If the merger of the parent of Delmarva Power with utility giant Exelon get the OK from regulators, it is likely that visitors will still have to back their vehicles into parking spaces at company headquarters south of Newark.
The company’s name and its safety-first practices will remain at Delmarva, executives of the two companies said earlier this month.
Delmarva Power Region President Gary Stockbridge and Richard Webster, a PECIO vice president, have been making the case for the merger at meetings around the state. PECO, a giant utility serving southeastern Pennsylvania, is also part of Chicago-based Exelon. Also a part of Exelon is BG&E, the utility serving much of Maryland.
The merger would put PEPCO utilities – Pepco in the Washington, D.C. area; Delmarva in Maryland and Delaware; and Atlantic City Electric under the Exelon umbrella.
Stockbridge says customers will see few visible changes. As noted earlier, the PEPCO companies will continue to operate under their current names, with Delmarva continuing to operate its offices in Newark and Salisbury.
Labor agreements have been reached with the International Brotherhood of Electrical Workers, with a pledge of no staff cuts for two years. Stockbridge says Exelon has a “culture” of not making job cuts. Moreover, Delmarva lost many of its corporate positions years ago with the acquisition by PEPCO.
Acquiring Delmarva is essentially a “wires and pipes” transaction without the complexities of the PEPCO merger, Stockbridge says.
The 2001 merger with PEPCO came after Delmarva underwent a major expansion that involved the acquisition of Atlantic City Electric, the renaming of the business to Conectiv and an ill-fated expansion into businesses such as telecommunications, and heating and air-conditioning contractors.
PEPCO became that wires and pipes company, selling off its generation and energy trading operations.
Stockbridge and Webster are taking pains to point out that the merger alone, will not result in higher electrical prices. In the case of the PEPCO-Delmarva-Conectiv merger, customers did see a price spike a few years after the merger. That was due to an agreement with the Public Service Commission to freeze rates for a few years. During that a period power costs were on the rise. The result was a 60 percent price increase that hit homeowners and businesses hard. That will not happen this time around, since no such agreement is in place and electricity prices remain relatively stable.
Rate increases have been in the news recently when the Delaware Public Service Commission sharply reduced Delmarva’s rate increase request, citing a report indicating that the utility was spending too much on upgrading its system. Delmarva has also been caught in the cross fire over the cost of alternative sources of electricity, with the Caesar Rodney Institute claiming the state’s mandates are driving away business through high utility costs.
Stockbridge says the utility plans to work with regulators to reach a middle ground that balances out costs of upgrades and improving reliability. Following outage problems in 1990s, Delmarva has shapely improved its performance. The utility has maintained that the increased ferocity of storms, such as Sandy and houses and businesses dependent on reliable service make such improvements necessary.
Webster says a related issue of response to storms is another plus that would come from the merger. While utilities have mutual assistance agreements, there is a major in advantage in “owning crews,” Webster and Stockbridge say standardized and best practice procedures that will come out of a merger will improve efficiency and allow crews to more easily move between major outages.
The merger will mark a return to a utility with both generation and a delivery system. Exelon has the nation’s largest fleet of nuclear power plants, but generates no electricity from coal.
Under federal and state rules, the generation and power delivery sides of the business operate separately. Delmarva seeks bids for power and firewalls exist between the two sides of the business.
Exelon pledged to maintain Delmarva’s charitable contributions and community involvement. It will also provide $17 million for a Customer Investment Fund to be used for uses the Delaware Public Service Commission deems appropriate. Uses could include bill credits, assistance for low income customers and energy efficiency measures.
The merger has received the endorsement of Delmarva unions, the Delaware State Chamber of Commerce, American Red Cross Delmarva and the United Way of Delaware. No organized opposition has yet emerged.
The utilities say the merger will produce between 1,000 to 1,500 new jobs and between $89 million to $142 million in benefits to the Delaware economy over a six year period. The investments would come from reliability improvement work at Delmarva.
