Pepco says D.C. settlement addresses regulator merger concerns

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Pepco Holdings Chairman, President and CEO Joseph Rigby on Oct. 26 said that a recent settlement agreement filed in the District of Columbia regarding the company’s proposed merger with Exelon addresses issues raised by the Public Service Commission of the District of Columbia.

"While we are disappointed with the decision by the Public Service Commission of the District of Columbia denying our merger application in August, we were pleased to announce the settlement agreement signed earlier this month by Pepco Holdings, Exelon, the District of Columbia government, the Office of the People's Counsel and other interested parties," Rigby said in the statement. "We believe the settlement agreement addresses the issues raised in the commission's denial order, and provides significant benefits to our customers and the communities we serve."

Discussing recent events, Pepco Holdings noted that it and Exelon on Oct. 6 entered into the non-unanimous full settlement agreement and stipulation with the District of Columbia government and others.

A motion to reopen the merger proceeding to consider that settlement was filed with the PSC that same day, the company said, adding that the settlement requires that a final order, on conditions consistent with the terms of the settlement agreement, be issued by the PSC within 150 days of the filing of the motion to reopen the merger proceeding. District of Columbia law does not impose a time limit on the PSC's review of the merger application, the company said.

Pepco Holdings also said that on Oct. 6, it and Exelon agreed that neither party will exercise termination rights under the merger agreement on or after Oct. 29, unless certain conditions of the settlement are not met, including issuance of a procedural schedule and a final order by the PSC approving the merger based on timeframes and conditions set forth in the settlement.

On Oct. 15, Pepco Holdings added, the New Jersey Board of Public Utilities issued an order extending the effectiveness of its merger approval until June 30, 2016.

Among other things, Pepco Holdings noted that its capital expenditures for the nine months ended Sept. 30 were $855 million. Due to the pending merger with Exelon, new distribution rate cases have not been filed since March 2014, although capital expenditures and operation and maintenance expenses have continued or increased from levels in prior periods, the company said.

Pepco Holdings also said that in the nine months ended Sept. 30, Pepco Energy Services signed $29 million in energy efficiency contracts and $38 million in underground transmission construction contracts. PES signed $33 million in energy efficiency contracts and $53 million in underground transmission construction contracts for the same period in 2014, the company said.

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