New Jersey Board of Public Utilities approves Exelon, Pepco merger
The New Jersey Board of Public Utilities on Feb. 11 approved the proposed merger of Exelon and Pepco Holdings
“We are pleased to have received approval from New Jersey earlier this week, and we’ve already received approvals from FERC and the state of Virginia,” William Von Hoene, chief strategy officer, Exelon, said during an Exelon earnings call on Feb. 13. “In Delaware … we are close to a settlement, and if a settlement is reached, there may be an adjustment in the schedule.”
The company filed for approval of the merger with the Delaware Public Service Commission (PSC) last June, and representatives from the PSC staff, Exelon and other parties to the case will present testimony to PSC commissioners at a hearing scheduled for Feb. 18-20.
“We are continuing the process of review in the remaining jurisdictions of Maryland and Washington D.C.,” Von Hoene said. “We expect a closing sometime in the second or third quarter of this year.”
In the order approving the merger, the BPU approved a Jan. 14 settlement agreement that was signed by Exelon, Pepco, BPU staff, the Independent Energy Producers of New Jersey and Pepco unit Atlantic City Electric.
As part of the settlement agreement, Exelon will create a $62 million customer investment fund to be used to direct rate credits, totaling about $114 per customer, to ACE customers within 60 days of the merger closing. The company also will provide $15 million in energy efficiency savings to ACE customers over five years.
According to the settlement, Exelon agreed to continue ACE’s existing reliability improvement plan through 2021, with specific goals for vegetation management, priority feeders, load growth, distribution automation, feeder improvement and substation improvement.
Exelon further agreed in the settlement that ACE, along with Pepco Holdings subsidiaries Potomac Electric Power Co. (Pepco) and Delmarva Power, as well as Exelon units PECO and Baltimore Gas and Electric, will remain members of PJM Interconnection through January 2025, unless there is a significant change to the utility industry or PJM, including markets administered by PJM, that have a material effect on those companies. In the event of a market change, the companies can apply to FERC to withdraw from PJM.
Exelon on Feb. 13 reported operating earnings of $421 million, or 48 cents per share, in 4Q14, down from $427 million, or 50 cents per share, in 4Q13. The company said that earnings in 4Q14 reflected unfavorable earnings associated with the December 2014 extension of bonus income tax depreciation impact on generation’s domestic production activities deduction and Exelon subsidiary Commonwealth Edison’s distribution and transmission formula earnings.
Exelon’s full-year operating earnings were $2.1 billion, or $2.39 per share, in 2014, compared to $2.2 billion, or $2.50 per share, in 2013. The company also introduced a guidance range for 2015 adjusted operating earnings of $2.25 per share to $2.55 per share.