Capital Losses?

$6.8 billion Exelon/Pepco merger on life support

Court action in Washington, D.C. has stifled a potential merger that would create the nation’s largest utility service, leaving many to believe the motion is dead for the second time since its proposal in 2014.

exelonpepcologoExelon, of Chicago, Ill., and Pepco, headquartered in D.C., have been engulfed in a two-year odyssey in the corporations’ attempts to merge their nearly 9 million combined customers, 30,000 plus employees, and over 50,000 megawatts of installed energy capacity to become one.

Impasse of the $6.8 billion merger would signal a proverbial fist-pump for environmentalists and renewable energy advocates across the country. Moreover, it would have an impact on the D.C. business economy for outsiders who view the area as unfriendly to big corporations.

Capital city mayor Muriel Bowser has been an influential figure throughout the process. She has both supported and opposed aspects of the deal during its various phases. Her most recent stance, vocalized Tuesday night, may have swung the momentum against the utilities giants irreversibly. Bowser opposed the recently amended version of the proposal by the D.C. Public Service Commission. The merger agreement calls for a $180 million termination fee if Exelon cannot gain regulatory approval for the deal.

Washington, D.C. Mayor Muriel Bowser.

Washington, D.C. Mayor Muriel Bowser

After the public service commission first rejected the merger last year, saying it would not benefit ratepayers, Bowser’s administration had negotiated for the companies to pay the District of Columbia $78 million for its support for the merger from District, Delaware, Maryland, New Jersey and federal regulators. That would have cushioned District residents from rate increases for four years, contained job guarantees and included investments in renewable energy.

District regulators rejected the plan last week, saying it was “not in the public interest.” They also said it would exacerbate an imbalance in which federal taxpayers and businesses subsidize residential rates. Bowser said Tuesday that the current PSC proposal fails to protect against rate increases for District residents and assistance for low-income rate payers.

Here is the Mayor’s official statement:

“From the start, we focused on affordability, reliability and sustainability. We pulled everyone together to negotiate an agreement that was a great deal for DC residents. The Public Service Commission rejected an agreement that had the support of the Peoples Counsel, Attorney General, DC Water and others. The PSC’s counterproposal guts much needed protections against rate increases for DC residents and assistance for low-income DC rate payers. That is not a deal that I can support.”

D.C. citizens have taken to the streets to oppose the merger.

D.C. citizens have taken to the streets to oppose the merger.

Exelon includes ComEd (Commonwealth Edison, Chicago), PECO (Philadelphia Electric Co., Philadelphia), and BGE (Maryland). Pepco includes Potomac Edison, Baltimore Gas & Electric, and Dominion Virginia Power, serving approximately 2.2 million people and homes from nine facilities and 150 substations.

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Trackbacks/Pingbacks

  1. Capital Gains? | Electrical Apparatus Magazine - March 24, 2016

    […] be “in the public interest”, something that is a direct challenge point of opponents, including the city’s mayor Muriel Bowser. To support this argument, the Commission said it would deposit $72.8 million in a customer […]

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