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Exelon Corporation and Pepco Holdings Inc. announced that they have signed a definitive agreement to combine the two companies in an all-cash transaction. The agreement, which has been unanimously approved by both companies’ boards of directors, brings together Exelon’s three top-performing electric and gas utilities — BGE, ComEd and PECO — and Pepco Holdings’ electric and gas utilities — Atlantic City Electric, Delmarva Power and Pepco — to create the leading Mid-Atlantic electric and gas utility.
The combined utility businesses will serve approximately 10 million customers and have a rate base of approximately $26 billion. The transaction will further expand Exelon’s regulated holdings, ensuring a balanced earnings mix as power prices recover.
Exelon President and CEO Chris Crane said, “Exelon and Pepco Holdings have a compelling strategic rationale for merging, given our geographic proximity and similar utility business models. Our cultures are an excellent match, with a shared focus on operational excellence, environmental stewardship, customer service and support for the communities we serve.”
Pepco Holdings Chairman, President and CEO Joseph M. Rigby, said, “This combination provides significant benefits for all of our stakeholders, including customers, employees and shareholders. Exelon is one of the most respected energy companies in the country, and it is committed to building on the progress our team has made over the last few years to improve system reliability and customer satisfaction. As part of this transaction, Exelon has committed to provide what our customers most want: investments in infrastructure improvements, continuation of our long tradition of philanthropy in our communities and direct customer benefits of $100 million. Our shareholders will benefit from an immediate cash premium, and employees should enjoy even more opportunities as part of a larger company.”
Rigby added that being part of a family of large urban utilities with distinguished emergency response capabilities will be of enormous value to the Pepco Holdings utilities and their customers during major storms.
Commitment for Increased Reliability
As part of the acquisition, Exelon and Pepco Holdings have committed to build on the significant improvements to service reliability that Pepco Holdings has already achieved for Atlantic City Electric, Delmarva Power and Pepco customers.
This commitment is backed by the strong reliability performance of the current Exelon utilities. ComEd and PECO are delivering first-quartile performance, and BGE’s reliability metrics have risen to their best-ever levels since BGE joined Exelon in 2012 and are just shy of first quartile.
Other Benefits to Electric and Gas Customers
In addition to reliability improvements, upon completion of the transaction, Exelon will provide an aggregate $100 million — equivalent to approximately $50 per customer — for a Customer Investment Fund to be utilized across the Pepco Holdings utilities’ service territories as each state public service commission deems appropriate for customer benefits, such as rate credits, assistance for low income customers and energy efficiency measures.
Exelon has also pledged to maintain charitable contributions in the Pepco Holdings service territories at Pepco Holdings’ highest-ever level for at least a decade, a total commitment of $50 million.