Exelon and PSEG Supplement FERC Filing to Assist in Expedited Approval Process; Companies Propose Additional Mitigation

Business Wire, May 10, 2005

CHICAGO & NEWARK, N.J. -- Exelon Corporation and Public Service Enterprise Group announced today that they have supplemented their February 4 filing with the Federal Energy Regulatory Commission (FERC), in which they seek approval of their planned merger. The filing addresses concerns raised by outside parties.

Provided that FERC approves the merger without a hearing, the companies will divest additional capacity to address some of the concerns raised.

"We stand behind our original FERC filing and believe that it fully satisfies the Commission's standards for evaluating proposed mergers. However, we are supplementing our filing -- including an offer to divest additional capacity -- in an effort to expedite approval of the merger," said Betsy Moler, executive vice president of government and environmental affairs and public policy of Exelon. "We're confident that the principal objections should be resolved by what we are offering today."

"We believe the commitments made in this filing will provide the certainty that the merger fully supports and enhances robust, competitive regional energy markets," said Ed Selover, senior vice president and general counsel, PSEG. "We will be selling plants with an expectation that they will remain in operation and continue to be important contributors to the regional electric grid."

Following are some of the additions the companies made to their original FERC filing, provided FERC approves the merger without a hearing:

Increased Divestiture. The companies propose to divest an additional 1,100 MW of generation in the PJM Pre-2004 market, which comprises New Jersey, Pennsylvania, Delaware, Maryland, District of Columbia, most of West Virginia, parts of Virginia, and a small area of Ohio. In combination with the 2,900 MW of fossil capacity already subject to divestiture and 2,600 MW of baseload nuclear capacity slated for virtual divestiture, this results in a total of 6,600 MW of capacity subject to mitigation -- an amount unprecedented in merger proceedings. The proposed additional divestitures are not expected to have a material effect on the results of operations of Exelon Electric & Gas following the merger.

Elimination of Limits on Purchasers. The filing removes limits on which entities may purchase generation. The increased divestiture of generation assets allows for larger market participants to purchase capacity without raising market concentration issues. The requirement would remain that no single entity may purchase more than 50 percent of the virtually divested nuclear capacity being sold.

Monitoring of Virtual Divestiture. The virtual divestitures will be conducted by an independent auction manager. The companies also will establish a public web page, detailing compliance with the virtual divestiture (and other interim and long-term mitigation requirements).

Reducing Time for Divestiture. The companies commit to executing sales agreements and making filings with FERC for the approval of sales within one year after the closing of the merger.

Transmission Upgrades. The companies commit to accelerating planned transmission upgrades on their own systems regardless of whether the merger is approved. In addition, the companies will fund approximately $25 million in transmission upgrades in the PJM system, contingent upon the approval and closing of the merger. The proposed transmission upgrades will not have a material effect on the results of operations of Exelon Electric & Gas.

The Companies Have Provided a List of Units Eligible for Divestiture. A full list of units eligible for divesture follows this release. The applicants propose to divest at least three of the following eight units to meet part of the divestiture commitments:

Bergen           1,225 MW combined-cycle (PSEG)
Conemaugh          350 MW coal (Exelon partial ownership interest)
                   382 MW coal (PSEG partial ownership interest)
Cromby 1           144 MW coal (Exelon)
Eddystone 1-2      579 MW coal (Exelon)
Hudson 2           608 MW coal (PSEG)
Keystone           350 MW coal (Exelon partial ownership interest)
                   388 MW coal (PSEG partial ownership interest)
Linden           1,218 MW combined-cycle (PSEG, under construction)
Mercer 1-2         648 MW coal (PSEG)

Media Conference Call

Exelon and PSEG will hold a teleconference for members of the media today at 10:00 a.m. Eastern time. The dial-in number for the call is 1-800-825-9580, and the passcode is 443053.

Corporate Profiles

Exelon is one of the nation's largest electric utilities with approximately 5.2 million customers and more than $14 billion in annual revenues. The company has one of the industry's largest portfolios of electricity generation capacity, with a nationwide reach and strong positions in the Midwest and Mid-Atlantic. Exelon distributes electricity to approximately 5.2 million customers in Illinois and Pennsylvania and gas to more than 460,000 customers in the Philadelphia area. Exelon is headquartered in Chicago and trades on the NYSE under the ticker EXC. For more information, visit the company's website at www.exeloncorp.com.