Regulators in the District of Columbia rejected the proposed merger of power companies Exelon and Pepco on Tuesday, saying the deal would not benefit ratepayers.
The three-member D.C. Public Service Commission voted unanimously to reject the merger. It had already been approved by the Federal Energy Regulatory Commission and by Delaware, Maryland, New Jersey and Virginia, leaving the District as the final regulatory hurdle.
Chicago-based Exelon announced in April 2014 that it was buying Washington, D.C.-based Pepco Holdings Inc. for $6.8 billion. The deal would create a large electric and gas utility in the mid-Atlantic region, serving about 10 million customers.
The merger would proposes to combine Chicago-based Exelon and its three electric and gas utilities (Baltimore Gas and Electric Co., Commonwealth Edison Co. and PECO Energy Co.) with D.C.-based Pepco Holdings’ utilities — Delmarva Power and Light Co., Atlantic City Electric Co. and Potomac Electric Power Co.
The companies were able to reach settlements with opponents of the deal in other jurisdictions, but not in the nation’s capital.
Commission chairman Betty Ann Kane, a former D.C. Council member, said the companies did not meet their burden of showing that the proposed merger would benefit the public, and she said the new company would present regulatory challenges.
“We found no benefit to District ratepayers in a new management structure that did not include the Pepco president, thereby diminishing the influence of Pepco,” she said. “Pepco would become a second-tier company in a much larger organization whose primary interest is production, not distribution.”
The companies have 30 days to ask the commission to reconsider the decision. Exelon and Pepco said in a statement that they will consider their options.
“We are disappointed with the commission’s decision and believe it fails to recognize the benefits of the merger to the District of Columbia,” the statement said. “We continue to believe our proposal is in the public interest and provides direct and immediate long-term benefits to customers, enhances reliability and preserves our role as a community partner.”
Opponents in the District argued the deal would cost jobs for their residents and hurt the environment. Mayor Muriel Bowser, a Democrat who had not previously weighed in on the merger, said in a statement that she supported the commission’s decision. Four members of the D.C. Council had called on the commission to reject the deal.
D.C. government lawyers had urged the commission to reject the deal unless a list of 40 conditions were met — among them ring-fencing protections, a requirement to keep Pepco headquartered in the District and funding of sustainable development and energy efficiency programs.
Regulators in the District, where activists have been outspoken in their opposition to the deal, were the last to decide on the merger following approvals of the deal by officials in Maryland, Delaware, Virginia and New Jersey.
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