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Exelon (EXC) - Get Exelon Corporation Report has walked away from its $17 billion merger agreement with Public Service Enterprise Group (PEG) - Get Public Service Enterprise Group Inc Report after fighting for more than 19 months to get approval from the New Jersey Board of Public Utilities.

The companies said in a joint press release Thursday that discussions made clear that gaps separating the parties' respective settlement positions "are insurmountable." Major differences included, among other things, issues relating to rate concessions and market-power mitigation, the companies said.

In early August, the two companies offered to give PSE&G customers $600 million in cash through 2008 and credits against future rate increases for natural gas delivery, according to

The Wall Street Journal

. New Jersey's utilities board responded with a counteroffer seeking $820 million through 2011 and the sale of two additional fossil-fuel-powered power plants beyond what was required by the U.S. Department of Justice, which approved the deal in June.

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"We are very disappointed that the merger cannot be completed," said John W. Rowe, Exelon's chairman, president and CEO. "We wish PSE&G and its team all the best. It is a truly first-class organization, and it was a pleasure teaming up with them on a merger that made so much sense."

In a separate release, E. James Ferland, chairman and CEO of PSE&G, said that, while he was disappointed the plan to merge with Exelon would not be completed, the business outlook for his company is strong.

Ferland reaffirmed earnings guidance for 2006 of $3.45 to $3.75 a share and projected double-digit growth in the next several years. He provided preliminary earnings guidance for 2007 of $4.60 to $5 a share.

Analyst consensus surveys by Thomson First Call were expecting 2006 EPS of $3.64 and 2007 EPS of $4.52.

Shares of Exelon rose 43 cents, or 0.7%, in after-hours trading to $58.20 on Instinet; Public Service Enterprise shares slid $3.70, or 5.6%, to $62.45.