- The Washington Times - Monday, April 25, 2016

Utilities regulators in two states that have signed off on the Pepco-Exelon merger are authorized to make such decisions without agreement among all of the parties involved in negotiations — authority that is not clearly delineated for the D.C. Public Service Commission, which faces a challenge from city officials for its approval of the $6.8 billion merger.

D.C. Attorney General Karl Racine and D.C. People’s Counsel Sandra Mattavous-Frye both have filed a motion for the PSC to reconsider its decision, giving the commission 30 days to respond. If the decision is upheld, the city officials can take their case to the D.C. Court of Appeals.

In the balance hangs a plan to create the largest publicly-held utility company in the United States by joining local energy supplier Pepco with Chicago-based energy generator Exelon. The proposed merger, first announced in 2014, has been approved by regulators in Delaware, Maryland, New Jersey and the federal government.

Robert Howatt, executive director of the Delaware Public Service Commission, told The Washington Times that many “decisions do not necessarily satisfy all parties, particularly when there is a non-unanimous settlement or a contested proceeding. The [Delaware PSC] routinely makes decisions based on the evidentiary record.”

Additionally, Tori Leonard, a spokeswoman for Maryland’s Public Service Commission, said the state regulatory agency operates in a similar manner.

“The Maryland PSC, in its discretion, may approve a non-unanimous settlement,” Ms. Leonard told The Times.

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In their motions for D.C. regulators to reconsider the merger, Mr. Racine and Ms. Mattavous-Frye objected to the PSC’s approval despite their opposition to the deal. The attorney general and people’s counsel, along with other city officials including Mayor Muriel Bowser, were involved in the negotiations and have criticized the regulators’ decision as not being in the best interest for D.C. residents.

“I strongly believe that the manner in which the decision was reached was legally flawed,” Ms. Mattavous-Frye said Friday. “If the flaws in this order are not corrected, it will erode the trust and confidence of consumers and all parties that practice before [the PSC].”

Mr. Racine posed a similar argument, saying the PSC wrongly approved the proposal over the majority of the parties’ objections and didn’t reveal why it concluded that the revised proposal was in the public interest.

“We believe the Public Service Commission exceeded its authority, failed to follow their own procedural rules, and denied the District due process when it approved merger terms acceptable to Pepco and Exelon but opposed by the overwhelming majority of the other parties involved,” the attorney general said.

But PSC spokeswoman Kellie Didigu told The Times that “there is no rule that addresses that situation,” meaning that the commission does not need the backing of the majority of the involved parties to approve a merger.

Still, Mr. Racine and Ms. Mattavous-Frye believe they are on solid legal footing, asking the PSC to reopen the case and permit all parties an opportunity to comment on its decision as required by PSC rules, or reject the merger as “procedurally improper.”

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The former option would allow Pepco, Exelon and city officials to comment on how the March 23 approval was handled. Pepco and Exelon had offered a $78 million deal to regulators for offsetting anticipated rate increases.

Mr. Racine, Ms. Mattavous-Frye and Ms. Bowser opposed the deal because some of the set-aside funds would be used to offset rate increases for the federal government and city businesses. All three wanted the money to go exclusively to offset residential rate hikes.

Ms. Bowser did not return emails seeking comment.

Two other parties in the negotiations, Public Citizen and DC Solar United Neighborhoods, also filed applications for reconsideration on Friday. Both said that if the PSC upholds its decision, they will take the commission to court over the matter.

• Ryan M. McDermott can be reached at rmcdermott@washingtontimes.com.

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