Duke Energy, which is buying Raleigh-based Progress Energy, reported second-quarter earnings that beat analysts’ expectations, Charlotte Observer staff writer Bruce Henderson reports.

The 33 cents a share in diluted earnings topped Wall Street analysts’ forecasts by 2 cents. Revenues rose to $3.5 billion, up 7 percent from the same quarter of 2010.

Profit at Duke’s largest sector, its regulated gas and electric businesses, dropped 8 percent for the quarter. Sales fell slightly in the Carolinas and Midwest, as the summer’s hot weather put less demand on air conditioning than in the even more torrid 2010. Storm damage repairs also ate into profit.

Not counting weather factors, residential sales improved slightly, commercial sales fell a little and industrial sales were flat, chief financial officer Lynn Good said. “We continue to see some volatility,” she said.

Duke also saw a boost from its international operations, including hydroelectric dams that produce power in Brazil.

As with Progress, Duke's results offer a snapshot of the broader economy, because they're tied to electricity demand from residential and industrial customers across North Carolina.

Progress Energy and Duke Energy announced today that they've set Aug. 23 as the date that the utilities' shareholders will vote on their merger.

The companies expect to mail investors a joint prospectus about the deal on Monday. with instructions on how to vote online, by mail, by phone or in person. Anyone who owned shares at the close of business on July 5 is eligible to vote.

Duke will hold its meeting at 10 a.m. at its offices at 526 S. Church St., Charlotte.

Progress shareholders will meet at 11 a.m. at the Progress Energy Center for the Performing Arts, a few blocks from the company's downtown Raleigh headquarters.

The companies announced Jan. 10 that they planned to join forces, forming the nation's largest electricity utility with 7.1 million customers in six states. The combined company will take the Duke name and have its headquarters in Charlotte.

Federal energy officials awarded a $5.15 million, three-year grant to a group led by Durham-based Cree that's working on new "smart grid" technology.

Cree's partners include researchers at N.C. State, ABB and Powerex. Most of the money will go to Cree, which is developing a new semiconductor device. N.C. State announced it will receive about $750,000 of the grant.

The grant is the latest from the U.S. Department of Energy to reach the Triangle. N.C. State has gotten money from previous grants related to electricity grids and renewable energy.

The term "smart grid" refers to a digital system that's expected to improve how electricity is delivered, and allow utilities to store power from renewable resources such as solar and wind.

Duke Energy CEO Jim Rogers ventured into enemy territory when he first met with his counterpart at Progress Energy to discuss a merger.

After Rogers called to suggest they talk about ways they might work together, Progress CEO Bill Johnson set up the July dinner at the Washington Duke Inn, on the campus of Duke University.

Rogers jokingly suggested during an interview with editors at The News & Observer Wednesday that Johnson had picked a site that would put him at a disadvantage.

Rogers is a University of Kentucky alumnus and a big basketball fan who still holds a grudge over the last-second shot the Blue Devils' Christian Laettner hit in a 1992 tournament game to beat UK.

"It's bad enough running a company called Duke," Rogers said, laughing.

Progress Energy CEO Bill Johnson, who will become CEO of the combined utility when Duke Energy buys Progress, will make a base annual salary of $1.1 million.

He also will be eligible for bonuses worth up to $6.7 million, and various other perks under Duke's compensation policy, including use of the corporate aircraft. The companies disclosed some details of Johnson's three-year employment agreement in a filing with the Securities and Exchange Commission today.

Johnson, 57, also will be reimbursed for expenses related to his relocation to Charlotte.

The top boss at Progress Energy will meet with employees on Wednesday morning in Raleigh to discuss the utility's proposed union with Duke Energy.

The meeting with Progress CEO Bill Johnson was scheduled for today, but was delayed because of the winter weather. Spokesman Mike Hughes declined to comment on where or when the meeting will happen.

On Thursday, Johnson and Duke CEO Jim Rogers will meet with workers in downtown Charlotte. That meeting is scheduled to be held from 2 to 3 p.m. at the Knight Theater in Charlotte, the companies reported in a filing with the Securities and Exchange Commission today.

Johnson and Rogers need support among the companies' thousands of workers, even though employees face several years of uncertainty about their future.

Duke Energy will be required to pay Progress Energy a breakup fee of $675 million if it backs out of its deal to buy the Raleigh-based utility.

Such fees are common with major corporate mergers, and are designed to include a financial incentive to keep the deal on track. The fees help cover legal costs and other expenses if a proposed union is terminated.

Progress will owe Charlotte-based Duke a $400 million fee if it accepts another offer or backs out of the Duke deal.

The companies disclosed the breakup fees in a filing with the Securities and Exchange Commission.

The CEOs of Duke Energy and Progress Energy wouldn't comment on how many jobs might be eliminated as the companies merge, but said that they don't expect many forced layoffs, staff writer John Murawski reports.

"We're going to rely on attrition, retirements to take care of most of this," said Progress CEO Bill Johnson, who will be chief executive of the combined company.

Johnson and Duke CEO Jim Rogers, who will become chairman of the new company, said on a conference call that they won't have details on cost-cutting goals for some time. They expect to win shareholder and regulatory approvals for the deal by later this year.

Duke Energy announced this morning that it will buy Progress Energy in a all-stock deal worth about $26 billion, creating the largest electric utility in the nation with 7.1 million customers.

The expanded company will keep Duke's name and corporate identity. It will remain headquartered in Charlotte, boosting that city's profile as the state's business and finance capital, but "maintain substantial operations in Raleigh," the companies said.

The deal will result in Raleigh losing a Fortune 500 corporate headquarters when Progress ceases to exist as an independent company after 102 years of continuous operation. The union is expected to bring job cuts as the companies look to save money by consolidating operations, but could result in lower rates for customers.

Progress CEO Bill Johnson will become CEO of the combined company, while Duke CEO Jim Rogers will serve as chairman. 

Duke Energy, based in Charlotte, is set to announce Monday that it is buying Raleigh-based Progress Energy, three sources have confirmed. The all-stock deal that would unite North Carolina's largest power companies and create the nation's largest electric utility with 7.1 million customers.

The companies plan to announce the merger in Charlotte tomorrow morning. Regulatory approval is expected this year. Sources confirmed the deal Sunday to The News & Observer and The Charlotte Observer.

The imminent deal was earlier reported The Wall Street Journal, New York Times and Financial Times.

According to reports, Duke would pay a "low premium" for Progress's shares, with a deal valued between $24 billion and $26 bilion, including $11.4 billion in Progress's long-term debt. Progress shares closed Friday at $44.72.