Duke's new troubleshooter.

When Paul Anderson resigned five years ago as Duke Energy's president and chief operating officer to head Broken Hill Proprietary Ltd., Duke was going up like an express elevator and the Melbourne, Australia-based mining company was, in his words, a dysfunctional family. Now he's coming back to Charlotte to replace Rick Priory as chairman and CEO of Duke, which is suffering from plunging revenue and sagging investor confidence.

Anderson turned around what is now BHP Billiton, Australia's largest company, with $31 billion market capitalization. Behind his casual style--BHP associates say he ate in the company cafeteria--is an executive experienced in righting reeling enterprises, including Houston-based PanEnergy. Its president and CEO from 1993 until it merged with Duke in 1997, he's credited with bringing it back into profitability. "Most of my career has been focused on troubled situations or leading companies through major transitions." Is Duke Energy a troubled company? "Certainly, the marketplace views it as going through a difficult period. I read the analysts' reports and the press like everybody else. And look at the share price, which is down from a couple of years ago. All indications are, there's opportunity here to reach a higher potential."

To outsiders, the announcement Oct. 7 that Priory was retiring early next year--and that Anderson was replacing him this Nov. 1--came as a bomb-shell. In an interview with BUSINESS NORTH CAROLINA in September, Priory gave no indication he would be departing. Nor had he in conversations with analysts who follow the company, says David Schanzer of Philadelphia-based Janney Montgomery Scott.

But Duke officials say he wasn't forced out. He had told the board he wanted to retire at 55, spokeswoman Cathy Roche says. Anderson adds that Priory delayed leaving until the utility industry showed signs of recovery and Duke was cleared of charges that it created shortages to manipulate prices in California in 2000 and 2001.

Regardless, the real question is not how or why he is departing, Schanzer says. "Duke has to reassess its overall culture. Now, admittedly, the CEO has that responsibility, but all officers and the board have to decide on how Duke does business and how it can return to being the General Electric of the energy and utility industry."

Anderson, who holds a bachelor's in mechanical engineering from the University of Washington and an MBA from Stanford University, is confident he can do that. Some things, though, are unlikely to change. Anderson says the corporate headquarters will remain in Charlotte. "That's logical, and I plan to move to Charlotte shortly after the first of the year."

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While Duke and Priory bet big, Progress and Cavanaugh, a Tulane-trained engineer and former submarine officer, hedged, sticking to the company's business model of generating regulated electricity for retail customers and selling the surplus on the wholesale market. Progress has made limited forays into other businesses. It has been burned a few times but quickly retreated before major financial harm was done. In contrast, Duke has been forced to pull back from bold excursions into trading, laying off thousands and last year announcing the sale of more than $1.5 billion of assets to reduce debt and maintain dividends. In that one year, its income from nonregulated businesses plunged from 52% to 11% of operating income. This year, Duke expects 80% of its operating income to come from regulated electricity and natural-gas sales.

Other hares are in or near bankruptcy, including not only Houston-based Enron but also California's Pacific Gas & Electric and Southern California Edison. Mirant, a merchant-energy company spun off by Atlanta-based Southern, filed for Chapter 11 bankruptcy protection and last year ditched plans for a $500 million gas-turbine electricity plant in Gaston County. Meanwhile, electricity deregulation in the Carolinas and the nation...