SOLAR POWERED.

• Author: Gray, Tim

Bill Cavanaugh brightens Carolina Power & Light's prospects by buying a utility in the Sunshine State.

Bill Cavanaugh has just returned to Raleigh from Wilmington, where he had breakfast with a group of linemen working 16-hour days to restore power to Eastern North Carolina. "These will have to go to the cleaners," grumbles the chairman, president and CEO of Carolina Power & Light Co., leaning forward in his chair and pinching the rumpled crease of his blue trousers just below the knee. A downpour had caught him hustling to the meeting.

It had been his third trip down east in the 12 days since Hurricane Floyd struck -- twice to Wilmington and once to Goldsboro, New Bern and Florence, S.C. He spent parts of two other days visiting customer-service centers and repair crews around the Triangle. "We've had linemen working from boats. We even found an airboat, one of those with the big fan in the back. We bought every set of waders and a bunch of johnboats at Neuse Sports Shop in Kinston. We've brought in a fleet of helicopters, 11 or 12 of them."

For the bragging rights it won his employees, Floyd had cost CP&L $63 million by mid-October, at what was supposed to be a time of celebration. It came three weeks after the company announced its biggest deal ever, the $5.3 billion acquisition of Florida Progress Corp., a St. Petersburg, Fla., electric utility. Between Floyd and Hurricane Dennis -- which brushed the coast only five days after the announcement, went out to sea, then came back -- Cavanaugh hadn't had a day off, much less time for toasting. His only fete: a dinner in New York with a handful of CP&L and Florida Progress top executives the night before the merger was announced. And he nearly canceled that because he was bushed after two months of negotiations.

But Cavanaugh, 60, has reason to revel. With this acquisition, he made good the vow he'd been making since becoming CEO in 1996 (he became chairman in May): He intended to transform CP&L into a "superregional" power producer and distributor, one that could survive, even thrive, in the coming age of deregulation. "This is a new company," he says. "This is not an electric utility of the old school."

Upon his arrival in 1992 as president and chief operating officer, Cavanaugh whipped CP&L's nuclear plants into shape. "He took our Brunswick plants from the cellar to the penthouse," says board member Roddy Jones, a Raleigh builder. Then he shored up the balance sheet, lopping off more than 2,000 jobs and earning a reputation as a CEO with high expectations and little time for those who couldn't meet them. In July 1999, he bought Fayetteville-based North Carolina Natural Gas Corp., ensuring CP&L a cleaner, less controversial source of fuel than nuclear power or coal for new generating plants. Now comes the Florida Progress deal. Assuming it is approved -- four federal regulators will get a crack at it -- it will create a company with 2.7 million customers in the Carolinas and Florida, up from CP&L's pre-merger total of 1.4 million, and nearly $7 billion in revenue, up from $3.1 billion. Its 18,500 megawatts of power-production capacity will make it the country's ninth-largest electric company. Combined, the two companies employ 17,250, though 1,200 jobs -- 7% -- will be cut as part of the merger.

Folks at CP&L won't say it, but Cavanaugh's record is, in some ways, a repudiation of his predecessor. That man, for his part, sees similarities between them: It's the times that have changed. "When I ran the company," Sherwood Smith says, "the focus was physical growth, construction, rate proceedings. That's changed to the challenge of being the best operating system and to facing deregulation."

Before Cavanaugh, CP&L was old Elvis, a flabby, predictable performer, generating power the way the King slurred his way through his hits: It wasn't always pretty, but it got the job done. The company delivered juice to much of the Triangle and the eastern part of the state, as well as a swath of mountain counties. But it had problems with its nuclear plants -- its two Brunswick County reactors made the U.S. Nuclear Regulatory Commission's list of the nations' worst-performing units -- and its rates were higher than Charlotte-based Duke Power Co. (now Duke Energy Corp.), its cross-state rival. Cavanaugh has remade the fat man into that lean, loose-limbed boy, twitching with...