Exelon Corp. last Tuesday said that if FERC approves the company's pending merger with Public Service Enterprise Group (PSEG) without a hearing, the companies will divest additional capacity to address some of the concerns raised by outside parties.
The companies supplemented their Feb. 4 filing with the Federal Energy Regulatory Commission (FERC), in which they seek approval of their planned merger.
The companies propose to divest an additional 1,100 MW of generation in the PJM pre-2004 market, which comprises New Jersey, Pennsylvania, Delaware, Maryland, District of Columbia, most of West Virginia, parts of Virginia, and a small area of Ohio.
In combination with the 2,900 MW of fossil capacity already subject to divestiture and 2,600 MW of baseload nuclear capacity slated for virtual divestiture, this results in a total of 6,600 MW of capacity subject to mitigation -- "an amount unprecedented in merger proceedings," Exelon said. The proposed additional divestitures are not expected to have a material effect on the results of operations of Exelon Electric & Gas following the merger.
The filing also removes limits on which entities may purchase generation. The increased divestiture of generation assets allows for larger market participants to purchase capacity without raising market concentration issues. The requirement would remain that no single entity may purchase more than 50% of the virtually divested nuclear capacity being sold.
Also, Exelon said that virtual divestitures will be conducted by an independent auction manager. The companies also will establish a public web page, detailing compliance with the virtual divestiture (and other interim and long-term mitigation requirements).
The companies committed to executing sales agreements and making filings with FERC for the approval of sales within one year after the closing of the merger.
Exelon and PSEG also committed to accelerating planned transmission upgrades on their own systems regardless of whether the merger is approved. In addition, the companies will fund approximately $25 million in transmission upgrades in the PJM system, contingent upon the approval and closing of the merger. The proposed transmission upgrades will not have a material effect on the results of operations of Exelon Electric & Gas.
The companies propose to divest at least three of the following eight units to meet part of the divestiture commitments:
The Exelon-PSEG deal was first unveiled in December of last year (see NGI, Dec. 27, 2004).
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