Duke Energy lost a two-year fight to build twin coal-fired power plants west of Charlotte, receiving a consolation prize instead: regulatory permission to build only one plant to meet growing energy demand in the Carolinas.

The state Utilities Commission ruled Wednesday that the state's largest utility failed to prove that two 800-megawatt power plants are needed.

The decision could thwart plans to build a coal plant at the Cliffside site, near the South Carolina border. Duke Energy officials, who had said that building just one plant would not be economical, are now reviewing whether it would make financial sense.

The commission's decision could represent a turning point in the state's energy policy, which for decades relied on coal and nuclear power to provide electricity in the state. Utilities are required by state law to provide electricity cheaply and reliably. They have been accorded great deference, as long as they meet those obligations.

But with increasing concern about global warming and growing momentum for energy alternatives, Duke Energy's proposal to build coal-fired plants met major opposition. The proposed plants would have pumped 11.5 million tons of carbon dioxide into the atmosphere a year, equal to 1 million automobiles.

Commissioners had noted that hundreds of residents spoke against the Cliffside project at public hearings and more than 600 wrote letters to state regulators.

The commission said that another factor weighing against Duke Energy was the company's testimony in January that it planned to sell 800 megawatts of electricity generated by one of the Cliffside units. Based on that admission, the commission concluded that Duke Energy didn't need both units.

In the end, not a single commissioner endorsed the company's request. Commissioner Robert Owens Jr. dissented from Wednesday's decision, saying that Duke Energy's application should have been denied in its entirety. The state attorney general previously urged the commission to approve one of the two units and deny the other.

"We live in complicated times, times when people are thinking about global warming," said Ellen Ruff, president of Duke Energy Carolinas. "We have seen that people view it differently than we do."

For the first time, the utilities commission required a utility to help customers cut electricity consumption through energy efficiency programs.

Under the commission's ruling, if Duke Energy proceeds with one 800-megawatt plant, it would have to put at least 1 percent of its annual statewide revenue -- $34.5 million in 2005 -- toward energy-efficiency programs.

Such programs typically offer rebates or low-interest loans to customers who buy efficient appliances and take other steps to reduce electricity consumption. The company had planned to submit details of a program in June.

The commission also ruled that the company would have to retire four smaller coal-fired plants if it builds a new one.

Duke Energy's application for two Cliffside units was supported by the Public Staff, the consumer advocacy arm of the utilities commission. Public Staff director Robert Gruber said that Duke Energy could decide to build one 800-megawatt coal-fired unit and one 800-megawatt unit fired by natural gas.

But opponents would likely fight that prospect, too.

"That's a loser scenario," said Jim Warren, director of N.C. Waste Awareness and Reduction Network in Durham. "The country is just now rapidly awakening to global warming and how severe it all is."

Duke Energy's case suffered a serious setback in the fall, when rising labor and equipment costs forced the utility to increase its cost estimate for the twin plants to $3 billion, from $2 billion. In January, the utility acknowledged that financing costs would add at least several hundred million dollars to the project.

The cost of building and operating the plants would be passed on to consumers in the Carolinas. Duke Energy, based in Charlotte, has 1.6 million customers in North Carolina, including about 115,000 in Durham County, 45,000 in Orange County and 1,700 in Wake County.

The commission issued a three-page decision Wednesday and plans to issue a full ruling by April 6.

Meanwhile, opponents next vow to challenge Duke Energy at the next regulatory hurdle -- when the state Department of Environment and Natural Resources issues an expected air-emissions permit for the Cliffside plant.

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