Pepco Holdings and Exelon Reach Merger Settlement with District of Columbia Government
Enhanced package of benefits filed today responds to PSC concerns
Pepco Holdings Inc. (NYSE: POM) and Exelon Corporation (NYSE: EXC) today
announced they have reached a settlement with the Government of the
District of Columbia and others on the companies’ proposed merger that
will deliver substantially enhanced benefits to consumers and businesses
in the District. The settlement package was specifically shaped to
address the concerns articulated by the District of Columbia Public
Service Commission (PSC) in its August order.
The new package of benefits includes commitments to provide bill
credits, low-income assistance, fewer and shorter outages, a cleaner and
greener D.C., and investment in local jobs and the local economy. Pepco
Holdings and Exelon submitted the settlement agreement to the PSC for
approval as part of the existing merger proceeding.
Also signing on to the settlement agreement are the Office of the
People’s Counsel and the Office of the Attorney General of the District
of Columbia, as well as the Apartment and Office Building Association of
Metropolitan Washington, the District of Columbia Water and Sewer
Authority, the National Consumer Law Center and the National Housing
Trust.
“We heard the Public Service Commission’s concerns loud and clear, and
this new merger proposal presents greater benefits to the District,”
said Chris Crane, president and CEO of Exelon. “Our settlement includes
more than 120 commitments to ensure the merger is unequivocally in the
public interest.”
“The District deserves a healthy utility company that guarantees
affordability, reliability and sustainability for residents and
ratepayers,” said District of Columbia Mayor Muriel Bowser. “We kept the
conversations with Pepco and Exelon alive, because we knew we had to do
better for the District. My team negotiated a deal that puts District
residents and ratepayers first – by delivering a public utility that is
cost-effective, dependable and environmentally sound.”
Under the new proposal, Exelon will more than double direct benefits to
customers by providing $72.8 million for bill credits, low-income
assistance, renewable energy and energy efficiency programs in the
District. These funds are expected to offset distribution rate increases
for residential customers through March 2019. Of the direct funds
provided, $16.15 million would be used to help low-income customers.
“This new proposal meets the needs of families and businesses in the
District,” said Joseph Rigby, chairman, president and CEO of Pepco
Holdings. “Merging with Exelon is the only way to provide Pepco
customers and communities these significant benefits, which we believe
are too great to forfeit.”
Todd Nedwick, Housing and Energy Efficiency Policy Director, National
Housing Trust, said, “The settlement announced today provides meaningful
benefits to vulnerable, low-income District residents. The settlement
provides at least $6.75 million for energy efficiency retrofits to make
multifamily homes healthy and affordable. Energy efficiency in
affordable housing lowers utility costs, keeps housing affordable and
reduces greenhouse gases. A triple win.”
Pepco and Exelon have committed to invest substantially in advancing the
District of Columbia’s long-term sustainability goals, including $3.5
million for new renewable energy and $3.5 million for energy efficiency
programs. In addition, Exelon will significantly expand solar energy in
the District by developing up to 10 megawatts (MW) of new solar
generation and making it easier and faster for customers to install
solar panels. Exelon will provide another $5 million of capital to
governmental entities to develop renewable energy in the District and
will purchase 100 MW of wind energy. In addition, Pepco will work with
the District to develop at least four new microgrids.
Under the enhanced proposal, Pepco will reduce the frequency and
duration of power outages. Pepco’s reliability performance will exceed
the standards the PSC has set or the company will face significant
financial penalties if it fails to do so. Pepco is expected to reach
these more aggressive goals for reliability without increasing planned
budgets, providing cost protection to customers.
The new package of benefits also includes commitments by Pepco Holdings
and Exelon to promote local jobs and an additional $5.2 million for
workforce development in the District.
Exelon also will continue Pepco’s support for the local community by
guaranteeing charitable contributions in the District of $19 million
over 10 years to nonprofits that serve residents in the District.
About Exelon Corporation
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 32,000 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.
About Pepco Holdings Inc.
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 City Electric provide regulated
electricity service; Delmarva Power also provides natural gas service.
PHI also provides energy efficiency and renewable energy services
through Pepco Energy Services. For more information, visit online: www.pepcoholdings.com.
Cautionary Statements Regarding Forward-Looking Information
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 uncertainty
surrounding reconsideration of the denial of the Merger application
by the DC Public Service Commission 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) 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; (4) the combined company may be unable
to achieve cost-cutting synergies or it may take longer than expected to
achieve those synergies; (5) the merger may involve unexpected
costs, unexpected liabilities or unexpected delays, or the effects of
purchase accounting may be different from the companies’ expectations; (6)
the credit ratings of the combined company or its subsidiaries may be
different from what the companies expect; (7) the businesses of
the companies may suffer as a result of uncertainty surrounding the
merger; (8) the companies may not realize the values expected to
be obtained for properties expected or required to be sold; (9)
the industry may be subject to future regulatory or legislative actions
that could adversely affect the companies; and (10) 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 Second Quarter
2015 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 19; (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 2014 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 Second Quarter 2015 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. 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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