Duke Energy and Progress Energy today asked federal regulators to conduct a fresh review of the companies' proposed merger, suggesting the regulators are applying standards so strict and unreasonable as to imperil utility mergers in general.

The two North Carolina power companies, which want to create the nation's largest electric utility, use such terms as "unrealistic" and "unprecedented" to characterize the Sept. 30 finding by the Federal Energy Regulatory Commission that the proposed Duke-Progress merger raises significant and severe monopoly concerns.

The FERC said last month the combined company could manipulate the market price of electricity, and in response Duke and Progress have proposed selling off wholesale power at a fixed price to appease the commission's concerns.

But today's filing by Charlotte-based Duke and Raleigh-based Progress suggests their proposed $26 billion merger is in deeper trouble than had been acknowledged. The tone of their filing suggests that Duke and Progress executives had expected a quick federal approval but instead were blindsided by the FERC's ruling.

North Carolina regulators suspended their rules this morning to allow Progress Energy and Duke Energy to make speedy modifications to their proposed merger as the two power companies try to stick to their schedule to get the $26 billion completed this year.

The green light means that Progress and Duke will file their modifications today with the Federal Energy Regulatory Commission. That agency last month said it would not approve the merger without extra safeguards to prevent the combined companies from manipulating the market price of electricity.

Charlotte-based Duke and Raleigh-based Progress are proposing to form the nation's largest electric utility. The deal requires approval from the federal commission as well as the N.C. Utilities Commission, with parallel reviews taking place simultaneously in Washington and Raleigh.

The federal commission said Sept. 30 that the proposed merger raises serious and systematic market power concerns. The feds could alter the merger to such a degree as to require another round of public hearings in this state, which could delay the proceedings for months.

Amid concerns that Progress Energy will slack off on corporate giving after the company merges with Duke Energy, the Raleigh-based electric utility is showering its home town with reminders of its commitment to local philanthropy.

Progress said this morning it will give $1.5 million to cultural organizations over three years to support their programs as well as to create a free annual arts festival. The day-long festival, called ARTStober, will be held tomorrow in downtown Raleigh.

The amount of the gifts is in line with previous years, except that this time the donations merited a special announcement to draw attention to the company's corporate giving. The Progress Energy Foundation distributes charitable donations on a quarterly basis.

"This is a tangible way to demonstrate we continue to be committed to Raleigh and to the arts," said Progress spokesman Scott Sutton. "The big difference is we're committing not only for this year but for the next two years as well."

Duke Energy and Progress Energy will offer to limit their corporate profit on the sale of large chunks of power in this state to assure federal regulators that the two companies will not manipulate electricity prices after the they merge.

The two utilities submitted their proposal this afternoon to the N.C. Utilities Commission and are asking for permission to make an expedited filing to the Federal Energy Regulatory Commission. Normally the companies would have to wait 30 days to make the federal filing.

The federal agency said last week the proposed merger between the two North Carolina companies raises severe and systematic concerns about market power control. The agency suggested selling off power plants, guaranteeing the cost of wholesale power or giving up control of transmission lines.

Charlotte-based Duke and Raleigh-based Progress say they can address those concerns by offering to sell up to 800 megawatts of power in the summer and up to 225 megawatts in the winter while limiting their profit on those sales to 10 percent above the cost of generating the electricity.

Employees at Duke Energy and Progress Energy will start receiving information next week to help them decide whether they should take a voluntary departure with guaranteed severance payments or risk getting laid off when the two utilities merge.

The two North Carolina power companies notified about 29,000 employees that the window to decide whether to leave or stay will be between Nov. 1 and Nov. 22. The workers could learn as early as December whether their request to leave has been approved.

The process gets underway next week, when employees will begin receiving information about the eligibility rules for the voluntary separation plan. Additional details will be provided Oct. 24 to employees who are eligible to participate.

Charlotte-based Duke and Raleigh-based Progress said they plan to eliminate about 2,000 positions between the two companies. Progress will cut between 700 to 1,000 positions at its Raleigh headquarters, eliminating up to half its downtown staff.

South Carolina's consumer advocate and others are asking regulators in that state to suspend proceedings on the proposed merger between Duke Energy and Progress Energy.

The S.C. Office of Regulatory Staff says it makes little sense to continue filing legal briefs and racking up billable hours in anticipation of an Oct. 26 public hearing now that a federal regulatory ruling requires the companies to take revise their application to address monopoly concerns.

The consumer advocate wants to resume the merger proceedings after Raleigh-based Progress and Charlotte-based Duke propose revisions to their merger proposal and the feds approve it.

"There's no use to go through this thing twice," said ORS director C. Dukes Scott.

Progress Energy this week is retiring the first of several coal-burning power plants as part of a conversion to cleaner-burning natural gas.

On Saturday the Raleigh-based power company is shuttering its 62-year-old W.H. Weatherspoon Power Plant near Lumberton, about 100 miles south of Raleigh. 

Progress plans to retire 11 coal-burning units at four sites in North Carolina by 2013. Those units will be replaced by three gas-burning plants, one of which went online this year.

Natural gas produces about half the greenhouse gases of coal and virtually no mercury, a potent neurotoxin that is linked to birth defects.

Progress Energy's H.B. Robinson nuclear plant, ranked earlier this year among the nation's worst-performing nuclear plants, is shut down again after more than 300 days of trouble-free operation.

The plant in South Carolina automatically shut off Monday at 11:45 a.m. a failure was detected in the reactor's emergency coolant system. Raleigh-based Progress has not said when the plant will be returned to operation.

The Nuclear Regulatory Commission is investigating the cause of the reactor trip. Nuclear plants are designed to trip off automatically if malfunctions or problems are detected.

The proposed merger between Duke Energy and Progress Energy would shift benefits to Wall Street at the expense of the environment and the state's poor, an environmental representative warned utilities regulators today.

Public hearings continue all day Wednesday in Raleigh on the proposed merger between Duke Energy and Progress Energy.

The N.C. Utilities Commission started the hearings yesterday with impassioned pleas from residents to block the merger, followed by statements from Duke CEO Jim Rogers and Progress CEO Bill Johnson. The agency, which is expected to approve the merger, has set aside the rest of the week to hear from experts.

The North Carolina electric companies want to create the nation's biggest utility with 7.1 million customers in six states. Rogers and Johnson laid out the rationale for the merger Tuesday as a strategy to create the financial heft needed to embark on multi-billion dollar construction projects.