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.
Shares in Pepco rallied 8% on the news, while Exelon shares
gained about 3%.
Last April, Chicago-based Exelon agreed to acquire Washington,
D.C.-based Pepco.
Conditions 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 approval, Exelon said in March that it would
more than double the value of a fund to benefit customers in
Maryland.
The commission said Friday that it found the proposed merger is
"consistent with the broader public interest" and "will bring
specific and measurable benefits and no harm to ratepayers." The
agency added that the merger will enable Pepco in Maryland to
improve reliability performance more quickly that without the
merger.
"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 deal has been approved by regulators in New Jersey and
Virginia, in addition to the Federal Energy Regulatory Commission,
but it 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.
The planned acquisition would boost Exelon's base by two million
accounts to 10 million in five states and Washington, D.C., as
electric utilities generally are attempting to adjust to lethargic
sales.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
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