By Lisa Beilfuss
Pepco Energy Services Inc.'s $6.8 billion takeover by Exelon
Corp. has been conditionally approved by the Maryland Public
Service Commission, bringing the companies a step closer to merging
a year after agreeing to do so.
Shares in Pepco rallied 8% on the news Friday. Exelon shares
gained about 3%.
The deal has also been approved by regulators in New Jersey and
Virginia, in addition to the Federal Energy Regulatory Commission,
but still needs to be cleared by regulators in Washington, D.C. The
companies have said they expect to close the transaction in the
third quarter.
Conditions for approval in Maryland include what the commission
calls higher reliability standards, $66 million in rate credits and
$43.2 million for energy-efficiency programs.
In an effort to win clearance in the state, Exelon said in March
that it would more than double the value of a fund to benefit
customers there.
The commission said it found that the proposed merger is
"consistent with the broader public interest" and "will bring
specific and measurable benefits and no harm to rate payers." It
also said the merger will enable Pepco in Maryland to improve
reliability performance more quickly.
"We find that their day-to-day normal weather outages will be
reduced, their distribution infrastructure will be improved more
quickly and at lower cost, and their ability to recover from
outages following major storms will be improved, all because of the
merger," the commission said.
The planned acquisition would boost Exelon's base by two million
accounts to 10 million in five states and Washington, as electric
utilities generally are attempting to adjust to lethargic
sales.
Write to Lisa Beilfuss at lisa.beilfuss @wsj.com
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