Compromise reached on Exelon, PHI, Delmarva Power merger
State regulators have tentatively settled with Exelon and Delmarva Power on Delaware’s part of the multistate, $6.8 billion Exelon-PEPCO Holdings Inc. utility merger, with a substantial boost in customer and other concessions over the original offer.
Public Service Commission officials, noting the development, have canceled a hearing scheduled to begin on Wednesday. On April 21, they will hold a hearing on the agreement and commission vote.
The deal includes more than $49 million for direct customer benefits, paid in the form of credits on customer bills, as well as workforce protection and training for Delaware residents. The credits were proposed to assure that utility customers receive a portion of the financial benefits expected for shareholders of the merged utilities.
Delmarva customers would also receive protection from the expenses of non-regulated operations, such as costs for nuclear plants that sell to the regional grid. And the merged utility agreed to a new purchase plan for wind-generated electricity.
PSC Ombudsman Matthew Hartigan said Monday the agreement reflected compromises.
“Of course, we wish we could have more,” Hartigan said. “From our perspective, I think this puts some finality to their [Delmarva’s] reliability and capital spending around reliability.
Delmarva had in the past proposed spending as much as $400 million in coming years to increase reliability, Hartigan said, with the commission saying that it would burden ratepayers for improvements to reliability “that has been pretty good.”
The agreement still commits Delmarva to reducing the average duration of service interruptions to 175 minutes or fewer by 2020, down from a current 295-minute minimum standard.
“We were fortunate in taking it to the level that we took it,” said Delaware Public Advocate David L. Bonar. “We got more than three times what they initially offered. It works out to about the same thing that New Jersey approved.”
Exelon and Delmarva originally proposed $17 million for customer credits.
“This agreement is good for Delaware,” said Gary Stockbridge, Delmarva regional president. “By joining the Exelon family of utilities, Delmarva will be able to deliver substantial benefits to its customers and communities.”
Delmarva said in a statement that the merger would provide another $61.5 million in merger savings that would be reflected in rates.
The company has 305,000 Delaware electric customers, along with 126,000 Delmarva natural gas customers in New Castle County. Another 201,000 Maryland residents are served by Delmarva on that state’s Eastern Shore.
New Jersey and Virginia already have approved the merger. Maryland and the District of Columbia are still considering the proposal, which also is under an anti-trust review.
The merger would retain Delmarva as a subsidiary of Pepco Holdings Inc., which would in turn merge with Exelon to form the Mid-Atlantic’s largest electricity and gas provider.
One party to the PSC case who has objected to the settlement, University of Delaware professor Jeremy Firestone, has asked for a later hearing date, citing travel and sabbatical schedule conflicts.
Contact Jeff Montgomery at (302) 463-3344 or jmontgomery@delawareonline.com.