Exelon Corporation (NYSE: EXC) and Pepco Holdings Inc. (NYSE:
POM) today announced that they have reached a settlement agreement
in the proceeding before the Delaware Public Service Commission
(PSC) to review the two companies’ proposed merger, which was
announced on April 30, 2014. The settlement, which is subject to
the approval of the Commissioners of the PSC, was filed by Exelon
and Pepco Holdings, Delmarva Power, and signed by PSC Staff, the
Delaware Public Advocate, the Department of Natural Resources and
Environmental Control (DNREC), the Delaware Sustainable Energy
Utility, the Mid-Atlantic Renewable Energy Coalition, and the Clean
Air Council.
The merger will bring together Exelon’s three electric and gas
utilities – BGE, ComEd and PECO – and Pepco Holdings’ three
electric and gas utilities – ACE, Delmarva Power and Pepco – to
create the leading mid-Atlantic electric and gas utility.
“We are pleased to have reached this settlement agreement for
our merger,” said Chris Crane, Exelon president and CEO. “Our
combined company will bring significant value to Delaware and to
Delmarva customers.”
“This agreement is good for Delaware,” said Gary Stockbridge,
Delmarva regional president. “By joining the Exelon family of
utilities, Delmarva will be able to deliver substantial benefits to
its customers and communities.”
The settlement agreement includes more than $51 million in
direct benefits, as well as other provisions that promote the
public interest, such as:
- More than $49 million over 10 years in
direct, monthly rate credits for Delmarva electric and gas
customers. In addition to the direct monthly rate credits,
customers also will benefit from another $61.5 million in projected
merger savings that will be reflected in rates during the next 10
years and beyond.
- $2 million in funding by Exelon for
energy efficiency programs for low income customers and specific
provisions to improve implementation of Delaware’s energy
efficiency efforts, including measures to ensure coordination among
Delmarva Power, the Delaware Sustainable Energy Utility, the
Department of Natural Resources and Environmental Control and other
interested stakeholders.
- Commitment to a new minimum standard of
reliability for customers by reducing the average duration of
outages standard to 175 minutes or shorter by 2020, while at the
same time substantially reducing capital spending. The current
minimum standard for the average duration of outages is 295
minutes.
- $2 million in funding by Exelon for a
workforce development program with Delaware State University, the
Delaware Technical Community College, and other community based
organizations such as the United Way and Boys and Girls Club
specifically focused on energy-efficiency, renewable energy and
Science, Technology, Energy and Math (STEM) education.
- Commitment to positively impact
Delaware jobs by making a good faith effort to hire at least 83
union workers in DE and to protect compensation and benefits for
current employees.
- Maintaining Delmarva’s operational
headquarters near Newark, and other key sites in Wilmington and
Millsboro.
- Providing annual average charitable
contributions and local community support that exceed Delmarva’s
2013 contributions of $699,000 for 10 years after the merger, and
continued support for supplier diversity and low-income assistance
efforts.
In addition to the Delaware PSC, the merger requires approvals
by the Public Service Commission of the District of Columbia and
Maryland Public Service Commission. Following the expiration of the
U.S. Department of Justice’s review period on Dec. 22, 2014, the
Hart-Scott-Rodino Act no longer precludes completion of the
merger.
The transaction was approved by the New Jersey Board of Public
Utilities in February, the Federal Energy Regulatory Commission in
November, the Virginia State Corporation Commission in October and
PHI stockholders in September. The companies expect to complete the
merger in the second or third quarter of 2015. For more information
about the merger or to download the settlement agreement, visit
www.phitomorrow.com.
About Exelon Corporation
Exelon Corporation (NYSE: EXC) is the nation’s leading
competitive energy provider, with 2014 revenues of approximately
$27.4 billion. Headquartered in Chicago, Exelon does business in 48
states, the District of Columbia and Canada. Exelon is one of the
largest competitive U.S. power generators, with approximately
32,500 megawatts of owned capacity comprising one of the nation’s
cleanest and lowest-cost power generation fleets. The company’s
Constellation business unit provides energy products and services
to more than 2.5 million residential, public sector and business
customers, including more than two-thirds of the Fortune 100.
Exelon’s utilities deliver electricity and natural gas to more than
7.8 million customers in central Maryland (BGE), northern Illinois
(ComEd) and southeastern Pennsylvania (PECO). Follow Exelon on
Twitter @Exelon.
About Pepco Holdings Inc.
Pepco Holdings Inc. is one of the largest energy delivery
companies in the Mid-Atlantic region, serving about 2 million
customers in Delaware, the District of Columbia, Maryland and New
Jersey. PHI subsidiaries Pepco, Delmarva Power and Atlantic City
Electric provide regulated electricity service; Delmarva Power also
provides natural gas service. PHI also provides energy efficiency
and renewable energy services through Pepco Energy Services. For
more information, visit online: www.pepcoholdings.com.
Cautionary Statements Regarding Forward-Looking
Information
Except for the historical information contained herein, certain
of the matters discussed in this communication constitute
“forward-looking statements” within the meaning of the Securities
Act of 1933 and the Securities Exchange Act of 1934, both as
amended by the Private Securities Litigation Reform Act of 1995.
Words such as “may,” “might,” “will,” “should,” “could,”
“anticipate,” “estimate,” “expect,” “predict,” “project,” “future”,
“potential,” “intend,” “seek to,” “plan,” “assume,” “believe,”
“target,” “forecast,” “goal,” “objective,” “continue” or the
negative of such terms or other variations thereof and words and
terms of similar substance used in connection with any discussion
of future plans, actions, or events identify forward-looking
statements. These forward-looking statements include, but are not
limited to, statements regarding benefits of the proposed merger,
integration plans and expected synergies, the expected timing of
completion of the transaction, anticipated future financial and
operating performance and results, including estimates for growth.
These statements are based on the current expectations of
management of Exelon Corporation (Exelon) and Pepco Holdings, Inc.
(PHI), as applicable. There are a number of risks and uncertainties
that could cause actual results to differ materially from the
forward-looking statements included in this communication. For
example, (1) the companies may be unable to obtain regulatory
approvals required for the merger, or required regulatory approvals
may delay the merger or cause the companies to abandon the merger;
(2) conditions to the closing of the merger may not be satisfied;
(3) an unsolicited offer of another company to acquire assets or
capital stock of Exelon or PHI could interfere with the merger; (4)
problems may arise in successfully integrating the businesses of
the companies, which may result in the combined company not
operating as effectively and efficiently as expected; (5) the
combined company may be unable to achieve cost-cutting synergies or
it may take longer than expected to achieve those synergies; (6)
the merger may involve unexpected costs, unexpected liabilities or
unexpected delays, or the effects of purchase accounting may be
different from the companies’ expectations; (7) the credit ratings
of the combined company or its subsidiaries may be different from
what the companies expect; (8) the businesses of the companies may
suffer as a result of uncertainty surrounding the merger; (9) the
companies may not realize the values expected to be obtained for
properties expected or required to be sold; (10) the industry may
be subject to future regulatory or legislative actions that could
adversely affect the companies; and (11) the companies may be
adversely affected by other economic, business, and/or competitive
factors. Other unknown or unpredictable factors could also have
material adverse effects on future results, performance or
achievements of the combined company. Therefore, forward-looking
statements are not guarantees or assurances of future performance,
and actual results could differ materially from those indicated by
the forward-looking statements. Discussions of some of these other
important factors and assumptions are contained in Exelon’s and
PHI’s respective filings with the Securities and Exchange
Commission (SEC), and available at the SEC’s website at
www.sec.gov, including: (1) Exelon’s 2013 Annual Report on Form
10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations and (c) ITEM 8. Financial Statements and Supplementary
Data: Note 22; (2) Exelon’s Third Quarter 2014 Quarterly Report on
Form 10-Q in (a) Part II, Other Information, ITEM 1A. Risk Factors;
(b) Part 1, Financial Information, ITEM 2. Management’s Discussion
and Analysis of Financial Condition and Results of Operations and
(c) Part I, Financial Information, ITEM 1. Financial Statements:
Note 18; (3) the definitive proxy statement that PHI filed with the
SEC on August 12, 2014 and mailed to its stockholders in connection
with the proposed merger (as supplemented by PHI’s Form 8-K filed
with the SEC on September 12, 2014); (4) PHI’s 2013 Annual Report
on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations and (c) ITEM 8. Financial Statements and Supplementary
Data: Note 15; and (5) PHI’s Third Quarter 2014 Quarterly Report on
Form 10-Q in (a) PART I, ITEM 1. Financial Statements, (b) PART I,
ITEM 2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations and (c) PART II, ITEM 1A. Risk Factors.
In light of these risks, uncertainties, assumptions and factors,
the forward-looking events discussed in this communication may not
occur. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
communication. Neither Exelon nor PHI undertakes any obligation to
publicly release any revision to its forward-looking statements to
reflect events or circumstances after the date of this
communication. New factors emerge from time to time, and it is not
possible for Exelon or PHI to predict all such factors.
Furthermore, it may not be possible to assess the impact of any
such factor on Exelon’s or PHI’s respective businesses or the
extent to which any factor, or combination of factors, may cause
results to differ materially from those contained in any
forward-looking statement. Any specific factors that may be
provided should not be construed as exhaustive.
ExelonPaul Elsberg312-394-7417orPepco Holdings/Delmarva
PowerLendel Jones302-283-5803
Exelon (NYSE:EXC)
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