...Weak Credit Metrics: After two years of improvement, Atlantic City Electric Co.'s (ACE) credit metrics are generally supportive of the current ratings, but will be pressured through 2016 due to rate case avoidance while regulators review the pending merger between ACE's parent, PEPCO Holdings, Inc. (PHI) and Exelon Corp. (EXC). Fitch Ratings expects debt/EBITDAR to be 4.3x in 2016, improving to 3.6x in 2018. FFO leverage and FFO fixed charge coverage are expected to be about 4.2x and 3.8x, respectively, in 2016, improving to 3.9x and 4.1x in 2018. Exelon Merger: If approved, the pending merger provides a stronger, better capitalized parent with far greater financial flexibility. Moreover, Fitch anticipates improved operating efficiency and lower costs due to the merger. Nonetheless, rate case avoidance and rate credits will adversely affect cash flow in the near term. A merger settlement agreement was approved by the New Jersey Board of Public Utilities (BPU) in February 2015 that includes...
