(FORTUNE Magazine) – FOR THOSE who lead America's big power companies, decades of peaceful, regulated coexistence are nothing more than a memory. Today the shots of aggression ring loudly across the land, skirmishes over territory break out almost weekly, and utility executives boldly boast of their latest battle plans. At stake in this ever-widening conflict: the very utility bills you pay, not to mention the survival of some of America's most widely owned companies. For a sense of how this war is shaping up, take a look at Broken Bow, Oklahoma, which lies in the foothills of the Ozarks about 125 miles north of Dallas. Not long ago some 4,000 locals depended for employment on a Tyson chicken processor and local tourist traffic. Then, in 1993, Pan Pacific Corp. came to town scouting for a place to build a paper plant that could employ 85 people. All that the company needed to move in was something by way of an incentive.

So Broken Bow pulled a stunt that a lot of towns are thinking about these days: They got this prospective employer a break on electricity rates. To do so, the local water utility, Broken Bow Public Works Authority, declared itself to be an electric utility. This allowed it to go shopping for cheap power in the wholesale market, where only utilities are permitted to buy and sell, and to undercut the prices charged by the established utility, Public Service of Oklahoma. PSO is now suing before the state supreme court to have the terms of the deal revealed to the public. Admits city administrator Mark Guthrie: "We got a fight on our hands, not that we expected Public Service to take kindly to what we were doing."

You'll find the same feisty attitude on the other side of this new industry divide, among aggressors like Richard C. Green Jr., CEO of UtiliCorp United of Kansas City, a utility that's rolling into new markets faster than a well-oiled panzer division. "Our corporate idols," Green says, "are McDonald's, Southwest Airlines, and Wal-Mart because they are fun, convenient, and low cost." In other words, he likes their snappy service and cutthroat pricing. Green has even come up with a brand name for the off-price power he sells, EnergyOne, flaunting it at a recent balloon race in Albuquerque (see opposite page). Okay, so "EnergyOne" doesn't have the pizazz of "Coke" or "Big Mac," but it's still early in the day.

The fight among power titans to win over consumers will likely play out house by house. Otter Tail Power Co.--there is one, in Fergus Falls, Minnesota--could well call you at your home in Atlanta, say, offering a year's supply of free light bulbs if you disconnect from Southern Co. and buy some Minnesota juice instead. Except it won't necessarily be juice from the Great Lakes. Utilities are already free to buy and sell electric power at various power plants and then wheel it, as they say, thousands of miles around North America. This in itself has spawned just what the world needs, a new Wall Street hybrid in the form of twentysomethings who pocket fortunes by trading electricity futures and derivatives.

Other opportunities for adventurous utilities will open up over the rest of this decade and beyond, as retail sales are freed from the regulators' chains and opened to competition. Although the national price of power now averages 7 cents per kilowatt-hour, the span of pricing is great: Some big corporate customers may pay less than 2 cents, while consumers like you can shell out more than 16 cents on a hot day when supply, and tempers, are short.

That wide spread has placed intense pressure on high-cost suppliers to get their expenses down, lest they lose their markets to more efficient competitors. This partly explains the spate of mergers in recent months, notably the $6.4 billion stock swap that will marry Baltimore Gas & Electric and Potomac Electric Power Co.

Another series of get-togethers has seen utilities form joint ventures with the glitterati of infotech. These deals will enable the power companies to create all kinds of new products and services, much as AT&T persuaded customers to subscribe to call waiting. Green's UtiliCorp, for example, and software maker Novell are planning a "smart house" where a computer can program appliances to use electricity when rates are at their lowest.

The deregulated utilities that end up victorious will owe their laurels largely to the CEOs who lead them into battle, just as it was with the airlines when they lost their protective shield almost 20 years ago. Indeed, the people who are turning up the heat in this industry are a new generation of power execs who, although trained mostly in the stuffy utilities of yesteryear, are already turning some pretty fine entrepreneurial loop-de-loops.

UtiliCorp's Green is one of the most aggressive of these high-voltage CEOs. He's virtually got electrons running through his veins. His great-grandfather Lemuel founded the company back in 1908 and then sold it in 1927, leaving for California to join the nascent orange juice business. His son returned in 1940 to save Missouri Public Service, as it was then known, from bankruptcy, and Greens have been running the place ever since. Rick Green, now 42, remembers going out with his father on weekends to replace bulbs in street lamps. He went to work for the utility in 1975 and became CEO ten years later. Since then, he has bought other utilities, like Kansas Power & Light, extended the distribution network into eight states, and set up subsidiaries in Canada, Australia, New Zealand, and Britain. He's also built up related businesses, like natural gas. Since Green took charge, revenues have grown from $242 million to $1.5 billion. Shareholders, including the Green family, who own 4%, have seen earnings grow at an average 16% a year.

Feeling constrained by the company's old name, Green scrapped it in 1984 in favor of UtiliCorp, a name without borders. Last spring, Green gave an in-your-face brand name to his surplus-power sales offensive, EnergyOne, and then stunned the industry with the announcement that he had signed contracts to supply EnergyOne billing services to 2,200 Bank of America branches and gas to over 300 Service Merchandise stores, the nation's largest jewelry retailer. These customers are also lined up to buy electricity from EnergyOne as the states deregulate their retail markets.

While the retail market may ultimately hold the biggest potential for expansionist utilities, the richest spoils are now in the wholesale sector. Nobody exploits this opportunity better than Frederick W. Buckman, 49, CEO of PacifiCorp in Portland, Oregon. Under him, this low-cost producer with lots of spare capacity has become the largest bulk-power trader in the West. The company gets about 21% of its revenues, or $530 million, buying electricity from and selling its own to other utilities. This part of the company is growing at a double-digit rate every year. Now Buckman is planning to invade the East. To help him, he has recruited Don Furman, a legendary trader in the arcane world of natural gas at Citizens Lehman Power in Boston. A trading room stocked with new computers stands empty, awaiting the talent that Furman is recruiting.

Buckman himself is a relatively new recruit. He quit as CEO of a CMS Energy subsidiary in Michigan two years ago to take over PacifiCorp. Buckman has positioned the utility for the fight that will follow full deregulation. "I think competition is approaching a lot faster than people expect," he says. Such impatience is typical of the man. Bored with high school in his home town of Kalamazoo, he dropped out at the age of 16 and went straight to the University of Michigan. At the age of 20, he was going for a doctorate in nuclear engineering at MIT, which he received at 23. Buckman may be impatient, but he's not impulsive. He has collected some 1,500 bottles of wine over the years, yet has never touched a drop, honoring a long-standing pledge to his father.

Who will be the likely victims as these share-hungry CEOs roll their marketing troops out across the land? One utility head who must be nervous is John E. Bryson, 52, chairman of SCEcorp, which serves central and southern California. SCE is stuck with some very high costs, including a nuclear power plant that produces electricity for more than 7 cents a kilowatt-hour. The company is also pinned down by tons of high-cost contracts with a number of small companies that make electricity from "renewable" sources like wind power. Al Fohrer, SCE's chief financial officer, estimates that in a free market, the price of electricity could fall to the 3- to 5-cent range. At that price, between $5 billion and $10 billion of SCE's assets, including the nuclear plant and the wind-power contracts, would be money losers. SCE isn't the only utility stuck with such pricey assets. Standard & Poor's estimates that these white elephants account for some $200 billion of assets industrywide.

The big question facing regulators now is how fast to bring on full deregulation, which would heap big savings on consumers but big losses on uncompetitive utilities. Federal regulators, most of the industry, just about everybody, in fact, except for consumers, favor a more gradual approach because it would give ailing power companies time to recoup their investments. They could do so, perhaps, through a fee on transporting electricity. But that would slow the fall in electricity rates that consumers are thirsting for.

For a clue as to how regulators will handle this weighty issue, look at what's going on in California, which may ultimately chart the course for everybody else. The innovative California public utility commission announced in 1994 that it was in favor of freeing the retail market by 1997. This could have bankrupted the companies that produce most of the power for the state. The commission has since relented and solicited a series of alternative plans, the strongest of which is a compromise that SCE's Bryson negotiated with some of the state's most powerful consumer groups. It calls for an independent pool to be formed wherein most electricity would be auctioned off, fees on power transportation would be levied to help pay for stranded investment, and, beginning in 1998, a fixed (but increasing each year) percentage of electricity sales could be negotiated directly between suppliers and their customers. Says Bryson: "We brought together strongly conflicting parties and got a plan that doesn't disadvantage anyone, including us."

The ability to balance competing interests is a Bryson forte. When he completed Yale law school in 1969, he founded the Natural Resources Defense Council with four friends and then became a utility regulator as chairman of the California State Water Resources Control Board. He also served as president of the state's public utility commission. He moved to the other side of the field when he joined SCE in 1984, becoming chairman in 1990. As if to underline his balancing skills, Bryson has taken up Rollerblading.

Not surprisingly, given the fact that some 51 regulatory agencies govern more than 198 publicly owned utilities, nobody's betting on when deregulation will be completed. But with each state choosing its own path and pace, it could take as long as a decade for the last bastions to fall. Among the likely slowpokes: both Carolinas, where opposition is tarheeled.

At the other extreme is Erroll B. Davis, 51, CEO of Wisconsin Power & Light in Madison. The utility is one of the lowest-cost power generators in the country, with an average 2.6 cents per kwhr. Davis is so keen to get deregulation over and done with that he has little sympathy for those peers who will be hamstrung by high costs. Although he favors letting utilities recoup the damages wrought by government fiat, he thinks they should pay for the mistakes they made themselves, like ignoring huge overruns on plants. He points out that utilities have enjoyed mandated rate increases to cover the cost of all kinds of dumb investments, plus an allowable rate of return. As a result, says Davis, "your new desk goes into the rate base. This is the only industry I've ever seen where you can increase your profits by redecorating your office."

And Davis has seen competition first-hand, working in the oil industry for Amoco, the auto industry for Ford Motor, and the infotech industry for Xerox. He joined Wisconsin Power & Light in 1978 as VP for finance and became CEO in 1988. In 1990, he took over as head of the parent company.

As anxiously as Davis and his like are waiting for deregulation, another group, utility shareholders, are mostly dreading it. Protected profits and predictable dividend growth are hard things to give up, and the dismal performance of utility stocks over the past year--up just 17%, vs. 28% for Standard & Poor's 500--suggests that many income-hungry investors are opting to look elsewhere for their meals. But where there is fear, and there is plenty here, there is also opportunity. For a list of promising plays in this industry, see the table below.