Duke Deal on State Oversight Could Boost Wholesale Profits

"I think Duke is going to march down to Columbia, [S.C.], and try to do the same thing they did in North Carolina," Stone said. "But I can't imagine that South Carolina will go for it. ... The culture is a little less agreeable down there."

Stone believes that Duke is scrambling to find "creative" ways to squeeze more profits out of its existing assets. The company is relying heavily on its regulated units to support it through a drastic downturn in the merchant energy business. It is weathering huge merchant losses that some believe will exceed the $300 million management has forecasted so far.

Olson, for example, predicts that losses in Duke's merchant division will total $360 million to $390 million this year. He also believes that a turnaround in the business could still be years away.

Even so, Duke has managed to win over many investors by hiring proven turnaround CEO Paul Anderson and maintaining a rich dividend as the company works to recover. Olson, who has owned Duke stock for more than a decade, calls Anderson a "good man" who has made a name for himself by steamlining troubled businesses.

Duke chose Anderson as its CEO last year after originally passing him over for the top job in 1997 and offering it to Richard Priory instead. But Stone, for one, doubts that even Anderson can restore Duke to its former power anytime soon.

"I think Paul Anderson is quite a visionary," Stone conceded. "But the mistake was made in 1997 when we chose Priory instead. Now, we're expecting this man to come in and straighten things out in one, two -- even three -- years. And without drastic changes in the market, I just don't see how that is going to happen."

Duke's stock, which had fetched more than $45 at its peak before the merchant energy meltdown, slipped a penny to $19.41 on Thursday.