UPDATE 1-Duke sees Progress deal approval, profit dips

* Q1 profit drops, but tops Wall St forecast

* Weather, Edwardsport charge hits bottom line

* Still sees July 1 close to Progress deal

May 4 (Reuters) - Duke Energy Corp said it expects federal regulators to back its plan to buy peer Progress Energy and allow the companies to close the proposed $13.7 billion deal by July 1.

Duke, which reported quarterly earnings that slightly topped Wall Street forecasts on Friday, first announced its plan to buy Progress in January 2011, but the Federal Energy Regulatory Commission has so far rejected Duke's efforts to cut its market power.

Duke sent new data to the FERC last month after the regulator requested more information on how it would reduce its market power.

"We think it's more likely than not that the FERC will approve our proposal," Chairman and Chief Executive James Rogers told Reuters.

Duke posted a drop in first-quarter profit on Friday, hurt by charges from a power generation project and the warm winter weather.

Net income fell to $295 million, or 22 cents per share, from $511 million, or 38 cents per share, a year earlier.

Excluding one-time items such as the $420 million charge from the company's Edwardsport power project, earnings per share were 38 cents.

That topped the 36 cents per share that analysts had forecast, according to Thomson Reuters I/B/E/S.

A retail rate increase in the Carolinas helped add about 3 cents per share during the quarter, according to Lynn Good, and reduced costs for power plant operations and maintenance added another 1 cent.

Shares of Duke have dropped 2.7 percent so far this year.