The Federal Energy Regulatory Commission on Thursday authorized the acquisition of NRG Energy Inc. (NRG) by Exelon Corp. as the latter continues to push its unsolicited offer for the power plant operator.

Regulators in a written order ruled the proposed deal won't adversely effect competition in regional power markets, but warned their decision shouldn't be viewed as an endorsement of the hostile bid. FERC placed some conditions on its approval, including requiring Exelon to file any changes to the proposed deal.

The ruling touched off the ongoing back-and-forth between NRG and Exelon over the bid to create the largest generator of electricity in the U.S. by output. Exelon declared the ruling a major step in winning needed regulatory approvals, saying in a statement the deal remains on track to close in the fourth quarter. NRG had a much different view, pointing to hurdles including financing, state approvals and shareholder votes.

Exelon in November launched an exchange offer to pay a fixed ratio of 0.485 Exelon share for each NRG share. NRG's board had rejected the offer, saying it grossly undervalues the company. About 51% of NRG shareholders tendered their shares in support of the transaction by a February deadline.

Exelon still has to get additional federal and state approvals, including from the Nuclear Regulatory Commission and state utility commissions such as Texas and California. The company also continues to face stiff opposition from NRG's board.

As part of its application to FERC, Exelon said the combined company would sell six power plants. Exelon would divest itself of three natural gas-fired plants in Texas, known as Mountain Creek, Handley and LaPorte. NRG Energy would likely need to unload 1,000 megawatts of generation, with Exelon suggesting three plants in Delaware and Maryland.

Looking ahead, NRG's annual shareholders meeting has become a key event in the takeover battle. Exelon has proposed expanding NRG's board and adding its own members as it tries to complete the deal amid the resistance of NRG's current board.

But no date has been set for the annual meeting. NRG held its last annual shareholders meeting on May 14, 2008. NRG has said shareholders can go to court and force the scheduling of a meeting if one hasn't been held within 13 months of the last one.

Exelon owns and operates electric utilities in Illinois and Pennsylvania, and power plants throughout the U.S., including the nation's largest fleet of nuclear power plants. NRG owns power plants with more than 24,000 MW of generation.

Shares of Exelon were recently down 65 cents, or 1.4%, at $45.72, while NRG was trading down 3.7% at $19.15.

-By Mark Peters, Dow Jones Newswires; 201-938-4604; mark.peters@dowjones.com