Exelon, Pepco agree to Maryland's merger conditions

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Exelon Corp (EXC.N) said on Monday it would agree to conditions placed last week by the state of Maryland on the power company's $6.8 billion bid for Pepco Holdings Inc (POM.N), clearing one of the deal's last hurdles.

Maryland's Public Service Commission said on Friday it would approve the deal, which would create the biggest U.S. power generator, if Exelon would agree to 46 conditions.

Exelon, for example, agreed to give $66 million in residential rate credits and spend $43.2 million for energy efficiency programs for a total of $109.2 million.

The companies must also establish a $19.8 million Green Sustainability Fund and pledge that Exelon would preserve Pepco's plans to improve reliability in snow and rainstorms.

Exelon President Chris Crane said the state's order on the transaction was constructive, though "challenging."

Three members of the state's utility-regulating commission voted to approve the deal. The two who dissented said the deal will, if allowed, create a company providing 80 percent of Maryland's electric power. That would reduce competition, raise rates and "eviscerate economic protections due to a weakened and compromised corporate governance structure," they wrote.

Maryland Energy Administration, a state agency which promotes clean energy, opposed the deal.

">Exelon Corp (EXC.N) said on Monday it would agree to conditions placed last week by the state of Maryland on the power company's $6.8 billion bid for Pepco Holdings Inc (POM.N), clearing one of the deal's last hurdles"So did Maryland's Office of People's Counsel, an independent state agency to represent residential consumers, as well as various public advocacy and environmental groups.

The deal was announced in April 2014, drawing objections from environmentalists concerned about Exelon's nuclear plants.

Exelon generates 55 percent of its power from nuclear plants, with the remainder coming from natural gas, oil and gas, hydroelectric, and coal, wind, oil, and solar/landfill gas.

Pepco serves about 2 million customers in the District of Columbia, Delaware, Maryland and New Jersey. Exelon has some 7.8 million customers in Maryland, Illinois and Pennsylvania.

The proposed transaction has won approval from New Jersey, Virginia and the U.S. Federal Energy Regulatory Commission.

The Justice Department is reviewing the deal, and the companies expect to hear from the District of Columbia in August. Exelon struck a deal with Delaware, which has to be approved by that state's utility commission, the company said.

(Editing by Kevin Drawbaugh and Andrew Hay)