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    Atlantic City Electric was acquired twice in the past 16 years as its parent companies merged to create larger ones.

    Now, its parent firm has agreed to be bought by an even larger corporation that expects to cut costs by $80 million a year, and experts wonder whether that will benefit consumers or shareholders.

    Exelon Corp., of Chicago, announced April 30 that it plans to buy Pepco Holdings Inc. for $6.8 billion in a deal that includes utilities Atlantic City Electric, Delmarva Power and Pepco and their 2 million electric customers.

    These acquisitions affecting South Jersey reflect a nationwide trend that started more than 20 years ago, when deregulation efforts encouraged utilities to become bigger with more competitive pricing structures, said Richard Michelfelder, a Rutgers University professor of finance and economics. The Brigantine resident is also a utility specialist and a former executive of Atlantic Energy.

    "Deregulation really started in the mid-1990s at the federal level and all across the country," he said. "We started to see back then signs there are going to be some fundamental changes in the industry."

    In 1998, Delmarva Power & Light, based in Wilmington, Delaware, acquired Atlantic Energy, the parent of Atlantic City Electric, for $968 million and formed Conectiv.

    Four years later, Washington, D.C.,based Potomac Electric Power Co. bought Conectiv for $5.4 billion, forming the base of Atlantic City Electric's current parent company, Pepco Holdings.

    These types of mergers took place across the U.S.

    There are about half the number of investor-owned, publicly traded utilities today than 30 years ago, Michelfelder said.

    "We had inflation in the early 1980s, the costs to electric utilities rose dramatically and certainly there was a need, desire to reduce rates," he said.

    Driving consolidations then more so than now, he said were economies of scale.

    "Today, I would say it's because of cost savings associated with a lack of redundancy and other efficiencies. Back then, it was the idea the bigger you are, the more efficient you are," he said.

    The proposed Exelon and Pepco deal also reflects Exelon's drive to diversify its holdings, adding more stable revenues from regulated utilities to its large portfolio of electric generation.

    Exelon owns power plants across the U.S. capable of powering 34 million homes. Among them are 23 nuclear generators, including Oyster Creek Generating Station in Lacey Township, southern Ocean County. Its utilities are Philadelphia's electric and gas utility PECO, Baltimore Gas & Electric and ComEd in Illinois.

    Exelon bought Baltimore Gas & Electric's parent, Constellation Energy, in 2012.

    "Being a commodity, it (wholesale energy) is a homogeneous product, and the only way you can improve your profit margin is if you're the low-cost producers. Exelon did a wonderful job with that, but with the recession, energy prices fell because of reduction in demand," Michelfelder said.

    The profits of utilities are regulated. But customers are essentially guaranteed.

    Even those who buy power from third-party suppliers are customers of Atlantic City Electric, which delivers electricity but has no electric generators of its own.

    This acquisition would diversify Exelon's earnings regardless of whether electric prices are high or low in wholesale markets, he said.

    The proposed acquisition will face regulatory scrutiny in New Jersey and other states, as well as the federal government.

    Exelon and Pepco officials said they expect a deal to close in mid-2015.

    Exelon CEO Chris Crane said on April 30 the proposal would reduce expenses by $80 million a year.

    Michelfelder said one of the big questions that regulators will look at is, "How much of the savings from this acquisition are going to be passed back to customers in the form of lower prices, and obviously how much of these efficiencies are going to go to shareholders?"

    This issue is part of what derailed an earlier proposal when Exelon sought to acquire Newark-based PSE&G, the state's largest utility.

    In announcing the proposed deal with Pepco, Exelon officials said Atlantic City Electric's main office would remain in Mays Landing, and the utility would keep its name.

    What would become known as Atlantic City Electric was incorporated in 1886 to serve a small section of Absecon Island, according to the utility's history.

    By 1888, it was powering an electric Merry-Go-Round in Atlantic City.

    The utility's name was changed to Atlantic City Electric Co. in 1907, according to Press archives.

    Atlantic City Electric was known as Conectiv after the acquisition in the 1990s but officially switched back to Atlantic City Electric in 2005.

    All accounts in this article are reported by the Press of Atlantic City.