For Immediate Release
WASHINGTON, D.C. (Feb. 18, 2015) - Exelon
Corporation (NYSE: EXC) and Pepco Holdings Inc. (NYSE: POM) have enhanced their
proposed package of merger benefits in the District of Columbia to provide even
greater benefits to Pepco customers, their communities and the District. The improved
package of benefits was outlined in testimony filed with the Public Service Commission
of the District of Columbia (PSC) and aligns with settlements achieved in New
Jersey and Delaware.
"We've listened to the feedback of stakeholders in the
District of Columbia," said Exelon President and CEO Chris Crane, "and have
substantially enhanced our proposed package to deliver even more value to Pepco
customers and their communities."
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.
and Pepco Holdings have proposed to increase the value of the District of
Columbia customer investment fund to $33.75 million from $14 million. The PSC will
determine the use of the funds for direct customer benefits, such as rate
credits, energy efficiency or low income 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 $51.2
million in projected merger savings over 10 years will flow back to District
customers through rates lower than they would be absent the merger.
In their PSC filing, Exelon and Pepco Holdings also enhanced
their commitments for reducing the frequency and duration of power outages in
the District. The companies committed that Pepco's reliability performance will
meet or exceed the PSC's existing standards for the three-year period from 2018
to 2020. Under these new performance targets:
The companies committed to achieving these reliability
targets without increasing Pepco's forecasted reliability spending. If Pepco
does not achieve the reliability performance target, it would be subject to enhanced
financial penalties of up to $5.6 million on an annual basis.
The companies were able to commit to meeting or exceeding
the PSC's 2020 standards for both outage frequency and duration after reviewing
Pepco's 2014 calendar year reliability performance, which recently became
available, and through the application of the Exelon management model. After a
thorough analysis, the companies determined that Pepco could make these
enhanced commitments without increasing budget and accept a larger penalty
should it not achieve them.
Exelon and Pepco Holdings' prior commitments for
maintaining Pepco's local presence, continuing its support for the community,
and promoting Pepco's low-income customer assistance, energy-efficiency and
demand-response programs have not changed. The companies' commitments related
to Pepco employment, and workforce and supplier diversity, also remain the same.
In addition to the District of Columbia PSC,
the merger requires approvals by the Delaware Public Service Commission and Maryland Public
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 New Jersey Board of Public
Utilities in February, the Federal
Energy Regulatory Commission in November, the
State Corporation Commission in October and PHI stockholders in
September. The companies expect to
complete the merger in the
third quarter of 2015. For more information about the
merger, visit www.phitomorrow.com.
Exelon Corporation (NYSE: EXC) is the nation's leading competitive
energy provider, with 2014 revenues of approximately $27.4 billion.
Headquartered in Chicago, Exelon does business in 48 states, the District of
Columbia and Canada. Exelon is one of the largest competitive U.S. power
generators, with approximately 32,500 megawatts of owned capacity comprising
one of the nation's cleanest and lowest-cost power generation fleets. The
company's Constellation business unit provides energy products and services to
more than 2.5 million residential, public sector and business customers,
including more than two-thirds of the Fortune 100. Exelon's utilities deliver
electricity and natural gas to more than 7.8 million customers in central
Maryland (BGE), northern Illinois (ComEd) and southeastern Pennsylvania (PECO).
Follow Exelon on Twitter @Exelon.
Pepco Holdings Inc. is one of the
largest energy delivery companies in the Mid-Atlantic
region, serving about 2 million
customers in Delaware, the
District of Columbia, Maryland and New Jersey.
PHI subsidiaries Pepco,
Delmarva Power and Atlantic
regulated electricity service; Delmarva Power also
gas service. PHI
also provides energy efficiency and renewable energy services through Pepco Energy Services. For more
information, visit online: www.pepcoholdings.com.
Except for the historical information contained herein, certain of
the matters discussed in this communication constitute "forward-looking
statements" within the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934, both as amended by the Private Securities Litigation Reform
Act of 1995. Words such as "may," "might," "will," "should," "could,"
"anticipate," "estimate," "expect," "predict," "project," "future", "potential," "intend," "seek to," "plan," "assume," "believe,"
"target," "forecast," "goal," "objective," "continue" or the negative of such
terms or other variations thereof and words and terms of similar substance used
in connection with any discussion of future plans, actions, or events identify
forward-looking statements. These forward-looking statements include, but are
not limited to, statements regarding benefits of the proposed merger,
integration plans and expected synergies, the expected timing of completion of
the transaction, anticipated future financial and operating performance and
results, including estimates for growth. These statements are based on the
current expectations of management of Exelon Corporation (Exelon) and Pepco
Holdings, Inc. (PHI), as applicable. There are a number of risks and
uncertainties that could cause actual results to differ materially from the forward-looking statements
included in this communication. For example, (1) the companies may be unable to
obtain regulatory approvals required for the merger, or required regulatory
approvals may delay the merger or cause the companies to abandon the merger; (2)
conditions to the closing of the merger may not be satisfied; (3) an
unsolicited offer of another company to acquire assets or capital stock of
Exelon or PHI could interfere with the merger; (4) problems may arise in
successfully integrating the businesses of the companies, which may result in
the combined company not operating as effectively and efficiently as expected;
(5) the combined company may be unable to achieve cost-cutting synergies or it
may take longer than expected to achieve those synergies; (6) the merger may
involve unexpected costs, unexpected liabilities or unexpected delays, or the
effects of purchase accounting may be different from the companies'
expectations; (7) the credit ratings of the combined company or its
subsidiaries may be different from what the companies expect; (8) the
businesses of the companies may suffer as a result of uncertainty surrounding
the merger; (9) the companies may not realize the values expected to be
obtained for properties expected or required to be sold; (10) the industry may
be subject to future regulatory or legislative actions that could adversely
affect the companies; and (11) the companies may be adversely affected by other
economic, business, and/or competitive factors. Other unknown or unpredictable
factors could also have material adverse effects on future results, performance
or achievements of the combined company. Therefore, forward-looking statements
are not guarantees or assurances of future performance, and actual results
could differ materially from those indicated by the forward-looking statements.
Discussions of some of these other important factors and assumptions are
contained in Exelon's and PHI's respective filings with the Securities and
Exchange Commission (SEC), and available at the SEC's website at www.sec.gov, including: (1) Exelon's 2013 Annual
Report on Form 10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations and
(c) ITEM 8. Financial Statements and Supplementary Data: Note 22; (2) Exelon's
Third Quarter 2014 Quarterly Report on Form 10-Q in (a) Part II, Other
Information, ITEM 1A. Risk Factors; (b) Part 1, Financial Information, ITEM 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations and (c) Part I, Financial Information, ITEM 1. Financial Statements:
Note 18; (3) the definitive proxy statement that PHI filed with the SEC on
August 12, 2014 and mailed to its stockholders in connection with the proposed
merger (as supplemented by PHI's Form 8-K filed with the SEC on September 12,
2014); (4) PHI's 2013 Annual Report on Form 10-K in (a) ITEM 1A. Risk Factors,
(b) ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations and (c) ITEM 8. Financial Statements and Supplementary
Data: Note 15; and (5) PHI's Third Quarter 2014 Quarterly Report on Form 10-Q
in (a) PART I, ITEM 1. Financial Statements, (b) PART I, ITEM 2. Management's Discussion
and Analysis of Financial Condition and Results of Operations and (c) PART II,
ITEM 1A. Risk Factors. In light of these risks, uncertainties, assumptions and
factors, the forward-looking events discussed in this communication may not
occur. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
communication. Neither Exelon nor PHI undertakes any obligation to publicly
release any revision to its forward-looking statements to reflect events or
circumstances after the date of this communication. New factors emerge from
time to time, and it is not possible for Exelon or PHI to predict all such
factors. Furthermore, it may not be possible to assess the impact of any such
factor on Exelon's or PHI's respective businesses or the extent to which any
factor, or combination of factors, may cause results to differ materially from
those contained in any forward-looking statement. Any specific factors that may
be provided should not be construed as exhaustive.
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