The D.C. Public Service Commission approved Exelon’s (NYSE: EXC) $6.8 billion acquisition of Pepco Holdings, the final step in creating the nation’s largest electric utility by customer base.
In a 2-1 vote, commissioners said the merger was in the public interest under new conditions reached after they rejected a settlement deal in late February. In a March 7 filing, Exelon and Pepco asked regulators to consider the merger on its merits without having the support for the new conditions from all parties. The DC PSC rejected the initial merger deal in August, and Exelon appealed. The utilities reached a settlement with D.C. Mayor Muriel Bowser’s office, and commissioners again rejected the deal in February, but placed four new stipulations on the deal that would result in automatic approval if all of the parties adopted them.
The stipulations include accepting 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. Exelon also would not be able to develop a solar power plant at D.C. Water’s Blue Plains Facility and Pepco would have to find another developer. The companies would have also had to create two new funds to support modernization of D.C.’s energy system within 60 days of the merger.
Chris Crane retains his position as president and CEO of Exelon. Joseph Rigby, president, CEO and chairman of Pepco Holdings, retires as an officer of Pepco Holdings. David M. Velazquez is now the president and CEO of Pepco Holdings.
The merger brings together Exelon's electric and ga sutilities - BGE, ComEd and PECO - with Pepco Holdings' three electric and gas utilities - Atlantic City Electric, Delmarva Power and Pepco. Atlantic City Electric, Delmarva Power and Pepco will remain separate companies located in New Jersey, Delaware and Washington D.C., respectively. As a result of the merger, shares of Pepco Holdings will no longer trade on the New York Stock Exchange.