Sunday, November 19, 2017

D.C. Mayor Announces Deal on Exelon-Pepco Merger

By Suzanne Herel

D.C. Mayor Muriel Bowser and Exelon CEO Chris Crane announced Tuesday that Exelon would invest $78 million in the district and protect consumers from rate hikes for three years under a settlement they hope will persuade the Public Service Commission to approve the company’s $6.8 billion acquisition of Pepco Holdings Inc.



“I believe this proposal is good for our economy and environment, and I’m asking the PSC to support the merger,” Bowser said in an afternoon press conference that also featured two former critics of the merger: People’s Counsel Sandra Mattavous-Frye and Attorney General Karl Racine.

“My sole objective has been to assure all consumers receive tangible and measureable benefits. … The applicants came back and took us seriously — they made major concessions,” Mattavous-Frye said. “The bottom line is: This is a good deal.”

Racine, who had filed a 40-point critique of the merger with the PSC and went on to be part of the negotiating team, also gave his support.

“We believe we’ve got a good deal that does look out for the ratepayers on Day 1,” Racine said. “I’m satisfied that we’ve pushed Pepco-Exelon to do the right thing.”

Bowser said the joint applicants are awaiting guidance from the PSC on what form the filing should take — a new application or an amendment to the existing case.

One of the main concerns dogging the deal has been a perceived conflict of interest between Exelon’s commitment to its nuclear fleet and pursuing the district’s goal of renewable energy.

Mattavous-Frye said the concern would be addressed with “checks and balances” included in the settlement.

“We have provisions that require the company to implement specific environmental and sustainability policies,” she said, including the strengthening of “ring-fencing” protections separating PHI’s finances from that of Exelon’s nuclear fleet and its other affiliates.

Anya Schoolman, president of solar power advocate group DC SUN, said the settlement “does nothing to change the fundamental conflict of interest identified by the Public Service Commission.”

“Allowing Exelon to take over Pepco will take money out of the pockets of D.C. ratepayers while providing them no tangible benefit,” Schoolman said. “It will also harm the ability of D.C. residents to develop their own clean, cost-effective energy. The token renewable energy provisions in the Exelon settlement are a smokescreen that will allow the company to dismantle the progress the district has made to develop renewable energy.”

The $78 million investment is five times more than Exelon’s initial pledge of $14 million and would go toward promoting sustainability, increasing reliability and supporting low-income residents, Bowser said.

Of that, $17 million would be put toward conserving natural resources and the environment and promoting energy efficiency. The merger, she said, will improve reliability, in part by allowing microgrids to connect to the grid.

Exelon also would set aside $25 million to offset rate increases through March 2019, and within 60 days of the merger it would disburse $14 million to customers — a one-time credit of about $50.

Exelon and PHI have committed to moving 100 jobs to the district from elsewhere and hiring at least 102 union employees within two years, meanwhile dedicating $5.2 million in workforce training for district residents, Bowser said.

“I believe this settlement is in the best interest of the district now and in our future,” said the mayor, saying that it reflects the “fresh approach to energy” she has brought to the district.

Said Mattavous-Frye: “My goal has been to ensure all customers, but particularly residential customers, got the best deal possible. … I could not, without abrogating my statutory responsibility, not take into account how consumers would benefit. I will do everything in my ability to make sure these commitments are followed through.”

Exelon’s Crane also spoke briefly. “We really do appreciate the responsibility of serving the nation’s capital,” Crane said, adding, “The last 30 days has been very beneficial for us.



“Our enhanced local presence will continue to drive our focus on what the needs are in the community.”

The merger already has been approved by FERC and regulators in Delaware, New Jersey, Maryland and Virginia. The state deals contain a “most favored nation” status, which means the companies may have to revisit those agreements to achieve parity with the concessions being offered the district.

“We will have to sit down and determine what effect this will have on Delaware’s settlement,” said Dallas Winslow, chair of the Delaware Public Service Commission. Winslow said he could not comment further because the issue will come before him and the commission.

Pepco shares rose Tuesday afternoon as word of the settlement circulated, with shares rising as high as $26.49 in after-hours trading, up more than $1 on the day. Exelon shares, which also rose earlier in the afternoon, fell after the details became clear, closing down 9 cents to $30.21 and falling further after hours.

Last week, Exelon asked the agency to reconsider its decision, taking issue in a 43-page filing with the PSC’s findings that the deal would not be in the public interest and it would not be in the public interest to identify additional conditions that could make it so. The filing came at the same time the mayor confirmed her office was discussing a settlement. (See Exelon Appeals DC PSC Decision; DC Mayor Confirms Negotiations.)



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