Exelon, Pepco In Settlement With New Jersey Regulatory Authority Over Merger

(RTTNews) - Exelon Corp (EXC) and Pepco Holdings Inc (POM) on Wednesday announced that they have reached a settlement in the proceeding before the New Jersey Board of Public Utilities ("BPU") to review the two companies' proposed merger, which was announced in April 2014.

The settlement, which is subject to the approval of the Commissioners of the BPU, was signed and filed by Exelon and Pepco Holdings, Atlantic City Electric ("ACE"), BPU staff and the Independent Energy Producers of New Jersey.

The settlement includes many provisions that will ensure the merger benefits ACE customers and New Jersey, such as:

- $62 million Customer Investment Fund to be used for direct rate credits to ACE customers within 60 days of merger closing

- commitments to hire 60 union employees and to protect compensation and benefits

- commitments to improve ACE's reliability performance to levels that exceed current BPU requirements for frequency and duration of outages, and to continued infrastructure investment

- maintaining ACE's local operational headquarters in Mays Landing, N.J.

In April, Exelon agreed to buy diversified utility company Pepco Holdings for $27.25 per share, implying a deal value of about $6.8 billion.

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 the New Jersey BPU, the merger requires approvals by the Delaware Public Service Commission, Public Service Commission of the District of Columbia 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. Exelon and Pepco will continue to work cooperatively with the DOJ until it advises them that it has concluded its evaluation of the merger.

The transaction was approved by the Federal Energy Regulatory Commission in November, the Virginia State Corporation Commission in October and Pepco stockholders in September. The companies expect to complete the merger in the second or third quarter of 2015.