Shares of both companies rose Monday on the news.
The combined company would serve some seven million electric users and two million natural gas customers in Illinois, New Jersey and Pennsylvania.
Company officials planned to discuss the merger Monday afternoon in Newark, New Jersey. Exelon and Newark-based PSEG said both of their boards have given unanimous approval to the merger.
The new company would have $79 billion in assets, with $27 billion in annual revenues and $3.2 billion in annual profit.
Excelon is the electric utility for much of the Rockford area and operates the Byron Nuclear Power Plant.