Capital Gains?

Surprise approval of Exelon-Pepco merger

Washington, D.C. may soon have to make room for property like the Exelon Plaza, outside the company's headquarters at the Chase building in Chicago. The long-debated $6.8 billion Exelon/Pepco merger was approved Wednesday.

Washington, D.C. may soon have to make room for property like the Exelon Plaza, outside the company’s headquarters at the Chase building in Chicago. The long-debated $6.8 billion Exelon-Pepco merger was approved Wednesday.

In what was a highly unanticipated decision — even to experts and analysts on the subject — District of Columbia regulators approved the precarious Exelon-Pepco Holdings merger on Wednesday afternoon. The $6.8 billion deal creates the largest utility provider in the United States.

In limbo for the past two years, the merger had become a determinant of sorts in the competition between the capital’s business community and its renewable energy advocates and environmentalists. Washington, D.C. businesses were lobbying for its approval so as not to deter other businesses from enriching the area’s economic appeal. The latter two groups, along with many smaller utilities across the country, called for a blockage to prevent a corporate giant that could both set the region well behind the rest of the country in clean energy efficiency and raise taxes in the community.

The compelling force behind the decision was the D.C. Public Service Commission, which determined the deal to 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 investment fund, direct $11.25 million for energy efficiency and conservation programs for low-income residents, and place another $21.55 million in pilot projects such as grid modernization.

It is important to note that the approval could still face obstacles. Opponents such as Bowser and the PowerDC coalition could pursue a stay that would delay implementation. Pepco representatives at the hearing did not claim victory, but rather emphasized that they would review the order before publicizing the company’s next steps.

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