Exhibit 10(ii)

                DEFERRED COMPENSATION PLAN FOR BOARD OF DIRECTORS
                           METHOD OF PAYMENT AGREEMENT


     Agreement by and between  ___________________________  (the "Director") and
PROGRESS ENERGY, INC. (the "Company").

                                   WITNESSETH
                                   ----------

     WHEREAS,  Director  has  served  or will  serve as a member of the Board of
Directors of the Company (the "Board");

     WHEREAS, the Board previously has adopted a Deferred Compensation Plan (the
"Plan") for the benefit of the directors, which Plan is incorporated herein;

     WHEREAS,  a portion of the Director's  annual retainer and certain matching
contributions  of the Company are  automatically  deferred  under the Plan,  and
Director  has been or will be  eligible  to defer  by means of  annual  deferral
agreements (the "Deferral  Agreements") the receipt of some or all of Director's
retainer and fees (other than the portion that is  automatically  deferred) (all
amounts  automatically  or electively  deferred  under the Plan and the Deferral
Agreements  being referred to  collectively  herein as the "Amounts  Deferred"),
until the calendar year after the year in which  Director  ceases to be a member
of the Board;

     WHEREAS, under the terms of the Plan and the Deferral Agreements,  Director
has been permitted to elect future  payment of the Amounts  Deferred in the form
of  either a  single,  lump-sum  payment  or a series  of up to ten (10)  annual
installments.

                                    AGREEMENT
                                    ---------

     NOW, THEREFORE,  in consideration of the premises, the Company and Director
hereby agree as follows:

     1.  Election of Method of Payment.  All Amounts  Deferred  beginning  on or
after January 1, 2005, shall be paid (choose one):

     [  ]      Through  the  transfer,  as soon as  practicable  after  the last
               business day of the calendar year in which Director  ceases to be
               a member of the  Board,  of a single,  lump-sum  payment  in cash
               determined in accordance with the applicable Deferral Agreements;
               or

     [  ]      In a series of  _______  annual  installments  (not more than 10)
               commencing  on  the  first  business  day of  the  calendar  year
               following the year in which Director ceases to be a member of the
               Board.  The  amount  of cash in each  such  installment  shall be
               determined in accordance with the applicable Deferral Agreements.
               The unpaid portion of the Director's  Unit Account shall continue
               to  be  adjusted,   as  provided  in  the   applicable   Deferral
               Agreements,  during the period that  Director is  receiving  such
               installment payments.

     2.  Change of  Election.  Director  may not  change  the  method of payment
elected in Section 1 hereunder.

     3. Ratification and Approval of Terms. This Agreement  supersedes any prior
Method of  Payment  Agreements  with  respect  to the  method of  payment of the
Amounts Deferred  beginning on or after January 1, 2005. The Agreement shall not
affect any Deferral or Method of Payment  Agreements  with respect to the method
of payment of Amounts  Deferred prior to January 1, 2005. In all other respects,
the Plan and the  Deferral  Agreements  as in  effect  prior to the date of this
Agreement are hereby ratified and approved.

     4. Governing Law. This Agreement  shall be interpreted in accordance  with,
and all rights  hereunder shall be governed by and construed in accordance with,
the laws of the State of North Carolina.

     5. Execution in Counterparts. This Agreement may be executed simultaneously
in one or more  counterparts,  each of which shall be deemed to be an  original,
but all of which shall constitute one and the same instrument.

     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement.


DIRECTOR:                           PROGRESS ENERGY, INC.:


                                    By:
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Director's Signature


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Name                                Name


Date:                               Date:
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