Exelon Corporation (NYSE: EXC) and Pepco Holdings Inc. (NYSE:
POM) have enhanced their proposed package of merger benefits in the
District of Columbia to provide even greater benefits to Pepco
customers, their communities and the District. The improved package
of benefits was outlined in testimony filed with the Public Service
Commission of the District of Columbia (PSC) and aligns with
settlements achieved in New Jersey and Delaware.
“We’ve listened to the feedback of stakeholders in the District
of Columbia,” said Exelon President and CEO Chris Crane, “and have
substantially enhanced our proposed package to deliver even more
value to Pepco customers and their communities.”
The merger will bring together Exelon’s three electric and gas
utilities – BGE, ComEd and PECO – and Pepco Holdings’ three
electric and gas utilities – Atlantic City Electric, Delmarva Power
and Pepco – to create the leading mid-Atlantic electric and gas
utility.
Exelon and Pepco Holdings have proposed to increase the value of
the District of Columbia customer investment fund to $33.75 million
from $14 million. The PSC will determine the use of the funds for
direct customer benefits, such as rate credits, energy efficiency
or low income assistance. These commitments provide an upfront
customer benefit that is 2.4 times the value of the companies’
original proposal. In addition to these near-term benefits, another
$51.2 million in projected merger savings over 10 years will flow
back to District customers through rates lower than they would be
absent the merger.
In their PSC filing, Exelon and Pepco Holdings also enhanced
their commitments for reducing the frequency and duration of power
outages in the District. The companies committed that Pepco’s
reliability performance will meet or exceed the PSC’s existing
standards for the three-year period from 2018 to 2020. Under these
new performance targets:
- Pepco’s average outage frequency in its
D.C. operational area will not exceed 0.66 outages, a 35.9 percent
improvement over Pepco’s average performance over the years from
2011 to 2013.
- Pepco’s average outage duration in its
D.C. operational area will not exceed 90 minutes, a 39.6 percent
improvement over Pepco’s average performance over the years from
2011 to 2013.
The companies committed to achieving these reliability targets
without increasing Pepco’s forecasted reliability spending. If
Pepco does not achieve the reliability performance target, it would
be subject to enhanced financial penalties of up to $5.6 million on
an annual basis.
The companies were able to commit to meeting or exceeding the
PSC’s 2020 standards for both outage frequency and duration after
reviewing Pepco’s 2014 calendar year reliability performance, which
recently became available, and through the application of the
Exelon management model. After a thorough analysis, the companies
determined that Pepco could make these enhanced commitments without
increasing budget and accept a larger penalty should it not achieve
them.
Exelon and Pepco Holdings’ prior commitments for maintaining
Pepco’s local presence, continuing its support for the community,
and promoting Pepco’s low-income customer assistance,
energy-efficiency and demand-response programs have not changed.
The companies’ commitments related to Pepco employment, and
workforce and supplier diversity, also remain the same.
In addition to the District of Columbia PSC, the merger requires
approvals by the Delaware Public Service Commission 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, 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 HoldingsMyra
Oppel202-872-2657
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