Providing a lengthy list of expected merger benefits,Commonwealth Edison and PECO Energy told FERC and the PennsylvaniaPUC in applications yesterday that they expect approval in nearrecord time. They said the deal will “enhance electric competition,foster FERC’s independent transmission system initiatives, protectboth wholesale and retail customers, and ensure sufficient, safe,reliable, low-cost and clean energy for consumers.” They alsobelieve the merger meets all FERC criteria. A notice ofreorganization is expected to be filed shortly with the IllinoisCommerce Commission, the companies said.

The merger “is another pro-competitive step by companies alreadyin the vanguard of competition,” they told FERC. As a result, theyhave asked for final regulatory approval in time for the deal to beconsummated in September of next year, one year after beingannounced. Mergers if this type typically require at least 15months for approval.

The ComEd-Peco merger of equals would form the largest domesticelectric utility holding company with five million customers andtotal revenues of $12.4 billion. It would also be the largestnuclear operator in the U.S. with assets located in the Midwest andNortheast. According to the deal shareholders would receive sharesin the new holding company with the opportunity to elect to receivecash ($45 per PE share or $42.75 per UCM share) at closing on aprorational basis. Each company will have $750 million of itsoutstanding shares repurchased before or simultaneous with closing.

To avoid any issue regarding post-merger market power, theapplicants agreed that PECO will sell its 300 MW sales agreementwith ComEd, which has been in place since 1996, to an unaffiliatedbuyer as promptly as possible after the merger is consummated.

The filing also indicates that existing provisions in theirwholesale power requirements already “ensure that customers willnot experience a rate change as a result of the merger.”Nevertheless, they have committed to “hold their requirements andtransmission customers harmless from net merger-related costs.”Also, both ComEd and PECO have retail rate freezes or caps ineffect.

To meet a requirement of the Public Utility Holding Company Act(PUHCA) that the two electric utilities be interconnected, theyassured regulators that “they are effectively interconnectedthrough a portfolio of transmission arrangements on third-partytransmission systems. This portfolio is highly effective, reliableand economical, and will enable the applicants to move power acrossthe system when it is economical to do so.”

PECO asked the Pennsylvania PUC to authorize the formation of aholding company, and to approve the merger of the newly formedholding company with Unicom, as well as the transfer of certainassets and common facilities from PECO Energy to newly establishedcorporate affiliates.

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