Electric companies decide to gas up for deregulation.

The independent North Carolina gas utility has become an endangered species. Endangered but not protected, at least not by much more than a single shareholder-rights plan.

In 1999, two of the state's three major gas utilities succumbed to suitors. Raleigh-based Carolina Power & Light Co. acquired Fayetteville-based North Carolina Natural Gas Corp. for $354 million in July, and Columbia, S.C.-based SCANA Corp.'s $900 purchase of Gastonia-based Public Service Company of North Carolina closed in December.

That leaves Piedmont Natural Gas Co. as the sole survivor and the subject of countless takeover and merger rumors. The Charlotte-based utility adopted a shareholder-rights plan in 1998, but unless it goes on a shopping spree of its own, many observers expect it to follow its brethren.

They thought the same thing might happen to CP&L as recently as 1998. But with its purchase of North Carolina Natural Gas and a deal in the works to buy the St. Petersburg, Fla.-based electric utility Florida Progress Corp., CP&L transformed itself from lamb to lion.

"CP&L has really moved itself from being one where a lot of people were sort of waiting for somebody to come in and buy them to really making a step forward, saying we're going to be one of the major companies here in the Southeast," says Thomas Hamlin, a utilities analyst with Richmond, Va.-based First Union Securities.

With the Florida Progress acquisition, CP&L will double its electric business, to $7 billion a year, become the nation's ninth-largest electric utility and enter the growing Florida market. With North Carolina Natural Gas, CP&L diversifies its product mix, adds takeover-discouraging bulk and gains access to a less-controversial source of power than nuclear or coal-fired plants. Even before that deal closed, CP&L was building the future of its electricity business on gas. In March, it announced plans for a $250 million, 175-mile pipeline to supply natural gas to future power plants in North Carolina and South Carolina. Later that month, it asked the state for permission to build gas-fired electric generators in Richmond and Rowan counties. Those plants should be running by mid-2002 or earlier, part of an effort to expand generation capacity by 7,000 megawatts -- 70% of current capacity -- by 2007.

While other Carolinas' utilities were busy inbreeding, Charlotte-based Duke Energy Corp. kept its gaze on the horizon, expanding its presence in Latin America, Australia, Texas and the...

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