ACE Customers Reap Second Benefit from Exelon Buyout of Pepco Holdings
Original deal had ‘most-favored jurisdiction’ clause ensuring ratepayers would receive equal benefits as those in other states affected by agreement
Atlantic City Electric’s half-million customers will see their electric rates drop a bit, courtesy of a deal negotiated by utility regulators several months ago in Washington, DC.
The New Jersey Board of Public Utilities yesterday approved a revised agreement that bolsters benefits to the utility’s customers stemming from the state’s approval of the acquisition of Pepco Holdings Inc., Atlantic City Electric’s parent, by Exelon.
That initial approval back in March 2015 led to customers receiving $62 million in credits, but it also included a so-called most favored-jurisdiction provision that ensured ratepayers in New Jersey would receive equal benefits to those negotiated in other states or the District of Columbia.
The $6.8 billion merger nearly fell apart when DC balked at approving it, thethe companies needed for the deal to go through. With that added leverage, DC Public Service negotiated a more lucrative agreement, forcing Exelon and PHI to sweeten the arrangement in New Jersey.
As a result, the companies are adding more than $53 million in benefits in New Jersey, which works out to about $97 per distribution customer. When combined with theresulting from the original BPU approval, each customer will get a total benefit of about $220.
Under the new agreement, ACE customers will get bill credits totaling roughly $38 million, a portion of which will more than offset an electric rate increase of $19 million approved by the state agency this past August.
The agreement also provides a total of $4 million in funding over four years to help low-income customers pay their electric bills with direct grants of up to $200, as well as $6.5 million in funding over six years for programs to train prospects for jobs in the utility industry.
The utility also plans to more than double its spending on energy efficiency programs over five years, targeting low-income customers and economically challenged town and counties, according to the agreement.
BPU President Richard Mroz praised the settlement, noting the positive impact it has on customers, particularly low-income ratepayers.
Rate Counsel Director Stefanie Brand agreed. “We still want to make sure that some of the other commitments, such as improving reliability, come to pass,’’ she said.
The merger created the nation’s largest utility, with about 10 million customers, and gave Exelon, the country’s largest operator of nuclear power plants, a bigger footprint in New Jersey. Exelon owns the Oyster Creek nuclear plant, and has an interest in the Salem nuclear stations in South Jersey.