WASHINGTON (The Deal) -- Exelon (EXC) now shifts its focus to District of Columbia and Maryland regulators in the company's effort to secure final government approvals for its pending purchase of Pepco (POM) . Exelon said Friday it reached a settlement with the staff of the Delaware Public Service Commission for the companies' proposed merger, which was announced in April.
The settlement remains subject to the approval of the Delaware PSC commissioners. Already signed on to the agreement are the Delaware Public Advocate, the Department of Natural Resources and Environmental Control, the Delaware Sustainable Energy Utility, the Mid-Atlantic Renewable Energy Coalition, and the Clean Air Council.
The settlement obligates Exelon to provide more than $51 million in direct benefits, as well as other provisions that promote the public interest. They include providing more than $49 million over 10 years in direct, monthly rate credits for Delmarva electric and gas customers and another $61.5 million in projected merger savings that will be reflected in rates during the next 10 years and beyond.
Exelon also will provide $2 million in funding for energy-efficiency programs for low-income customers and specific provisions to improve implementation of Delaware's energy efficiency efforts, including measures to ensure coordination among Delmarva Power, the Delaware Sustainable Energy Utility, the Department of Natural Resources and Environmental Control and other interested stakeholders.
It also committed to a new minimum standard of reliability by reducing the average duration of outages to 175 minutes or shorter by 2020, while at the same time substantially reducing capital spending. The current minimum standard for the average duration of outages is 295 minutes. The agreement also provides $2 million in funding by Exelon for a workforce development program with Delaware State University, the Delaware Technical Community College and other community-based organizations such as the United Way and Boys and Girls Club specifically focused on energy efficiency, renewable energy and Science, Technology, Energy and Math (STEM) education. It also must make a good faith effort to hire at least 83 union workers in Delaware and to protect compensation and benefits for current employees.
Finally the company agreed to maintain Delmarva Power's operational headquarters near Newark, Del., and other key sites in Wilmington and Millsboro and provide annual average charitable contributions and local community support that exceed Delmarva's 2013 contributions of $699,000 for 10 years after the merger, and continued support for supplier diversity and low-income assistance efforts.
New Jersey approved the transaction Feb. 11.
The U.S. Department of Justice has not ruled on the merger, but the federal antitrust waiting period has expired and the companies are free to close the deal once they receive the pending state-level approvals. Exelon may not be clear of DOJ scrutiny though, as the agency has asked multiple parties for information pertaining to how the transaction would affect construction of new generation capacity within the mid-Atlantic. Even if Exelon consummates the deal the DOJ could challenge the transaction after it closes.