DC Regulators Block Exelon’s $6.8B Takeover of Pepco
Washington, D.C. isn’t OK with handing over its hometown utility to Exelon. On Tuesday, the D.C. Public Service Commission denied Exelon’s $6.8 billion takeover of Pepco Holdings, dealing a major blow to one of the country’s biggest utility merger deals.
The commission voted unanimously to reject Exelon’s bid, finding that it would not be in Pepco’s customers’ best interests. As the Washington Post reported, commissioners expressed concern that Pepco would become a “second-tier company” in the merger, losing its ability to concentrate on a “cleaner and greener” grid.
Exelon’s “primary interest is not in distribution, but in generation,” the decision read, highlighting Exelon’s position as one of the country’s top nuclear power-plant owners. “At a time of change in the energy field, Pepco’s ability to adapt will be constrained by an increased management bureaucracy.”
Tuesday’s decision presents a serious threat to the merger, which got underway in April 2014 and has already received approval from state regulators in Maryland, New Jersey and Virginia, as well as from the U.S. Federal Energy Regulatory Commission. Both utilities have 30 days to ask the commission to reconsider and are expected to press their case.
This is only the third time in 30 years that state utility regulators have rejected utility mergers, although a few other deals have fallen apart after regulators have imposed terms to which parties couldn’t agree. Indeed, Tuesday’s decision comes three months after Maryland’s Public Service Commission voted 3-2 to a deal that would have set 46 conditions on the combined companies, including improved reliability targets and allocating more than $150 million to customer rate credits and energy efficiency programs.