The prius actually has 5 modes of operation as far as I can tell:

1. For fast accel its uses the gas and electric for more torque
2. highway it uses gas only mode and charges the battery at the same time
3. electric only mode you can cruise and enjoy great gas mileage
4. regen mode is crusing down a slope with the gas pedal released
5. is a special mode, when you release the gas pedal and the arrows on the energy screen go black. In this mode you will not use gas or electric.

Great vehicle, fun to drive, can't wait for the 3rd generation vehicle with the special batteries that will help to get 100mpg. Coming spring 2009!!

47-48 mpg around town
55 highway
NJ
2006 Prius