<PAGE>

                           CERTIFICATE OF MERGER OF

                            ATLANTIC ENERGY, INC.,
                           a New Jersey Corporation,

                                 with and into

                                CONECTIV, INC.,
                            a Delaware Corporation



TO:       Secretary of State
          State of New Jersey


          Pursuant to the pertinent provisions of Chapter 10 of the New Jersey
Business Corporation Act (hereinafter referred to as the "Act"), the undersigned
corporations hereby execute the following Certificate of Merger.

                                ARTICLE I
                                ---------

          Atlantic Energy, Inc. ("Atlantic"), a corporation organized and
                                  --------
existing under the laws of the State of New Jersey, shall be merged with and
into Conectiv, Inc., a corporation organized and existing under the laws of the
State of Delaware and qualified to do business in the State of New Jersey,
which is designated as the surviving corporation (hereinafter referred to as the
"Surviving Corporation").  The name of the Surviving Corporation shall be
changed to "Conectiv" in Delaware pursuant to Sections 102(a) and 252 of the
Delaware General Corporation Law (the "Delaware GCL"), and shall continue to
use the name "Conectiv, Inc." in New Jersey pursuant to the requirements of the
Act, in particular, Section 14A:2-2 of the Act.
<PAGE>

                                ARTICLE II
                                ----------

          The Agreement and Plan of Merger set forth in Exhibit A hereto (the
"Plan") was approved by the Board of Directors of Atlantic on August 9, 1996.
-----
The Plan was amended and restated and such amendment and restatement was
approved by the Board of Directors of Atlantic on December 8, 1996 in accordance
with the requirements of Sections 14A:10-1 and 14A:10-7 of the Act.  The Plan
was approved by the Shareholders of Atlantic on January 30, 1997.  The Plan was
approved by the Board of Directors of Conectiv, Inc. on August 9, 1996.  The
Plan was amended and restated and such amendment and restatement was approved by
the Board of Directors of Conectiv, Inc. on December 8, 1996.  The Plan was
unanimously approved by the stockholders of Conectiv, Inc. on December 8, 1996.
The Plan was amended by the Boards of Directors of Atlantic and Conectiv, Inc.
by amendment dated August 12, 1997.

                                ARTICLE III
                                -----------
          As to Atlantic, the number of shares entitled to vote was as follows:
<TABLE>
<CAPTION>
======================================================================================
Name of Corporation                     Total Number of        Total Number      Total
- Class of Stock                             Shares               of            Number
                                       Entitled to Vote       Shares Voting       of
                                                                in Favor        Shares
                                                                                Voting
                                                                               Against

<S>                                  <C>                     <C>            <C>
--------------------------------------------------------------------------------------
Atlantic Energy, Inc.                            52,704,052    37,843,06 7  1,539,886
  - Common Stock
 Conectiv, Inc.                                         500            500          0
  - Common Stock
======================================================================================
</TABLE>
<PAGE>

                                ARTICLE IV
                                ----------
          The merger shall take effect at 12:01 a.m. on March 1, 1998.

                                ARTICLE V
                                ---------

          Such Merger shall be in compliance with all of the applicable
provisions of the Delaware GCL with respect to such Merger as well as the
applicable filing and recording requirements under the Delaware GCL.

                                ARTICLE VI
                                ----------

          The Surviving Corporation does hereby agree that it may be served with
process in the State of New Jersey in any proceeding for enforcement of any
obligation of Atlantic in New Jersey, as well as for enforcement of any
obligation of the Surviving Corporation arising from the Merger provided for
herein.  The Surviving Corporation does hereby irrevocably appoint the
Secretary of State of the State of New Jersey as its agent to accept service of
process in any such proceeding and does hereby specify the following address
without the State of New Jersey to which a copy of such process shall be mailed
by the Secretary of State of the State of New Jersey:

               Conectiv
               800 King Street
               Wilmington, Delaware 19801

                                ARTICLE VII
                                -----------

          The Surviving Corporation does hereby agree that it will promptly pay
to the dissenting shareholders of Atlantic, if any, the amount, if any, to which
they shall be entitled under the provisions of the Act with respect to the
rights of dissenting shareholders.
<PAGE>

          IN WITNESS WHEREOF, each of the undersigned corporations has caused
this Certificate of Merger to be executed in its name by its duly authorized
officer, as of the 27th day of February, 1998.

                              CONECTIV, INC.




                              By: /s/ Barbara S. Graham
                                  ---------------------
                                Barbara S. Graham
                                President



                              ATLANTIC ENERGY, INC.




                              By: /s/ Jerrold L. Jacobs
                                  ---------------------
                                Jerrold L. Jacobs
                                Chairman and Chief Executive
                                Officer
<PAGE>

                                EXHIBIT A