CP&L's comfort machine.

• Position: Carolina Power and Light Co. - On the Market

Picture this: your fantasies turned into reality. Everything you've ever wanted at your fingertips. Oops. Sorry, that's Bud Lite. The topic here is Carolina Power & Light.

Well, with Raleigh-based CP&L (CPL-NYSE) you can still dream, and you won't lose sleep worrying about the stock market. That's the beauty of utility stocks, and it might be especially true of CP&L.

For two decades, CP&L has saddled itself with what CEO Sherwood Smith describes as very heavy construction expenditures,' coupled with continuing rate hikes to help pay for it all. With construction finished, investors might see more money headed their way in the form of increased dividends.

The largest project has been the Harris Nuclear Plant in Wake County. Since May 1987, the plant's No. 1 unit has been producing electricity.

But units 2, 3 and 4 will never be built. A series of decisions by CP&L in the early 1980s to scrap plans for those units has cost dearly - $500 million spread over 10 years. CP&L wrote off $152 million in fiscal 1988 alone to cover costs disallowed by utility regulators in North and South Carolina.

The write-off caused earnings per share to drop to $2.04 in 1988, compared with $3.90 the previous year. The dividend increase in 1988 was tiny - just 2 cents per share.

Last year, though, CP&L's investors once again saw reasonable increases in earnings and dividends. Earnings reached $4.20 per share, and the dividend rose to $2.84 per share, up from $2.76 the year before.

In a sense, CP&L returned to normal - predictable, slow-but-steady growth. Call it boring, call it plain vanilla. But that's traditionally what has made utility stocks appealing to investors who are willing to trade aggressive capital appreciation for safe, solid, steady income.

Thank the regulators for the steady income. State utility commissions allow a certain rate of return based on a company's total investment. That total investment represents the rate base, and earnings tend to rise with it.

CP&L:s construction program, a 20-year effort, now accounts for about 75 percent of its total 44.4 million-megawatt electric-generating capacity. Significantly, CP&L:s current requirements come to about 40.1 million megawatts, meaning it has a lot of power to spare.

Besides a rate hike it received in 1988, CP&L began to restructure, trimming its work force by about 1,250 jobs in the past two years. More than half the positions were lost through attrition, but 570 employees were let go.

Smith...