United States of America v. Exelon Corporation and Public Service Enterprise Group Incorporated; Proposed Final Judgment and Competitive Impact Statement, 49477-49490 [06-7043]

Agencies

• Antitrust Division
• Department of Justice

[Federal Register Volume 71, Number 163 (Wednesday, August 23, 2006)]
[Notices]
[Pages 49477-49490]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-7043]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States of America v. Exelon Corporation and Public Service 
Enterprise Group Incorporated; Proposed Final Judgment and Competitive 
Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Hold Separate Stipulation and Order, and Competitive Impact Statement 
have been filed with the United States District Court for the District 
of Columbia in United States of America v. Exelon Corporation and 
Public Service Enterprise Group Incorporated, Civil Action No. 
1:06CV01138. On June 22, 2006, the United States filed a Complaint 
alleging that the proposed acquisition by Exelon Corporation 
(``Exelon'') of Public Service Enterprise Group Incorporated (``PSEG'') 
would violate Section 7 of the Clayton Act, 15 U.S.C. 18. The Complaint 
alleges that the acquisition would reduce competition substantially for 
wholesale electricity in the Mid-Atlantic United States. Specifically, 
the Complaint alleges that Exelon's acquisition of PSEG's electric 
generation assets would enhance Exelon's ability and incentive to raise 
wholesale electricity prices, resulting in increased retail electricity 
prices for millions of residential, commercial, and industrial 
customers. The proposed Final Judgment requires Exelon and PSEG to 
divest six electric generation plants. The plants to be divested are 
Cromby Generating Station and Eddystone Generating Station in 
Pennsylvania and Hudson Generating Station, Linden Generating Station, 
Mercer Generating Station, and Sewaren Generating Station in New 
Jersey.
    Copies of the Complaint, proposed Final Judgment, Hold Separate 
Stipulation and Order, and Competitive Impact Statement are available 
for inspection at the Department of Justice, Antitrust Division, 
Antitrust Documents Group, 325 7th Street, NW., Room 215, Washington, 
DC 20530 (telephone: 202-514-2481), on the Department of Justice's Web 
site at https://www.usdoj.gov/atr, and at the Office of the Clerk of the 
United States District Court for the District of Columbia. Copies of 
these materials may be obtained from the Antitrust Division upon 
request and payment of the copying fee set by Department of Justice 
regulations.
    Public comment is invited within sixty (60) days of the date of 
this notice. Such comments, and responses thereto, will be published in 
the Federal Register and filed with the Court. Comments should be 
directed to Donna N. Kooperstein, Chief, Transportation, Energy & 
Agriculture Section, Antitrust Division, Department of Justice, 325 7th 
Street, NW., Suite 500, Washington, DC 20530 (telephone: 202-307-3278).

Patricia A. Brink,
Deputy Director of Operations, Antitrust Division.

United States District Court, District of Columbia

United States of America, U.S. Department of Justice, Antitrust 
Division, 325 7th Street, NW., Suite 500, Washington, DC 20530, 
Plaintiff, v. Exelon Corporation, 10 South Dearborn Street, Chicago, IL 
60603, and Public Service Enterprise Group, Incorporated, 880 Park 
Plaza, P.O. Box 1171, Newark, NJ 07101-1171, Defendants

    Case No. 1:06CV01138
    Judge: John D. Bates
    Deck Type: Antitrust
    Date Stamp: 06/22/2006

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil action to 
enjoin the merger of Exelon Corporation (``Exelon'') and Public Service 
Enterprise Group Incorporated (``PSEG'') and alleges as follows:
    1. On December 20, 2004, Exelon entered into an agreement to merge 
with PSEG. The transaction would create one of the largest electricity 
companies in the United States, with total assets of $79 billion and 
annual revenues of $27 billion.
    2. Exelon and PSEG compete to sell wholesale electricity throughout 
the Mid-Atlantic and in Illinois, North Carolina, West Virginia, and 
Ohio.
    3. Exelon and PSEG are the two largest electricity firms in the 
area encompassing central and eastern Pennsylvania, New Jersey, 
Delaware, the District of Columbia, and parts of Maryland and Virginia. 
Together, they would account for more than 35 percent of the electric 
generating capacity in this area and would have wholesale electricity 
revenues of approximately $4 billion.
    4. In the eastern portion of this area, which includes the densely 
populated northern New Jersey and Philadelphia areas, Exelon and PSEG 
together would account for more than 45 percent of the electric 
generating capacity in this area and would have wholesale electricity 
revenues of approximately $3 billion.
    5. Exelon's merger with PSEG would eliminate competition between 
them and give the merged firm the incentive and the ability to raise 
wholesale electricity prices, resulting in increased retail electricity 
prices for millions of residential, commercial, and industrial 
customers in these areas.
    6. Accordingly, the merger would substantially lessen competition 
in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.

I. Jurisdiction and Venue

    7. This action is filed by the United States under Section 15 of 
the Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain 
Defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18.
    8. Exelon and PSEG are engaged in interstate commerce and in 
activities substantially affecting interstate commerce. The Court has 
jurisdiction over this action and the parties pursuant to Sections 15 
and 16 of the Clayton Act, 15 U.S.C. 25, 26; and 28 U.S.C. 1331, 1337.
    9. Exelon and PSEG transact business and are found in the District 
of Columbia. Venue is proper under Section 12 of the Clayton Act, 15 
U.S.C. 22; and 28 U.S.C. 1391(c).

II. The Defendants and the Transaction

    10. Defendant Exelon is a Pennsylvania corporation, with its 
headquarters in Chicago, Illinois. Exelon

[[Page 49478]]

owns Exelon Generation Company, LLC, which owns electric generating 
plants located primarily in the Mid-Atlantic and the Midwest with a 
total generating capacity of more than 25,000 megawatts (``MW''). 
Exelon also owns two electricity retailers that buy wholesale 
electricity and resell it to consumers: PECO Energy Company, a gas and 
electric utility that serves customers in the Philadelphia area; and 
Commonwealth Edison Company, an electric utility that serves customers 
in northern Illinois.
    11. Defendant PSEG is a New Jersey corporation, with its 
headquarters in Newark, New Jersey. PSEG owns PSEG Power LLC, which 
owns electric generating plants located primarily in New Jersey with a 
total generating capacity of more than 15,000 MW. PSEG also owns a gas 
and electric utility, Public Service Electric and Gas Company, that 
serves customers in New Jersey.
    12. Following Exelon's merger with PSEG, the combined company would 
be known as Exelon Electric & Gas, with corporate headquarters in 
Chicago.

III. Trade and Commerce

A. Background
    13. Electricity supplied to retail customers is generated at 
electric generating plants, which consist of one or more generating 
units. An individual generating unit uses any one of several types of 
generating technologies (including hydroelectric turbine, steam 
turbine, combustion turbine, or combined cycle) to transform the energy 
in fuels or the force of following water into electricity. The fuels 
used by a generating unit include uranium, coal, oil, or natural gas.
    14. Generating units vary considerably in their operating costs, 
which are determined primarily by the cost of fuel and the efficiency 
of the technology in transforming the energy in fuel into electricity. 
``Baseload'' units--which typically include nuclear and some coal-fired 
steam turbine units--have relatively low operating costs. ``Peaking'' 
units--which typically include oil- and gas-fired combustion turbine 
units--have relatively high operating costs. ``Mid-merit'' units--which 
typically include combined-cycle and some coal-fired steam turbine 
units--have costs lower than those of peaking units but higher than 
those of baseload units.
    15. Once electricity is generated at a plant, an extensive set of 
interconnected high-voltage lines and equipment, known as the 
transmission grid, transports the electricity to lower voltage 
distribution lines that relay the power to homes and businesses. 
Transmission grid operators must closely monitor the grid to prevent 
too little or too much electricity from flowing over the grid, either 
of which might damage lines or generating units connected to the grid. 
To prevent such damage and to prevent widespread blackouts from 
disrupting electricity service, a grid operator will manage the grid to 
prevent any more electricity from flowing over a transmission line as 
that line approaches its operating limit (a ``transmission 
constraint'').
    16. In the Mid-Atlantic, the transmission grid is overseen by PJM 
Interconnection, LLC (``PJM''), a private, non-profit organization 
whose members include transmission line owners, generation owners, 
distribution companies, retail customers, and wholesale and retail 
electricity suppliers. The transmission grid administered by PJM is the 
largest in the United States, providing electricity to approximately 51 
million people in an area encompassing New Jersey, Pennsylvania, 
Delaware, Maryland, Virginia, West Virginia, the District of Columbia, 
and parts of North Carolina, Kentucky, Ohio, Indiana, Michigan, 
Tennessee, and Illinois (the ``PJM control area'').
    17. PJM oversees two auctions for the sale and purchase of 
wholesale electricity: a day-ahead auction that clears the day before 
the electricity is required, and a real-time auction that clears the 
day the electricity is required. Generation owners located in the PJM 
control area sell through these auctions to electricity retailers that 
provide retail electric service in the PJM control area. Buyers and 
sellers of wholesale electricity may also enter into contracts for the 
sale and purchase of electricity with each other, or third parties, 
outside of the PJM auction process; prices for these bilateral 
contracts generally reflect expected auction prices.
    18. In the day-ahead auction, each buyer typically submits to PJM 
the amount of electricity the buyer expects to need each hour of the 
next day. Then PJM adds up the amount of electricity buyers will need 
to determine how much electricity will be demanded each hour. Each 
seller submits to PJM an offer to sell electricity indicating the 
amount of electricity it is willing to sell the next day and the price 
at which it is willing to sell. Then PJM sorts the offers to sell from 
lowest to highest offer price to determine how much electricity will be 
supplied at any given price.
    19. Subject to the physical and engineering limitations of the 
transmission grid, PJM seeks to have generating units operated in 
``merit'' order, from lowest to highest offer. In the day-ahead 
auction, as long as transmission constraints are not expected, PJM 
takes the least expensive offer first and then continues to accept 
offers to sell at progressively higher prices until the needs for each 
hour the next day are covered. In this way, PJM minimizes the total 
cost of generating electricity required for the next day. The clearing 
price for any given hour essentially is determined by the generating 
unit with the highest offer price that is needed for that hour, and all 
sellers for that hour receive that price regardless of their offer 
price or their units' costs. In the real-time auction, which accounts 
for differences between anticipated and actual supply and demand, PJM 
accepts sellers' offers in merit order, subject to the physical and 
engineering limitations of the transmission grid, until there is a 
sufficient quantity of electricity to meet actual demand.
    20. At times, transmission constraints prevent the generating units 
with the lowest offers from meeting demand in a particular area within 
the PJM control area. When that happens, PJM often calls on more 
expensive units located within the smaller area bounded by the 
transmission constraints (a ``constrained area''), and the clearing 
price for the buyers in that area adjusts accordingly. Because more 
expensive units are required to meet demand, the clearing price in a 
constrained area will be higher than it would be absent the 
transmission constraints.
    21. PJM East. One historically constrained area within the PJM 
control area includes the densely populated northern New Jersey and 
Philadelphia areas. This area (``PJM East'') is defined by the 
``Eastern Interface,'' a set of five major transmission lines that 
divides New Jersey and the Philadelphia area from the rest of the PJM 
control area. When the Eastern Interface is constrained, PJM is limited 
in its ability to supply demand located east of the constraint with 
electricity from generating units located west of the constraint. PJM 
often responds to constraints on the Eastern Interface by calling on 
additional generating units east of the constraint to run, generally 
resulting in higher prices in PJM East because the cost of additional 
generation east of the constraint is higher than the cost of additional 
generation west of the constraint
    22. In PJM East during 2005, more than $10 billion of wholesale 
electricity was sold for resale to nearly 6 million retail customers.

[[Page 49479]]

    23. PJM Central/East. A second constrained area in PJM includes PJM 
East and central Pennsylvania. This area is defined by two major 
transmission lines known as ``5004'' and ``5005'' that run from western 
to central Pennsylvania and divide the area east of the lines (``PJM 
Central/East'') from the rest of PJM. When the 5004 and 5005 
transmission lines are constrained, PJM is limited in its ability to 
supply demand located east of the constraint with electricity from 
generating units located west of the constraint. PJM often responds to 
constraints on the 5004 and 5005 lines by calling on additional 
generating units east of the constraint to run, generally resulting in 
higher prices in PJM Central/East because the cost of additional 
generation east of the constraint is higher than the cost of additional 
generation west of the constraint.
    24. In PJM Central/East during 2005, more than $19 billion of 
wholesale electricity was sold for resale to nearly 9 million retail 
customers.
B. Relevant Product Market
    25. Wholesale electricity is a relevant product market and a line 
of commerce within the meaning of Section 7 of the Clayton Act. In the 
event of a small but significant increase in the price of wholesale 
electricity, insufficient purchasers would switch away to make that 
increase unprofitable.
C. Relevant Geographic Markets
    26. When the Eastern Interface is constrained, purchasers of 
wholesale electricity for use in PJM East have limited ability to turn 
to generation outside of PJM East. At such times, the amount of 
electricity that could be purchased outside PJM East is insufficient to 
make it unprofitable for generators located inside PJM East to seek a 
small but significant price increase.
    27. PJM East is a relevant geographic market and a section of the 
country within the meaning of Section 7 of the Clayton Act.
    28. When the 5004 and 5005 transmission lines are constrained, 
purchasers of wholesale electricity in PJM Central/East have limited 
ability to turn to generation outside of PJM Central/East. At such 
times, the amount of electricity that could be purchased outside PJM 
Central/East is insufficient to make it unprofitable for generators 
located inside PJM Central/East to seek a small but significant price 
increase.
    29. PJM Central/East is a relevant geographic market and a section 
of the country within the meaning of Section 7 of the Clayton Act.

IV. Anticompetitive Effects

A. Market Shares and Concentration
    30. Exelon owns approximately 20 percent of the generating capacity 
in PJM East. PSEG owns approximately 29 percent of the generating 
capacity in PJM East. After the merger, Exelon would own approximately 
49 percent of the total generating capacity in PJM East.
    31. Using a measure of market concentration called the Herfindahl-
Hirschman Index (``HHI''), explained in Appendix A, Exelon's merger 
with PSEG would yield a post-merger HHI in PJM East of more than 2,700, 
representing an increase of more than 1,100.
    32. Exelon owns approximately 19 percent of the generating capacity 
in PJM Central/East. PSEG owns approximately 21 percent of the 
generating capacity in PJM Central/East. After the merger, Exelon would 
own approximately 40 percent of the total generating capacity in PJM 
Central/East.
    33. Exelon's merger with PSEG would yield a post-merger HHI in PJM 
Central/East of approximately 2,100, representing an increase of 
approximately 800.
B. Effect of Transaction
    34. In addition to owning a significant share of overall generating 
capacity in PJM East and PJM Central/East, the merged firm will own 
generating units with a wide range of operating costs, including low-
cost baseload units that provide the incentive to exercise market 
power, mid-merit units that provide the ability and incentive to 
exercise market power, and certain peaking units that provide 
additional ability to exercise market power in times of high demand. 
The combination of Exelon's and PSEG's generating units would 
significantly enhance Exelon's ability and incentive to reduce output 
and raise prices in PJM East and PJM Central/East.
    35. The merger would enhance Exelon's ability to reduce output and 
raise prices in PJM East and PJM Central/East by increasing its share 
of mid-merit and peaking capacity in those markets. With a greater 
share of mid-merit and peaking capacity, Exelon would more often be 
able to reduce output and raise clearing prices at relatively low cost 
to it by withholding capacity. Exelon could withhold capacity in 
several ways. For example, it could submit high offers in the PJM 
auctions for some of the capacity from its mid-merit units such that 
they are not all called on to produce electricity. By reducing its 
output, Exelon could force PJM to turn to more expensive units to meet 
demand, resulting in higher clearing prices in PJM East and PJM 
Central/East.
    36. The merger would enhance Exelon's incentive to reduce output 
and raise price in PJM East and PJM Central/East by increasing the 
amount of baseload and mid-merit capacity it owns in these markets. 
With a greater amount of baseload and mid-merit capacity, Exelon would 
more often find it profitable to reduce output and raise market-
clearing prices by withholding capacity. For example, as clearing 
prices increase due to its withholding certain of its mid-merit 
capacity, Exelon would earn those higher prices on its expanded post-
merger baseload capacity, which almost always runs, making it more 
likely that the benefit of increased revenues on its baseload capacity 
would outweigh the cost of withholding mid-merit capacity.
    37. Increasing Exelon's incentive and ability to profitably 
withhold output makes it likely that Exelon will exercise market power 
after its merger with PSEG, resulting in significant harm to 
competition and increased prices. Thus, the effect of the merger may be 
substantially to lessen competition in violation of Section 7 of the 
Clayton Act.

V. Entry

    38. Entry into the wholesale electricity market through the 
addition of new generating capacity in PJM East or PJM Central/East or 
the addition of new transmission capacity that would relieve the 
constraints that limit the flow of electricity into PJM East or PJM 
Central/East would take many years, especially considering the 
necessary environmental, safety, and zoning approvals.
    39. Entry into the PJM East or PJM Central/East wholesale 
electricity market would not be timely, likely, and sufficient in its 
magnitude, character, and scope to deter or counteract an 
anticompetitive price increase.

VI. Violation Alleged

    40. The effect of Exelon's proposed merger with PSEG, if it were 
consummated, may be substantially to lessen competition for wholesale 
electricity in PJM East and PJM Central/East in violation of Section 7 
of the Clayton Act, 15 U.S.C. 18. Unless restrained, the transaction 
would likely have the following effects, among others:
    a. competition in the market for wholesale electricity in PJM East 
would be substantially lessened;
    b. prices for wholesale electricity in PJM East would increase;

[[Page 49480]]

    c. competition in the market for wholesale electricity in PJM 
Central/East would be substantially lessened; and
    d. prices for wholesale electricity in PJM Central/East would 
increase.

VII. Request for Relief

    The United States requests:
    41. that Exelon's proposed merger with PSEG be adjudged a violation 
of Section 7 of the Clayton Act, 15 U.S.C. 18;
    42. that Defendants be permanently enjoined and restrained from 
carrying out the Agreement and Plan of Merger dated December 20, 2004, 
or from entering into or carrying out any agreement, understanding, or 
plan by which Exelon would merge with or acquire PSEG, its capital 
stock or any of its assets;
    43. that the United States be awarded the costs of this action; and
    44. that the United States have such other relief as the Court may 
deem just and proper.

    Dated: June 22, 2006.

    Respectfully submitted.

    For Plaintiff United States:

Thomas O. Barnett,
Assistant Attorney General.

J. Bruce McDonald,
Deputy Assistant Attorney General.

Dorothy B. Fountain,
Deputy Director of Operations.

Donna N. Kooperstein,
Chief, Transportation, Energy & Agriculture Section.

William H. Stallings,
Assistant Chief, Transportation, Energy & Agriculture Section.

Mark J. Niefer (DC Bar 470370),
Jade Alice Eaton (DC Bar 939629),
Tracy Lynn Fisher (MN Bar 315837),
Jennifer L. Cihon (OH Bar 0068404),
J. Richard Doidge (MA Bar 600158),
Angela L. Hughes (DC Bar 303420),
J. Chandra Mazumdar (WI Bar 1030967),
James A. Ryan,
John M. Snyder (DC Bar 456921),
Stephanie Toussaint (TX Bar 24045253),
Janet Urban,
David S. Zlotow (CA Bar 235340),
Trial Attorneys, U.S. Department of Justice, Antitrust Division, 
Transportation, Energy & Agriculture Section, 325 7th Street, NW., 
Suite 500, Washington, DC 20004. Telephone: (202) 307-6318. 
Facsimile: (202) 307-2784.

Appendix A--Definition of HHI

    The term ``HHI'' means the Herfindahl-Hirschman Index, a 
commonly accepted measure of market concentration. The HHI is 
calculated by squaring the market share of each firm competing in 
the market and then summing the resulting numbers. For example, for 
a market consisting of four firms with shares of 30, 30, 20, and 20 
percent, the Hill is 2,600 (30\2\ + 30\2\ + 20\2\ + 20\2\ = 2,600). 
The HHI takes into account the relative size and distribution of the 
firms in a market. It approaches zero when a market is occupied by a 
large number of firms of relatively equal size and reaches its 
maximum of 10,000 when a market is controlled by a single firm. The 
HID increases both as the number of firms in the market decreases 
and as the disparity in size between those firms increases.
    Markets in which the HHI is between 1,000 and 1,800 are 
considered to be moderately concentrated, and markets in which the 
HHI is in excess of 1,800 points are considered to be highly 
concentrated. See Horizontal Merger Guidelines ] 1.51 (revised Apr. 
8, 1997). Transactions that increase the HHI by more than 100 points 
in highly concentrated markets presumptively raise significant 
antitrust concerns under the Department of Justice and Federal Trade 
Commission. See id.

Certificate of Service

    I hereby certify that on June 22, 2006, I caused a copy of the 
foregoing Complaint, proposed Final Judgment, Hold Separate Stipulation 
and Order, and Plaintiff United States' Explanation of Procedures for 
Entry of the Final Judgment to be served on counsel for defendants in 
this matter in the manner set forth below:
    By electronic mail and hand delivery:

Counsel for Defendant Exelon Corporation, John M. Nannes (DC Bar 
195966), John H. Lyons (DC Bar 453191), Skadden, 
Arps, Slate, Meagher & Flom LLP, 1440 New York Avenue, NW., Washington, 
DC 20005. Telephone: (202) 371-7500. Facsimile: (202) 661-9191.
Counsel for Defendant Public Service Enterprise Group Incorporated, 
Douglas G. Green (DC Bar 183343), Steptoe & Johnson LLP, 1330 
Connecticut Avenue, NW., Washington, DC 20036. Telephone: (202) 429-
3000. Facsimile: (202) 429-3902.

Mark J. Niefer (DC Bar 470370),
Department of Justice, Antitrust Division, 325 Seventh Street, NW., 
Suite 500, Washington, DC 20530. Telephone: (202) 307-6318. 
Facsimile: (202) 307-2784.

United States District Court for the District of Columbia

United States of America, Plaintiff; v. Exelon Corporation and Public 
Service Enterprise Group Incorporated, Defendants

    Case No.: 1:06CV01138
    Judge: John D. Bates
    Deck Type: Antitrust
    Filed: 06/22/06

Proposed Final Judgment

    And Whereas, Plaintiff, United States of America, filed its 
Complaint on June 22, 2006, relating to the proposed merger of 
Defendants Exelon Corporation (``Exelon'') and Public Service 
Enterprise Group Incorporated (``PSEG'');
    And Whereas, Defendants, by their respective attorneys, have 
consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law, and without this Final 
Judgment constituting any evidence against or admission by any party 
regarding any issue of fact or law;
    And Whereas, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    And Whereas, the essence of this Final Judgment is the prompt 
divestiture of certain assets by Defendants to assure that competition 
is not substantially lessened;
    And Whereas, the United States requires Defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    And Whereas, Defendants have represented to the United States that 
the divestitures required below can and will be made, subject to 
receipt of necessary regulatory approvals, and that Defendants will 
later raise no claim of mistake, hardship, or difficulty of compliance 
as grounds for asking the Court to modify any of the provisions 
contained below;
    Now Therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is Ordered, Adjudged, and Decreed:

 I. Jurisdiction

    The Court has jurisdiction over the subject matter of and each of 
the parties to this action. The Complaint states a claim upon which 
relief may be granted against Defendants under Section 7 of the Clayton 
Act, as amended, 15 U.S.C.

II. Definitions

    As used in this Final Judgment:
    A. ``Acquire'' means obtain any interest in any electricity 
generating facility, including real property, deeded development rights 
to real property, capital equipment, buildings, or fixtures.
    B. ``Acquirer'' or ``Acquirers'' means the entity or entities to 
whom Defendants divest any of the Divestiture Assets or with whom 
Defendants have entered into definitive contracts to sell any of the 
Divestiture Assets.
    C. ``Control'' means have the ability, directly or indirectly, to 
set the level of, dispatch, or offer the output of one or more units of 
an electricity generating

[[Page 49481]]

facility or to operate one or more units of an electricity generating 
facility.
    D. ``Designated Utility Zones'' means the service territories in 
which the following companies on June 1, 2006, owned the wires through 
which electricity is distributed:
    1. Atlantic City Electric Company,
    2. Baltimore Gas and Electric Company,
    3. Delmarva Power and Light Company,
    4. Jersey Central Power and Light Company,
    5. Metropolitan Edison Company,
    6. Rockland Electric Company,
    7. PECO Energy Company,
    8. Potomac Electric Power Company,
    9. PPL Electric Utilities Corporation, and
    10. Public Service Electric and Gas Company.
    E. ``Divestiture Assets'' means the following facilities: (1) 
Cromby Generating Station, 100 Cromby Rd. at Phoenixville, PA, 19460; 
(2) Eddystone Generating Station, Number 1 Industrial Hwy. at 
Eddystone, PA, 19022; (3) Hudson Generating Station, Duffield & Van 
Keuren Aves. at Jersey City, NJ, 07306; (4) Linden Generating Station, 
4001 South Wood Ave. at Linden, NJ, 07036; (5) Mercer Generating 
Station, 2512 Lamberton Rd. at Hamilton, NJ, 08611; and (6) Sewaren 
Generating Station, 751 Cliff Rd. at Sewaren, NJ, 07077; and
    a. For each of those facilities, all of Defendants' rights, titles, 
and interests in any tangible and intangible assets relating to the 
generation, dispatch, and offering of electricity at the facility; 
including the land; buildings; fixtures; equipment; fixed assets; 
supplies; personal property; non-consumable inventory on site as of 
June 1, 2006; furniture; licenses, permits, and authorizations issued 
by any governmental organization relating to the facility (including 
environmental permits and all permits from federal or state agencies 
and all work in progress on permits or studies undertaken in order to 
obtain permits); plans for design or redesign of the facility or any 
assets at the facility; agreements, leases, commitments, and 
understandings pertaining to the facility and its operation; records 
relating to the facility or its operation, wherever kept and in 
whatever form (excluding records of past offers submitted to PJM); all 
equipment associated with connecting the facility to PJM (including 
automatic generation control equipment); all remote start capability or 
equipment located on site; and all other interests, assets, or 
improvements at the facility customarily used in the generation, 
dispatch, or offer of electricity from the facility; provided, however, 
that ``Divestiture Assets'' shall not include (i) electric and gas 
distribution or transmission assets located in, or appurtenant to, the 
boundaries of the facility, or (ii) any communications links between 
the facility and Defendants, which will be disconnected.
    b. At the option of the Acquirer of the Linden Generating Station, 
the natural gas pipeline facilities connecting any assets at the Linden 
Generating Station (including the assets listed in Section ILE.a. for 
the Linden Generating Station), to an interconnection with the Texas 
Eastern Gas Transmission LP, and all of Defendants' rights, titles, and 
interests in any tangible and intangible assets relating to the 
delivery of natural gas from the Texas Eastern Gas Transmission LP 
interconnection with the Linden Generating Station, including the land; 
buildings; fixtures; equipment; fixed assets; supplies; personal 
property; non-consumable inventory on site as of June I, 2006; 
furniture; licenses, permits, and authorizations issued by any 
governmental organization relating to the facility (including 
environmental permits and all permits from federal or state agencies 
and all work in progress on permits or studies undertaken in order to 
obtain permits); plans for design or redesign of the facility or any 
assets at the facility; agreements, leases, commitments, and 
understandings pertaining to the facility and its operation; records 
relating to the facility or its operation, wherever kept and in 
whatever form, and all other interests, assets, or improvements 
customarily used in the delivery of natural gas from the 
interconnection of the Texas Eastern Gas Transmission LP to the Linden 
Generating Station.
    To the extent that any licenses, permits, or authorizations 
described in Section IIE.a. or Section II.E.b. are nontransferable, 
Defendants will use their best efforts to obtain the necessary consent 
for assignment to the Acquirer or Acquirers of the license, permit, or 
authorization.
    F. ``Exelon'' means Exelon Corporation, a Pennsylvania corporation 
headquartered in Chicago, Illinois, its successors and assigns, and its 
subsidiaries, divisions, groups, affiliates, partnerships, joint 
ventures (not including Exelon's participation in the ownership, 
operation, dispatch, or offering of output of the Keystone Generating 
Station or the Conemaugh Generating Station), and their directors, 
officers, managers, agents, and employees.
    G. ``Exelon/PSEG Transaction'' means the merger of Exelon and PSEG 
that is the subject of HSR Transaction Identification No. 2005-696, 
which was filed pursuant to the Hart-Scott-Rodino Antitrust 
Improvements Act of 1976, as amended, 15 U.S.C.A. 18a (West 1997) 
(``HSR Act''), including any changes in the terms of that merger that 
do not necessitate a new Hart-Scott-Rodino filing.
    H. ``Good Utility Practice'' means any of the practices, methods, 
and acts engaged in or approved by a significant portion of the 
electric utility industry during the relevant time period, or any of 
the practices, methods, and acts which, in the exercise of reasonable 
judgment in light of the facts known at the time the decision is made, 
could have been expected to accomplish the desired result at a 
reasonable cost consistent with good business practices, reliability, 
safety, and expedition. ``Good Utility Practice'' is not intended to be 
limited to the optimum practice, method, or act to the exclusion of all 
others, but rather is intended to include acceptable practices, 
methods, or acts generally accepted in the region.
    I. ``Including'' means including but not limited to.
    J. ``Person'' means any natural person, corporation, association, 
firm, partnership, or other business or legal entity.
    K. ``PJM'' means PJM Interconnection, LLC.
    L. ``PSEG'' means Public Service Enterprise Group Incorporated, a 
New Jersey corporation headquartered in Newark, New Jersey, its 
successors and assigns, and its subsidiaries, divisions, groups, 
affiliates, partnerships, joint ventures (not including PSEG's 
participation in the ownership, operation, dispatch, or offering of 
output of the Keystone Generating Station, the Conemaugh Generating 
Station, or the Yards Creek Generating Station), and their directors, 
officers, managers, agents, and employees.

III. Applicability

    A. This Final Judgment applies to Defendants Exelon and PSEG, as 
defined above, and all other persons in active concert or participation 
with any of them who receive actual notice of this Final Judgment by 
personal service or otherwise.
    B. Defendants shall require, as a condition of the sale or other 
disposition of all or substantially all of their electricity generating 
facilities in the Designated Utility Zones or of lesser business units 
that include the Divestiture Assets, that the purchaser agrees to be 
bound by the provisions of

[[Page 49482]]

this Final Judgment, provided, however, that Defendants need not obtain 
such an agreement from the Acquirers of the Divestiture Assets.

IV. Divestitures

    A. Defendants are hereby ordered and directed, in accordance with 
the terms of this Final Judgment, to sell the Divestiture Assets to 
Acquirers acceptable to the United States in its sole discretion. 
Defendants shall enter into definitive contracts for sale of the 
Divestiture Assets within 150 days after consummation of the Exelon/
PSEG Transaction. The United States, in its sole discretion, may extend 
the time period set forth in Section IV.A. for entering into definitive 
contracts for sale for an additional period not to exceed thirty (30) 
calendar days and shall notify the Court in such circumstances. 
Defendants shall use their best efforts as expeditiously and timely as 
possible (1) to enter into these contracts, and (2) after obtaining the 
United States' approval of the Acquirers, to seek the necessary 
approvals of the sale of Divestiture Assets from regulatory agencies 
with jurisdiction over the Exelon/PSEG Transaction. Defendants shall 
consummate the contracts for sale no later than twenty-one (21) 
calendar days after receiving, for each Divestiture Asset, the last 
necessary regulatory approval required for that Divestiture Asset.
    B. In accomplishing the requirements imposed by Section IV.A., 
Defendants promptly shall make known, by usual and customary means, the 
availability for sale of the Divestiture Assets. Defendants shall 
inform any person making an inquiry regarding a possible purchase of 
the Divestiture Assets that the sales are being made pursuant to this 
Final Judgment and provide such person with a copy of this Final 
Judgment. Defendants shall also offer to furnish to prospective 
Acquirers who have been invited to submit binding bids, subject to 
reasonable protection for confidential commercial information, all 
information and documents relating to the Divestiture Assets 
customarily provided in a due diligence process, except such 
information subject to attorney-client privilege or the attorney work-
product doctrine. Defendants shall make available such information to 
the United States at the same time that such information is made 
available to any other person.
    C. Subject to reasonable protection for confidential commercial 
information, Defendants shall permit prospective Acquirers who have 
been invited to submit binding bids for the Divestiture Assets to have 
reasonable access to their personnel and to make such inspection of the 
Divestiture Assets and any and all of their financial, operational, or 
other documents and information customarily provided as part of a due 
diligence process, as well as access to any and all environmental and 
other permit documents and information.
    D. Defendants shall provide to each Acquirer of any of the 
Divestiture Assets, and to the United States, the name and most recent 
contact information (if known) for each individual who is currently, or 
who, to the best of Defendants' knowledge, has, at any time since 
January 1, 2006, been stationed at a specific Divestiture Asset and 
involved in the operation, dispatch, or offering of the output, of that 
Divestiture Asset to be purchased by the Acquirer. Defendants shall not 
impede or interfere with any negotiations by the Acquirer or Acquirers 
to employ such persons.
    E. Defendants also agree to preserve the Divestiture Assets in a 
condition and state of repair at least equal to their condition and 
state of repair as of the date the Complaint was filed, ordinary wear 
and tear excepted, and consistent with Good Utility Practice.
    F. Defendants shall warrant to the Acquirers of the Divestiture 
Assets that each asset (other than assets retired in place as of June 
1, 2006) will be operational, consistent with Good Utility Practice, on 
the date of sale, subject to legal or regulatory restrictions on any of 
the Divestiture Assets in existence on the date of sale.
    G. Defendants shall warrant to the Acquirers of the Divestiture 
Assets that there are no undisclosed material defects in the 
environmental, zoning, or other permits pertaining to the operation of 
each asset, and that following the sale of the Divestiture Assets, 
Defendants will not undertake, directly or indirectly, any challenges 
to any permits or certifications relating to the operation of the 
Divestiture Assets, or otherwise take any action to impede the 
divestiture or operation of the Divestiture Assets.
    H. The divestitures, whether accomplished by Defendants pursuant to 
Section IV, or by the trustee appointed pursuant to Section V of this 
Final Judgment, shall be accomplished in such a way as to satisfy the 
United States, in its sole discretion, that the Divestiture Assets can 
and will be used by the Acquirers as part of viable, ongoing businesses 
engaged in the provision of electric generation services. The 
divestitures, whether pursuant to Sections IV or V of this Final 
Judgment, (1) shall be made to Acquirers that, in the United States' 
sole judgment, have the intent and capability (including the necessary 
managerial, operational, technical, and financial capability) of 
competing effectively in the business of the provision of electric 
generation services; and (2) shall be accomplished so as to satisfy the 
United States, in its sole discretion, that none of the terms of any 
agreement between the Acquirers and Defendants give Defendants the 
ability unreasonably to raise the Acquirers' costs, to lower the 
Acquirers' efficiency, or otherwise to interfere in the ability of the 
Acquirers to compete effectively.

V. Appointment of Trustee

    A. If Defendants have not entered into definitive contracts for 
sale of the Divestiture Assets within the time specified in Section 
IV.A. of this Final Judgment, Defendants shall notify the United States 
of that fact in writing. Upon application of the United States, the 
Court shall appoint a trustee selected by the United States and 
approved by the Court to effect the divestiture of the Divestiture 
Assets, including the application for necessary regulatory approvals. 
Until such time as a trustee is appointed, Defendants shall continue 
their efforts to effect the sale of the Divestiture Assets as specified 
in Section IV.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Divestiture Assets. The 
trustee shall have the power and authority to accomplish the 
divestitures at the earliest possible time to Acquirers acceptable to 
the United States, in its sole discretion, at such price and on such 
terms as are then obtainable upon reasonable effort by the trustee, 
subject to the provisions of Sections IV, V, and VI of this Final 
Judgment, and shall have such other powers as the Court deems 
appropriate. Subject to Section V.D. of this Final Judgment, the 
trustee shall have the power and authority to hire at the cost and 
expense of Defendants any investment bankers, attorneys, or other 
agents, who shall be solely accountable to the trustee, reasonably 
necessary in the judgment of the trustee to assist in the divestitures.
    C. Defendants shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objections by 
Defendants must be conveyed in writing to the United States and the 
trustee within ten (10) calendar days after the trustee has provided 
the notice required under Section VI of this Final Judgment.
    D. The trustee shall serve at the cost and expense of Defendants, 
on such terms and conditions as the United

[[Page 49483]]

States approves, and shall account for all monies derived from the sale 
of the assets sold by the trustee and all costs and expenses so 
incurred. After approval by the Court of the trustee's accounting, 
including fees for its services and those of any professionals and 
agents retained by the trustee, all remaining money shall be paid to 
Defendants, and the trust shall then be terminated. The compensation of 
the trustee and of any professionals and agents retained by the trustee 
shall be reasonable in light of the value of the Divestiture Assets and 
based on a fee arrangement providing the trustee with an incentive 
based on the price and terms of the divestitures and the speed with 
which they are accomplished, but timeliness is paramount.
    E. Defendants shall use their best efforts to assist the trustee in 
accomplishing the required divestiture, including their best efforts to 
effect all necessary regulatory approvals. The trustee and any 
consultants, accountants, attorneys, and other persons retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and assets at the facilities to be divested, and Defendants 
shall develop financial or other information relevant to the assets to 
be divested customarily provided in a due diligence process as the 
trustee may reasonably request, subject to reasonable protection for 
confidential commercial information. Defendants shall permit 
prospective Acquirers who have been invited to submit binding bids for 
any of the Divestiture Assets to have reasonable access to their 
personnel and to make such inspection of the Divestiture Assets and any 
and all financial, operational, or other documents and other 
information as may be relevant to the divestitures required by this 
Final Judgment, subject to reasonable protection for confidential 
commercial information. Defendants shall take no action to interfere 
with or to impede the trustee's accomplishment of the divestitures.
    F. After its appointment, the trustee shall file monthly reports 
with the United States and the Court setting forth the trustee's 
efforts to accomplish the divestitures ordered under this Final 
Judgment; provided however, that to the extent such reports contain 
information that the trustee deems confidential, such reports shall not 
be filed in the public docket of the Court. Such reports shall include 
the name, address, and telephone number of each person who, during the 
preceding month, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the Divestiture 
Assets, and shall describe in detail each contact with any such person 
during that period. The trustee shall maintain full records of all 
efforts made to divest the Divestiture Assets.
    G. If the trustee has not accomplished such divestitures within 
sixty (60) calendar days after its appointment, the trustee shall file 
promptly with the Court a report setting forth (1) the trustee's 
efforts to accomplish the required divestitures; (2) the reasons, in 
the trustee's judgment, why the required divestitures have not been 
accomplished; and (3) the trustee's recommendations. To the extent such 
reports contain information that the trustee deems confidential, such 
reports shall not be filed in the public docket of the Court. The 
trustee shall at the same time furnish such report to the United 
States, who shall have the right to make additional recommendations 
consistent with the purpose of the trust. The Court shall enter 
thereafter such orders as it shall deem appropriate to carry out the 
purpose of this Final Judgment which may, if necessary, include 
extending this Final Judgment and the term of the trustee's appointment 
by a period requested by the United States.

VI. Notice of Proposed Divestitures

    A. Within two (2) business days after signing a definitive contract 
for sale of any of the Divestiture Assets, Defendants or the trustee, 
whichever is then responsible for effecting the divestiture required 
herein, shall notify the United Stales of any proposed divestiture 
required by Sections IV or V of this Final Judgment, and submit to the 
United States a copy of the proposed contract for sale and any other 
agreements with the Acquirer relating to the Divestiture Assets. If the 
trustee is responsible, it shall similarly notify Defendants. The 
notice shall set forth the details of the proposed divestiture 
(including the name, address, and telephone number of the proposed 
Acquirer), and list the name, address, and telephone number of each 
person not previously identified who offered or expressed an interest 
in or desire to acquire the Divestiture Assets, together with full 
details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from Defendants, 
the proposed Acquirers, any other third party, or the trustee if 
applicable, additional information concerning the proposed divestiture, 
the proposed Acquirers, and any other potential Acquirers. Defendants 
and the trustee shall furnish any additional information requested 
within fifteen (15) calendar days of the receipt of the request, unless 
the parties shall otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice or 
within twenty (20) calendar days after the United States has been 
provided the additional information requested from Defendants, the 
proposed Acquirers, any third party, and the trustee, whichever is 
later, the United States shall provide written notice to Defendants and 
the trustee, if there is one, stating whether or not it objects to the 
proposed divestiture, provided, however, that the United States may 
extend the period for its review up to an additional thirty (30) 
calendar days. If the United States provides written notice that it 
does not object, the divestiture may be consummated, subject only to 
Defendants' limited right to object to the sale under Section V.C. of 
this Final Judgment. Absent written notice that the United States does 
not object to the proposed Acquirer, or upon objection by the United 
States, a divestiture proposed under Section IV or Section V shall not 
be consummated. Upon objection by Defendants under Section V.C., a 
divestiture proposed under Section V shall not be consummated unless 
approved by the Court.

VII. Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter and every thirty (30) calendar days thereafter until the 
Divestiture Assets have been sold, whether pursuant to Sections IV or V 
of this Final Judgment, Defendants shall deliver to the United States 
an affidavit as to the fact and manner of compliance with Sections IV 
or V of this Final Judgment. Each such affidavit shall include the 
name, address, and telephone number of each person who, during the 
preceding thirty days, made an offer to acquire, expressed an interest 
in acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the Divestiture 
Assets, and shall describe in detail each contact with any such person 
during that period. Each such affidavit shall also include a 
description of the efforts that Defendants have taken to solicit 
purchasers for the Divestiture Assets and to provide required 
information to prospective purchasers including the limitations, if 
any, on such information. Assuming the information set forth in the 
affidavit is true and complete, any objection by the United States to

[[Page 49484]]

information provided by Defendants, including limitation on 
information, shall be made within fourteen (14) calendar days of 
receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, Defendants shall deliver to the United States an 
affidavit that describes in detail all actions Defendants have taken 
and all steps Defendants have implemented on an ongoing basis to comply 
with Section IX of this Final Judgment. The affidavit also shall 
include a description of Defendants' efforts to maintain the 
Divestiture Assets in operable condition at no less than current 
capacity configurations with current levels of staffing and management 
and to otherwise comply with the Hold Separate Stipulation and Order. 
Defendants shall deliver to the United States an affidavit describing 
any changes to the efforts and actions outlined in Defendants' earlier 
affidavit(s) filed pursuant to this Section within fifteen (15) 
calendar days after the change is implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve and divest the Divestiture Assets until one year after such 
divestitures have been completed.

VIII. Financing

    Defendants shall not finance all or any part of any purchase made 
pursuant to Sections IV or V of this Final Judgment.

IX. Hold Separate

    Until the divestitures required by this Final Judgment have been 
accomplished, Defendants shall take all steps necessary to comply with 
the Hold Separate Stipulation and Order entered by the Court. 
Defendants shall take no action that would jeopardize, delay, or impede 
the divestiture order by the Court.

X. No Reacquisition

    Defendants may not acquire or control any of the Divestiture Assets 
during the term of this Final Judgment.

XI. Prior Approval

    A . Without the prior approval of the United States, Defendants 
shall not acquire any electricity generating facility, or enter into 
any contract to obtain control of, an electricity generating facility 
or of one or more units of an electricity generating facility in the 
Designated Utility Zones, which facility or units are in existence as 
of June I, 2006, or are listed in Attachment A. Such prior approval 
shall be within the sole discretion of the United States.
    This prior approval requirement shall not apply to:
    1. Upgrades, expansions, or uprates of existing units up to the 
amount of such upgrades, expansions, or uprates;
    2. Units that are rebuilt, repowered, or activated out of inactive 
status after June 1, 2006, as long as such rebuild, repowering, or 
activation, if done by Defendants, begins within one year of purchase 
of the facility that includes the unit; and
    3. Acquisitions of a facility of 25 megawatts or less of summer net 
capability, as defined by PJM, or contracts to control 25 megawatts or 
less of summer net capability, as defined by PJM, provided, however, 
that Defendants do not acquire, or enter into contracts to obtain 
control of, more than 100 megawatts of summer net capability from units 
at a single facility during a single calendar year. For the purpose of 
Section XI.A.3., the summer net capability of a unit that is an 
intermittent capacity resource, as defined by PJM, will be measured as 
of the date of acquisition of the unit, or of entry into the contract 
to control the unit, in accordance with the methodology used by PJM for 
calculating capacity values for intermittent capacity resources.
    B. Unless a transaction subject to Section XI.A. is otherwise 
subject to the reporting and waiting period requirements of the HSR 
Act:
    1. Defendants shall provide notification to the United States 
within five (5) calendar days of acceptance of any contract subject to 
Section XI.A. and shall submit copies of the contracts and any 
management or strategic plans discussing the proposed transaction, and 
the names of the principal representatives of the parties to the 
agreement who negotiated the agreement. Defendants shall send the 
required materials to Chief, Transportation, Energy, and Agriculture 
Section, Antitrust Division, United States Department of Justice, 325 
Seventh Street, NW., Suite 500, Washington, DC 20530. Should oversight 
of this Final Judgment be the responsibility of another section of the 
Antitrust Division, the required materials shall be sent to the chief 
of the section responsible for oversight of this Final Judgment;
    2. Within thirty (30) calendar days of the receipt of the required 
materials, if the transaction is not reportable under the HSR Act, the 
United States will determine whether it requires additional information 
from the parties to the contract. If the United States makes such a 
request for additional information, the parties will provide the 
information requested.
    C. Once the parties have provided all of the information requested 
under Section XIB. or under the HSR Act, the United States must notify 
Defendants within thirty (30) calendar days if the United States 
disapproves the proposed transaction.
    D. Section XI.A. shall be broadly construed and any ambiguity or 
uncertainty shall be resolved in favor of requiring prior approval.
    E. Nothing in this Section limits Defendants' responsibility to 
comply with the requirements of the HSR Act with respect to any 
acquisition.

XII. Compliance Inspection

    For purposes of determining or securing compliance with this Final 
Judgment, or of determining whether this Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time duly authorized representatives of the United States 
Department of Justice, including consultants and other persons retained 
by the United States, shall, upon written request of a duly authorized 
representative of the Assistant Attorney General in charge of the 
Antitrust Division, and on reasonable notice to Defendants, be 
permitted:
    1. Access during Defendants' office hours to inspect and copy, or 
at the United States' option, to require Defendants to provide copies 
of, all books, ledgers, accounts, records, and documents in the 
possession, custody, or control of Defendants, relating to any matters 
contained in this Final Judgment; and
    2. To interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Defendants.
    B. Upon the written request of a duly authorized representative of 
the Assistant Attorney General in charge of the Antitrust Division, 
Defendants shall submit written reports, or responses to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings

[[Page 49485]]

to which the United States is a party (including grand jury 
proceedings), or for the purpose of securing compliance with this Final 
Judgment, or as otherwise required by law.
    If at the time information or documents are furnished by Defendants 
to the United States, Defendants represent and identify in writing the 
material in any such information or documents to which a claim of 
protection may be asserted under Rule 26(c)(7) of the Federal Rules of 
Civil Procedure, and Defendants mark each pertinent page of such 
material, ``Subject to claim of protection under Rule 26(c)(7) of the 
Federal Rules of Civil Procedure,'' then the United States shall give 
Defendants ten (10) calendar days notice prior to divulging such 
material in any legal proceeding (other than a grand jury proceeding).

XIII. Retention of Jurisdiction

    The Court retains jurisdiction to enable any party to this Final 
Judgment to apply to the Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

XIV. Expiration of Final Judgment

    Unless the Court grants an extension, this Final Judgment shall 
expire ten (10) years from the date of its entry.

XV. Public Interest Determination

    Based on the record in this case, entry of this Final Judgment is 
in the public interest, and the parties have complied with the 
procedures of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16.

Dated:-----------------------------------------------------------------

----------------------------------------------------------------
United States District Judge


                                                  Attachment A
----------------------------------------------------------------------------------------------------------------
                                        Identification number PJM
                State                      Queue, www.pjm.com                        Substation
----------------------------------------------------------------------------------------------------------------
DE..................................  Q42.........................  Indian River.
NJ..................................  P23.........................  Bayonne 138 kV.
NJ..................................  Q08.........................  Red Oak 230 kV.
NJ..................................  Q11.........................  Red Oak 230 kV.
NJ..................................  Q26.........................  Churchtown 230 kV.
NJ..................................  Q41.........................  Mt. Hope Mine 34.5 kV.
PA..................................  CO2.........................  South Lebanon 230 kV.
PA..................................  G06.........................  Martins Creek 4.
PA..................................  M11.........................  Susquehanna 1.
PA..................................  M12.........................  Susquehanna 2.
PA..................................  P04.........................  Peach Bottom 500 kV.
PA..................................  Q20.........................  Holtwood.
PA..................................  Q28.........................  Eldred-Frackville 230kV.
----------------------------------------------------------------------------------------------------------------

United States District Court for the District of Columbia

    United States of America, Plaintiff; v. Exelon Corporation and 
Public Service Enterprise Group Incorporated, Defendants
    Case No. 1:06CV01138
    Judge: John D. Bates
    Deck Type: Antitrust
    Filed: August 10, 2006

Competitive Impact Statement

    The United States, pursuant to Section 2(b) of the Antitrust 
Procedures and Penalties Act (''APPA'' or ``Tunney Act''), 15 U.S.C. 
16(b)-(h), files this Competitive Impact Statement relating to the 
proposed Final Judgment submitted for entry in this civil antitrust 
proceeding.

I. Nature and Purpose of the Proceeding

    On December 20, 2004, Defendants entered into an Agreement and Plan 
of Merger under which Exelon Corporation (``Exelon'') would merge with 
Public Service Enterprise Group Incorporated (``PSEG''). On June 22, 
2006, the United States filed a civil antitrust Complaint seeking to 
enjoin the proposed merger. The Complaint alleges that the merger 
likely would lessen competition substantially for wholesale electricity 
in sections of the United States in violation of Section 7 of the 
Clayton Act, 15 U.S.C. 18. This loss of competition would result in 
increased wholesale electricity prices, raising retail electricity 
prices for millions of residential, commercial, and industrial 
customers in parts of the Mid-Atlantic states.
    At the same time the Complaint was filed, the United States filed a 
Hold Separate Stipulation and Order (``Stipulation'') and proposed 
Final Judgment that are designed to eliminate the anti competitive 
effects of the merger. Under the proposed Final Judgment, as explained 
more fully below, Defendants are required to divest six electric 
generating plants (collectively the ``Divestiture Assets''). The 
Stipulation and proposed Final Judgment require Defendants to take 
certain steps to ensure that these assets are preserved and maintained 
and that competition is maintained during the pendency of the ordered 
divestiture.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations of 
it. Defendants have also stipulated that they will comply with the 
terms of the Stipulation and the proposed Final Judgment from the date 
of the signing of the Stipulation, pending entry of the proposed Final 
Judgment by the Court and the required divestiture. Should the Court 
decline to enter the proposed Final Judgment, Defendants have also 
committed to abide by its requirements and those of the Stipulation 
until the expiration of the time for appeal.

II. Description of the Events Giving Rise to the Alleged Violation

A. The Defendants and the Proposed Transaction
    Defendant Exelon is a Pennsylvania corporation, with its 
headquarters in Chicago, Illinois; it owns Exelon Generation Company, 
LLC, which owns electric generating plants located primarily in the 
Mid-Atlantic and the Midwest with a total generating capacity of more 
than 25,000 megawatts (``MW''). Defendant PSEG is a New Jersey 
corporation, with its headquarters in

[[Page 49486]]

Newark, New Jersey; it owns PSEG Power LLC, which owns electric 
generating plants located primarily in New Jersey with a total 
generating capacity of mor