New Jersey Requires Higher Refund From Exelon-PSEG To OK Deal

MarketWatch — Thursday, August 17, 2006

By Matthew Dalton

NEW YORK — New Jersey on Thursday set tougher conditions for its approval of Exelon Corp.'s (EXC) plan to merge with Public Service Enterprise Group (PEG), requiring more refunds to customers and additional power plant sales than the two utilities previously offered.

Sources said New Jersey's latest offer would require the combined giant electric utility to refund $820 million to the state by 2011 and sell two additional power plants beyond what the U.S. Department of Justice required when it approved the merger earlier this year. Those power plants, currently owned by PSEG, are Essex, a 617-megawatt natural-gas facility, and Burlington, a 557 MW plant fueled by natural gas and oil, sources said.

The proposal from the New Jersey Board of Public Utilities doesn't require the sale of any nuclear power plants, a move sought by many in New Jersey who oppose the merger because they say it would concentrate to many power plants in the hands of one utility.

"We believe what is being proposed (by the board) will lead to higher rates for New Jersey," said Phyllis Salow-Kaye, executive director of New Jersey Citizen Action, a consumer advocacy group. She declined to comment on the specifics of the proposal.

Spokespeople for Exelon and PSEG declined to comment on the proposal, as did the Board of Public Utilities.

Exelon and PSEG earlier this month had offered to refund the state $660 million in cash along with other incentives, in a package the utilities valued at $1.46 billion. Exelon said the offer was as high as it could go, set a deadline of Aug. 4 for a reply from the state and suggested it would abandon the deal if there was no reply.

The New Jersey board, however, refused to reply, saying it couldn't evaluate Exelon's proposal in the time requested. Exelon then backed off, saying it would continue to negotiate with state.

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