D.C.-based energy supplier Pepco and Chicago-based energy producer Exelon offered a new $78 million deal Monday to D.C. regulators to salvage a $6.8 billion merger that has been on the ropes for the past year.
“We have offered a third option that aims to balance the alternate terms the [Public Service] Commission offered in its Feb. 26 order with the views of some of the settling parties on the issue of rate credits to residential customers,” said Exelon President and CEO Chris Crane.
Pepco and Exelon aren’t offering the District any more money in their new deal, but the power companies said their new offer frees up cash to offset residential rate increases until 2019 and gives D.C. Mayor Muriel Bowser and the Public Service Commission some power to dole out money.
The new $78 million deal would create a $25.6 million escrow fund controlled by the mayor to offset residential rate increases, a $20 million fund controlled by the Public Service Commission (presumably to offset rate increases for businesses and federal government) and $32.4 million for electric grid modernization and environmental projects.
“This alternative proposal provides flexibility in determining a path forward for the merger, addressing the guidance the Commission provided in its order and the desire to protect District residents, including those most in need, from rate increases,” Mr. Crane said.
The Bowser administration, which rejected a counterproposal by the commission last week, did not offer comment on the new deal Monday. The Public Service Commission said that all parties involved in the negotiations must agree to its revised deal or present a new one by Friday.
D.C. Council member Mary Cheh, who has criticized the proposed merger from the start, lambasted the new offer on Monday.
“We expected that Exelon would try a Hail Mary pass, but from my analysis, it doesn’t appear to satisfy requirements set forth by the Office of the People’s Counsel in terms of protections for rate payers. In any event, this deal is rotten at its core. So, like many Hail Mary passes, let’s hope this one is dropped,” said Ms. Cheh, Ward 3 Democrat.
Environmental activists who have long opposed the merger came out against the new proposal.
“Exelon’s latest filing is another example of the company’s total arrogance and disregard for D.C. residents,” said Anya Schoolman of the PowerDC Coalition. “The Public Service Commission shouldn’t let Exelon rearrange deck chairs on the Titanic. It is time for D.C. to move on.”
Late last month, the Public Service Commission rejected a Pepco-Exelon merger deal brokered by Ms. Bowser, objecting to the panel’s lack of oversight of how the $78 million would be spent. It offered an alternative in which the commission would exercise control of the funds.
Ms. Bowser, D.C. People’s Counsel Sandra Mattavous-Frye, city Attorney General Karl Racine and D.C. Water General Manager George Hawkins rejected the commission’s counteroffer last week.
The D.C. administration’s opposition apparently killed the merger deal, which was first announced in April 2014 and has been approved by utility regulators in Maryland, Virginia, New Jersey and the federal government.
The Public Service Commission in August first rejected the Pepco-Exelon merger, which would create the largest electric utility in the United States.