Correction: Fitch Revises PSEG's Outlook to Positive; Affirms Exelon.

NEW YORK -- (This is a revised version of a press release issued earlier today and contains amended rating information on PSEG Funding Trusts I and II.)

Fitch Ratings has revised the Rating Outlook for Public Service Enterprise, Inc Group (PSEG) and subsidiary PSEG Power, LLC to Positive from Stable following the announcement of a merger agreement between PSEG and Exelon Corp. (Exelon). Fitch has also affirmed the ratings of Public Service Electric and Gas, PSEG Energy Holdings and each of the Exelon entities as shown in the table at the end of this release.

The rating actions reflect the stock for stock nature of the transaction that allows the combined entity to emerge with a strong credit profile, expected pre-tax synergies that management estimates will approximate $400 to $500 million annually and the positive impact of Exelon's strong nuclear management team on PSEG's nuclear operations. The companies have agreed to a nuclear service agreement to address the operating problems at PSEG's nuclear plants. About 70% of the synergies are expected to come from non-regulated operations. The combined entity will also benefit from a large portfolio of low cost coal and nuclear generation. Fitch estimates the combined entity will have a debt ratio of in the 45% range and a ratio of debt to EBITDA of less than 3.5 times (x). About 50% of projected EBITDA is expected to come from regulated distribution operations.

The merger is conditioned on a number of state and federal agencies and is expected to take 12 to 15 months to complete. These included the New Jersey Board of Public Utilities, the Pennsylvania Public Utility Commission, the Illinois Commerce Commission, the Federal Energy Regulatory Commission (FERC), the Nuclear Regulatory Commission, the SEC under the Public Utilities Holding Company Act and either the Department of Justice or the Federal Trade Commission. Meeting the FERC's market power requirements could prove to be difficult because of the concentration of generation in the PJM Region. The market power issues are mitigated by the membership of both companies in a Regional Transmission Organization (RTO). Nonetheless the company is likely to be required to divest some fossil generation.

The ratings of Exelon and PSEG are as follows:

Exelon Corp.

-- Senior unsecured debt 'BBB+';

-- Commercial paper 'F2';

-- Rating Outlook Stable.

Exelon Generation, LLC

-- Senior unsecured debt 'BBB+';

-- Commercial paper 'F2;

-- Rating Outlook Stable.

Commonwealth Edison Co.

-- Secured debt 'A-';

-- Senior unsecured debt 'BBB+';

-- Preferred stock 'BBB';

-- Commercial paper 'F2'.

PECO Energy Co.

-- Secured debt 'A';

-- Senior unsecured debt 'A-';

-- Preferred stock 'BBB+';

-- Commercial paper 'F1'.

Public Service Enterprise Group Inc.

-- Indicative senior unsecured 'BBB';

-- Trust preferred securities 'BBB-';

-- Commercial paper rating 'F2';

-- Rating Outlook Positive.

PSEG Power LLC

-- Senior unsecured 'BBB';

-- Rating Outlook Positive;

PSEG Funding Trust I and II

-- Preferred securities 'BBB-';

-- Rating Outlook Positive.

Enterprise Capital Trust I, II and III

-- Preferred securities 'BBB-';

-- Rating Outlook Positive.

Public Service Electric and Gas Company 

-- First Mortgage Bonds 'A';

-- Senior unsecured debt 'A-';

-- Preferred stock 'BBB+';

-- Commercial paper 'F2';

-- Rating Outlook Stable

PSEG Energy Holdings

-- Senior unsecured debt 'BB';

-- Rating Outlook Negative.