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The District of Columbia Public Service Commission (PSC) rejected the full settlement agreement recently proffered by Exelon in its attempt to acquire Pepco but has set conditions for its acceptance.

On Feb. 26, the PSC voted down, 2-1, the Nonunanimous Full Settlement Agreement and Stipulation (NSA) that was negotiated by Mayor Muriel Bowser’s administration and with the support of the Office of the People’s Counsel and other interested parties. Chair Betty Ann Kane and Commissioner Joanne Doddy Fort said the NSA was not in the public’s best interest. Commissioner Phillips dissented, however, saying the “NSA is in the public interest and should be approved.”

Kane offered four reasons for rejecting the NSA and therefore the merger. She said that non-residential ratepayers couldn’t participate in the proposed $25.6 million Customer Investment Fund (CIF), which was unacceptable. Exelon as the sole developer of a solar generation facility at Blue Plains and Pepco as the developer of four public purpose microgrids are moves that would be inconsistent with the District’s restructured market, she continued. The use of the CIF for sustainability projects and Low Income Home Energy Assistance Program payments don’t improve Pepco’s distribution system and doesn’t advance the commission’s objective to modernize the District’s energy system, she added. And, the proposed method of allocating the CIF to District government agencies and designated funds deprives the commission of the ability to enhance the distribution system that would benefit District ratepayers, Kane concluded.

However, Fort offered an alternative to Exelon. Fort’s plan would require that Exelon defer a decision on the $25.6 million Customer Base Rate credit until the next Pepco rate increase; remove the provision that would designate Exelon as the solar developer and require Pepco to manage a process that would allow D.C. Water and Sewer Authority to select the solar developer through its procurement procedures; create an escrow fund with two sub-accounts at Pepco to hold $32.8 million of the $72.8 million CIF funded by Exelon; $21.55 million to modernize the District’s energy system and $11.25 million for energy efficiency and conservation initiatives that would focus on housing units for low-income District residents and strike Pepco’s provisions to develop public purpose microgrids.

Fort said she didn’t believe the Bowser-administration supported NSA was “fatally flawed” and the merger would get her support if her plan was accepted by Exelon. In the second vote, the offer of the alternative plan was approved with Fort and Phillips voting in favor of it while Kane voted “no.”

Kane said the alternative plan presented by Fort had its flaws, saying in essence that the Fort plan “will adversely affect Pepco and create a diversion of focus that carries it in the opposite direction from D.C. law and policy.”

Exelon has 14 days to consider whether to accept Fort’s plan and, if they do, Fort and Phillips said they will vote to approve the merger. D.C. Council member Mary Cheh (D-Ward 3) doesn’t support the merger and wasn’t happy with Fort’s plan.

“They are just tinkering around the edges ,” Cheh said. “This is an inherent conflict of interest and isn’t the way we do business in the District of Columbia. I am disappointed with Commissioner Fort and this is a loss for the District of Columbia and will result in higher rates for all of us.”

Vincent Morris, Exelon’s regional communications director, told the AFRO that a decision hasn’t been made whether to accept Fort’s plan.

“We are still studying the order at this point,” he said.