[SEE UPDATE: DC PSC OKs Exelon-Pepco Deal.)
By Suzanne Herel
The D.C. Public Service Commission is poised to decide Wednesday the fate of the controversial proposed merger of Exelon and Pepco Holdings Inc.
The $6.8 billion deal looks in doubt, as the most recent proposal by Exelon and PHI was rejected by all but three of the other settling parties.
The companies on March 7 asked the commission to consider three options: Revisit its rejection of the settlement agreement brokered by the administration of Mayor Muriel Bowser; adopt the revised proposal offered by the commission; or accept a third alternative that would include no additional money for a customer investment fund, but would give the PSC more latitude in how to spend it regarding customer rate relief. (See Exelon-Pepco Deal Doubtful as DC Officials Reject Alternatives.)
It asked the commission to rule by April 7.
The Apartment and Office Building Association of Metropolitan Washington was the only settling party to file its support of the commission’s revised proposal.
Those opposing it were the National Consumer Law Center, National Housing Trust and National Housing Trust-Enterprise Preservation Corp., the Office of People’s Counsel, D.C. government and the D.C. Water and Sewer Authority.
They took issue with the PSC’s requirement that $25.6 million of the roughly $78 million customer investment fund earmarked for residential rate relief be held in escrow until the next Pepco rate case and then be considered for disbursement, including to nonresidential customers.
The NCLC/NHT were the only settling parties to voice support for the companies’ third alternative.
“Should option three be rejected, the merger is likely to collapse,” they said. “From the perspective of NCL/NHT, this is contrary to the public interest, and particularly contrary to the interests of low-income households in the district.”
The General Services Administration, the largest consumer of electricity in the district, had not signed on to the settlement negotiated by D.C. government, but had voiced concern that the included rate relief would not be disbursed to non-residential customers. It initially supported the commission’s revised proposal, which addressed that issue, but on March 17 filed comments urging the PSC to reject Exelon’s filing.
The first option proposed by the companies should be rejected because it did not include grounds that the commission’s rejection was “unlawful or erroneous.” The second should be dismissed because it was not approved by all of the settling parties, as the PSC required. The third should be refused as either a petition for reconsideration or a new settlement agreement that would be subject to normal commission proceedings, it said.
Exelon has spent an estimated $259 million over the past two years trying to capture Pepco’s $7 billion rate base.
CEO Chris Crane said in a Feb. 3 earnings call that the company was prepared to immediately begin buying back the 57.5 million shares it issued for the $6.8 billion deal if the merger fell through.
The uncertainty of the merger has taken a toll on Pepco’s stock. In late afternoon trading, it was down 52 cents (2.37%) at $21.45. Exelon shares have remained largely unaffected. In late afternoon trading they stood up 30 cents (0.85%) at $35.18.