk in Florida.

Such action by the ratings agencies could impair Progress Energy's ability to access cash as well as cause capital to come at a higher cost, he said.

In the meantime, however, the company has strong available liquidity of approximately $2.5 billion, and it has already pre-funded a significant portion of its 2011 maturities at the holding company level through a debt deal done in late 2009, Mark Mulhern, chief financial officer of Progress Energy, said during the call.

As a result, "While any action by the agencies will impact us over the long term, our proactive approach to financing should serve us in the near term," Mulhern said.

Based on the regulatory decision in Florida and the lingering effects of the recession, Progress Energy expects a challenging year in 2010.

"We will work our way through these present challenges and create a strong future for our shareholders, as well as our customers. We have a history of responding well to challenges, both financial and operational, and we'll do the same here," Johnson said.

Johnson also said the company will review its regulatory options in Florida, including the possibility of filing another rate case in the near term.

The company said Tuesday that it had narrowed its 2009 earnings guidance to a range of $3.00 to $3.05 from a previous range of $2.95 to $3.15.

Progress Energy is a Raleigh, N.C.-based energy company.

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