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Utilities Companies Consolidating – Exelon (EXC) Bids for NRG Energy (NRG)

In this time of uncertainty, there is one thing definitely clear – people will continue to need and use utilities. That’s the wager that nuclear power giant Exelon is making as it put in a $6.2 billion bid for NRG Energy. If the deal goes through, Exelon would become the nation’s largest power company. Two years ago, NRG declined an offer from Mirant Corp for $8 Billion.

The combined Exelon and NRG would be big enough to power nearly 45 million homes with 47,000 megawatts. It would have a diverse power mix and a market capitalization of $40 billion. If NRG agrees to the deal, it would be the second big power generation merger announced in the past month. A unit of Warren Buffett’s Berkshire Hathaway Inc. is buying wholesale power generator Constellation Energy Group Inc. of Baltimore for the bargain price of $4.7 billion.

“This company combined would be the largest power company in the nation in terms of assets, market capitalization, enterprise value and generation capacity,” Exelon Chairman and Chief Executive John Rowe told analysts on a conference call. “And there is simply no doubt that scale is important in turbulent times and it’s important as the costs of growth continue to rise.”

NRG has ownership interests in 44 power generating facilities, primarily in the U.S., which generate 24,000 megawatts of power. Exelon has nearly $19 billion in annual revenue and 5.4 million electric customers in northern Illinois and Pennsylvania. It also has 480,000 natural gas customers in the Philadelphia area. Our Director of Marketing happens to be one of their Philly-based customers. Exelon operates 10 nuclear stations, with 17 reactors, representing approximately 20 percent of the U.S. nuclear industry’s power capacity, and about 3 percent of all U.S. power generation.

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