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D.C. Attorney General and People’s Counsel Seek Reconsideration of Pepco-Exelon Merger

April 28, 2016—D.C’s Office of People’s Counsel (OPC) and Office of the Attorney General (OAG) filed an application this week asking the District’s Public Service Commission (PSC) to reconsider its March decision to approve the Pepco-Exelon Merger after it had been rejected twice before.

After the most recent rejection, the Commission had offered a roadmap for approving the merger by suggesting some fixes to a settlement agreement that, if approved by the involved parties, would result in the regulators approving the merger. These included:

  • Postponing the determination of how the $25.6 million in rate credits would be used until the utility's next rate case.
  • Transferring $11.25 million from the Customer Investment Fund into an account for Energy Efficiency and Energy Conservation Initiatives primarily focused on low-income households. The PSC said this would be an "ongoing and systemic solution" to helping lower energy usage by vulnerable households.
  • Requiring the utility to commit charitable contributions equal to $1.9 million annually for 10 years in the D.C. area.

The Exelon representatives chose to follow the PSC’s roadmap. However, not all of the nine parties involved in the settlement had agreed to the new terms. D.C. Attorney General Karl Racine had already spoken out against the PSC's revised proposal, saying that the credits for ratepayers that would have insulated them from increased prices through 2019 were an "essential protection" that the PSC removed. Mayor Muriel Bowser, a lead architect of the settlement offered to Exelon and Pepco in October 2015, could not support the PSC's revised plan, which, she said, "guts much needed protections against rate increases for D.C. residents and assistance for low-income D.C. ratepayers."

After the Commission’s late March decision to go ahead with the merger, both the OPC and the OAG are claiming the Commission’s actions were procedurally improper and violated the due process rights of the involved parties by approving changes to the deal that had not been unanimously supported.

OAC’s application requests that the PSC either approve the original October 2015 settlement that protected residential ratepayers from a rate increase through March 2019 and offered millions in other community benefits, including LIHEAP assistance; or disapprove the merger entirely. Sandra Mattavous-Frye, of the OPC, has requested that the Commission reopen the merger docket and allow all parties a chance to comment or reject the merger, stating that, “As the energy regulatory landscape is rapidly evolving and a number of important policy issues will have to be made, I will use the full breadth of my authority to ensure the Commission’s process affords all parties the opportunity to have their positions considered.”

To read more about how the Exelon-Pepco merger fared in other states, please see this article in the Clearinghouse's June 2015 newsletter.

Sources: Press Releases