Good morning. My name is Brandy and I will be your conference operator today. At this time, I would like to welcome everyone to the Exelon Acquisition of Pepco Holdings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session (Operator Instructions) Thank you. Mr. Ravi Ganti, Vice President of Investor Relations, sir you may begin your conference.

Thank you, operator. Good morning everyone, thank you for joining us. Earlier this morning we made two announcements. Exelon plans to acquire Pepco Holdings in an all cash transaction and our first quarter 2014 earnings results. Materials and presentations related to the earning and acquisition are available on the investor relations section of our website. Our discussion in today’s call contains forward looking statements and estimates that are subject to various risks and uncertainties. You should refer to the first two slides of today’s presentation as well as information in Exelon’s SEC filings for a discussion of factors that may cause the results to differ from management’s projections, forecasts and expectations. Leading the call today are Chris Crane, Exelon’s President and CEO; Joe Rigby, Chairman, President and CEO of Pepco Holdings and Jack Thayer, Executive Vice President and CFO, Exelon. We have scheduled 60 minutes for today’s call. After the prepared remarks, we will open the call for Q&A session. With that, I turn the call over to Chris, CEO, Exelon.

Thanks everybody for joining us this morning. Before we get to the topic that will focus on today’s call, our acquisition of Pepco Holdings, I want to spend a minute on our earnings for the quarter. We delivered on our financial expectations with earnings of $0.62 a share which was within the range of our – for our quarter. Our earnings for the quarter would have been $0.12 higher without the large outage in January – the outage at [indiscernible] nuclear facility and the impact of the severe ice storm in the PECO service territory. We are providing guidance of $0.40 to $0.50 per share for the second quarter operating earnings. We are on track to deliver on our financial goals for the full-year. We provided prepared remarks on the market portfolio strategy and advantage results along with our earnings release this morning, you can contact IR for any follow-up questions. We do have Ken Cornew and Joe Nigro in the room if there is specific that you want to touch on. Now move on to the topic that is the focus today. We’re extremely pleased to announce that we’ve reached an agreement to acquire Pepco Holdings. We’re doing is call from Washington DC and I'm very pleased to be here today with Pepco’s CEO Joe Rigby joining the call to share his views on the transaction, what it means or Pepco, the 2 million customers in the DC, Delaware, Maryland and New Jersey area. We think this deal is the right deal at the right time for Exelon. This is a strategic acquisition that results in a leading Mid-Atlantic electric and gas utility platform with the contiguous footprint that will serve almost 10 million customers in six states. This acquisition will add further sources of stable regulated cash to…

Thanks, Chris and I want to thank you and your great team for helping make this transaction happen. This is a great day for the Pepco Holdings family, our shareholders, employees, customers and our communities. We’re excited to join the Exelon team and to become part of a larger well-capitalized company that has better scale to invest in infrastructure, people and the local community. Our shareholders will receive an attractive premium of 24.7% for the purchase of their shares by Exelon. Chris Crane and Exelon are committed to building upon our significant improvements in system reliability, customer service and outage restoration. Exelon has experience in large urban cities like ours and is a value corporate citizen. We share a culture of continuous improvement, accountability, safety and commitment to our community. Our customers will directly benefit as a result of this transaction, including $100 million of customer benefits across Pepco Holdings service territories, the rate credit, low-income assistance and energy efficiency programs, a commitment to further improve system reliability and enhance storm restoration capability. This is a tremendous opportunity and Exelon is the right partner for taking Pepco Holdings to the next level. I’d now like to turn the call over to Jack Thayer, CFO of Exelon to discuss the financial of the transaction.

Thank you, Joe and good morning everyone. This is an exciting day for Exelon and our shareholders. The financial overview of the transaction begins on Slide 11. The acquisition of Pepco Holdings adds significant value for our shareholders. As Chris mentioned, it’s significantly earnings accretive in the first full-year after closing. The deal will increase earnings by $0.15 to $0.20 per share in 2017. The rapid growth of rate based, retained synergies and earnings of Pepco’s three utilities, combined with our financing plans for the transaction drive sustainable earnings accretion. As you know, Exelon has committed $15 billion in capital to ComEd, PECO and BGE to grow their rate bases over the next five years. The addition of the Pepco utilities to the Exelon family will add an incremental $8.3 million in regulated rate base. This in turn will increase our regulated earnings, add stable cash flows and add to our financial strength. Additionally the utility earnings from the pro forma company can fully support the Exelon dividend by 2015. The integration of the two companies will result in more than $250 million of net synergies over the first five years of which we can expect roughly one-third will be retained. Our past experience gives us confidence that we can deliver on these synergy targets. The Constellation integration resulted in significant savings and we believe we can achieve meaningful savings for customers and shareholders in this case as well. This deal brings substantial benefits to our shareholders and the contemplated financing approach preserves the upside to be gained from power market recovery. On Slide 13, you can see the earnings accretion, the rate base growth and continued strong credit metrics as well as a more balanced business mix on a pro forma basis with operating earnings, pro forma for the…

Thanks, Joe and Jack. We talked with all of you over the last few years and we’ve been relentless in our commitment to deliver value to our shareholders in all aspects of the business. We've taken actions to create flexibility to invest in growth while maintaining a strong investment grade balance sheet. You all know our fundamental view in the upside of power prices which we're starting to enjoy seeing come to fruition, that has not changed. We position ourselves to further benefit from the market recovery. We also believe in the need for strong infrastructure investment in our utility platforms. As Jack mentioned we are investing 15 billion in rate base over the next five years at ComEd, PECO and BGE. We now have a unique strategic opportunity to add Pepco Holdings to our company and continue to grow and diversify our regulated footprint. This truly is an exciting time for Exelon and we’re pleased to have had the time – to discuss this with you this morning and again I want to thank Joe Rigby personally and his team for allowing this transaction to go forward, with the culture of the companies are very similar and we look forward to learning from the Pepco organization and sharing some of the things we've learned over the past few years as we’ve improved the performance of our operation as they have also. With that, I will open it up for questions.

(Operator Instructions) And your first question is from Dan Eggers [Credit Suisse].

Hey, good morning, guys. Chris, you've been talking for a while about ways or opportunities to deploy capital and all the alternatives that were out there with the goal of visible earnings and consistency and repeatability. Can you just walk through how you came to a regulated utility acquisition like this versus maybe renewable investments, and some of the things you have talked about and maybe how the returns compared to this versus what else you would have seen in the market?

Sure, we’re in the market on all sides, the renewable opportunities that are coming to the market, the conventional generation opportunities, we continue to hunt for value in that area. And we've seen some of the conventional stuff go at higher premium that we’re not willing to commit to but we will stay in that market. As Jack said, we have considerable flexibility that’s been created on the balance sheet by this acquisition and it will not deter us from looking at opportunities when there is a willing partner on the other side to sell their assets. It is in a large part opportunistic, we were able to find a partner that saw the strategic sense in creating scale and so it’s more about timing and opportunity but we are still looking on a regular basis at anything that comes to the market or in conversations with folks that we think should come to the market. But we will continue to work on that, this will not deter or distract us from any of the power side, we will have an integration organization that will be led under Bill Von Hoene but it will lean heavily on the Exelon utilities to come up with the integration plan. In the meantime under Ken Cornew and Joe Nigro’s leadership we will continue with the Genco strategy independently as we operate these businesses independently and we think there will be future opportunities that will come our way and we will be able to integrate them into our platform equally as efficiently as we will do this transaction.

I guess maybe Jack, you can walk through how the balance sheet works that you were able to add that level of debt and still keep a lot of flexibility apparently for other investments and what kind of assurance you have gotten from the agency so far?

Sure, Dan, as you are aware, historically the rating agencies have looked at Exelon corporate and Exelon generation on that combined basis and our target FFO to debt metrics, if I was to pick one agency S&P as an example have largely viewed the corporate entity and the merchant part of our business as one and the same. With the acquisition of Pepco Holdings and the rebalancing of the earnings mix and re-rating of the risk perception related to Exelon corporate, what it affords is the opportunity to add significant incremental leverage at the holding company that absent this transaction we would not have otherwise been able to do. So as we think about adding $3.5 billion of corporate debt at the holding company in an historic interest rate environment where we can login long-term rates at very effective levels we see that marry up with the opportunity to invest in growing rate base at Pepco Holdings and the opportunity to marry that up with a strong operating overlap, we see this as a uniquely opportune time about – tap the debt markets but also add highly accretive investments to our overall mix.

Let me add one thing to that, Dan, just to go back to some of the things we talked about, when we started to communicate last fall, our investment in the utility business, the 15 billion part of the strategy here is to have the utilities be able to cover our commitment to the shareholders on the dividend and within the next couple of years. So we've right-sized the dividend appropriately for the business, the utilities will be able to service the debt and dividend as needed at the holding company. And we can have more flexibility on free cash flow off of the generation business to continue to grow that side of the business. So from a strategic approach, this advances where we were hearing and strengthens our view on the strategy and structure of the entity while being able to use that quantity based cyclical – somewhat more cyclical to capture the upside, where we see fit.

I guess just to go back to my first question and then I will stop it. When you look at the value return of this to shareholders relative to the other options that have been out in the market, can you just maybe give a context or how the comparability of accretion or net value return worked for this deal relative to the other places where you could have deployed capital that you have seen or that you see in the market today?

I will take a couple of the typical CCGTs that you were to have $752 million to $1 billion that have gone across the market, you can see accretion of a couple pennies at best on those type of assets. For something like this we’re using some equity and using more debt, you can see the accretion of $0.15 to $0.20, it is powerful. And so I think you could probably get fairly strong accretion if we were dealing with a fleet of assets to come in. On the renewable side, the investment thesis is not as much about EPS as it is about free cash flow, that helps enable us to do other things. So Jack, if you want to provide any clarification any more, go ahead.

Sure, Dan, I think as Chris mentioned, here we have a growing or an opportunity in invest in growing rate base and the opportunity for sustained investments and continued investment to further rate base opportunities versus, as Chris mentioned, once you get through the tax attributes of renewable investment, really does a very modest in some cases negative EPS contribution further out the curve and there it’s about velocity of return of capital and seeking out further opportunities to invest relative to, here we have a sustained opportunity to invest in infrastructure in a way that earns us a very attractive returns, that on a standalone basis that the incremental leverage at the holding company makes that much more beneficial when it comes to dropping EPS down the bottom line for our shareholders.

But just to be clear, this does not preclude us from other growth opportunities on the other side of the business, it's a good opportunity at the time that we’re able take advantage of and it further moves our strategic focus down the road that as we discussed previously.

Your next question is coming from Greg Gordon [ISI Group].

I've got one question on the merger and one question on the quarter. So on the transaction, obviously Mr. Rigby and his team despite doing a pretty good job running their business had a hard time getting the type of rate relief they have needed to move their earned returns on equity up towards their authorized returns. When you think about the base case forecast that you are using to give us the accretion numbers, what do you assume your ROE trends are? And how much different are they under the Exelon merger case than they are under the standalone Potomac case?

In terms of what we assumed in our operating model when calculating the synergy it’s very much into Pepco Holdings projections that they used and recently rolled out in their communications at their analyst day, that’s very consistent with the Ivys [ph] projection for the company on a going forward basis. So to the extent that we are able to through synergies to speed, the opportunity to earn allowed ROEs that we’re able to through – continued performance improvements and improved storm response and other elements to earn higher allowed ROEs from our jurisdictions in New Jersey, Delaware, Washington DC and Maryland that would all be upside to the transaction. Obviously that’s something that that's we will be targeting as we’re integrating the companies and integrating Pepco’s utilities into our operating model. But right now in our transaction economics we just assume that Pepco continues on the path that it was –

No, I think as we went through the due diligence process as Jack mentioned, that obviously we provided all the information and I think what I am hearing Jack said is that there was no kind of remarkable upside that was assumed and the opportunity I think to realize the synergies and to be able to work that into the forecast I think it’s going to have a positive impact on the actual earned ROEs.

Segueing to the quarter. Looking at Slide 9, which is the 2013 versus 2014 comparison of ExGen -- the negative deltas into $0.09 from lower realized energy prices, higher procurement costs, $0.05 from nuclear and fossil output. So can you explain to us how we should think about this because clearly the retail business probably was on the wrong side of power price volatility in the quarter in terms of having a lot of demand and having to manage variable load risk? And at the same time your lowest cost resources were not available, so you can you kind of breakdown what happened that was sort of uniquely in the retail book in that $0.09? I think it's probably simpler when we think about the $0.05 just in terms of outage days but can you explain to us exactly what happened?

Greg, there is a number of things that are moving around when you think about – I assume your question is Q1 ’13 versus Q1 ’14, when you think about it, the thing is we had – when you hedge our portfolio, we had substantially lower energy benefitting PJM in the Midwest, in the Mid-Atlantic quarter over quarter when you think about ’14 versus ’13. The big driver in the Midwest was the roll off of the Comed swap, in ’14, still in the first quarter in ’13. In the Mid-Atlantic, it was just driven by energy prices. [Indiscernible] that was a positive hiccup but we review that all from lower energy. In addition to that, as you see on the Slide, we had some decrease in nuclear output and fossil output in ’14 and – we had a roll-off with long term contract in the Midwest, that’s why you add in to that as well and then when you get into the other regions, there is lot of moving pieces associated with it, in New England with the restructuring of our fuel contractor Mystic, we had a lot less generation output in New England than we did in 2013 and then in Ercot [ph], just like everyone else we faced some outages in the first quarter and that was from some gas unavailability down there. So there is a number of moving pieces. On the retail side, it wasn’t in the period --

So when I think about the $0.09 there isn't some -- there is not a meaningful portion of that let's say where you were upside down in your retail book, it's other factors like the roll off in contract?

No, our retail book, we managed it as we have talked to you about previously. We manage all of risk inherent in our portfolio in our wholesale book of business. So when you think about it, what we are doing is reflecting all of that in our disclosure and you see that. I would tell you, we face the same load charges, PJM for example, that everyone else did in the first quarter. But we also had an offsetting benefit of having generation and having the generation to load strategy it benefits us some although we did incur net cost to serve loads but that includes our wholesale load as well.

Your next question comes from Steve Fleishman [Wolfe Trahan]

Could you maybe just be a lot more explicit on the financing plan for the different pieces and how much stock versus converts versus debt? And also the asset sales how you might most likely look at?

Sure, Steve, it’s Jack. So with respect to the financing side of the equation as we have discussed we will use a mix of convertibles as well as straight comment, we are still finalizing and we will finalize the mix of that as we go to market. And we will size that so that we’re tapping the substantial liquidity that exists in both those instruments and leverage the opportunity to tap different investor bases as we do so. Clearly the benefit of a mandatory convert is the equity credit we received while retaining opportunity for to share and the upside related to share performance during the duration of the convert. On the asset sale side as we mentioned we anticipate roughly $1 billion of proceeds from asset divestitures that we would use to fund this transaction, we would anticipate that those assets are in our non-core elements of our business. So when we think about maintaining the exposure to a power recovery where that exists most significantly is within our nuclear fleet, we would be looking to sell certain awful [ph] assets that have appreciated considerably in value and given the valuation methodologies in terms of how we are valued relative to IPPs or private equity firms, those assets can or likely to be more valuable in a private equity firm or IPP sense, you can use significantly more leverage than we can in our capital structure. And the loss of earnings associated with those assumed divestitures is incorporated into the $0.15 to $0.20 of earnings accretion calculation. So clearly we see that as an opportunity to sell assets that on a relative basis contribute less earnings to our overall EPS and invest those proceeds in a growing utility investment.

And just a clarification on the asset sales. Are those assets that likely had debt on them as well so that we should use the $1 billion as a mix of debt and equity, or is the $1 billion replacing what otherwise would be equity issuance for the deal?

The debt that we have is at Exelon generation, so there's not plant level specific debt, we would anticipate that, $1 billion of proceeds is in lieu of equity used in the transaction.

Last question on this, will you probably wait until you have close to all approvals to execute on these funding plans?

The bridge is in place for the duration of the approval process. We have the opportunity to issue at any times or during that bridge being in place and I think we will – as we get further into integration process, into the regulatory approval process, we will stare down and look at when is the appropriate time to look to issue equity. Certainly we have some big valuation of that is coming, the upcoming capacity auction, a summer with a tightening supply demand mix and an upcoming winter as well, so we have a lot of flexibility around when we might think about tapping the equity market and the convert market.

Just one more thing to add on to that, Steve, the asset rationalization was going forward with – on the annual basis we look at core assets, their valuation, market valuation, look at non-core assets and we had determined that we were going to adjust the portfolio –

Our next question comes from Julien Smith [UBS].

So, quick question if you will, going back to Dan's first starting point here. What is the ideal composition of regulated versus merchant? If you think about the company down the line are you going to follow your peers on the diversified side and become more regulated, or ultimately do you think about yourselves as having a meaningful commodity kicker to yourself?

We still are very supportive of the commodity side of the business. This is not a mandatory diversification that we had to do because of any balance sheet tightening, it is about creating value and the opportunity that we have with it. There's not a fixed 65, 55% regulated to merchant. What we learned in the last downturn of the commodity cycle that we are coming out of is that we need to make sure that our commitments are sized to be able to be sustainable in that the investment thesis and the strategy for both sides of the business can stand on their own. So what we want to have it is regulated revenue that continues to grow at a reasonable CAGR as we make our investments in that side that support any debt or dividend requirements that we have at holding company which we think is a rational strategy on how we should size and pursue and invest going forward. We do not want to over lever that the holding company that to a point the utility businesses that we’re investing in, or acquiring would not able to service debt requirement we don't want to size the dividend to a point that it can’t be reasonably serviced to provide value back to the shareholders. And we also want to have the flexibility which this transaction maintains for us to be able to invest in the merchant side, the competitive side of the business in electric and gas assets as we go forward.

Now, second question here, going back to the balance sheet. When it comes to credit metrics I would be very curious how much incremental leverage beyond the transaction does this create by shifting your regulated profile?

Julien, as you might anticipate, we’ve been in dialogue with the agencies and in the re-risk rating of the company pro forma for this transaction and the ability for both utility as well as merchants cash flow service the debt at the holding company we left ourselves room to make further incremental investments whether they be regulated or merchants in nature. So we clearly could have learned more heavily on the fixed income markets and made this transaction even more accretive. We felt the appropriate and balanced approach was to leave ourselves powered because as we’ve experienced from time to time particularly in moments of significant volatility whether it be in the retail business or whether it be in other parts of the merchant chain, it’s generally good to have powered should opportunities present themselves.

And how does that jive with dividend expectations? Obviously it's a more regulated profile, what is the thought process?

I think the thought process is post this transaction the utility can be a 100% funded – dividend to be a 100% funded from the utilities, the speeds – we were already on that path, this clearly speeds that and it gives our board of directors significant flexibility around how they -- with Chris’ guidance may choose to return capital to shareholders.

But you are not committing to a payout off of the utilities or anything like that?

We are not.

Your next question comes from Paul Ridzon [KeyBanc]. Paul Ridzon – KeyBanc: I'm just wondering, I know Pepco and BGE tried to get married once and Exelon has got history in New Jersey. Have you had any dialogue with regulators? –

We’ve had some initial outreach with regulators to explain what the value proposition is for their stakeholders, so we learned a lot from some things that worked and some things that haven't worked in the past. We put that into our regulatory strategy in Maryland when we were able to secure the acquisition of Constellation and BGE 10 and half months and our regulatory team is ready to approach this one in the same way with, making sure we get our filings in, there's no delay on that, making sure we engage and open the dialogue up with regulators. The regulators have a tough job to do, they have to prove that this is in the best interest of the consumer and but we believe that we have prepared a package that shows that by our commitments that we’re making. And we will engage - I wouldn’t expect to hear a reaction from any regulator publicly. They have to see what we put in writing what we offer they have to go through the process. This is a tough job for them to do but we at the end of the day see a success path or we wouldn’t be doing it. Paul Ridzon – KeyBanc: Again, just a follow-up question shifting gears, can you give us an update on Illinois and any movement on legislation that would ascribe a little more value to the value of nuclear?

Yes, that story has gotten away from this, we continue to say we are not looking for legislation for a bailout of the competitive nuclear fleet in Illinois. We believe that is a market issue that our units are not being compensated for the firm fixed fuel that they provide in the capacity market and we're not being compensated for the clean carbon free generation that they are providing. So our focus on creating value for the nuclear fleet is more around market design and at the federal level. We pushed hard that, above and for a few years talking about the unintended consequences of the PTC and the concentration of excess wind generation and the pricing issues that it has in the Midwest primarily that is still what we’re pushing on. We have – we said a couple years ago it was going to be a problem, it has become a problem. There's a few ways that that we can get compensated for that, that as you all know we are working on. The market issues in the capacity market PJM, those changes coming to fruition, some of the short-term changes and the work that we need to do in the stakeholder community, to recognize the vulnerability that the grid has, we will be incurring with dependency on gas and we saw that during the polar vortex. So when we load at core, we load it for 18 to 24 months, it can run through any weather situation. It’s not dependent on fuel being delivered on an hourly basis or wind blowing. So that’s the stuff we’re working on. We believe in the competitive market, we don't believe in the subsidized market. We need to be compensated for the value proposition on the plan and that should not be a bailout from the state.

Your next question comes from Jonathan Arnold [Deutsche Bank]

Just curious as you sort of think about the company post this transaction and on the business mix issues you’ve addressed, does this give you the capacity to be a little less hedged than sort of sort of bet more heavily on your favorable view of the markets and maybe this be an opportunity just to update us on how you are seeing liquidity in those forward curves.

From a macro level in servicing our commitments on the value of the dividend and making sure that we maintain the strong balance sheet this does contribute to that focus. All that Joe talked about the liquidity and where we are out with the hedging strategy.

Hey Jon, good morning. There is a couple of things we have said. We have seen liquidity begin to pick up in the marketplace, first to first of the year, that's too pretty much all the regions and in particular importance for us. We have seen liquidity in the NI-Hub and we believe a lot of that is in the back of what happened in January and February with some forward broadcast in some of the price appreciation and more importantly the volatility depreciation we saw and some of the retailers coming back to the market. I think from a hedging perspective, we really have already see it at the approach being less hedged. If you look at our disclosure, normally when you look at 2015 by the end of the first quarter of ’14, we should have been about 75% hedged. Our total portfolio is approximately 65% and we have been cleared that about 10% of that is in natural gas. So, we really have about 20% incremental exposed to the power market and we have had about half of that so about 10% incremental as to where we should be in ’16 as suppose to the power market. So we’ve really looked at and already beginning to be more aggressive and we work very closely taking into account with our balance sheet commitments are and making sure that we are aligned all of that.

So there is an angle that is giving you -- having a more regulated base but it gives you the ability to take a little more risk in the merchant business?

Yes, I agree.

Jonathan, clearly the message on our side is we have faith and belief in the power of recovering. We have maintained substantial exposure to that power recovery. We are seeing in the first quarter and we saw on our hedge disclosure, the meaningful uplift and impact of improving prices. We have seen significant improvement in prices subsequent to that and anticipate further market recovery particularly in the NI-Hub market as we go further out the curve. From a balance sheet flexibility standpoint, we already retained considerable flexibility and our ability to lag ratable where we didn’t believe fundamental supported current marks. We have exercised that perspective and most importantly we have been right and exercising that prospective. And as Joe mentioned, we continue to keep that considerable exposure in place as we anticipate further market recovery. So in all instances, while this does improve our earnings mix of regulated versus merchant, we do anticipate as the power market recovers will get to that roughly balanced 50/50 mix that Chris has communicated as being roughly optimal for our business.

Just to be clear as I said earlier the strategy that we were moving to is to have a value return proposition through our dividend that is funded to a more classical or typical methodology with the regulated entities dealing up to the holdco and in those entities servicing any debt that would be at the holdco so naturally that does allow us that those commitments are made that allow us flexibility on the generating side to verge as the analytics would tell us to on being able to capture the upside or if we think we are high then we could hedge out further.

Certainly, just one caviar, certainly in the near term, both the merchant and the utility cash flows will support the holding company that as we see growth in the earnings power at the utilities that will the utilities will shorter more that.

In the long term. Right.

Okay, and can I ask on, when you say 250 million, just a detail on the merger stuff, 250 million net synergies, is that net of tax, net of cost to achieve, net of something else, what is the, can you just kind of frame that number?

That is separate and distinct from cost to achieve. So as we think about cost to achieve and then the realization of those synergies would expect to retain roughly a third of the overall savings, it will get to a run rate. Synergy number of approximately $120 million to $140 million, we anticipate that our customers are the net beneficiaries of two-thirds of those savings and that we would keep roughly a third for the benefit of our shareholders.

Okay. So that way run rate is that 2017 that's the number in the 2017, $0.15 to $0.20 is that?

I would say further out, first of all yes and second of all as you do the math you will synergies is a very small elements of the accretion in this transaction, holding company that this transaction of boards. It’s the monetization of certain assets at higher value than what would be implied in our PE multiple and synergies are an important but very modest contributors to that in the $0.15 to $0.20.

Okay. And how should think about the customer fund? Is that something you would fund upfront as almost part of the purchase price or something that would kind of be funded over the time?

It is intended to be given up front after approval as we integrate. So it is part of the cost to achieve.

Okay. I think that's and could I may be, could just one other thing and I am sorry if you have touched on this but what kind of assumptions you are making about end returns at the Pepco utilities?

Jonathan, in terms of our earned returns, our internal forecast is very much look into the internal forecast of Pepco holdings. It's very much in line with the consensus estimates as you look with IBIS. In terms of, from a synergy standpoint, if that allows us to seed or getting closer to that earned return to reduce the regulatory lag if the operational benefits and uplift from improved operations supports higher returns all that will be up side to the economics that we communicated to you as part of this presentation.

Okay. Thank you very much guys.

I think we have time for one more call?

Yes. Your next question comes from Michael J. Lapides.

Good morning, Michael.

Michael?

If your line is mute, please unmute your line.

I think operator if you can go to the queue for the last and final caller.

Yes sir. One moment. Your next question is from Ali Agha. Ali Agha – SunTrust Robinson Humphrey: Good morning.

Morning. Ali Agha – SunTrust Robinson Humphrey: Chris, one question, how comfortable are you with the new regulatory jurisdiction you are getting into. Obviously, Maryland you are very familiar with, but the other ones have been challenging to say the least and I am sure you would've been observing them. So what gives you confidence that you can handle those different than the way they have been handled in the past?

Well, we think the way that Joe has taking the company, Pepco in the last couple of years, significant investment and reliability continue to develop the stronger relationship and his tenure in the position, we are comfortable in the direction we are heading. We understand the expectations of the regulator and will continue on the path that the Joe has taken the company in the last few years. The regulatory process is not easy in any jurisdiction and as I mentioned earlier, there is a significant responsibility upon the regulator to make sure that the utilities are providing the service level at the right economic point with reliability and safety of the system. We have to prove that we can do that in this case to gain approval and then we have the responsibility of maintaining our operations at that level to continue. So we believe we are strongly supportive and believe what Joe has done and what the Pepco team has been doing in their service areas and the path they continue on and we believe as it has been shown in the Pepco stand alone that things are very much improving. Ali Agha – SunTrust Robinson Humphrey: A separate question, in the past you've told us about that $2.00 to $4.00 uplift that you believe fundamentals justify in the forward curves, where do you think we are in that today?

Yeah Joe will talk about that

As Jack mentioned earlier, we have seen materially material improvement in each year end in the forward curve and if I look at not have worth about $5.50 and around the clock basis since the first of the year and was about $7.50 at west hub. As you see in our hedge disclosure that were up about $200 million to $400 million respectively in hedge group margins, 331 in ‘16. It will up about another $300 million in ’15 and approximately $400 million to $450 million in ’16 since 331. When you think about the upside, there is a big seasonal shape to lift at this point giving that we have seen big move in the winter GAAP basis and the underlying winter power prices but we still think ’15 to ’16 time period, there is is less than $2 of upside remains at Ni-Hub but there is still upside I mean on annualized basis. At the west hub, we think that most of it is pricing but again it's very seasonally driven and as you get out to ’17 and ’18, we see a little more up-sided Ni-Hub than we do in ’15 and ’16 and little more upside at west hub when we were doing ’15 and ’16. So it really seasonally driven at this point and we are taking an opportunity as we do hedging to the power price move to make sure that we are matching where we think the market is move. So our hedging is matching we are aligned to our views and what the market has done. Ali Agha – SunTrust Robinson Humphrey: Got it. The last question, Chris and I am picking up from what you guys were saying I mean the markets are moving, the commodity prices are moving in your favor, your pieces seems to be coming together, stocks been obviously rallying as a result of that. From a timing perspective do you think, perhaps, was this the right time to be adding more regulated mix given that this is a 12- to 15-month approval process, kind of has its own levels of uncertainty associated with that? Would you have wanted to let this thing run I mean the way it had been running and has been running?

Yes, we are not distracting or deterring ourselves from the upside of the commodity market. With the way that this is being structured with opening up more of the balance sheet using a view by the rating agencies of the Holdco utilities allows us to use to cheap debt at this time to pick up more regulated revenue. There is an equity component but it is not a significant component. So if you did the math and Jack was explaining it earlier this morning, it's less than 10% of our share count that would equity would be issued for. You still get somewhere of 90% of whatever the upside is that's coming from the power market. So you have to be opportunistic, you have to be able to create value. This deal creates a significant accretion in earnings per share. It allows us structurally to be looked at differently by the rating agencies and we get still when anything would come to the market that was a relative value deal, we would still be able to transact on it and continue to grow on that side of the business. So there was if you can create value with accretion like this, I think the time is whenever it comes available and if this was to distract us from the upside of the commodity or recovery and the power recovery, we wouldn't have done it but we can do both. Ali Agha –- SunTrust Robinson Humphrey: Fair enough. Thank you.

Thank you. That brings us to the end of the caller. Thank you very much.