The powers that be will be meter made.

• Position: North Carolina's utilities - Industry Overview

The state's utilities get ready for what could be survival of the fittest.

Most observers of the utilities industry expected deregulation to bring change, but few imagined the degree: Charlotte-based Duke Power Co. is searching for business in Africa, and Gastonia-based Parkdale Mills Inc., which has never had a plant outside North Carolina, is building one in Virginia because of cheaper electricity there.

"What we face," says Hugh Wells, chairman of the N.C. Utilities Commission, "is emerging uncertainty, created at the federal level by those who want more competition."

The state's big electricity providers, Carolina Power & Light Co. and Duke Power Co., once could rely on strong industrial and residential sales, relatively stable fuel costs and increased efficiency to provide solid earnings. Deregulation changed the rules, and CP&L winced when its biggest customer, a DuPont plant in Kinston, turned competitor a few months ago. It convinced the Utilities Commission it could build and operate its own power plant cheaper than it could buy CP&L electricity.

Then, Parkdale Chairman Duke Kimbrell, whose 21 plants employ 2,100, decided to build an $80 million factory near Hillsville, Va., to obtain Appalachian Power Co.'s industrial rate of 3.76 cents a kilowatt hour. (Duke Power's is 4.29 cents.)

"Duke Power did everything it was allowed to under the law, but it was still at a disadvantage to Alabama and Virginia," says Watts Carr, the Commerce Department's industry-development director. Recruiters and utilities kicked off a drive for leeway in industrial pricing and incentives.

Such interstate competition, analysts and executives say, is only one force squeezing CP&L, Duke Power and smaller North Carolina providers such as Virginia Electric and Power Co. Competing power sources, rate-shopping by industries and eager out-of-state recruiters conspire to pressure rates, Duke Power spokesman Randy Wheeless says. Also looming for electric companies is compliance with the federal Clean Air Act, likely to cost them $2 billion by the year 2000.

By fall, CP&L earnings per share had dropped about 13%, despite 3% higher revenues. Duke Power took a $48 million charge against second-quarter earnings to buy out 1,200 employees, dropping total employment to 17,000. Duke Power earnings were up nearly 17% per share by late in the year. Cuts and hiring freezes at BellSouth, CP&L and other utilities have kept total employment unchanged for six years.

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