...Exelon Merger: The 2016 acquisition of Delmarva Power and Light Company (DPL) and its affiliates by Exelon Corp. (EXC) provides a stronger, better capitalized parent with far greater financial flexibility that supports current ratings. Fitch Ratings expects DPL to benefit from improved operating efficiency and lower costs as a result of the merger. The ratings assume EXC will provide equity to support capex and to maintain the authorized capital structure. Ring Fencing: DPL has several ring-fencing measures in place that protect bondholders from the activities of its parent and affiliates. These include maintaining a rolling 48% equity ratio, and maintenance of separate books and records and separate debt. In addition, a bankruptcy remote special purpose entity (SPE) holds 100% of the equity of direct parent Pepco Holdings LLC. The board of the SPE has four directors, one of whom is independent. Decoupling Reduces Business Risk: In Maryland, which accounts for about 35% of retail electric...
