FERC Gives Thumbs Up To PECO, Unicom Union
Just days after winning antitrust clearance from the Department
of Justice (DOJ), the proposed merger of Philadelphia-based PECO
Energy Co. and Unicom Corp. of Chicago, parent of Commonwealth
Edison Co., got more good news last week --- it sailed through FERC
without any conditions attached.
The new holding company to be created by the transaction, Exelon
Corp., is on track to become the nation's largest electric utility
with five million customers and total revenues of $12.4 billion.
Exelon would be worth $31.8 billion upon completion of the merger,
with $15.2 billion in equity market value and $16.6 billion in debt
and preferred stock. The utilities hope to complete the merger by
"It's a very large merger and it's one that's very important to
the bulk power market in the middle of the country," said Chairman
James Hoecker. "The combined loads of these two utilities is some
30,000 MW, which is as much as in either the New York or New
Both Corbin McNeill Jr. and John W. Rowe, CEOs of PECO Energy
and Unicom, respectively, said they were "delighted" by the
Commission's "expeditious decision" to approve the proposed merger.
Elizabeth Anne ("Betsy") Moler, former FERC chair and now senior
vice president for federal government affairs with Unicom, was at
the Commission meeting when the utility marriage was endorsed. She
will head up Exelon's Washington office.
Massey noted FERC saw some red flags with the merger, but they
were mitigated after the Commission examined other factors. For
example, "the applicants horizontal screen analysis showed that
merger-related increases in generation concentration in the
Commonwealth Edison-destination market violated the DOJ/FTC
guideline thresholds in several time periods," he said.
But upon reviewing other factors, "the analysis [showed] that it
would not be profitable for the merged company to drive up prices
even in [these] relatively concentrated markets," If it withheld
output to boost prices, Massey said Exelon would lose market share
to generation plants that could provide service at "comparable
Also mitigated were concerns that the wedded company would use
its transmission system to "strategically frustrate" the market,
Massey said. Both utilities have vowed to relinquish control of
their transmission systems to "appropriate independent regional
entities," he noted. The merger deal still requires the approval of
the Securities and Exchange Commission, the Nuclear Regulatory
Commission, the Pennsylvania Public Utility Commission and the
shareholders of both utilities.
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