The proposed merger between Potomac Electric Power Co. and Conectiv came one step closer to becoming a reality last Tuesday after the Delaware Public Service Commission (PSC) voted to approve the transaction.

The PSC signed off on a settlement submitted by a broad and diverse group of interests, including PSC staff, the Delaware Public Advocate, large industrial customers, Old Dominion Electric Cooperative, the Delaware Electric Cooperative, Local 1307 of the International Brotherhood of Electrical Workers and the Consumer Education and Protective Association of Delaware.

Under the agreement, a modest change of about 1% in rates will assure that Delaware customers will receive a reliable supply of electricity at prices frozen through May 1, 2006. During that time, customers will continue to have the option to shop for alternate suppliers. The agreement also provides about $1 million for economic development and renewable energy. Conectiv also agrees to maintain at least the same level of charitable contributions for the next 6 years.

“We are pleased that the Delaware Public Service Commission recognizes the many benefits of the merger for the state of Delaware and our customers,” said Tom Shaw, President of Conectiv. “The merger benefits customers by locking in low and stable rates and providing additional resources that will help us enhance reliability.”

The approval marks another milestone in the merger, which has already been cleared by the Federal Trade Commission and the U.S. Justice Department. The merger also has been approved by the Federal Energy Regulatory Commission, regulators in Virginia, where Conectiv serves customers on the Delmarva Peninsula, and in Pennsylvania, where both companies own transmission assets.

The merger, first unveiled in February of last year, will create the largest electricity delivery company in the mid-Atlantic region with a transmission network serving 1.8 million customers in a 10,000-square-mile area. The two utilities, however, will continue as separate operating companies.

Proposed settlements requiring regulatory approval also have been reached in Maryland and the District of Columbia. The merger also needs regulatory approval in New Jersey and by the U.S. Securities and Exchange Commission.

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