Grounded: under Paul Anderson, Duke Energy is down to earth again. But that's how he's getting it ready to soar.

• Author: Martin, Edward
• Position: Cover Story

Along the bottomlands, wind rustles millet planted for migrating ducks and geese. A coyote, once a symbol of the Western frontier, lopes off into the underbrush. Jack Mason, a state game biologist, isn't surprised. "They're everywhere nowadays. They can adapt to just about anything."

The Catawba River makes a sharp turn here. On the other side, age has faded the brick walls of a massive industrial building a ruddy brown. This once was frontier, too. By 1929, the industrializing Piedmont had pushed hydroelectric power to its limits, prompting Duke Power Co. to build this, the Riverbend Steam Station in Gaston County. An outpost on the fossil-fuel frontier, it generated its first current the day before Black Tuesday.

During the Depression, Duke Power kept building coal-burning plants, adapting to make more of what factories and homes needed--broad-shouldered, hardworking American electricity. Paul Anderson, 60, can appreciate that. In his Charlotte office, he leans across a table to explain why.

His last job was turning around Australia's biggest company, molding what's now BHP Billiton--a mining, petroleum and steel conglomerate--to the demands of a changing global economy. Named Duke Energy Corp. CEO and chairman two years ago, he had to adapt again, this time turning the troubled company on its ear.

Under his predecessor, Duke also had gone global, girding for a new energy market whose revolutionary rules soon proved to be formulas for failure. Anderson hacked it back almost to its roots, slashing new operations like energy trading to concentrate on what the company does best: produce, distribute and sell power.

Now, with its pending merger with Cincinnati-based Cinergy Corp., Duke Energy will have $70.5 billion in assets and spread into the Midwest as the nation's second-largest utility operator. "What he's done has been to move the company back to the center, with focus on the basics of how we operated prior to the late 1990s and 2000," says Cinergy President James Rogers, who will succeed Anderson as CEO once the merger is final.

This is no retreat to the past but a way back to the future. Like the coyote, the company has adapted to a new environment. Now it will be a predator. "My goal," Anderson says, "is for Duke Energy to become the Bank of America of the utility world."

He has made a career of sizing up situations and seizing opportunities. "Paul's got the capability of identifying problems, coming up with solutions and executing them," Rogers says. "He approaches them almost as triage--start with the big ones and work down to the smaller ones."

In the fall of 2003, his first task was to yank Duke Energy back from the precipice of illiquidity. Debt was mounting, and the stock price had plunged, down 70% from its all-time high. "There was a crisis of confidence" among board members, customers and Wall Street, Anderson says. "All were questioning whether the company was headed in the right direction. Some were even asking if it could survive."

It could, and experts credit Anderson, whom Ray Moore, an analyst with the New York brokerage of Shields & Co., calls Mr. Fixit. The company earned $1.5 billion in 2004, reversing its $1 billion loss the year of his arrival. Duke stock, which in early 2003 fell below $13 a share, was recently trading around $26. "It's a complete reversal for Duke," says Moore, who has tracked the company for more than 30 years.

Rick Priory, Anderson's predecessor, had bet that by now electricity would be deregulated nationwide and a competitive market in place. As he began to transform the company into a freewheeling global colossus, with outposts from Lima to London, Duke Power, which supplies regulated electricity to 2.2 million Carolinians, found itself eating at the second table.

But deregulation shorted out, with only about half the states allowing competitive energy markets. In the Carolinas? "It's dead," says state Sen. David Hoyle, the Gastonia Democrat who co-chairs the legislature's electricity study commission. "I don't think...