UPDATE 1-Progress Energy sees '08 profit at lower end of outlook

Jan 5 (Reuters) - Progress Energy Inc (PGN.N) said it sees fiscal 2008 earnings at the lower end of its prior outlook range, citing mild weather across service territories in December and the continuing impact of the slowing economy, and cut its 2009 capital expenditure budget.

The electricity provider now expects 2008 ongoing earnings to be at the lower of its prior forecast of $2.95 to $3.05 a share. Analysts, on average, expect earnings of $3.02 a share, according to Reuters Estimates.

Progress said it cut its planned capital expenditures for 2009 by about $250 million.

For 2009, the company expects ongoing earnings of $2.95 to $3.15 a share. Analysts were expecting $3.11 a share.

In a separate statement, the company said its has awarded a contract to Westinghouse Electric Company LLC and The Shaw Group Inc SGR.N to build two nuclear units for a proposed nuclear power plant in Levy County, Florida.

The company estimates the total cost for the two generating units to be about $14 billion and expects them to be operational in the 2016 to 2018 time frame.

An additional $3 billion is estimated for the transmission equipment and about 200 miles of transmission lines associated with the project.

The majority of the project's costs will be invested by the company and its shareholders and will not be recovered from customers through rates until the plant goes in service.

However, starting this month customers will begin paying for a portion of the costs of the project as approved by the Public Service Commission, the company said.

The company's stock was trading down 56 cents at $40.09 late Monday morning on the New York Stock Exchange. (Reporting by Hezron Selvi in Bangalore; Editing by Amitha Rajan)