D.C. public watchdog won't support Pepco/Exelon merger

Pepco Exelon logos

Washington, D.C.'s Office of the People's Council said it would not support the revised terms of the merger of Exelon Corp. and Pepco Holdings, the approval of which now hangs on the whims of D.C. politics.

People’s Counsel Sandra Mattavous-Frye said her office has reviewed the D.C. Public Service Commission’s revisions to the Pepco-Exelon settlement agreement announced on this past Friday, adding that the PSC removed a guarantee of no rate increases for residential ratepayers through March 2019.

“The Commission’s order eviscerates the benefits and protections essential to render the proposed merger in the public interest by making changes to the $25.6 million rate offset provision for residential customers which was the single most critical provision I supported,” Mattavous-Frye said. “OPC has consistently focused throughout this long proceeding on ensuring that any outcome is in the best interest of ratepayers, and that the merger’s claimed benefits will be meaningful and verifiable, particularly for our most vulnerable residential ratepayers for whom electric bills consume a whopping and disproportionate percentage of their income. The inability to afford to pay their bills is a reality for many of our residents and cannot be trivialized and dismissed. Affordable rates and affordable housing are inextricably linked.”

The Maryland Office of People’s Counsel, created in 1924, is appointed by the Attorney General, with the advice and consent of the Senate, and acts independently of the Maryland Public Service Commission and the Office of Attorney General.

Functioning primarily as a law office, the OPC is a state of Maryland agency, yet works independently to represent Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the PSC, federal regulatory agencies and the courts.

With the loss of the OPC's support, the PSC deal regarding the Exelon-Pepco merger has lost one of its influential signatories.

Exelon and Pepco reportedly remain dedicated to making the merger work, but have only until Friday, March 4 to make the deal work.

Last week, the PSC voted to reject the $6.8 billion deal under the terms offered by the utilities and Washington, D.C. Mayor Muriel Bowser's office — a deal meant to salvage the merger when the commission voted to reject the original terms in August 2015.

Washington, D.C. is the merger's final hurdle after a wave of approvals from other East Coast regulatory boards, and the Federal Energy Regulatory Commission.

The Exelon-Pepco merger was previously approved in Maryland, New Jersey and Delaware.

The combination of the companies would bring together Exelon’s three electric and gas utilities — BGE, ComEd and PECO — and Pepco Holdings’ three electric and gas utilities — Atlantic City Electric, Delmarva Power and Pepco — to create one of the largest electric and gas utilities in the country.

The companies also made transaction-related filings with FERC and the Virginia State Corporation Commission. The transaction was also subject to the notification and reporting requirements under the Hart-Scott-Rodino Act and other customary closing conditions.

The combined utility businesses would serve about 10 million customers and have a rate base of about $26 billion. The purchase deal was worth about $6.8 billion.

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