Delmarva Power customers could see one, big bill credit

Delmarva Power residential customers could see a big, one-time break on bills across Delaware by summer under a revised concession made public Tuesday during a regulator hearing on the Exelon-Pepco Holdings Inc. merger.

The $40 million bill-credit proposal replaced a larger payout plan that would have been spread over 10 years, part of an agreement by the merging companies to share some of the benefits and cost savings from combining their multistate operations.

Delmarva Power is part of PHI. The $6.8 billion merger deal, still subject to Public Service Commission approval for Delaware's portion, would create the Mid-Atlantic's largest electric and gas utility. Maryland and the District of Columbia still are considering their merger settlements, with all jurisdictions assured that the best agreement will apply to all.

Details on calculation methods and the size of the credits likely to reach Delmarva's residential base were unavailable Tuesday. The company has about 250,000 residential service customers. Delmarva spokesman Nicholas Morici said PSC members would determine final details.

The merger agreement, up for final testimony Tuesday from applicants, regulators and other parties to the settlement, includes $36 million in savings on Delmarva spending to improve service reliability. In addition, the company would have to shorten the length of its average system outage to 175 minutes by the year 2020, down from the 295-minute standard that would have applied without the merger concessions.

Average individual customer outage durations would have to fall by 120 minutes by the same year.

"Fundamentally, the purpose of this merger is to help make Delmarva Power a better utility, a stronger utility, a better-performing utility," Darryl M. Bradford, Exelon's general counsel, said during the commission hearing. He added later that Delmarva would remain locally guided and oriented, noting: "This will not be a company managed remotely from Chicago," Exelon's headquarters.

Also among the last-minute settlement additions was a requirement for a study of land-based wind energy prospects in Kent County and Sussex County, in addition to a commitment to purchase three 40-megawatt sets of land-based wind energy credits between 2017 and 2023, each for 10- to 15-year terms. Some $2 million would be invested in energy-efficiency studies and programs as well.

Low-income customer debts older than 3 years would be forgiven at no cost to Delmarva ratepayers. The company would also invest $2 million in energy-efficiency programs for low-income residents.

Bradford said that total savings from the merger to Delmarva customers would exceed $130 million overall. Delmarva's workforce would be protected from layoffs associated with the merger for two years.

Although several parties with reservations about the deal said Tuesday they would support the plan, an independent market monitor retained by PJM, the region's multistate power distribution grid, testified that the merger should not be approved without provisions to protect competition and protect customers from the merged companies influence over markets and prices.

Jeffrey W. Mayes, general counsel for Pennsylvania-based Monitoring Analytics LLC, said the agreement "should not be approved without additional conditions" to protect competition. Those conditions should include a commitment to remain part of the regional PJM system "indefinitely," as well as assurances that competing transmission companies would have access to lines paid for by ratepayers at "no additional cost."

Exelon originally proposed a $17 million payment to customers over a period of years, an amount significantly increased as Delaware negotiations moved forward over the past year and as Maryland, New Jersey and the District of Columbia pressed for improvements.

PSC officials indicated that Delaware would await final terms of settlements in Maryland before proceeding.

Bradford described the settlement as "robust," and said the merger would not create a company with advantages different from other competitors.

Terms of the deal also protect Delmarva Power customers from costs associated with Exelon nuclear plant operations that sell to the regional power grid, rather than to particular customers or distribution systems.

Contact Jeff Montgomery at (302) 463-3344 or jmontgomery@delawareonline.com