New Jersey BPU gives Exelon, Pepco more time to complete merger

Pepco Exelon logos

New Jersey state regulators, in an Oct. 15 order, granted an extension of time for Exelon and Pepco Holdings to consummate their proposed merger to June 30, 2016.

The New Jersey Board of Public Utilities’ order addresses a request for an extension of time filed by Pepco Holdings, Atlantic City Electric, Exelon, Purple Acquisition Corp., Exelon Energy Delivery Co., and New Special Purpose Entity – collectively the “joint petitioners,” to consummate the merger of Exelon and Pepco Holdings.

The BPU also noted that it approved last March a stipulation of settlement setting the terms and conditions for the merger. That order contained a sunset provision ordering the consummation of the merger to occur by Nov. 1, unless otherwise extended by the BPU.

On Sept. 16, the joint petitioners filed a motion seeking an extension of time, until June 30, 2016, to consummate the merger. According to that motion, the BPU added, the joint petitioners have received the required approvals of the merger from the BPU, Delaware Public Service Commission, Maryland PSC and the Virginia State Corporation Commission. The PSC of the District of the Columbia in late August denied the joint petitioners’ application “as filed,” the BPU said.

The joint petitioners stated that they remain convinced that the merger provides benefits and is in the public interest. The BPU also noted that the joint petitioners stated that they plan on continuing to work to complete the merger and are seeking time to enable them to continue to work to complete the merger. In late September, the joint petitioners filed an application for reconsideration with the PSC of the District of Columbia.

Myra Oppel, Pepco Holdings regional communications vice president, told TransmissionHub on Oct. 19: "The proposed procedural schedule in our motion to the Public Service Commission of the District of Columbia would have the record closing in late December and the commission's decision coming sometime in the first quarter of 2016. To ensure that we would not have to return to the New Jersey Board of Public Utilities for a further extension, we requested an expiration date well beyond the timeframe we currently anticipate."

The BPU noted that the New Jersey Division of Rate Counsel (Rate Counsel) on Sept. 17 filed a reply to the extension motion stating that it does not object to the granting of the extension of time to June 30, 2016. However, the BPU said, the Rate Counsel requested that, if granted, “the extension be contingent upon the parties’ right to review the final form of the merger in order to insure that New Jersey ratepayers’ interests continue to be protected.”

The joint petitioners, the BPU added, filed a response to the Rate Counsel’s letter on Sept. 22, asking that the BPU grant the request for extension with no other modifications to the BPU’s March merger order. The joint petitioners said that any further modification of the merger order is unnecessary and confusing, and argued that the detailed “Most Favored Nation” provision included in the settlement and adopted in the merger order, addresses the Rate Counsel’s concerns and protects the interests of the state and consumes, the BPU said.

The joint petitioners argued that the Rate Counsel’s request to review the final form of the merger is confusing and vague, and said that they are already required to provide the Rate Counsel and BPU staff with copies of the final orders and settlements from the other jurisdictions, along with an analysis and explanation of the benefits awarded in each jurisdiction, the BPU said.

“After reviewing the submissions of the joint petitioners and rate counsel and after due consideration of the arguments and of the provisions of the merger order, the board hereby finds the extension request to be reasonable, and hereby grants an extension of time for the joint petitioners to consummate the merger of Exelon and [Pepco Holdings] to June 30, 2016,” the BPU said.

Given the joint petitioners’ affirmation of their obligation to provide the BPU and Rate Counsel with copies of the final orders and settlements from each of the jurisdictions, including the District PSC, along with an analysis and explanation of the benefits awarded in each jurisdiction, the BPU said that it declines to order any additional review process at this time.

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