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PSEG, Exelon Hopeful of Bypassing FERC Hearing on Merger

Top officials with Exelon Corp. and Public Service Enterprise Group (PSEG) last Wednesday expressed optimism that the pending mega-merger between the two companies will be able to navigate FERC's regulatory process without a hearing.

"I think at the federal level, we're quite encouraged," said PSEG CFO Tom O'Flynn in an appearance before the Morgan Stanley 12th annual Global Electricity & Energy Conference in New York. "We feel we made a good, full proposal to mitigate things." The two power companies filed their application related to the merger at FERC last month.

While noting that "it's hard to predict these things," O'Flynn said that the companies think there's "a good chance" that the federal agency will take action on the merger proposal in late summer, without holding hearings on the deal.

An analyst asked O'Flynn and John Young, executive vice president-finance and markets at Exelon, when they think the companies will know for sure one way or another as to whether FERC will hold a hearing on the transaction.

"I couldn't tell you that we're going to know any earlier than the date that they could rule that we're done or we've got to go to hearing," said Young. "We predict that date right now to be like July 27." FERC is scheduled to hold an open meeting on that date. The Commission will not hold any open meetings in August.

"We won't get indications -- I don't believe -- that we're liable to go to hearing before that," Young added. "All I can tell you is that we believe through some discussion internally and just a quick pass early on that FERC is positively disposed and we've been getting that in the press as well. So we're hopeful of a result without hearing in that same end of July-early August timeframe."

O'Flynn said that the companies expect the regulatory process in New Jersey "to probably be the longest. The history in New Jersey is to have a full and fair review of things, as they should. That's consistent with rate cases [and] consistent with other things. We've put out the objective for closing in the first quarter '06. That would be consistent with the kind of timeline that New Jersey has looked at through other proceedings and we think would be a reasonable expectation as we stand here."

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