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Pepco and Exelon make last-ditch effort to save $6.8-billion merger Pepco and Exelon make last-ditch effort to save $6.8-billion merger
(about 4 hours later)
Exelon and Pepco filed papers on Monday seeking a compromise with the D.C. Public Service Commission — a last-ditch attempt to save their proposed $6.8 billion merger, which the commission rejected last month.Exelon and Pepco filed papers on Monday seeking a compromise with the D.C. Public Service Commission — a last-ditch attempt to save their proposed $6.8 billion merger, which the commission rejected last month.
Washington’s electric provider and Exelon, a Chicago-based nuclear energy giant, refused to sweeten the pot by offering the District any more money. But they said they would support efforts by D.C. regulators and politicians to come up with a new plan for how to distribute $78 million the utility companies offered the city in exchange for its support. Washington’s electricity provider and Exelon, a Chicago-based nuclear energy giant, refused to sweeten the pot by offering the District any more money. But they said they would support efforts by D.C. regulators and politicians to come up with a new plan for how to distribute $78 million the utility companies have offered the city in exchange for its support.
The commission, which stands as the last regulatory hurdle for the merger, recently said no to a plan negotiated by D.C. Mayor Muriel E. Bowser that would have used part of that money from the companies to shield residents from rate increases through 2019. The commission, which stands as the last regulatory hurdle for the merger, recently said no to a plan negotiated by D.C. Mayor Muriel E. Bowser that would have used part of that $78 million to shield residents from rate increases through 2019.
The regulators offered a counter-proposal that did not guarantee holding down rates. That plan was rejected by Bowser (D), the District’s attorney general and the Office of the People’s Counsel, which advocates for ratepayers.The regulators offered a counter-proposal that did not guarantee holding down rates. That plan was rejected by Bowser (D), the District’s attorney general and the Office of the People’s Counsel, which advocates for ratepayers.
[D.C.. mayor rejects merger; $6.8 billion deal appears dead]
In their filing, Exelon and Pepco said that if rate relief is the biggest concern, city regulators and politicians could direct a large majority of the $78 million to that cause — away from microgrid projects and other environmental efforts.In their filing, Exelon and Pepco said that if rate relief is the biggest concern, city regulators and politicians could direct a large majority of the $78 million to that cause — away from microgrid projects and other environmental efforts.
The companies’ filing appeared certain to again delay a final decision in the merger. Friday had been the deadline for parties to agree or propose an alternative. In all, nine separate parties have to approve a compromise. The companies’ filing appeared certain to delay, yet again, a final decision on the merger. Friday had been the deadline for parties to agree or propose an alternative. In all, nine separate parties have to approve a compromise.
“This alternative proposal provides flexibility in determining a path forward for the merger, addressing the guidance the Commission provided in its order and the desire to protect District residents, including those most in need, from rate increases,” Exelon Chief Executive Christopher Crane said in a news release that accompanied Monday’s filing.“This alternative proposal provides flexibility in determining a path forward for the merger, addressing the guidance the Commission provided in its order and the desire to protect District residents, including those most in need, from rate increases,” Exelon Chief Executive Christopher Crane said in a news release that accompanied Monday’s filing.
“It maintains the full $78 million in benefits for the District and Pepco customers agreed to in the original settlement,” Crane said. “It maintains the full $78 million in benefits for the District and Pepco customers agreed to in the original settlement.”
Whether such a compromise is possible among D.C. politicians and regulators, however, remains entirely unclear. Whether such a compromise is possible among D.C. politicians and regulators, however, remained entirely unclear.
Bowser had originally directed tens of millions of the settlement offer to green energy projects to buffer criticism from environmentalists that the merger would expand the reach of a nuclear power giant and undercut city efforts to move toward greater dependence on sustainable energy sources such as wind and solar. Bowser, D.C. Attorney General Karl A. Racine and People’s Counsel Sandra Mattavous-Frye all declined to comment on the companies’ joint proposal Monday, saying they were reviewing the details.
The compromise also does not address how money from the utilities would be directed to help low-income residents. The Bowser plan that was rejected by the commission included money for a fund to subsidize utility payments for low-income residents. The commission said in its ruling there was no proof Bowser’s administration would use the money for that purpose and not raid it for other city spending, which happened last year. Environmentalists and other critics of the merger celebrated the fact that none of the D.C. officials who would have to approve the deal signed onto the latest compromise proposal. Opponents of the deal called on city regulators to reject any further changes to try to accommodate the merger.
In rejecting the regulators’ counter-proposal, Sandra Mattavous-Frye, the People’s Counsel, singled out the loss of money for low-income residents as a major driver of her decision. [People’s Counsel in spotlight with Pepco-Exelon merger]
“The inability to afford to pay their bills is a reality for many of our residents and cannot be trivialized and dismissed,” Mattavous-Frye said in announcing her decision. “The Public Service Commission shouldn’t let Exelon rearrange deck chairs on the Titanic. It is time for D.C. to move on,” said Ben Delman, a spokesman for the Community Power Network.
Bowser had originally directed tens of millions of the settlement offer to green energy projects, hoping to buffer criticism that the merger would expand the reach of a nuclear power giant and undercut city efforts to move toward greater dependence on sustainable energy sources such as wind and solar.
Bowser also wanted to put some of the money in a fund to subsidize utility payments for low-income residents. The commission rejected that proposal, saying there was no proof Bowser’s administration would use the money for that purpose and not raid it for other city spending, which happened last year.
Sandra Mattavous-Frye, the People’s Counsel, singled out the loss of money for low-income residents as the major reason that she withdrew her support for the merger last week. “The inability to afford to pay their bills is a reality for many of our residents and cannot be trivialized and dismissed,” Mattavous-Frye said in announcing her decision.
That issue of subsidies for the poor will also need to be resolved in connection with any effort to direct the majority of the money from the settlement to holding down rates. Doing so would hold down residential electric bills in the short-term. But residents could then face multiple years’ worth of increases all at once after 2019.That issue of subsidies for the poor will also need to be resolved in connection with any effort to direct the majority of the money from the settlement to holding down rates. Doing so would hold down residential electric bills in the short-term. But residents could then face multiple years’ worth of increases all at once after 2019.
The commission has indicated that residential rates will need to rise over that term any way, in order to rebalance a situation in which large businesses and the federal government have come to subsidize D.C. residential rates.The commission has indicated that residential rates will need to rise over that term any way, in order to rebalance a situation in which large businesses and the federal government have come to subsidize D.C. residential rates.
The companies’ compromise proposal gives the commission leeway to spend as much as $45.6 million to protect commercial and residential customers from rate increases through 2019.The companies’ compromise proposal gives the commission leeway to spend as much as $45.6 million to protect commercial and residential customers from rate increases through 2019.
In its filing, the utilities are requesting the commission limit public comment on the latest proposal to seven business days.In its filing, the utilities are requesting the commission limit public comment on the latest proposal to seven business days.
It also requests that the commission issues its ruling by April 7, at the latest.It also requests that the commission issues its ruling by April 7, at the latest.