For Immediate Release
Agreement Extends Rate Caps and Provides $1 Million for Energy Conservation
For Immediate ReleaseNovember 30, 2001
Washington, D.C., and Wilmington, Del., November 30, 2001- Potomac Electric Power Company ("Pepco") (NYSE: POM) and Conectiv (NYSE : CIV/CIVA) announced today that a diverse group of parties to their merger approval proceeding before the Maryland Public Service Commission, including energy suppliers, customers, union representatives, Public Service Commission staff and the Maryland People`s Counsel, have reached a settlement which, if adopted by the Public Service Commission, would result in approval of the proposed merger between Pepco and Conectiv. The proposed settlement includes key provisions extending rate caps and funding energy efficiency programs in Maryland, once the merger is completed.
The settlement agreement will be submitted as a non-unanimous proposed settlement to the Public Service Commission of Maryland, which has the authority to accept or reject it. 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 also are required by regulators in the District of Columbia, Delaware and New Jersey and by the U.S. Securities and Exchange Commission.
"This settlement agreement is a major milestone," said Dennis Wraase, Pepco President and Chief Operating Officer. "It extends rate cap protections for Maryland customers and moves us closer to completing the merger process." Tom Shaw, Conectiv President, added, "We are pleased that this broad-based group, representing a variety of interests, was able to reach an agreement that benefits all concerned. We hope that the Commission will approve the settlement as in the public interest."
Parties to the settlement include Pepco; Conectiv; the Maryland Office of the People`s Counsel; the Maryland Public Service Commission staff; the International Brotherhood of Electrical Workers, Local 1900; AES New Energy, Inc.; the Maryland Energy Administration, and the Maryland Energy User`s Group.
The settlement agreement includes the following key provisions:
Currently, electricity rates are either frozen or capped at both companies. The settlement agreement caps the distribution portion of the companies` rates for an additional 30 months, until December, 2006 and requires the companies to file cost information with the Maryland Public Service Commission by December 2003 to determine if a rate decrease is warranted. Additionally,Conectiv non-residential customers in Maryland will see a modest decrease beginning July 1, 2003 to reflect the phase-out of certain costs that otherwise would have occurred in due course without the proposed merger. The settlement includes a provision for the companies to request rate increases if they experience severe financial distress resulting from events outside their control.
Standard Offer Service will not be extended
The settlement does not extend either company`s obligation to provide Standard Offer Service (electricity supply service for customers who do not choose an alternate supplier) beyond the dates previously approved by the Public Service Commission. Under legislation enacted in 1999, the Public Service Commission will decide how Standard Offer Service will be provided in the future.
Following the merger, Pepco and Conectiv will continue to operate as separate companies. Together they will serve more than 1.8 million customers in Delaware, the District of Columbia, Maryland, New Jersey and Virginia.
About PepcoPepco 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.
About ConectivConectiv, 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.
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