Duke Energy's (NYSE:DUK) sales looked good this past quarter. Revenue came in at $5.88 billion, $150 million above analyst estimates and 64% above Q2 2012's pre-merger (more on this later) numbers.

On the bottom line, however, Duke failed to turn sales into profits. Adjusted EPS clocked in at $0.87, $0.07 below anaysts' predictions and a whole $0.15 under Q2 2012's mark.

For a bit of long-term perspective, let's see how Duke's done over the last five years. It's been a bit of a rocky road, with sales headed 67% higher (but around 12% before the merger), while net income has managed to edge up just 10.4%. 

DUK Revenue TTM Chart

DUK Revenue TTM data by YCharts

Regulated = good
Duke's latest earnings report is an important one for investors. First, it provides us with a detailed description of how the utility's fared since its merger with Progress Energy last year. According to new CEO Lynn Good, "After one year, we have had tremendous success coming together as one, stronger company."

The utility seems on track to make the most of its merger, and its regulated results shone due in part to increased operational efficiency, higher volumes, and wider margins. Exelon (NYSE:EXC) underwent a similar merger with Constellation Energy last year, and its latest earnings report puts it on track for major savings. The company expects that by 2014, it will enjoy around $550 million in annual savings.

Unregulated = bad
But even as Duke's regulated division pulled in $235 million in adjusted income this quarter, every other division took a loss. Its international energy unit (Saudi Arabia and Latin America) knocked $18 million off the bottom line, while Duke's unregulated commercial power business took a doubly large $35 million hit.

For investors who were watching Duke's feed last Friday, its generation troubles should come as no surprise. The company's writing off $382 million to retire an inoperational Florida nuclear facility, and announced last Friday that it was dropping plans (for now) for a new $25 billion reactor.

At the same time, Duke's cutting back even further on coal. The company's now considering early retirement for another 875-MW facility to keep costs competitive. This past quarter, coal generation accounted for around 40% of Duke's $35 million commercial power loss.

Coal took a bite out of TECO Energy's (NYSE:TE) earnings, as well. Not only does TECO use coal for its regulated business, but it also owns and operates Appalachian mines capable of churning out 9 million tons of the stuff every year. With prices $8 below last year and $4 below expectations, an average selling price of $86 per ton put TECO's earning between a rock and a hard place. While TECO's the only major utility with that kind of vertical integration, most utilities are looking for contingencies to coal. FirstEnergy (NYSE:FE) is avoiding disproportional environmental compliance costs by closing two coal plants that account for 10% of its total generation, while American Electric Power (NYSE:AEP) plans to retire a whopping 3,123 MW of the solid black gold by 2016. In Q2, the utility is writing off about $160 million to cover its most recent coal retirement.

Natural gas = good?
Looking ahead, Duke's solid regulated earnings allowed the company to reaffirm 2013 adjusted EPS between $4.20 and $4.45. On the generation front, Duke is looking toward natural gas to provide cheaper, cleaner, and more consistent earnings. The company received approval last week for a 1,150 MW plant to be opened before 2018, and can consider an additional 1,800 MW add-on by 2019.

Can Duke dig it?
Duke's Q2 was not smooth. But with a new CEO in charge, stable regulated earnings, an evolving generation fleet, and a 4.4% dividend yield to boot, I remain positive about this utility's outlook. This company has had a tumultuous past, but my recent outperform call on my Motley Fool CAPS page isn't going anywhere just yet, and I look forward to seeing what this company has in store for Q3 and beyond.

Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.

The Motley Fool recommends Exelon. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.