D.C. officials are asking the city’s highest court to overturn a multibillion-dollar merger between local energy supplier Pepco and Chicago-based energy generator Exelon that utility regulators approved nearly a year ago.
The D.C. People’s Counsel Sandra Mattavous-Frye and D.C. Attorney General Karl Racine have filed briefs in D.C. Court of Appeals stating why the Public Service Commission’s March 23 decision to approve the Pepco-Exelon merger was legally flawed.
“This appeal boils down to two fundamental questions: Did the PSC, in the most important case it has ever decided, fail to provide parties with adequate opportunity to be heard and act outside of its authority in approving the merger? OPC submits the answer is yes,” Ms. Mattavous-Frye said, referring to her Office of the People’s Counsel.
Ms. Mattavous-Frye is asking the court to send the case back to the commission so that she can argue for the restoration of consumer benefits that had been negotiated in the agreement but were struck down by the PSC.
Mr. Racine filed a similar brief, saying that the PSC rejected a deal that had been agreed to by the utility companies and more than a half-dozen city agencies, leaders and other stakeholders.
“Rather than accepting this carefully negotiated and balanced settlement agreement that we believe provided maximum benefits to District residents, the PSC proposed alternative terms for the merger against the opposition of the District and most parties involved,” Mr. Racine said.
The deal brokered by his office, Mayor Muriel Bowser and Ms. Mattavous-Frye was the product of an “arduous negotiation process with the public interest in mind, but the PSC’s actions denied District residents the benefits of that process,” Mr. Racine said.
A PSC spokesman said the commission couldn’t comment but is preparing a responsive brief, which is due to the court on March 13.
The court is expected to hear the case in May, but no date has been set.
Pepco said it stands by the merger deal and is confident the court will affirm the PSC approval.
“We will continue to move forward as one company with a focus on providing safe, reliable, affordable and clean energy to all our customers,” a Pepco spokesman said Wednesday.
In March PSC approved a $6.8 billion merger to create the largest publicly held utility company in the United States after two years of debate and rejected deals.
The deal set aside $72.8 million for the District in an escrow customer investment fund that includes $25.6 million to offset rate increases, $14 million for a one-time direct bill credit to be distributed among residential customers, $11.25 million for energy efficiency programs for low-income residents and $21.55 million for grid modernization projects.
The terms gave the commission control of the investment fund rather than the mayor’s office. That had been a sticking point for city officials, who wanted to control the funds to help offset rates only for residential customers through 2019. The PSC has said it wants rate freezes for the federal government and businesses as well.
Mr. Racine argues that the alternative terms PSC approved last year “simply displace terms of the settlement agreement that already satisfy the factors that the PSC uses to determine whether a merger is in the public interest.”
And some of the terms the commission ordered, the attorney general says, are illegal. He argues that provisions giving the PSC control over renewable energy programs are invalid under the city’s Clean and Affordable Energy Act, which terminated the commission’s role over renewable energy programs.
• Ryan M. McDermott can be reached at rmcdermott@washingtontimes.com.
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