DC Regulators Deny Exelon-Pepco Merger As Is But Suggest Changes

 D.C. Regulators Deny Exelon-Pepco Merger As Is But Suggest Changes

The proposed $6.8 billion merger between Exelon (NYSE: EXC) and Pepco Holdings (NYSE: POM) was denied as submitted, leaving the door open for potential future approval.

The District of Columbia Public Service Commission in a 2-1 vote rejected the submitted merger deal on four grounds, including that Pepco did not provide sufficient rationale for not including commercial and industrial ratepayers in a rate freeze proposed for residential customers and that Exelon’s role in developing four microgrids could undermine competition and grid neutrality, according to Utility Dive. However, commissioners outlined changes to the settlement that, if adopted, could finalize the deal.

Exelon and Pepco have 14 days to decide on the revised stipulations.

As part of the revision, Exelon would accept the use of the $25.6 million customer investment fund for use as a customer rate base credit and defer the decision on how to allocate those funds among customers for the next rate case, the article said. Exelon would also not develop a solar power plant at D.C. Water’s Blue Plains Facility and Pepco would have to find another developer. The companies would also have to create two new funds to support modernization of D.C.’s energy system within 60 days of the merger.

If they agree to the changes, the deal would close and the new company would be the largest electric utility in the U.S.

The PSC rejected an initial merger package in August, saying the companies failed to show how the merger was in the public’s best interest. The utilities, however, said the commission failed to “recognize the substantial immediate and long-term benefits” of the merger. Exelon and Pepco quickly worked out a settlement with the mayor’s office and resubmitted it to the PSC.   

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