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Questions and answers about the Pepco sale

Pepco said Wednesday it was being acquired by nuclear energy giant Exelon for about $6.8 billion in cash, a deal that could affect more than 2 million customers from Washington and its Maryland suburbs to the Delaware shore and New Jersey.

Here’s what you need to know if you’re a Pepco customer:

Q: What is Exelon?

Exelon, based in Chicago, is one of the country’s biggest electricity companies and operates more nuclear plants than any other U.S. firm. In addition to generating power, Exelon delivers it, providing electricity and natural gas to more than 6.6 million customers in central Maryland, northern Illinois and southeastern Pennsylvania through its subsidiaries Baltimore Gas and Electric, Commonwealth Edison and PECO. Revenue totaled $23.5 billion in 2012.

Q: Why is this deal happening now?

A: Utilities such as Pepco are struggling to increase profits because of the sluggish economy and the energy-efficiency movement. There is also a broader shake-up in the industry. About a decade ago, power plant owners began splitting off from regulated utilities. Companies such as Pepco sold their power plants and stopped generating their own electricity; many power plant owners did not have their own local distribution companies.

But cheap natural gas from the shale gas boom and a growing amount of wind energy has upended that model. Many merchant power plants using other fuels, such as coal and nuclear, have been forced to shut down.

Exelon’s purchase of Pepco brings together a regulated utility and a company with the ability to generate power. There was a similar deal in 2012 when Exelon merged with Constellation Energy, which operated the regulated utility Baltimore Gas and Electric.

Q: When will the deal be final?

A: It could take a while — or even get scuttled — because many regulators have to weigh in. The takeover requires a green light from the Federal Energy Regulatory Commission. The Justice Department and Federal Trade Commission have to look at the deal on antitrust grounds. Public service commissions in three states and the District also have to give their approval.

Q: What will happen to prices?

A: Any price increases or decreases must be approved by state regulators. For now, your bill should be unaffected.

Q: Will service become more reliable?

A: Possibly, if regulators require the company to invest more money in improvements that could reduce the number of power outages. In the merger of Exelon and Constellation, the Maryland Public Service Commission required the new firm to create a $113.5 million fund to invest in energy efficiency and low-income energy assistance. The new firm also had to give a $100 rate credit to Baltimore Gas and Electric residential customers within 90 days.



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