New generation shifts the balance of power.

The property is almost perfect for a gas-fired power plant: a remote part of Rockingham County, next to the only interstate gas pipeline that runs through North Carolina and near major transmission lines of Charlotte-based Duke Power Co., the electric utility for much of western North Carolina. But Duke didn't build there. Houston-based Dynegy Inc. did, at Duke's urging. The Dynegy plant, generating power for Duke since June, is the state's first speculative commercial power plant built and operated by an out-of-state energy company. Its contract with Duke is for less than four years compared with 15 at traditional nonutility plants.

Get used to it. More are on the way. Columbia, S.C.-based SCANA Corp. was negotiating with Fayetteville to build a pipeline to a gas-fired plant it would build and partially own. SCANA wouldn't sell directly to North Carolina electricity consumers -- its 40% share of the plant's output would go back to SCANA's South Carolina distribution system -- but the pipeline would give it a launching pad to supply gas to other power plants and businesses in Eastern North Carolina. That is a stronghold of Carolina Power & Light Co. and North Carolina Natural Gas Corp., both subsidiaries of Raleigh-based Progress Energy Inc., which until December had been CP&L Energy Inc. The deal would be SCANA's first big score since entering the North Carolina gas market by acquiring Gastonia-based Public Service Company of North Carolina Inc. in February 2000.

Another newcomer, Houston-based Enron Corp., wants to build a $120 million plant near Rocky Mount to supply power to Virginia Electric & Power Co., part of Richmond, Va.-based Dominion Resources Inc. And Dynegy is looking for other plant sites. When the state's retail electricity markets are deregulated, probably five to 10 years from now, Dynegy could end up buying plants from homegrown utilities.

Duke, which builds plants freely on other utilities' home turf, hasn't built one on its own since 1995 -- too much uncertainty about how retail deregulation, which will allow users to choose their suppliers, will play out in North Carolina. Duke can recoup its investment faster on unregulated plants it builds outside its retail distribution system.

Duke Power's parent, Charlotte-based Duke Energy Corp., opened its first merchant plant, which sells power to other distribution systems, in Bridgeport, Conn., in 1998 and now has U.S. plants as far-flung as Maine and California. Progress got into the game later, completing its first merchant plant in Monroe, Ga., in December 1999. A second merchant plant is planned for the

Savannah, Ga., area in summer 2002.

So what does it all mean for Tar Heel utilities? "Sure, people are going to come in, and they're going to build plants and competition will increase, but as long as [Duke and Progress] have low costs, I'm not concerned about them," says Zach Wagner, a utility analyst with St. Louis-based Edward Jones and Co.

Investors were much more concerned about their technology holdings in 2000. Many fled to the safety of moneymaking, dividend-paying utilities. Duke was up 85% for the year in early December and split its shares 2 for 1. Though revenues more than doubled in the first three quarters, net income slipped 12.1% to $1.5 billion. Progress stock was up 51%. Net income rose 63% in the first three quarters to $489.8 million.

One way Duke boosted revenues was through four California power plants it bought from Pacific Gas & Electric in 1998. As demand outstripped supply, energy prices there soared. "Duke, I think, made a lot of money, particularly in California, this year because they were selling electricity at very high prices," Wagner says. "On the other hand, consumers and politicians have been up in arms about the high prices."

Progress' main achievement in 2000 was closing its acquisition of Florida Progress, a move that roughly doubles its size, prompted CP&L to change its name and gives it a foothold in the growing Florida market. "Now the real work begins of actually integrating and running the companies as one," Progress spokesman Keith Poston says.

Competition is coming at a different pace to the state's local telephone markets. Long-distance giant AT&T Corp. started local service for businesses in Charlotte in 1998 and in the Triangle and the Triad in September. But the limitations of incumbent carrier BellSouth's switching capabilities have curbed competition, AT&T spokesman David Arneke says. "We're able to get into the market, but we can't get in as broadly and serve as many customers and provide a real alternative to the market as a whole yet."

                         N.C. EMPLOYMENT AND WAGES
COMMUNICATIONS             1995     1997     1999
Employers                 1,190    1,411    1,419
Employment               32,401   35,189   37,972
Total wages (millions) $1,228.7 $1,441.0 $1,819.5
Average weekly wage     $729.27  $787.48  $921.47
ELECTRIC, GAS AND
SANITARY SERVICES          1995     1997      1999
Employers                   480      535       589
Employment               27,397   25,744    23,495
Total wages (millions) $1,200.6 $1,309.7  $1,287.5
Average weekly wage     $842.75  $987.33 $1,053.80
Source: Employment Security Commission
                          N.C. ELECTRIC COMPANIES
                     (investor-owned power companies,
                           dollars in millions)
                              OPERATING   NET      N.C.
COMPANY                        REVENUE   INCOME  CUSTOMERS
Duke Power [1]                $3,424.4  $1,040.1 1,488,225
Carolina Power & Light [2]     2,632.1     251.3 1,199,495
North Carolina Power [3]         312.2      61.0   106,414
Nantahala Power and Light [4]     69.6       7.5    59,658
Total                          6,356.5   1,347.7 2,853,792
(1.)Subsidiary of Duke Energy Corp.
(2.)Subsidiary of Progres Energy Inc.
(3.)North Carolina trade name of Virginia Electric
& Power Co., part of Dominion Resources Inc.
(4.)Separately reporting subsidiary of Duke Power
Source: N.C. Utilities Commission, 1999.
                        N.C. NATURAL GAS COMPANIES
                               (in millions)
                               OPERATING  NET     N.C.
COMPANY                         REVENUE  INCOME CUSTOMERS
Piedmont Natural Gas            $381.3   $33.0   397,959
Public Service Co. of N.C. [1]   306.7    25.8   354,763
North Carolina Natural Gas [2]   201.0    12.8   166,408
NUI North Carolina Gas [3]        15.3     0.5    13,906
TOTAL                            904.3    72.1   933,036
(1.)Columbia, S.C.-based SCANA Corp.
bought Public Service in February 2000
(2.)Subsidiary of Progress Energy Inc.
(3.)North Carolina division of New Jersey-based NUI Corp.
Source: N.C. Utilities Commission, 1999
                       N.C. UTILITY REVENUE SOURCES
                               (in millions)
                                 ELECTRIC
Residential $2,234
Commercial  $1,635
Industrial  $1,353
Resale        $952
Other         $183
                                    GAS
Residential     $406
Commercial      $203
Industrial      $177
Transport        $64
Other gas sales  $38
Other revenues   $15
Source: N.C. Utilities Commission, 1999
                           N.C. PHONE COMPANIES
                       (largest telephone companies
                      reporting to the N.C. Utilities
                     Commission; dollars in millions)
                            OPERATING   NET    ACCESS
COMPANY                      REVENUES INCOME   LINES
BellSouth                    $1,776.0 $194.6 3,059,097
Carolina Telephone              878.7   85.0 1,182,861
GTE South                       336.2   30.8   376,875
Central Telephone               194.6   23.9   279,794
Alltel Carolina                 130.7   11.9   221,808
Concord Telephone                82.7   14.4   113,247
North State Telephone            72.1   20.6   130,492
Lexcom Telephone [1]             32.9    9.0    34,771
Citizens Telephone               15.4    3.6    20,202
Mebtel Communications             8.1    0.3    11,375
Randolph Telephone                2.8    0.4     4,825
Ellerbe Telephone                 1.8    0.5     2,417
Service Telephone [2]             2.0    0.4     1,287
Pineville Telephone               1.5    0.7     2,477
Saluda Mountain [2]               1.5    0.5     1,838
Barnardsville Telephone [2]       1.5    0.3     1,543
TOTAL                         3,538.5  392.7 5,223,101

(1.)Formerly Lexington Telephone

(2.)Tennessee-based companies owned by Wisconsin-based TDS Telecom; reflects North Carolina operations only List does not include local-access companies that started under 1996 deregulation measures and that are not subject to the same reporting requirements.

Source: N.C. Utilities Commission, 1999