For Immediate Release
Second Settlement this Week; Extends Rate Freeze and Provides Nearly $1 million for Economic Development and Renewable Energy
For Immediate ReleaseNovember 30, 2001
WILMINGTON, Del. - Conectiv (NYSE: CIV/CIVA) has reached a settlement with a group representing broad and diverse interests in its request for regulatory approval in Delaware of its merger with Potomac Electric Power Co. ("Pepco") (NYSE: POM). Among the supporters are the Delaware Public Service Commission staff, the Delaware Public Advocate, large industrial customers, Old Dominion Electric Cooperative, the Delaware Electric Cooperative, Local 1307 of the International Brotherhood of Electrical Workers and the Consumer Education and Protective Association of Delaware. The agreement requires the approval of the Delaware Public Service Commission.
Earlier today, a settlement agreement was reached among parties in Maryland. "The Delaware settlement reflects Conectiv's commitment to a fair and balanced resolution that's good for customers, shareholders, employees and the communities we serve," said Conectiv President Tom Shaw. "This is a day of significant progress for our merger", added Dennis Wraase, Pepco President and Chief Operating Officer. "This settlement, coupled with the Maryland settlement agreement announced earlier, brings us closer to the finish line, to everyone's benefit."
Following the merger, Pepco and Conectiv will continue to operate as separate companies. Conectiv will keep its headquarters and senior utility managers in Wilmington for at least five years. Neither company expects significant job reductions as a result of the merger. The combined company will have greater resources to invest in technology and other areas to enhance reliability and customer service.
The settlement includes the following key provisions:
Rate Freeze to be extended until 2006 in Delaware
The settlement, which is encouraged under Delaware law, will serve to prevent costly and time-consuming litigation. Under the settlement, Conectiv agrees to extend an existing rate freeze by more than three years -- until May of 2006. During that time, customers will still have the ability to shop for competitive electric suppliers. Conectiv will serve as the default supplier of electricity for customers who choose not to shop. Rates for customers receiving default service will increase slightly to cover the added risk Conectiv will be taking on in the volatile energy market. Despite the adjustment, Conectiv's rates will remain below what they were in 1999.
Conectiv to Provide Nearly $1 million for Economic Development and Renewables
Under the settlement Conectiv will make a $750,000 contribution for job training or small business investment in its Delaware service territory. The contribution may be matched by federal or Small Business Administration funds. In addition, Conectiv will make a $200,000 contribution for the further promotion of renewable resources. Conectiv also agreed to maintain the same level of charitable contributions for the next 6 years. Conectiv will participate in a working group that will be responsible for identifying cost-effective energy conservation programs, and it will help start a pilot program to test the appropriateness of advanced metering technology. Under the settlement, the parties urge the PSC to approve service level guarantees involving customer appointments, new residential installations, bill accuracy and restoration of outages. Conectiv also will accelerate projects to enhance the reliability of its transmission system. The settlement also provides for a cost-effective method to limit congestion on its high-voltage transmission system serving the Delmarva Peninsula.
Cost of Merger Borne by Companies Not Customers
Conectiv customers will not bear the costs of this merger. Under the settlement, Conectiv and Pepco agree to not seek recovery in future rates of Delaware's portion of the merger transaction costs, the acquisition premium paid by Pepco and the cost of terminations or severances that occur up to 18 months after the closing.
The merger has already been cleared by the Federal Energy Regulatory Commission, the Pennsylvania Public Utility Commission, the Virginia State Corporation Commission, The Federal Trade Commission and the U.S. Justice Department. Approvals are also being sought in the District of Columbia, Maryland and New Jersey, and from the U.S. Securities and Exchange Commission.
Conectiv, a Fortune 500 company headquartered in Wilmington, Del., is focused on two core energy businesses. Conectiv Power Delivery provides energy to more than one million customers in New Jersey, Delaware, Maryland and Virginia. Conectiv Energy uses a sophisticated power-trading unit to optimize the value of a growing portfolio of mid-merit power plants that can start and stop quickly in response to changes in the demand for power within the PJM power pool. For more information, visit the company's web site at www.conectiv.com.
Pepco is an investor owned company that delivers electricity to more than 700,000 customers in Washington, D.C. and the Maryland suburbs. Through its family of
subsidiaries, Pepco also operates in the competitive arena of telecommunications and energy products and services in the mid-Atlantic region. For more information visit the company's web site at www.pepco.com.
Forward Looking StatementsExcept for historical statements and discussions, the statements in this news release constitute "forward-looking statements" within the meaning of federal securities law. These statements contain management`s beliefs based on information currently available to management and on various assumptions concerning future events. Forward-looking statements are not a guarantee of future performance or events. They are subject to a number of uncertainties and other factors, many of which are outside the Companies` control. Factors that could cause actual results to differ materially from those in the forward-looking statements herein include general economic, business and financing conditions; weather conditions; competition; governmental actions; and other presently unknown or unforeseen factors. These uncertainties and factors could cause actual results to differ materially from such statements. Pepco and Conectiv disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Point of Contact:Makini Street