Exelon Corporation (NYSE: EXC) and Pepco Holdings Inc. (NYSE:
POM) today announced that they have reached a settlement agreement
with Montgomery and Prince George’s counties in the proceeding
before the Maryland Public Service Commission (PSC) to review the
companies’ proposed merger, which was announced on April 30, 2014.
The two counties represent all of Pepco’s Maryland customers and
nearly three-fourths of Pepco Holdings total customers in Maryland.
The settlement, which is subject to the approval of the
Commissioners of the PSC, was filed by Exelon and Pepco Holdings
and signed by Montgomery County, Prince George’s County, the
National Consumer Law Center, National Housing Trust, Maryland
Affordable Housing Coalition, the Housing Association of Nonprofit
Developers and a consortium of nine recreational trail advocacy
organizations led by the Mid-Atlantic Off-Road Enthusiasts
(MORE).
“This agreement is a good deal for Montgomery County," said
Montgomery County Executive Isiah Leggett. “Our residents deserve a
top-performing utility that is accountable to customers. Exelon and
Pepco Holdings are committing to reduce both the frequency and
duration of outages and to bring Pepco’s reliability into the top
quartile, or face financial penalties if they fall short. I'm also
pleased that Exelon and Pepco have agreed to make major investments
in technology and innovation that will create jobs and drive the
energy, environmental and economic policy goals of Montgomery
County and Maryland."
“This agreement not only deals with the importance of reliable
electric service, but also addresses some of my highest priorities:
Promoting jobs in Prince George's County, creating pathways out of
poverty and ensuring that our residents will enjoy the provision of
energy service under stronger and more stringent reliability
standards,” said Rushern L. Baker III, Prince George’s County
Executive. “Exelon and Pepco will partner with us on workforce
development, preparing our public school students for advanced
careers in the sustainable energy sector and putting Prince
George's County at the forefront of creating an advanced energy
industry.”
“We are pleased to have reached this settlement agreement, which
will deliver significant, direct economic and reliability benefits
to all of Pepco and Delmarva Power’s customers in Maryland,” said
Chris Crane, Exelon president and CEO. “It also represents our
commitment to further modernize our grid to incorporate more
renewable and distributed generation, increase reliability and
protect consumers through effective cost-containment measures.”
The settlement includes commitments aimed at providing benefits
to customers and the state through a combination of bill credits,
funding for energy-efficiency programs and renewables investments,
low-income customer assistance and other provisions, including:
- A commitment to designate a portion of
a proposed $94.4 million customer investment fund to provide $36.8
million in bill credits, or approximately $50 per Pepco and
Delmarva Power customer in Maryland. The remainder -- $57.6 million
-- will go toward funding energy-efficiency programs designated by
Montgomery County, Prince George’s County and the PSC.
- A commitment to help economically
challenged customers lower their energy bills by dedicating at
least 20 percent of the energy efficiency funds to programs
targeting low- and moderate-income customers.
- A $50 million “Green Sustainability
Fund” to stimulate investment in solar, energy storage and other
distributed generation throughout the PHI service territory. The
funds could also be used for such things as energy-efficiency
investments, microgrids, water conservation in buildings, clean
transportation, community solar and other qualifying energy
technologies. The fund will be available to qualified borrowers --
including organizations targeting low- and moderate-income
residents -- in Pepco Holdings’ Delmarva Power, Pepco and Atlantic
City Electric territories.
- A commitment to accelerate Pepco and
Delmarva Power’s reliability improvements so that by 2018, Pepco
will achieve first-quartile performance and Delmarva Power will
achieve second-quartile performance as measured against peers, or
face financial penalties if they fall short.
- Development of 15 megawatts of solar
generation, with 5 megawatts each in Montgomery County, Prince
George’s County and the Delmarva Power service territory in
Maryland. Prince George’s has also entered into an energy purchase
agreement with Exelon that will result in the development of an
additional 5 megawatts of electricity generated by solar projects.
This electricity will be provided to the county free of charge for
a set period of time.
- A commitment to file a proposal with
the PSC for public-purpose microgrid projects in Pepco service
territory, including one project each in Prince George’s County and
Montgomery County.
- A commitment for Pepco and Delmarva
Power to request that the PSC initiate a “grid-of-the-future”
proceeding to examine opportunities to transform the electric grid
through smart grid technology, microgrids, renewable resources and
distributed generation. Exelon will provide up to $500,000 for the
PSC to retain a consultant to study relevant issues and facilitate
the proceeding.
- A commitment to work with PSC staff and
other stakeholders to accelerate and enhance Pepco and Delmarva
Power’s energy-efficiency initiatives. The commitment includes
establishing penalties for failure to meet commission-approved
goals.
- A commitment of $4 million to support
workforce development programs in Prince George’s County,
Montgomery County and the Delmarva Power service territory in
Maryland. The Montgomery and Prince George’s county programs will
emphasize training in sustainable-energy and energy-efficiency
careers.
- Development of recreational trails
along certain Pepco transmission corridors.
These benefits come on top of the enhanced benefits package
Exelon and Pepco Holdings filed with the PSC on March 4. The
enhanced benefits package more than doubled the customer investment
fund to $94.4 million and strengthened the companies’ commitment to
reduce the frequency and duration of power outages in Maryland. To
help reduce the burden of long-standing debts for low-income
families in Maryland, Exelon and Pepco Holdings also committed to a
one-time elimination of unpaid bills that are over three years past
due as of the date of the merger closing.
In addition to these near-term benefits, merger-related cost
reductions of another $127.2 million over 10 years, and $17 million
in every year thereafter, will flow back to Pepco and Delmarva
Power’s Maryland customers through rates lower than they would be
absent the merger. In addition to the reliability commitments, upon
consummation of the merger Pepco and Delmarva will become part of a
family of large urban utilities with distinguished emergency
response capabilities. This will give Pepco and Delmarva additional
resources in the event of significant weather events and will be of
enormous value to their customers during major storms.
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.
In addition to today’s agreement, Exelon and Pepco Holdings
announced March 10 that they have reached a settlement with The
Alliance for Solar Choice in Maryland.
The merger requires approvals by the Maryland Public Service
Commission, the Public Service Commission of the District of
Columbia and the Delaware Public Service Commission. On Feb. 13,
Exelon reached a settlement agreement with staff of the Delaware
Public Service Commission and other stakeholders, and the agreement
is pending approval by the 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.
Media Contacts:ExelonPaul Adams410-470-4167orPepco
HoldingsCourtney Nogas202-872-2680
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