Washington, D.C. agency cannot agree to Pepco, Exelon proposals on merger

Industry:    2016-03-14

A Washington, D.C. agency that advocates for utility customers rejected on Friday a possible compromise that would allow power company Exelon Corp (EXC.N) to merge with Pepco Holdings Inc (POM.N). The companies need permission to merge from the various public service commissions where they operate, and have been unsuccessful in winning over Washington despite offering a $78 million payment to the U.S. capital. In the most recent development in what has become an extended back and forth between the companies and various agencies, Washington’s Office of the People’s Counsel, which advocates for utility customers, said it could not sign on to a compromise developed by Exelon and Pepco because it felt it did not do enough to protect Washington’s poorest. “Most critical to me were the benefits for residential ratepayers, particularly low-income residents who struggle to pay their electric bills,” said People’s Counsel Sandra Mattavous-Frye. Exelon said that it hoped that a compromise could be reached on how the money would be spent so the deal could go forward. “We hope the Public Service Commission will find a solution that secures all of the benefits for the District and Pepco’s customers and urge it to consider the alternatives we have outlined to approve the merger,” the companies said in a joint statement. Exelon said that it did not have an immediate comment. The $6.8 billion deal would create the largest U.S. power distributor. The deal was rejected on Aug. 25 by the Public Service Commission of the District of Columbia, which later agreed to reconsider the deal. The companies then reached a compromise, along with Mayor Muriel Bowser and other agencies, where they would give Washington $78 million at least partly aimed at countering rate increases. But the Public Service Commission, which regulates power, gas and telecommunication companies in the District of Columbia, rejected that in February, and offered its own counterproposal which weakened the plan to hold down rates. The proposed transaction has won approval from Delaware, Maryland, New Jersey, Virginia and the U.S. Federal Energy Regulatory Commission. Pepco does not generate electricity but delivers it to about 2 million customers in the District of Columbia, Delaware, Maryland and New Jersey. Chicago-based Exelon is the largest nuclear power operator in the United States, according to its website.

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