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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 27, 1998
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DELMARVA POWER & LIGHT COMPANY
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(Exact Name of Registrant as Specified in Charter)
Delaware and Virginia I-1405 51-0084283
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
800 King Street, P.O. Box 231, Wilmington, Delaware 19899
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code 302-429-3448
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None
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events
On February 25, 1998, the Securities and Exchange Commission (the
"Commission") issued an order approving the Application Declaration on Form
U-1 previously filed by Conectiv, Inc. ("Conectiv") under Section 9(a)(2)
of the Public Utility Holding Company Act of 1935, as amended (the "Act").
The order approved the combination of Delmarva Power & Light Company
("Delmarva") and Atlantic Energy, Inc., ("Atlantic") pursuant to which
Delmarva and its direct subsidiaries and the direct subsidiaries of
Atlantic will become direct subsidiaries of Conectiv, a Delaware holding
company. The merger will be effective on March 1, 1998. Conectiv also
received an order from the Commission on February 26, 1998 authorizing it
to engage in certain financing activities under the Act.
The following was released by the Company and Atlantic on February 26,
1998:
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Delmarva/Atlantic Merger approved by SEC,
Merger expected to close March 1
Wilmington, DE and Egg Harbor Township, NJ, February 26, 1998 - The merger
involving Delmarva Power & Light Company and Atlantic Energy, Inc. has
cleared the final regulatory hurdle in the companies plan to combine under
a common holding company named Conectiv.
The federal Securities and Exchange Commission approved the merger under
the Public Utility Holding Company Act in a written order dated February
25, 1998. With the SEC approval, the merger is expected to be effective
March 1. The approval by the SEC follows numerous federal and state
regulatory approvals, including the Federal Energy Regulatory Commission
and the Nuclear Regulatory Commission, and the public utility commissions
of Delaware, New Jersey, Maryland, Pennsylvania and Virginia. The merger
was originally announced August 1996.
With the completion of the merger, it is expected that shares of Conectiv
Common Stock and Conectiv Class A Common Stock will begin trading on the
New York Stock Exchange on March 2. The ticker symbol for Conectiv Common
Stock is CIV, and CIV.A will be the symbol for Conectiv Class A stock. The
merger will have no effect on Delmarva Power and Atlantic City Electric
Company preferred stock, or on either company's debt securities.
"Completion of the merger will allow Conectiv to reduce its rates upon
closing by over 1 percent to more than 1 million customers in our region,"
said Howard E. Cosgrove, Conectiv's Chairman and Chief Executive Officer.
"These accomplishments will be made while continuing to provide superior
customer care and service reliability. The shareholders of Conectiv will
also realize long-term benefits from a larger, competitively well-
positioned provider of energy, telecommunications and related products for
homes and businesses in the Mid-Atlantic region. Conectiv will continue the
tradition of building and maintaining community partnerships which Delmarva
Power and Atlantic Electric are known for."
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While the parent company will be named "Conectiv", for the time being the
regulated utilities will be operated under their traditional names Delmarva
Power and Atlantic Electric.
Conectiv will have operating revenues of over $2.5 billion and serve more
than 1 million electric customers and over 100,000 gas customers in
Delaware, Maryland and New Jersey. Following the merger and other internal
restructuring, Conectiv will have about 3,400 employees in its core
businesses. Corporate headquarters will be located in Wilmington, Delaware.
A major operations facility will be constructed in Salem County, New
Jersey.
Operations that will carry the "Conectiv" name include Conectiv Energy
(retail energy), Conectiv Communications (telecommunications), Conectiv
Solutions (energy services) and Conectiv Services (HVAC). A district
heating/cooling company named Atlantic Thermal Systems will soon change to
Conectiv Thermal Systems. These five operations have nearly 100,000
customers.
Conectiv Officers and Directors
As previously announced, the chairman and CEO of Conectiv will be Howard E.
Cosgrove. Jerrold L. Jacobs will serve as Vice Chairman. Other key
officers are Meredith I. Harlacher, Jr., President of Conectiv and head of
the Energy Delivery group; Thomas S. Shaw, Executive Vice President of
Conectiv and head of the Energy Supply group, Barry R. Elson, Executive
Vice President of Conectiv and head of the Enterprises group, and Barbara
S. Graham, Senior Vice President and Chief Financial Officer of Conectiv.
The Board of Directors of Conectiv is made up of six directors from
Atlantic Energy and eight directors from Delmarva Power. The directors are:
Howard E. Cosgrove, Jerrold L. Jacobs, Bernard J. Morgan, Cyrus T. Holley,
Richard B. McGlynn, Dr. Harold J. Raveche, Kathleen MacDonnell, Michael G.
Abercrombie, R. Franklin Ballotti, Robert D. Burris, Audrey K. Doberstein,
Michael B. Emery, Sarah I. Gore and Weston E. Nellius.
Dividend information
It is anticipated that Conectiv initially will pay an annual dividend of
$1.54 per share on its Common Stock and $3.20 per share annually on the
Class A Common Stock, subject to final determination by the Conectiv Board
of Directors. The Board's determination will be based upon Conectiv's
results of operations, financial condition, capital requirements and other
relevant considerations.
The Bank of New York has been selected as transfer agent and registrar for
Conectiv stock.
Conectiv's internet address is http://www.conectiv.com
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As previously reported by Atlantic on Form 8-K on January 6, 1998, the New
Jersey Board of Public Utilities ("BPU"), on January 7, 1998, issued an
order to finalize its December 30, 1997 ruling approving the petition of
Atlantic City Electric Company ("ACE") and Conectiv for a transfer on
Atlantic's books and records of all of the issued and outstanding shares of
its common stock, which will result in the change ownership and control of
ACE. Atlantic is the parent of ACE and the sole common shareholder of ACE.
Pursuant to the change in control, ACE will become a wholly owned
subsidiary of Conectiv. Under the terms of the order, the BPU ordered that
approximately 75 percent of the total average projected $21.12 million
annual merger savings for New Jersey ratepayers, or $15.75 million, be
returned to customers, for an overall merger-related rate reduction of 1.7
percent. The net result of the merger related-decrease in rates, combined
with the effect of a previously approved rate increase, was an annual net
decrease in customers rates of approximately $10.75 million or 1.2
percent. The BPU order concluded that this entire 1.2 percent decrease
should be credited towards the 5 to 10 percent rate reduction required
pursuant to the BPU Restructuring Report.
On January 21, 1998, the Division of the Ratepayer Advocate ("DRA")
filed a Motion for Reconsideration and Clarification of Certain Issues
regarding the BPU's January 7, 1998 order. The DRA seeks clarification and
reconsideration regarding (1) the BPU's determination to employ the "no
harm" standard of review, rather than the "positive benefit to the public
interest" standard; (2) the BPU's adoption of the Administrative Law
Judge's "rounding down" in calculating 75% of the net annual merger
savings; (3) the BPU's approval of the 1.2% rate decrease resulting from
merger as a credit towards Atlantic's 5-10 percent rate reduction required
pursuant to the BPU Restructuring Report. The DRA motion also seeks
clarification from the BPU on how it calculated the requirement that
Atlantic decrease its rates by an additional $9.88 million on the effective
date of the merger.
The Motion for Reconsideration and Clarification of Certain Issues
does not request, as an item of relief, that the approval of the merger be
denied. No stay of the BPU order issued January 7, 1998 has been requested
or issued. The appeal period for the BPU order, however, has not expired.
The Company does not expect that the outcome from this proceeding will have
a material adverse impact.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Delmarva Power & Light Company
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(Registrant)
Date: February 27, 1998 /s/Barbara S. Graham
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Barbara S. Graham
Senior Vice President and
Chief Financial Officer
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