By Meg Kinnard, Associated Press

COLUMBIA, S.C. -- After more than year of wrangling over competition concerns, federal regulators have cleared Duke Energy's ( DUK - Get Report) proposed takeover of Progress Energy ( PGN), a deal that will create the nation's largest electric utility.

The Federal Energy Regulatory Commission's ruling, issued Friday, does impose some additional conditions on the merger, including requiring regular status updates on transmission upgrades. FERC stipulated that the upgrades must be completed by June 2015 and not charged to wholesale customers.

The companies have 15 days to say if they will accept the latest conditions and proceed. On Saturday, both Duke and Progress said that they are reviewing the FERC's latest order while pursuing necessary approvals from state regulators in North and South Carolina. The companies hope to complete the deal by July.

"We are pleased that FERC has issued all merger-related orders within the timeframe requested by the companies," Duke and Progress said in identical statements issued Saturday.

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Duke Energy offered to purchase Raleigh, N.C.-based Progress in January 2011 for stock then valued at $13.7 billion. But Duke's share price has risen substantially since then. At current prices, Progress shareholders would receive $60.48 worth of stock for each share held, for a total value of $17.9 billion based on the company's 296 million shares outstanding. Charlotte-based Duke Energy also will assume about $12.2 billion in debt.

The combined utility would serve 7 million customers in the Carolinas, Florida, Indiana, Ohio and Kentucky. Shareholders approved the merger in August.

But FERC twice rejected the deal over concerns that it would reduce competition for wholesale electricity in the Carolinas. In September, the FERC suggested that Duke and Progress consider selling power plants, building new transmission lines, or giving up control of their transmission system to a regional operator.

The companies responded by offering to sell excess electricity at a fixed price to wholesale buyers in their Carolinas territories, but regulators said that didn't go far enough. In March, the companies said they would spend $110 million to build new power transmission lines or enhance existing ones, in order to increase the electricity that can flow into the Carolinas from outside suppliers.

Last month, Duke and Progress also agreed not to ask customers to cover millions of dollars in severance costs to employees who could be laid off as part of the merger. Duke and Progress agreed to swallow the severance costs and also promised to cut retail rates by $70 million.

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