It would be the largest rate increase for residential customers in at least 20 years - raising the bill for a typical household by nearly $20 a month.
Duke Energy said it is necessary to pay for modernizing its plants. They said it would also pay for higher employee benefits and an employee buyout program.
Plus, sales are lagging because of the poor economy.
"We believe that the $4.8 billion that we've invested in the system on new power plants, transmission and distribution infrastructure, and environmental controls, will really benefit our customers for decades to come," Duke Energy Spokesperson Betsy Conway said.
Even with the increase, Duke Energy said its rates would remain below the average in the southeast.
Still, people are speaking out against the proposed increase.
State regulators heard from frustrated customers during a hearing at Durham's city council chambers Wednesday night.
"I get it, you need growth for your share holders, but you do not need to squeeze it out of your customers so coldly," Duke Energy customer Laura Sandvik said.
Last night's meeting also gained support from members of Occupy Durham who support opponents of the proposed rate hike.
"There's lots of people in the community who are going to speak out about the injustice of them raising the rates that much while bringing in record profits," said Adam Pyburn with Occupy Durham.
The decision on the rate increase is up to North Carolina Utility Commission. One more hearing is planned in Raleigh on Nov. 28.
Duke Energy and Progress Energy hope to complete a merger by the end of the year.