RALEIGH — The state’s top utility regulator suggested Friday that his agency could unilaterally impose a chief executive to run Duke Energy, pointing to one potential outcome of the state’s investigation into Duke’s abrupt firing of CEO Bill Johnson.

N.C. Utilities Commission Chairman Edward Finley Jr. said during public hearings in Raleigh that the commission is weighing several options on how best to punish Duke in connection with Johnson’s ouster this month, just hours after the electric utility completed its merger with Raleigh-based Progress Energy.

Barely concealing his agitation, Finley suggested the commission can hold more hearings and drag out the probe, consider a settlement proposal from Duke, or reopen the merger proceedings and stipulate who the CEO should be.

Finley’s remarks capped two days of public hearings that featured testimony from Johnson and four Duke board members. On Thursday, Johnson and two board members who support him said Duke officials dumped Johnson without cause or warning, but the trio urged the commission not to repeal the merger, a move that could be crippling to Progress.

Questions from commissioners were pointed Friday when the utility panel heard from a pair of Duke board members who engineered Johnson’s removal and justified their decision. They acknowledged that doubts about Johnson’s ability to lead the Charlotte power company were not a recent development, but had been simmering even before Duke proposed its merger with Progress in January 2011.

The N.C. Utilities Commission approved the $32 billion merger deal June 29 with the expectation that Johnson would run the combined companies. The panel is now investigating whether it was intentionally misled by Duke officials.

Finley’s enigmatic comments Friday about the commission’s legal powers unnerved Wall Street.

“The operative word is uncertainty,” said New York analyst Paul Patterson of Glenrock Associates. “We don’t know where the commission is headed.”

“In this case,” Patterson added, “I don’t know what the specific quantifiable harm is, much less what the remedy would be.”

Lead director Ann Maynard Gray, however, told Finley such an action would be damaging.

Duke lawyers denounced the proceedings as a kangaroo court presenting no opportunity for lawyers to challenge witnesses.

“It is surprising to me that Duke was not given a chance to confront its accusers by being able to probe their testimony directly so that the Commission can evaluate credibility on the basis of something other than a one-sided presentation of the facts,” Carter Phillips, a Duke lawyer, said in a prepared statement.

Facing a skeptical audience in the six-member commission, Duke board directors did their best Friday to put the company in a good light.

Gray revealed that concerns about Johnson arose the first time Duke’s corporate board met Johnson in November 2010, two months before the merger was announced.

“He did describe himself as an individual who liked to learn but not be taught,” Maynard said, who joined Duke’s board in 1997. “That comment stayed with me and I saw some reflections of that going forward.

“It was the first flag,” she said.

Finley pounced on Gray and demanded to know if Gray was aware that the comment she attributed to Johnson is a direct quote from Winston Churchill, one of the most admired leaders of the 20th century.

“No, I did not,” Gray replied softly.

Still, Gray warned the commission that the investigation will make it harder to integrate the two workforces.

“Are you implying,” Finley retorted, “that we need to bug out and get out of the way and let you get on with your business?”

Gray replied: “When it’s over it will be very constructive.”

Another Duke board member, Michael Browning, disclosed there were clear doubts about Johnson when the two North Carolina companies announced their merger in January 2011. Browning, a real estate developer in Indiana, said Johnson had limited experience as a CEO, less than 3-1/2 years at the helm of the smaller Raleigh-based power company, when the merger was announced.

But it was Gray who spent most of the day on the witness stand as one commissioner after another took turns grilling her. A former president of one of ABC Inc.’s divisions, she started out her testimony in the clipped, formal tone of a confident executive, but became visibly wearied by the incessant interrogation that continued into the mid-afternoon.

She insisted that Johnson’s “controlling” style was a bad fit for Duke, and defended not disclosing those concerns to the commission as a prerogative of the board.

The Duke board’s early concerns about Johnson festered as tensions arose between the two companies in 2012 over how to get the merger through the Federal Energy Regulatory Commission.

Over time, Duke’s board became particularly concerned about missed deadlines and rising costs at Progress’ idled Crystal River nuclear plant in Florida, potentially costing more than $1 billion to repair, she testified.

Commissioner Bryan Beatty shot back: Doesn’t Duke ever miss deadlines? Doesn’t Duke ever have cost overruns?

Gray said the board was alarmed that the Crystal River costs would adversely impact the economics of the merger. She said Duke’s primary concern was preserving shareholder value, while Progress was set on getting the merger done at any cost – an assessment that jibes with Johnson’s testimony the previous day.

Gray also disputed Thursday’s testimony from former Progress board members that the vote was fixed before the fateful July 2 board meeting that cost Johnson his job.

She said the 10 legacy Duke members remained open to being persuaded by the five new board members from Progress. The Progress members pleaded with Gray to consider the fallout that would follow Johnson’s exit.

3 press releases prepared

Gray also acknowledged that the weekend before the board vote, Duke’s communications team had prepared two press releases: One said Johnson resigned by mutual agreement; the other said Johnson resigned without mutual agreement.

During a break, Duke spokesman Tom Williams clarified to reporters that there was also a third announcement, saying Johnson was the company’s CEO.

After the contentious board vote, Gray met with Johnson in person at about 6:45 p.m. and told him that the board wanted him to step down. Stunned, Johnson flew back to Raleigh and consulted with his lawyer. He tendered his resignation just before 6 a.m. the next day.

Gray said Duke made a good faith effort to give Johnson a chance as CEO, and was sorry it didn’t work out. She described Johnson’s dismissal as a “vote of no confidence,” saying Johnson stifled open discussion and tried to impose Progress’ values on Duke.

“His style is controlling – not only controlling of the flow of information but of the content of the information,” she said.

“I can assure you we anguished over this,” she said. “I’m not looking for sympathy but this was an enormously difficult step for us.

“I’m really sorry to be here, to be talking about Bill.”

Murawski: 919-829-8932