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The public utility board of the District of Columbia shocked many residents when it denied the Pepco-Exelon merger application on Aug. 25.

The Public Service Commission of the District of Columbia rejected the request for a merger of Pepco Holdings, the Mid-Atlantic power company that supplies the energy needs for its residents and businesses with Exelon Corporation, a company that owns various energy sources subsidiaries such as nuclear power plants. The vote was unanimous, 3-0, and its chairman, Betty Ann Kane, said that advocates of the merger didn’t make the case to the commission’s satisfaction.

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Betty Ann Kane

“The public policy of the District is that the local electric company should focus solely on providing safe, reliable, and affordable distribution service to District residences, businesses and institutions,” Kane said. “The evidence in the record is that the sale and change in control proposed in the merger would move us in the opposite direction.”

Commissioner Joanne Doddy Fort expressed concerns about what will happen to District ratepayers if the merger takes place. “The proposed merger would diminish Pepco’s ability to directly raise issues that address the needs of District ratepayers while posing regulatory challenges for the commission and the interested parties who participate in commission proceedings,” she said.

Willie L. Phillips, a commissioner, said that “I agree with my colleagues that the merger application as filed is a bad deal for the District, however, I am disappointed in the loss of the many opportunities that could have achieved benefits for our local communities and across the region.”

Exelon officials told District residents and political leaders that the company would help Pepco in its reliability challenges by providing resources it needed to deliver better service. Company officials promised residents that rate increases in the future would be done in consultation with customers and offered a community benefits package that would have given thousands of dollars and resources to non-profits in the city.

The Exelon-Pepco merger seemed as if it would become reality, with Maryland, Delaware, New Jersey, Virginia and the Federal Energy Regulatory Commission approving the deal. However, with the District’s rejection, no merger will take place.

In a joint statement issued by Exelon and Pepco, the companies weren’t pleased with the commission’s action. “We are disappointed with the commission’s decision and believe it fails to recognize the benefits of the merger to the District of Columbia and its residents and businesses,” the statement said. “We continue to believe that our proposal is in the public interest and provides direct immediate and long-term benefits to customers, enhances reliability and preserves our role as a community partner. We will review our options with respect to this decision and will respond once that process is complete.”

Muriel Bowser

A commission spokesperson told the AFRO that Exelon and Pepco have 30 days to ask the commission to reconsider its decision.

The support for the merger among District leaders was not strong. D.C. Mayor Muriel Bowser (D) cheered the commission’s decision.”I support the decision against the proposed merger,” the mayor said. “Moving forward, we want to ensure that D.C. utility rate payers receive quality service, that we maintain and grow jobs in the District and that we keep D.C. on our continued path toward sustainability.”

Bowser and the members of the D.C. Council had no role in the commission’s decision. D.C. Council members such as Brianne Nadeau (D-Ward 1), Mary Cheh (D-Ward 3), Charles Allen (D-Ward 6), David Grosso (I-At Large) and Elissa Silverman (I-At Large) publicly expressed reservations on a variety of issues such as service reliability and a community benefits package that they felt was wholly inadequate. The concerned council members were bothered by the lucrative payout that Pepco shareholders and executives would have gotten had the deal gone through while District ratepayers would have gotten a one-time credit on their energy bill that amounted to no more than $200 in many cases.

Twenty-six out of the 40 advisory neighborhood commissions voted not to support the merger.

Cheh and her colleague, D.C. Council member Vincent Orange (D-At Large), attended the hearing along with dozens of residents, supporters, and opponents of the merger. She was also satisfied with the commission’s decision.

“This decision allows the District of Columbia to continue to provide programs to residents, particularly those who are low-income, to help pay their energy bills,” the council member said. “We can continue to build on the city’s sustainability plan that calls for the use of clean energy. If the deal had gone through, I suspect District ratepayers would be paying for the bad financial conditions of Exelon’s nuclear holdings through what can be called ‘creative accounting.’”

Orange, who used to work at Pepco as a regional vice president and didn’t publicly take a stand on the merger, shrugged his shoulders after the vote. “We have to move forward,” he said. “We have to make sure that Pepco provides good and reliable service to customers. We shall see.”