[NukeNet] Biggest Nuclear Utility (Exelon) in Economic Doldrums

[Mike Ewall]

"On Monday, Fitch Ratings lowered ComEd (Exelon) to one notch above 
junk status.  'The lower ratings reflect the unfavorable rate order 
issued by the Illinois Commerce Commission and the increased business 
risk that results from the ongoing regulatory uncertainty in 
Illinois,' Fitch said."


http://www.chicagotribune.com/business/chi-0608010420aug01,1,133045.story?coll=chi-business-hed

Exelon woos, prods N.J. for merger OK

Deadline attached to $600 million offer

By Robert Manor
Tribune staff reporter
Published August 1, 2006

Exelon Corp.'s seemingly endless attempt to buy a New Jersey gas-and 
electric-utility appears to be reaching a climax, with the 
Chicago-based company offering consumers there $600 million in 
concessions but demanding that regulators decide soon whether the 
deal can go through.

"We must reach a preliminary agreement with the principal government 
parties in the next week or so," Exelon Chief Executive John Rowe said Monday.

He said Exelon would grant customers of Public Service Enterprise 
Group Inc. concessions worth $600 million, without giving much detail 
about the offer, and added, "It is as far as we can go."

The merger with PSEG, valued at about $13 billion when it was 
announced in late 2004, was supposed to have been completed by now. 
But the New Jersey Board of Public Utilities, the last barrier to the 
merger, has yet to decide whether it can proceed. A spokesman for the 
board declined to comment.

The 20-months-long merger attempt is one of the few things not 
running smoothly at Exelon, corporate parent of Commonwealth Edison.

The company said second-quarter net income rose to $644 million, or 
95 cents a share, from $514 million, or 76 cents a share, for the 
same period a year ago. Excluding certain items, Exelon made 85 cents 
a share, beating estimates by 5 cents a share. Revenue rose 6 
percent, to $3.7 billion.

Exelon, the nation's largest operator of nuclear reactors, is reaping 
the benefit of it atomic fleet. The company is operating its plants 
efficiently, at more than 99 percent capacity, which leads to cheap 
electricity at a time when energy prices are high.

But the New Jersey deal is proving to be problematic. Rowe seemed to 
say that if New Jersey isn't interested in Exelon, Exelon wasn't that 
interested in New Jersey.

"We have to be wanted to be here," he said. "We know we can't badger 
our way, we can't bluff our way in."

Morningstar equity analyst Mark Sadeghian said regulators are the 
wild card in any utility merger, and delay is always a risk.

"They seem to be the last holdout," he said of New Jersey's utility 
regulators. "It is a peril with one of these deals."

The merger has run into opposition among some consumer groups in New 
Jersey, who fear that Exelon will have too much power in the state.

Exelon has not had the best of luck with regulators in recent days.

On Friday, the Illinois Commerce Commission gave ComEd a nominal 
increase of $8.3 million in its delivery fees. The company had sought 
$345.5 million.

Rowe has warned that if the state cripples ComEd, he will cut the 
company loose from Exelon rather than lose money.

On Monday, Fitch Ratings lowered ComEd to one notch above junk status.

"The lower ratings reflect the unfavorable rate order issued by the 
Illinois Commerce Commission and the increased business risk that 
results from the ongoing regulatory uncertainty in Illinois," Fitch said.

Exelon stock shed 45 cents, to $57.90, on the New York Stock Exchange.

Also Monday, Exelon said it may be sued over radioactive wastewater 
leaks at its Dresden and Byron nuclear reactors. The Illinois 
Environmental Protection Agency in July indicated its intention to 
sue over the Dresden leak, Exelon said in a regulatory filing.

The state agency also said it was considering referring the Byron 
leak to the Illinois attorney general, the state's attorney for Ogle 
County or the U.S. EPA for enforcement action, Exelon said.

----------

rmanor at tribune.com


Copyright © 2006, Chicago Tribune