D.C. Public Service Commission Rejects PEPCO-Exelon Merger with Conditions

The Washington D.C. metropolitan region was expecting to hear about one of the largest utility mergers in the country today but the D.C. Public Service Commission (PSC) says the deal is not that simple.  The PSC rejected the merger between PEPCO and Exelon in a room packed with media and  but will still keep the lights on surrounding the merger.

By a vote of 2 to 1 against the merger, the PSC rejected the deal but will allow for consideration of an alternative agreement. The Nonunanimous Full Settlement Agreement and Stipulation (NSA) of PEPCO and Exelon was deemed as “not being in the public interest.”

Chairman Betty Kane explained why she voted against the merger.

“There are additional significant flaws in the NSA which are not addressed by the proposed alternative terms. In particular, the return of PEPCO to an ownership structure that includes energy generation, supply, marketing and sales will result in an entanglement of management, financial health, and decision-making. This is a fatal flaw which will adversely affect PEPCO and create a diversion of focus that carries it in the opposite direction from DC law and policy,” Kane said in a news release.

Image of Pepco truck door with Pepco logo

Commissioner Joanne Fort proposed to allow alternative terms for the merger to be approved without additional action by the Commission.

“I agree with the NSA’s supporters that the changes made by the NSA to the merger application, other than those [four concerns] that I have identified in this concurrence, have removed the reservations that I had with the original merger application. Moreover, I do not believe that the NSA is fatally flawed because each of the four concerns that the majority opinion has noted can be corrected by revising the NSA with alternative terms. For that reason and as explained in more detail in Order No. 18109, I have crafted alternative terms for the NSA and asked my fellow Commissioners to approve sharing them with the Settling Parties for their consideration under Commission Rule 130.17(b),” Fort said in a news release.

Chairman Kane and Commissioner Fort agreed that there were four concerns that warranted rejection of the NSA.

  • Allocation of $25.6 million in funds for the Customer Investment Fund (CIF)
  • PEPCO’s role in solar energy production
  • Proposed use of CIF funds for sustainablity projects and Low Income Home Energy Assistance Program (LIHEAP) payments and modernization of the District’s power grid
  • The method for allocation of CIF funds to District government agencies deprives the Commission ability to ensure funds are being used to enhance the power grid and benefit customers

Commissioner Willie Phillips released a separate opinion on the merger.

“I applaud the parties for negotiating a settlement that I believe is in the public interest. The Joint Applicants worked to address deficiencies outlined by the Majority’s initial order on the merger, and got most of the parties to agree to a settlement. However, today’s decision has effectively moved the goal post in order to reject the settlement. So, I cast my vote today to allow my colleague to circulate proposed terms, for the sole purpose of giving the Settling Parties an avenue to consummate their agreement, instead of resulting in an outright denial,” Phillips said in a news release.

PEPCO and Exelon will have two weeks to come up with a revised agreement after Friday’s vote.

“The Commission’s order prescribes new provisions that we and the settling parties must carefully review to determine whether they are acceptable. Once we have had a chance to study the order and confer with the settling parties, we will have more to say about what it means and our next steps,” PEPCO and Exelon officials said in a joint news release.



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Willie James Inman

About Willie James Inman

Willie James Inman is a Community Engagement Specialist and Multimedia Journalist at Montgomery Community Media (MCM). You can email story ideas at winman@mymcmedia.org or reach him on Twitter @imwilljames.


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