By Suzanne Herel

Exelon would retain Pepco Holdings Inc.’s D.C. headquarters, not forcibly reduce the workforce for at least two years and match any commitments it has made to New Jersey, Delaware and Maryland if it is permitted to buy Pepco in a proposed $6.8 billion deal, CEO Christopher Crane testified Monday before the District’s Public Service Commission.

Those promises include customer bill credits, grid reliability improvements, renewable energy projects, energy efficiency programs, help for low-income consumers and the creation of trails.

D.C. and Maryland are the last holdouts to the transaction, which Crane agreed Monday is an acquisition rather than a merger, given the size of the Chicago-based energy giant. The evidentiary hearings, which are being webcast, continue through April 8 in D.C. and are scheduled for April 15-17 in Maryland.

The direction of questioning followed opening statements delivered by the D.C. Office of People’s Counsel and the D.C. government, who strongly oppose the deal. Crane was grilled on Exelon’s commitment to renewable and distributed energy, protecting ratepayers’ interests over the profitability of its nuclear generators, retaining a true local presence and how Exelon would be held accountable to its promises.

“We hope to, within the District and other districts, to enter settlement negotiations to satisfy stakeholders in the process if we could,” Crane said.

Regarding jobs, Crane said, “There will be no reductions of the utility staff for two years — there’s actually a commitment to hire.”

In part, that’s because about 400 employees are eligible for retirement, he said, and Exelon wants to bring some of the work currently being contracted in-house. While Exelon can’t promise to preserve staff “in perpetuity,” Crane said there was nothing viewable in today’s landscape that would indicate the need for future layoffs.

Crane said Exelon cannot alter its proposal to D.C. without resetting the clock for the decision timeline, but he welcomed additional concessions either through a negotiated settlement or a unilateral decision by the commission.

When asked by People’s Counsel attorney Jason Gray what would be the “tipping point” that would make the acquisition unprofitable, Crane said that to his knowledge, Exelon had not conducted such an analysis.

“You don’t have any concern that applying any of these provisions would put you over the tipping point?” Gray asked.

“I don’t believe any of these do,” Crane responded.

In his opening statement, John Coyle, an attorney representing the D.C. government, noted that the transaction involved a premium of more than 24% over the current market value of Pepco stock, when in essence, he said, “Exelon is proposing $6.8 million for a $4.3 million balance sheet.”

“The mere size of the premium begs the question of why it is being offered,” Coyle said, suggesting that commissioners engage in what he called an old D.C. tradition and “follow the money.” (See Consumer Advocate Seeks Delay in Exelon-Pepco Proceedings.)

Md. County Reps Want More from Deal

Meanwhile, Exelon continues to encounter opposition in Maryland, where the Montgomery County Council has split from County Executive Ike Leggett, arguing that the settlement he reached with Exelon doesn’t go far enough to protect ratepayers and encourage renewable energy.

The nine-member Council on Tuesday unanimously passed a resolution asserting that Leggett’s settlement “does not adequately address the overarching issues that have led the state, the Office of People’s Counsel, the environmental community and other public interest organizations to maintain that the merger is contrary to the public interest.”

Montgomery and Prince George’s counties agreed to support the takeover in return for additional commitments. (See Exelon, Pepco Ink Deal with Md. Counties, but Critics Stand Firm.)

The resolution, spearheaded by energy attorney Roger Berliner, cites fears that Exelon will seek to raise rates to offset losses at its nuclear plants and will favor that generation at the expense of renewable and distributed energy resources.

“If the serious risks the proposed merger poses to the public interest can be mitigated, it can only be mitigated by very strong, verifiable and financially accountable commitments by Exelon to holding down costs and to clean, renewable, distributed energy, including energy efficiency, values at the heart of Maryland’s energy policy,” the resolution states.

Patrick Lacefield, a spokesman for Leggett, told Bethesda Now that the executive took the council’s position into account before signing the settlement with Exelon.

“The alternative to this settlement is not necessarily something better. The alternative could well be no deal at all. … We made this decision in the public interest to change the status quo. It is an executive decision.”

The Maryland Public Service Commission is set to finish reviewing the takeover on May 8.

The acquisition has been approved by the New Jersey Board of Public Utilities, the Federal Energy Regulatory Commission, the Virginia State Corporation Commission and the staff of the Delaware Public Service Commission.

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