By Suzanne Herel

Maryland Attorney General Brian Frosh called on state regulators to reject Exelon’s acquisition of Pepco Holdings Inc., while the companies more than doubled their offer of ratepayer incentives.

Frosh told the Public Service Commission the $6.8 billion deal was unlikely to improve reliability and would harm competition.

“Post-merger, Exelon will control service to 80% of the state’s ratepayers,” Frosh said. “Internal documents show that Exelon plans to operate its distribution utilities to protect the company’s massive, multi-billion dollar investment in unregulated generation (including its economically challenged nuclear plants) by seeking to control the pace of distributed energy resource penetration in retail service territories.”

Frosh said the deal would only benefit the companies’ shareholders and executives, not ratepayers.

At the same time, the Coalition for Utility Reform and the city of Gaithersburg asked the PSC to require Exelon to up its commitment to renewable energy, energy efficiency and distributed generation. The March 3 filing was made by the coalition’s counsel, energy attorney and Montgomery County Councilmember Roger Berliner, a long-time Pepco critic.

“If the commission chooses to allow one energy company to control 85% of the Maryland market, a company hostile to renewables, distributed energy and energy efficiency among other things, then the commission must insist on a precondition that the merged entity adopt the very best practices in the Pepco service territory as a ‘pilot’ for the rest of the state, practices that simultaneously address the threat to the public interest and are, at the same time, generally recognized as the cornerstone of utilities of the future,” the coalition said.

Increased Rate Credits

Exelon outlined its new offer in a filing March 3 with the PSC.

With Pepco’s agreement, Exelon boosted a reserve that will pay for benefits such as rate credits, energy efficiency and help for low-income customers from $40 million to $94.4 million.

The use of the fund would be at the discretion of the PSC, whose staff had recommended $167 million in credits. Maryland’s consumer advocate, the Office of People’s Counsel, has urged the PSC to turn down the original deal, calling the benefits Exelon offered “either non-existent or woefully deficient.”

Exelon also increased its commitment to reliability, saying performance will be measured on an annual basis beginning next year instead of by a three-year average from 2018 to 2020.

Exelon also said it will offer a one-time amnesty for qualifying low-income families, eliminating unpaid bills that are more than three years past due.

The acquisition would combine Exelon’s electric and gas utilities — Baltimore Gas and Electric, Commonwealth Edison and PECO — with PHI’s Atlantic City Electric, Delmarva Power & Light and PEPCO.

In addition to Maryland, the merger must be approved by regulators in D.C. and Delaware. (See DC Consumer Advocate Seeks Delay in Exelon-Pepco Proceedings.)

The staff of the Delaware PSC has approved the transaction, as has the New Jersey Board of Public Utilities, the Federal Energy Regulatory Commission and the Virginia State Corporation Commission.

Exelon hopes to close the deal in the second or third quarter of this year.

Environmentalists Say Most Marylanders Against Exelon-Pepco Merger

The Chesapeake Climate Action Network (CCAN) last week released the results of a poll it commissioned that shows 61% of Marylanders share the group’s opposition to Exelon’s acquisition of Pepco Holdings Inc.

The telephone poll, conducted by Annapolis-based research firm OpinionWorks, sampled 594 randomly selected registered Maryland voters from Feb. 26 through March 8. It shows only 22% expressing approval, with 17% unsure. It has a margin of error of ± 4%, according to OpinionWorks.

Opposition was strongest in Baltimore City, where 73% opposed the merger. CCAN noted that Baltimore ratepayers have seen four rate hikes in the three years since Exelon acquired Baltimore Gas and Electric.

The pollsters prefaced the question with a statement noting that the Maryland Energy Administration “is opposed to the merger, saying it would create a large monopoly that would be costly for consumers.”

“We now know that this merger is not only a bad deal for Marylanders, but a highly unpopular one as well,” CCAN Director Mike Tidwell said in a statement. “… This deal would harm ratepayers and harm our future ability to generate local, renewable energy.”

On March 3, CCAN and the Sierra Club filed a joint brief with the Maryland Public Service Commission opposing the merger.

Exelon spokesman Paul Elsberg called the poll “fundamentally flawed.”

“The poll was conducted for a group that opposes the merger, not for an unbiased organization. Many of the respondents are not even customers of BGE or Pepco Holdings utilities,” he said. “Testimony provided at community hearings and directly to the PSC shows that there is broad support for the merger in the community.”

— Ted Caddell