Exelon (NYSE:EXC) and Pepco Holdings (NYSE:POM) (PHI) on Feb. 5 requested from Maryland state regulators an extension of time to April 15 to file an energy efficiency program proposal required under “Merger Condition No. 5,” in relation to the companies’ proposed merger.
As TransmissionHub reported, the companies in a May 2015 joint statement, said that they have completed reviewing the Maryland state regulators’ order approving their merger and have committed to fulfill the modified conditions and package of customer benefits imposed by the order.
The Maryland Public Service Commission (PSC), in a 3-2 decision on May 15, 2015, approved, with conditions, the application to merge Exelon, Pepco Holdings, and Pepco Holdings’ Delmarva Power and Potomac Electric Power Company (Pepco).
The PSC also said in its May 15, 2015 statement that its approval lists 46 conditions, including higher reliability standards. The PSC further noted that it approved two settlement agreements between the companies and multiple parties in the case with some modifications.
In approving the merger, the PSC said, “[w]e find that the proposed merger, as conditioned by this order, is consistent with the broader public interest, will bring specific and measurable benefits and no harm to ratepayers.”
As reported at the time, among the conditions listed in the order, Exelon is to provide funding for energy efficiency programs through a customer investment fund of $43.2m for the benefit of Delmarva Power and Pepco customers in each utility’s service territory in Maryland. Exelon is to provide $31.5m in funding for energy efficiency program support, including about 20% for limited-income customers, in the Pepco Maryland service territory for programs to be directed and administered by Prince George’s and Montgomery counties. Exelon is to provide Delmarva $11.7m in funding for incremental energy efficiency program support in the Delmarva Maryland service territory.
Under “Condition 5: Enhanced energy efficiency plans,” as noted in the order, the companies are to cooperate with staff and other stakeholders to develop and file a distinct set of milestones as to how they will accelerate and enhance Baltimore Gas and Electric’s (BGE), Delmarva’s and Pepco’s EmPOWER Maryland plans, including proposed penalties for failure to meet PSC-approved goals. That proposal is to be filed with the PSC by March 1, 2016, the PSC said.
In their Feb. 5 letter to the PSC, the companies said that a short extension is appropriate in light of the fact that the merger has not yet closed and remains pending at the PSC of the District of Columbia, the last regulatory approval needed prior to closing.
“If the D.C. Commission does not render a decision approving the merger in sufficient time prior to April 15, 2016 to facilitate development of the proposal with staff and other stakeholders, the [companies] will notify the commission and propose further steps,” the companies said.
Exelon President and CEO Christopher Crane said on Feb. 3 during the company’s 4Q15 earnings call that Exelon’s primary goal in the utility business in 2016 is closing the merger with PHI.
At that “point, we’ll begin the important job of integrating PHI to the Exelon family of utilities,” he said. “We will bring our management model to PHI utilities in order to improve the experience of the customers in the region. We’ll work diligently to develop and implement an effective regulatory strategy for PHI. We’ll invest approximately $4bn in our existing utilities to refurbish and modernize the grid to improve service for our customers. That is part of $18bn we’ll invest in our existing utilities over the next five years.”
Exelon said in a Feb. 3 statement that the Hart Scott Rodino Act waiting period expired on Dec. 2, 2015, and as such, no longer precludes the completion of the merger.
The record in the settlement proceedings before the PSC of the District of Columbia closed on Dec. 23, 2015, Exelon said, adding that the companies are currently awaiting a decision from the PSC.
Also, Exelon noted that a Circuit Court judge on Jan. 8 affirmed the Maryland PSC’s order approving the merger and denied the petitions for judicial review filed by the Office of People’s Counsel (OPC), the Sierra Club, the Chesapeake Climate Action Network (CCAN) and Public Citizen, Inc. The OPC on Jan. 19 filed a notice of appeal to the Maryland Court of Special Appeals, and the Sierra Club and CCAN filed a notice of appeal on Jan. 21, Exelon said.