CHICAGO and WASHINGTON, D.C. (March 4, 2015) - Exelon Corporation (NYSE: EXC) and Pepco Holdings Inc. (NYSE: POM) have enhanced their proposed package of merger benefits in Maryland to provide even greater benefits to customers of Pepco and Delmarva Power, their communities and the state. The improved package of benefits was outlined in a filing made with the Maryland Public Service Commission (PSC).
"Maryland's utility customers, communities and economy will greatly benefit from the substantial enhancements we have proposed in response to feedback from the public and other stakeholders," said Exelon President and CEO Chris Crane. "The additional commitments we are making increase the direct financial benefits to customers and strengthen our pledge to deliver significant reliability improvements."
Exelon and Pepco Holdings have increased the value of the Maryland customer investment fund to $94.4 million from $40 million. The PSC will determine the use of the funds for direct customer benefits, such as rate credits, energy efficiency or low income customer 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 $127.2 million in projected net merger savings over 10 years, and more than $17 million per year 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 their PSC filing, Exelon and Pepco Holdings also enhanced their commitment to reduce the frequency and duration of power outages in Maryland. Performance improvements will be measured on an annual basis beginning in 2016, instead of a three-year average of 2018-2020 as originally proposed. If the utilities do not achieve the reliability performance target in any of the years 2018 to 2020, they will be subject to escalating annual non-compliance payments of up to $7.75 million over the three-year period.
In addition, Exelon commits to achieve the performance improvements within existing annual reliability-related budgets. This will also be reinforced with annual non-compliance cash payments for exceeding capital budget levels and forgoing recovery of excess operations and maintenance spending. The non-compliance payments will not be recoverable in rates.
To help reduce the burden of long-standing debts for low-income families, Exelon and Pepco Holdings also committed to a one-time elimination of unpaid bills that are over three years past due for qualifying low-income families in Maryland, as of the date of the merger closing.
Exelon and Pepco Holdings' prior commitments related to Pepco and Delmarva Power's employment -- including the hiring of 110 union employees -- and workforce and supplier diversity have not changed. The companies' commitments for maintaining Pepco and Delmarva Power's local presence, continuing their support for the community, and promoting their low-income customer assistance, energy-efficiency and demand-response programs, also remain the same.
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.
In addition to the Maryland PSC, the merger requires approvals by 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, visit www.phitomorrow.com.