The two units, which were built in the 1960s, will be retired after the utility builds a nuclear plant in Levy County, 10 miles north of Crystal River. The plant is expected to go on line in 2016.
Retiring the two coal units would cut emissions of carbon dioxide, a greenhouse gas linked to global warming, by 5.5 million tons a year, said Jeff Lyash, president and chief executive of Progress Energy Florida.
"They are our oldest, most carbon-intensive generating resources," Lyash said. "We needed to work our way out of dependence on those plants.
The two units can generate up to 866 megawatts, enough power for 53,000 Florida homes.
In addition, the utility agreed to spend more than $1.3 billion on improvements to its two other coal units at Crystal River. The improvements will reduce emissions of nitrogen oxide and sulfur dioxide, the chief causes of smog and acid rain, by 90 percent, Lyash said.
He said the improvements and the retirement of the two units will move Progress Energy substantially closer to meeting Gov. Charlie Crist's mandate for cutting greenhouse gas emissions.
Under executive orders signed by Crist in 2007, carbon dioxide emissions from power plants must be reduced to 1990 levels by 2025.
"This moves us almost 60 percent of the way to the governor's target," Lyash said.
Stephen Smith, executive director of the Southern Alliance for Clean Energy, applauded the utility's plan to mothball the two coal units.
"The urgency of global warming requires that we look at retiring coal-fired power plants," he said.
However, Smith questioned the need to replace that capacity with nuclear power, especially when demand has flattened, the byproduct of a sour economy. A stronger energy-efficiency program might eliminate the utility's need to build a nuclear plant, he said.
"It is very clear to us that Progress Energy is not an aggressive utility in looking at energy efficiency," Smith said.
Nuclear plants produce no harmful air emissions.
The nuclear plant in Levy County would generate up to 2,200 megawatts of power, enough for 1.3 million homes. The utility also plans to increase the capacity of its nuclear plant in Crystal River by 15 percent.
"These are all elements of a long-term plan that's designed to make sure our customers have the energy they need at a price that is affordable," Lyash said.