A decision on the merger appeal and settlement may not be made until early 2016, according to the D.C. Public Service Commission.
If the merger appeal with settlement is approved, it will be the final piece to enable the Exelon, Pepco merger to go through, making Exelon the nation’s largest electric utility. The merger has already been approved by The Federal Energy Regulatory Commission, the U.S. Justice Department and the states of Maryland, Delaware and New Jersey. However, if it is not, the merger will not happen, despite other jurisdictions approval.
Key executives for Pepco and Exelon recently sponsored a town hall meeting to discuss the benefits of the proposed merger.
Dave Velazquez, the executive vice president of Pepco and Bill Von Hoene, the senior vice president and chief strategy officer of Exelon conducted the meeting on Dec. 8 with Denise Rolark Barnes, publisher of the Washington Informer Newspaper and chairman of the National Newspaper Publishers Association board, acting as the moderator. Velazquez told the Howard Theatre audience of 150 people that the merger is in the best interest of District ratepayers and residents.
“The merger will not cause rates to immediately increase,” Velazquez said. “Sixty days after the merger, customers will get a one-time $50 credit on their bill and we have set up a program of $16 million to assist low-income and senior residents and for energy assistance programs.”
On Aug. 25, the District of Columbia Public Service Commission rejected Exelon’s $6.4 billion bid to acquire Pepco. The commission said that Exelon hadn’t proven, for a number of reasons that the merger was in the best interest of District residents and rate payers.
Shortly after the vote, D.C. Mayor Muriel Bowser’s administration officials quietly worked on a settlement package that was announced by the mayor on Oct. 6. The package included the one-time credit for ratepayers, assistance in various forms for low-income and senior citizen ratepayers and no rate increases until 2019.
After the settlement was announced, D.C. Attorney General Karl Racine and Sandra Matavous-Frye of the Office of the People’s Counsel, who initially opposed the merger, supported it. Nevertheless, there is strong sentiment in the District that the merger will benefit shareholders and high-level employees of the merged company but Hoene said that’s not true.
“We want to be citizens of Washington, D.C.,” Hoene said. “The package that we negotiated is in response to what the commission said.”
Hoene said that merger customers will have the benefit of the resources that Exelon possesses. Exelon owns energy companies ConEd, Baltimore Gas & Electric (BG&E) and PECO and Hoene said that merger customers will have access to those utilities ideas and resources to carry out its mission.
Hoene said that since ConEd and PECO joined Exelon, there is has been a 37 percent decrease in outage frequency, 40 percent decrease in outage duration and customer satisfaction has gone up 30 percent. He said that under Exelon leadership, BG&E has risen from being one of the worst utilities in the country to the top 25.
Some residents expressed concerns about a huge rate increase that will not take place until March 2019. Velazquez said that there are mechanisms designed to make sure that while the increase will take place, customers will not be adversely affected by it.
“Remember, in 2019, under the merger, there will not have been an increase in rates for five years,” he said. “The last rate increase that took place was in March 2014. We don’t approve rate increases, the public service commission does.”
Reginald Vinson asked Hoene about jobs for District residents. Hoene said that Exelon will within two years of the merger hire 102 union employees and set up a $5.2 million workforce training program for District residents.
In addition, Hoene said that a major Exelon office will be located in the District, with top level executives working and living in the Washington area.
Both Velazquez and Hoene said that they were sensitive to the contracting needs of small businesses. Hoene said that BG&E’s small business contracting program is a success, noting that $182 million has gone to those businesses and Exelon itself has given $1.3 billion in contracting opportunities.