August 31, 2006
Excelon Acquisition of Public Service Enterprise Group
The attempted acquisition of Public Service Enterprise Group Inc. by Excelon Corp. is a classic illustration of how difficult utility acquisitions are in the United States. The Chicago utility announced a friendly deal with the New Jersey company over two years ago. The Justice Department approved the acquisition. The Federal Energy Regulatory Commission approved the acquisition. Several state regulatory bodies have approved the acquisition. But the New Jersey Board of Public Utilities is balking. PSEG owns New Jersey's largest electric utility. To satisfy the concerns of the NJBPU that the new company would raise utility fees for New Jersey residents, PSEG offered $600 million in rate relief, a freeze on rates, other consumer incentives, and the sale of some power plants. The NJBPU refused, demanding $220 million additional refunds and the sale of two additional New Jersey power plants to competitors. Shares of stock of both companies fell on the Exelon announcement that the "likelihood" of the deal closing has substantially decreased.
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