Exelon's utilities deliver electricity and natural gas to more than 6.6 million customers in central Maryland, northern Illinois and southeastern Pennsylvania.
The combined entity will serve about 10 million customers, Exelon said in a statement.
There have been several multibillion-dollar utility deals in the past two years, including Duke Energy's $13.7 billion acquisition of Progress Energy and AES Corp.'s $3.5 billion takeover of DPL Inc.
Exelon itself bought Constellation Energy for $7.9 billion in 2011.
Barclays, Goldman Sachs, and Loop Capital Markets are serving as financial advisers to Exelon. Kirkland & Ellis is the legal counsel.
Lazard is Pepco Holdings' financial adviser. Sullivan & Cromwell and Covington & Burling are the legal counsel.
Exelon said on Wednesday the deal was expected to "significantly" add to its adjusted earnings in the first full year after closing.
The company also reported a lower-than-expected profit, hurt by weak energy prices and a fall in nuclear and coal output.