- The Washington Times - Wednesday, March 23, 2016

The proposed merger of D.C.-based energy supplier Pepco and Chicago-based energy producer Exelon has risen from the dead and looks to be alive and well.

The D.C. Public Service Commission approved Wednesday the $6.8 billion merger to create the largest publicly-held utility company in the United States, after two years of debate and rejected deals.

“Today, we join together as one company to play a vital role as a leader in our industry and the mid-Atlantic region,” Chris Crane, president and CEO of Exelon said Wednesday. “We’ve made a number of commitments to customers in all of the Pepco Holdings utilities’ jurisdictions — the District, Maryland, Delaware and New Jersey — and we look forward to getting to work to deliver those benefits to our customers and communities.”

The commission approved the merger in a 2-1 vote, with Commissioner Betty Ann Kane voting against it.

Unlike earlier deals, the utility commission did not need the approval of all the parties involved in the negotiations in order to approve the merger. D.C. Mayor Muriel Bowser, D.C. People’s Counsel Sandra Mattavous-Frye and D.C. Attorney General Karl Racine had rejected the latest deal earlier this month.



The merger deal would set aside $72.8 million for the District in an escrow customer investment fund that includes $25.6 million to offset rate increases, $14 million would go to a one-time direct bill credit to be distributed among Pepco residential customers, $11.25 million for energy efficiency programs for low-income residents and $21.55 million for grid modernization pilot projects.

PSC spokeswoman Kellie Armstead Didigu said the customer investment fund will be controlled by the commission, not the mayor’s office.

That had been a sticking point for Miss Bowser, who wanted to control the funds to help offset rates only for residential customers through 2019. The PSC has said it wants rate freezes for the federal government and businesses as well.

“These benefits, among others, would not be available to District ratepayers if the merger is not approved,” the commission said in a statement after the ruling.

The plan is essentially the same as the one the PSC offered in February after it had rejected a deal brokered by Miss Bowser. At the time, the PSC said the deal would be approved only if everyone agreed to it. Miss Bowser, Mr. Racine and Ms. Mattavous-Frye quickly opposed that proposal.

“It appears the Public Service Commission favors government and commercial ratepayers over D.C. residents,” Miss Bowser said. “Instead of a three year rate increase reprieve that we negotiated, it appears that D.C. residents will be hit with a rate increase as soon as this summer.”

On Twitter, Ms. Mattavous-Frye said her office would review the PSC decision, but she was not optimistic about residents being protected by rate hikes in the new plan.

Several D.C. Council members also took to Twitter to voice disapproval.

“This is the most important case in the Public Service Commission’s history. And they got it wrong,” said council member Mary Cheh, Ward 3 Democrat, who has opposed the merger from the start.

Council member Charles Allen, Ward 6 Democrat, tweeted that he was disappointed in the decision.

“It’s not in the city’s best interest,” he said on Twitter.

Pepco isn’t celebrating just yet: The company said Wednesday it is reviewing the commission’s order.

“Once we have had a chance to do so, we will have more to say about what it means and our next steps,” Pepco said.

The approval was a surprise to many who thought the deal was dead after city leaders opposed a proposal offered by Pepco and Exelon.

Opponents of the merger expressed displeasure Wednesday.

“We are profoundly disappointed and saddened that the D.C. Public Service Commission has ignored the clear opposition to the proposed Exelon-Pepco merger voiced by the District’s elected officials, community and business leaders, and residents,” said Ben Delman of PowerDC, a collective of environmental and resident activist groups.

In August the PSC rejected the initial merger plan set out by Pepco and Exelon. Then Miss Bowser negotiated an agreement with both companies, but the PSC rejected that deal in late-February.

The PSC objected to the commission’s lack of oversight of millions of dollars set aside to offset rate hikes for residential customers. It offered an alternative in which the commission would dole out funds, hoping to offset rates increases for businesses and the federal government.

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

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