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James Rogers, Cinergy chairman and chief executive, said the merger puts Cinergy in a better position to meet its power generating needs in the Midwest.

"Over time, Duke's Midwest plants would allow us to modernize our fleet faster as environmental regulations become more stringent on coal plants," Rogers said.

The combined company will own or operate 54,000 megawatts of electric generation with operations in two thirds of the United States, Canada and internationally -- primarily in Latin America.

The company will have 3.7 million retail electric customers and 1.7 million retail gas customers in Ohio, Kentucky, Indiana, North Carolina, South Carolina and Ontario, Canada.

Duke Energy, based in Charlotte, N.C., is a diversified energy company with natural gas and electric businesses and a real estate portfolio. Cinergy, based in Cincinnati, operates Cincinnati Gas & Electric Co., Union Light, Heat & Power and PSI Energy.

Analyst Mike Heim of A.G. Edwards & Sons said the deal will prompt rivals to reconsider the need to get bigger. But he doubts the industry is on the verge of a new wave of consolidation, as happened in the late 1990s when utilities, as a result of deregulation, were forced to shed generation or distribution assets. That left them significant cash with which they could make an acquisition.

In the wake of Enron's collapse and the economic downturn, however, the power industry went through a slump, deregulation stalled and companies that tried to expand too quickly into new businesses or countries were left with high levels of debt.