Progress Energy will cut its operating expenses and delay two planned nuclear reactors in Florida in the wake of a decision by regulators in that state to deny the electric utility a rate increase.

Raleigh-based Progress, which runs electric companies in Florida and the Carolinas, said it will provide more details next month, but warned Wall Street analysts today in a special telephone conference that its Florida utility will not have sufficient money to maintain service quality.

The Florida Public Service Commission last week denied a $500 million rate increase beyond $132 million that had been previously received provisional approval. The regulators said that they couldn't justify raising customers' rates during a severe recession.

The Florida ruling has no direct effect on electricity rates in North Carolina, but it affects the company's overall financial performance and impacts all shareholders.

Progress announced this morning that it has reduced its profit forecast for the year and said it will cut spending throughout its operation.

CEO Bill Johnson said the nation's three rating agencies could reduce the company's credit rating, which would increase the cost of borrowing money for maintenance, upgrades and power plants.