Exelon Strikes Deal Worth $6.8 Billion To Acquire Pepco
WASHINGTON (WJZ) -- A major electric and gas utility announcement from Exelon Corporation--the parent company of BGE.
Wednesday night, Exelon said it will buy Pepco and its subsidiaries, which provide electricity to hundreds of thousands on the Eastern Shore and in the Maryland suburbs around Washington, D.C.
Derek Valcourt has details on the deal and what it means for customers.
This mega-utility merger will create the largest gas and electric utility company in the mid-Atlantic.
It was just a few years ago Exelon Corporation scooped up BGE's parent company, Baltimore-based Constellation Energy. Now Chicago-based Exelon says it will pay out $6.83 billion to buy up Pepco Holdings, the parent corporation of Potomac Electric, Delmarva Power and Light and Atlantic City Electric. The deal will make it the largest utility of the mid-Atlantic, expanding Exelon's reach beyond the Baltimore, Philadelphia and Chicago areas it already serves into New Jersey, Delaware, Maryland's Eastern Shore, Washington, D.C. and its northern suburbs--in all now servicing 10 million customers.
Exelon says the deal will allow them to continue improving customer reliability and they'll set aside $100 million in a fund to help out customers as each state's Public Service Commission sees fit.
But some consumer advocates question the deal, worried it will haunt ratepayers in the form of higher prices.
"You don't know how power prices are going to be on a daily basis and that's risky for a company like Exelon, and so what they are seeking to do is to mitigate that risk by acquiring control over more captive ratepayers," said Public Citizen Energy Director Tyson Slocum. "Exelon is able to pass on 100 percent of its wholesale costs and risks onto those captive ratepayers."
Higher rates are exactly what concern some of Exelon's BGE customers about the deal.
"They are going to have total control and raise the prices of their service," said Rolando Gonzalez.
"That's going to be a problem. Definitely a problem," said Harry McNally.
"Cut that bill down. That's all they gotta do," said Corey Pitt.
The merger is subject to approval by the Maryland Public Service Commission, which had no comment on the deal Wednesday. A spokesperson said they have not yet received the application for a merger but says once they do, they have 225 days to render a decision.
If all goes well in the approval process, Exelon executives said they expect the deal could be closed in the second or third quarters of 2015.
Other Local News:
