Exelon Corporation and Delmarva Power owner Pepco Holdings Inc. reached a settlement in is proposed merger with Exelon.
The settlement, which is subject to the approval of the Commissioners of the PSC, was filed by Exelon and Pepco Holdings, Delmarva Power, and signed by PSC Staff, the Delaware Public Advocate, the Department of Natural Resources and Environmental Control (DNREC), the Delaware Sustainable Energy Utility, the Mid-Atlantic Renewable Energy Coalition, and the Clean Air Council.
There had been concerns about the environmental stance of Exelon, the owner of a large fleet of nuclear power plants though another subsidiary. Exelon was also concerned that demands by regulators would make the company unprofitable.
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 (Atlantic City Electric) Delmarva Power and Pepco – to create the largest mid-Atlantic electric and gas utility. Delmarva will retain its corporate identity.
Delmarva offers electric service in a large chunk of Delaware and portions of Maryland. Delaware does have several municipally owned power utilities and Delaware Electric Cooperative in portions of Kent and Sussex counties. Delmarva provides natural gas service in northern New Castle County.
“We are pleased to have reached this settlement agreement for our merger,” said Chris Crane, Exelon CEO. “Our combined company will bring significant value to Delaware and to Delmarva customers.”
“This agreement is good for Delaware,” said Gary Stockbridge, Delmarva regional president. “By joining the Exelon family of utilities, Delmarva will be able to deliver substantial benefits to its customers and communities.”
Excelon cited the following advantages to the merger:
- More than $49 million over 10 years in direct, monthly rate credits for Delmarva electric and gas customers. In addition to the direct monthly rate credits, customers also will benefit from another $61.5 million in projected merger savings that will be reflected in rates during the next 10 years and beyond.
- $2 million in funding by Exelon for energy efficiency programs for low income customers and specific provisions to improve implementation of Delaware’s energy efficiency efforts, including measures to ensure coordination among Delmarva Power, the Delaware Sustainable Energy Utility, the Department of Natural Resources and Environmental Control and other interested stakeholders.
- Commitment to a new minimum standard of reliability for customers by reducing the average duration of outages standard to 175 minutes or shorter by 2020, while at the same time substantially reducing capital spending. The current minimum standard for the average duration of outages is 295 minutes.
- $2 million in funding by Exelon for a workforce development program with Delaware State University, the Delaware Technical Community College, and other community based organizations such as the United Way and Boys and Girls Club specifically focused on energy-efficiency, renewable energy and Science, Technology, Energy and Math (STEM) education.
- Commitment to positively impact Delaware jobs by making a good faith effort to hire at least 83 union workers in DE and to protect compensation and benefits for current employees.
- Maintaining Delmarva’s operational headquarters near Newark, and other key sites in Wilmington and Millsboro.
- Providing annual average charitable contributions and local community support that exceed Delmarva’s 2013 contributions of $699,000 for 10 years after the merger, and continued support for supplier diversity and low-income assistance efforts.
In addition to the Delaware PSC, the merger requires approvals by the Public Service Commission of the District of Columbia and Maryland Public Service Commission.
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. More information is available at www.phitomorrow.com.
