Does the Exelon-Pepco merger still stand a chance?
Perhaps those closest to the deal saw it coming, but many in the electric power industry were caught off-guard by the news that the Washington, D.C., Public Service Commission had voted down the Exelon-Pepco merger.
The merger, if allowed to move forward, would have created an enormous electric and gas utility in the mid-Atlantic region serving about 10 million customers. The PSC reportedly based its Aug. 25 decision on numerous factors, including the merger’s impact on public safety, conservation and environmental goals. While the PSC consented that the merger “presented some tangible benefits to D.C. residents,” it ultimately ruled that it was “not in the best interest of customers.”
D.C. was the last hurdle in the proposed $6.9 billion merger between Chicago-based Exelon Corp. and District-based Pepco Holdings Inc. The merger had already been approved by regulators in four states — Maryland, Delaware, New Jersey and Virginia — and given the green light by the Federal Energy Regulatory Commission. Those states that had given their blessings added several conditions to doing so. Their conditions, which primarily revolved around improving reliability, providing credits to customers and a variety of energy and investment concessions, enabled the companies to ultimately reach settlements with opponents of the deal in order to gain approvals.
Exelon and Pepco now plan to petition the Washington, D.C., PSC for a rehearing on the merger. How it might go is anyone’s guess. But understanding the concessions made in other states might shed light on what the companies may have to do to get the D.C. Public Service Commission to allow them to move forward.
Pepco and Exelon ultimately accepted nearly four-dozen conditions placed on their proposed merger by Maryland’s Public Service Commission, including a $100 rate credit for Delmarva and Pepco residential customers (to be awarded in $50 increments over one year) and $43.2 million for energy efficiency programs in Prince George’s and Montgomery counties and the Delmarva Maryland service territory.