Duke Energy and Progress Energy filed merger applications with N.C. and federal regulators Monday, making their case that a combined company would be in the public interest despite expected rate increases.

The $13.7 billion deal would create the nation's largest utility with 7.1 million customers in six states. Raleigh-based Progress would become a subsidiary of Duke, with headquarters of the combined companies in Charlotte.

Carolinas customers would benefit from nearly $700 million in lower fuel costs and savings from jointly operating power plants over five years, the companies told the N.C. Utilities Commission on Monday.

They expect more savings in building new power plants and in combining information technology, supply chain, administrative and other functions.

But the savings will only help offset expected future rate increases to pay for building new plants and meeting increasingly stringent environment regulations. Together the companies have $9 billion in power plant construction under way.

Their N.C. filing made no promises on future rate increases they might seek - Duke will file one this summer - and did not rule out layoffs of redundant workers in a fragile economy.

"The filing provides greater detail of the benefits of a combined company," said Duke spokesman Tom Williams.

The flurry of filings Monday to the utilities commissions in North Carolina and Kentucky, and to the Federal Energy Regulatory Commission, shows the merger is on track for completion by the end of the year, he said.

The companies have also submitted filings for review under federal antitrust laws with the Justice Department and Federal Trade Commission. They will file later this month in South Carolina. Commissions in Indiana, Ohio and Florida, where the companies also do business, don't have to approve the merger.

It all sets the stage for regulatory proceedings that could last into the fall, with regulators and customer advocates pushing their interests. Negotiations could grow contentious, but no one expects the regulators to reject the merger.

Among the hurdles Duke and Progress must clear is proving that their combined size won't unfairly squeeze out regional power suppliers. The companies say their analyses show that will not occur.

Investment analysts have said the size of the combined companies would help them do large projects, such as the nuclear plants both Duke and Progress plan to build. Duke estimates the cost of its planned plant near Gaffney, S.C., at $11 billion.

Their Carolina operations would continue to be run as two entities, with separate rate schedules, but would eventually be combined into one legal entity. Among the disparities to be worked out: Duke's rates average $89 a month per household, compared to Progress' $102.

By using the lowest-cost power available from their combined fleet of power plants, Duke and Progress expect to save $364 million in fuel costs between 2012 and 2016. Customers would feel the effects of the fuel savings in the first year, Williams said, reflected in annual fuel-cost adjustments.

The companies say they will save another $299 million in buying, shipping coal and blending coal, and $32 million in natural gas savings.

John Murawski of the (Raleigh) News & Observer contributed.