UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨ | Preliminary Proxy Statement | |
¨ | CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)) | |
¨ | Definitive Proxy Statement | |
x | Definitive Additional Materials | |
¨ | Soliciting Material Under Rule 14a-12 |
PEPCO HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. | |||
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies:
| |||
(2) | Aggregate number of securities to which transaction applies:
| |||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:
| |||
(4) | Proposed maximum aggregate value of transaction:
| |||
(5) | Total fee paid:
| |||
¨ | Fee paid previously with preliminary materials. | |||
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid:
| |||
(2) | Form, Schedule or Registration Statement No.:
| |||
(3) | Filing Party:
| |||
(4) | Date Filed:
|
On August 19, 2014, Pepco Holdings, Inc. began conducting presentations and handing out the following presentation materials to public utility commissions and their staff members, elected officials, customers, media and members of the community in Maryland.
The
Exelon
&
Pepco
Holdings
Combination
-
Maryland
Enhancing reliability and providing
benefits to customers |
Customer,
community
and
employee
benefits
for
all
PHI
utilities
The Exelon & Pepco Holdings Combination
2
Reliability, investment, opportunity
Customers
$100 million in direct customer benefits
Commitment to further build on significant reliability progress underway
Enhanced emergency-response
Cost reduction opportunities
Communities
Charitable contributions of $50 million over 10 years maintained
at levels exceeding PHIs 2013
giving
Pepco, Delmarva Power and Atlantic City Electric (ACE) regional headquarters locations
maintained; regional presidents remain in their roles
Employees
All existing collective-bargaining agreements honored
No net involuntary merger-related job losses of PHI utility employees for at least
two years following closing
Shared company cultures and values
Workforce and supplier diversity commitments are important; will
be honored and supported
More opportunities as part of larger company |
The Exelon &
Pepco Holdings Combination 3
Commonwealth Edison
Pepco
Customers:
Service Territory:
Peak Load:
2013 Rate Base:
3,800,000
11,400 sq. miles
23,753 MW
$8.7 bn
Customers:
Service Territory:
Peak Load:
2013 Rate Base:
801,000
640 sq. miles
6,674 MW
$3.4 bn
PECO Energy
Atlantic City Electric
Customers:
Service Territory:
Peak Load:
2013 Rate Base:
2,100,000
2,100 sq. miles
8,983 MW
$5.4 bn
Customers:
Service Territory:
Peak Load:
2013 Rate Base:
545,000
2,700 sq. miles
2,797
MW
$1.6 bn
Baltimore Gas & Electric
Delmarva Power
Customers:
Service Territory:
Peak Load:
2013 Rate Base:
1,900,000
2,300 sq. miles
7,236 MW
$4.6 bn
Customers:
Service Territory:
Peak Load:
2013 Rate Base:
632,000
5,000 sq. miles
4,121 MW
$2.0 bn
Headquartered in Chicago, with utility headquarters also in Baltimore
and Philadelphia, Exelon is the nations leading competitive energy
provider.
Its
family
of
companies
participates
in
every
stage
of
the
energy business, from generation to power sales to transmission and
delivery, and does business in 48 states, D.C. and Canada.
2013 assets: $80 billion
2013 revenues: $24.9 billion
2013 employees: 26,000
Headquartered in Washington, D.C., with utility headquarters also in Delaware
and
New
Jersey,
Pepco
Holdings
Inc.
is
one
of
the
largest
energy
delivery
companies in the mid-Atlantic, serving about two million customers in
Delaware, the District of Columbia, Maryland and New Jersey through its
subsidiaries.
2013 assets: $15 billion
2013 revenues: $4.7 billion
2013 employees: 5,000
Creating
the
leading
mid-Atlantic
electric
and
gas
utility |
The Exelon &
Pepco Holdings Combination 4
DE
MD
PA
NJ
VA
Philadelphia
Baltimore
Dover
Wilmington
Trenton
Washington, DC
Atlantic
City
IL
Chicago
Pepco Service
Atlantic City Electric Co. Service
Delmarva Power Service
Baltimore Gas and Electric Co. Service
PECO Energy Service
ComEd Service
Creating
the
leading
mid-Atlantic
electric
and
gas
utility
A
larger
utility
footprint
and
access
to
more
crews
will
further
improve
combined
companys
ability
to
respond
to
major
weather
events.
Newark |
Creating
the
leading
mid-Atlantic
electric
and
gas
utility
The Exelon & Pepco Holdings Combination
5
Headquarters and Employees:
No change to utility headquarters in local service areas
Corporate Headquarters: Chicago
Significant employee presence maintained in MD, DC, DE & NJ
No net involuntary merger-related job losses of PHI utility
employees for at least two years following closing
Governance:
President and CEO: Chris Crane
No change to Exelon Board of Directors or senior
management team
Pepco Holdings CEO Joe Rigby remains in current role
until transaction closing
Dave Velazquez of PHI will become president and CEO
of the PHI utilities
Gary Stockbridge and Donna Cooper, Delmarva and
Pepco regional presidents, will remain in their roles
Approvals and Timing:
Required regulatory approvals in DC, DE, MD, NJ, VA
Federal regulatory approvals required from FERC, DOJ
PHI shareholder approval later in 2014
Closing expected in second or third quarter of 2015 |
Powering
performance
Pepco
and
Delmarva
Power
The Exelon & Pepco Holdings Combination
6
A winning combination
Transaction
combines
Exelons
three
top-performing
utilities
BGE,
PECO
and
ComEd
and
Pepco
Holdings
electric
and
gas
utilities
Pepco,
Delmarva
Power
and
ACE.
Exelon and PHI are committed to maintain reliability levels for Pepco and Delmarva
Power and have proposed more stringent targets.
In the filing, the companies are committed to exceeding the PSCs reliability
standards and further propose that by 2020:
o
Delmarva Powers outage frequency in its Maryland service territory will not
exceed 1.22, representing a nearly 40 percent improvement compared with the
2011-2013 period. Average outage duration will not exceed 118 minutes,
representing a more than 53 percent improvement compared with the 2011-2013
period.
o
Pepcos average outage frequency in its Maryland service territory will not
exceed 1.00, representing a 38 percent improvement compared with the
2011-2013 period. Average outage duration will not exceed 101 minutes,
representing a nearly 43 percent improvement compared with the 2011-2013 period.
Exelon has offered to be subject to financial penalties if Delmarva Power and Pepco do
not meet their targets.
This reliability commitment is backed by merger testimony showing that Exelon utilities
perform at a high level. ComEd and PECO are delivering first-quartile
performance, and BGEs reliability metrics have risen to their
best-ever levels since joining Exelon in 2012.
Exelon and Pepco Holdings share cultures of continuous operational and reliability
improvement, customer focus, infrastructure investment, safety, environmental
stewardship and community support that will facilitate the sharing of best
practices. |
Delivering benefits to Pepco and Delmarva Power utility
customers, employees and communities
The Exelon & Pepco Holdings Combination
7
Customers
Upon closing of the merger, Exelon will provide an aggregate amount of $40
million to Maryland
for a Customer Investment Fund to be used as the PSC deems appropriate.
Use of funds will be determined by each state utility commission
and could include:
Bill credits
Assistance for low-income customers
Energy efficiency programs
Exelon will maintain and promote PHI utilities
low-income customer
assistance, energy-efficiency and demand-response programs.
In addition, Exelon will establish ring-fencing measures to maintain
Pepco, Delmarva Power and ACE
as separate entities.
The transaction will deliver direct benefits to:
|
Delivering benefits to Pepco and Delmarva Power utility
customers, employees and communities
The Exelon & Pepco Holdings Combination
8
The transaction will deliver direct benefits to:
Communities
Exelon shares Pepco and Delmarva Powers commitment to
the local communities it serves.
In Maryland, Exelon has committed to provide an annual
average of charitable contributions and local community
support that exceeds Delmarva Power and Pepcos 2013
level of $623,000.
PHI utilities will retain their local operational headquarters
|
Delivering benefits to Pepco and Delmarva Power utility
customers, employees and communities
The Exelon & Pepco Holdings Combination
9
The transaction will deliver direct benefits to:
Employees
All existing collective-bargaining agreements will be honored, and
PHI has successfully negotiated contract extensions with all four of
the unions representing their utility employees.
No net involuntary merger-related job losses of PHI utility
employees for two years following closing.
Current and former employees at Pepco, Delmarva Power and ACE
will receive compensation and benefits at least as favorable in the
aggregate as those provided before the merger for at least two
years following the transaction.
Exelon shares PHIs commitment to workforce and supplier diversity
and will maintain its strong track record in these areas.
|
The Exelon &
Pepco Holdings Combination 10
Merger expected to add jobs, inject millions of dollars into
local Maryland economy
The transaction will deliver benefits to:
Local Maryland economy:
The merger commitments are expected to result in significant economic benefits for
Maryland, as detailed in an economic modeling analysis included in the
merger approval filing.
Combined with reliability improvement projects already announced
by PHI and underway, the
merger commitments are expected to produce about 6,300 to 7,000
new jobs and result in $542
million to $623 million
in benefits to the Maryland economy.
These results are anticipated to be achieved within six years after the merger closes.
|
The Exelon &
Pepco Holdings Combination 11
Entity
Jurisdiction
Number of
customers
Allocated customer
investment fund
Pepco
MD
537k
$29m
DPL
MD
264k
$11m
TOTAL
801k
$40m
Customer investment fund benefits for Maryland
|
Questions? |
Cautionary
Statements
Regarding
Forward-Looking
Information
The Exelon & Pepco Holdings Combination
13
Except
for
the
historical
information
contained
herein,
certain
of
the
matters
discussed
in
this
communication
constitute
forward-looking
statements
within
the
meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended
by the Private Securities Litigation Reform Act of 1995. Words such as
may,
might,
will,
should,
could,
anticipate,
estimate,
expect,
predict,
project,
future, potential,
intend,
seek to,
plan,
assume,
believe,
target,
forecast,
goal,
objective,
continue
or the negative of such terms or other variations thereof and words and terms of similar
substance used in connection with any discussion of future plans, actions, or events
identify forward-looking statements. These forward-looking statements include, but are not limited
to, statements regarding benefits of the proposed merger, integration plans and expected
synergies, the expected timing of completion of the transaction, anticipated future
financial and operating performance and results, including estimates for growth. These statements are based on the current expectations of management of
Exelon Corporation (Exelon) and Pepco Holdings, Inc. (PHI), as applicable. There are a number
of risks and uncertainties that could cause actual results to differ materially
from
the
forward-looking
statements
included
in
this
communication.
For
example,
(1)
PHI
may
be
unable
to
obtain
shareholder
approval
required
for
the
merger; (2)
the companies may be unable to obtain regulatory approvals required for the merger, or
required regulatory approvals may delay the merger or cause the companies
to
abandon
the
merger;
(3)
conditions
to
the
closing
of
the
merger
may
not
be
satisfied;
(4)
an
unsolicited
offer
of
another
company
to
acquire
assets
or
capital
stock
of
Exelon
or
PHI
could
interfere
with
the
merger;
(5)
problems
may
arise
in
successfully
integrating
the
businesses
of
the
companies,
which
may
result
in
the
combined
company
not
operating
as
effectively
and
efficiently
as
expected;
(6)
the
combined
company
may
be
unable
to
achieve
cost-cutting
synergies
or
it
may
take longer than expected to achieve those synergies; (7)
the merger may involve unexpected costs, unexpected liabilities or unexpected delays, or the
effects of purchase
accounting
may
be
different
from
the
companies
expectations;
(8)
the
credit
ratings
of
the
combined
company
or
its
subsidiaries
may
be
different
from
what
the
companies
expect;
(9)
the
businesses
of
the
companies
may
suffer
as
a
result
of
uncertainty
surrounding
the
merger;
(10)
the
companies
may
not
realize
the
values
expected
to
be
obtained
for
properties
expected
or
required
to
be
sold;
(11)
the
industry
may
be
subject
to
future
regulatory
or
legislative
actions
that
could
adversely
affect
the
companies;
and
(12)
the
companies
may
be
adversely
affected
by
other
economic,
business,
and/or
competitive
factors.
Other
unknown
or
unpredictable
factors could also have material adverse effects on future results, performance or
achievements of the combined company. Therefore, forward-looking statements are not
guarantees or assurances of future performance, and actual results could differ materially from those indicated by the forward-looking statements. Discussions of
some
of
these
other
important
factors
and
assumptions
are
contained
in
Exelons
and
PHIs
respective
filings
with
the
Securities
and
Exchange
Commission
(SEC),
and
available
at
the
SECs
website
at
www.sec.gov,
including:
(1)
Exelons
2013
Annual
Report
on
Form
10-K
in
(a)
ITEM
1A.
Risk
Factors,
(b)
ITEM
7.
Managements
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations
and
(c)
ITEM
8.
Financial
Statements
and
Supplementary
Data:
Note
22;
(2)
Exelons
Second
Quarter 2014 Quarterly Report on Form 10-Q in (a) Part II, Other Information, ITEM 1A.
Risk Factors; (b) Part 1, Financial Information, ITEM 2. Managements Discussion
and Analysis of Financial Condition and Results of Operations and (c) Part I, Financial
Information, ITEM 1. Financial Statements: Note 15; (3) the definitive proxy
statement
that
PHI
filed
with
the
SEC
on
August
12,
2014
and
mailed
to
its
stockholders
in
connection
with
the
proposed
merger;
(4)
PHIs
2013
Annual
Report
on
Form
10-K in (a) ITEM 1A. Risk Factors, (b) ITEM 7. Managements Discussion and Analysis
of Financial Condition and Results of Operations and (c) ITEM 8. Financial Statements
and Supplementary Data: Note 15; and (5) PHIs Second Quarter 2014 Quarterly Report on Form 10-Q in (a) PART I, ITEM 1. Financial Statements, (b) PART I,
ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations and (c) PART II, ITEM 1A. Risk Factors. In light of these risks,
uncertainties, assumptions and factors, the forward-looking events discussed in this
communication may not occur. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this communication. Neither Exelon nor PHI undertakes any obligation to publicly release any
revision to its forward-looking statements to reflect events or circumstances after the
date of this communication. New factors emerge from time to time, and it is not
possible for Exelon or PHI to predict all such factors. Furthermore, it may not be possible to
assess the impact of any such factor on Exelons or PHIs respective
businesses or the extent to which any factor, or combination of factors, may cause results to
differ materially from those contained in any forward-looking statement. Any
specific factors that may be provided should not be construed as exhaustive. |