Pepco-Exelon Merger Rejected by D.C. Public Service Commission


From a press release:

“The POWER DC coalition released the following statement in response to today’s decision by the D.C. Public Service Commission to reject Exelon’s attempt to acquire Pepco.

“Power DC is glad that the Public Service Commission followed the will of the District’s electric customers. Thousands of those customers, dozens of Advisory Neighborhood Commissions, and at least six D.C. Councilmembers strongly opposed Exelon’s acquisition of Pepco because it is not in the public interest of the District.

As the Commission recognized in its decision, the proposed acquisition would have been a substantial step backwards in the District’s efforts to move toward more sustainable electricity generation and greater reliance on local, renewable energy. It would have exposed D.C. residents and businesses to the risk of steeply rising electricity bills.

Pepco has always affirmed its capability to provide a high level of service for its customers without this merger, and it has demonstrated a much greater willingness than Exelon to integrate new, customer-centered technologies. We urge Exelon not to pursue its acquisition further, but to accept the Commission’s decision and the overwhelming rejection by the District’s customers. We look forward to working with Pepco to accelerate the progress that the District has made in adopting energy efficiency, distributed solar generation and other affordable, clean energy technologies throughout the city.”

18 Comment

  • I don’t know if this is a “good” thing or a “bad” thing – I lean “god” = I am surprised it was rejected.

  • +1
    (Good + 1 = Great!)

  • I wonder what happens now that DC has rejected the merger while MD and DE have approved it. Does the whole deal tank or will the rest of Pepco merge?

    • Yes, if one state/jurisdiction doesn’t agree, then the deal doesn’t go through for all parties–I’m sure Exelon will appeal the decision.

  • Great news- the merger would have been bad for rooftop solar and would probably have led to higher electricity prices

  • Can someone explain why I should oppose the merger? On the one hand I get the impression it’s probably bad for me as a consumer. On the other hand, the anti-merger cause is supported by a lot of the local crazies on the listserv who I tend to reflexively disagree with. Help me out on this one!

    • Here are some reasons to oppose:
      1. The merger would make the largest utility in the country. This could be harder for DC to influence than Pepco.
      2. Pepco does distribution, not generation (mostly). The merged company would do mostly generation, through nuclear. I’m pro-nuclear power, but worry that DC ratepayers would be asked to eventually foot the bill for running and decommissioning Exelon’s old plants. In opposing the merger Racine asked for ring-fencing to protect against this.
      3. If we’re moving to more distributed, renewable generation, that bill could come due earlier. Excelon has opposed renewable energy.
      4. Exelon offered a huge acquisition premium ($2.5 B, ~30%) to Pepco shareholders. That money has to come either from efficiencies or ratepayers. Exelon didn’t prove it would be the former.

      Investors and ratepayers can’t both win, unless there are some huge efficiencies to be found.

  • Happy about the decision! I think a little more review will be a good thing. Also, PECO (from the photo) is the Philadelphia Electric Company, which Excelon already ate in another merger about a decade ago – nice subtle merger jab, @PoP!

  • So, a lot of low-information commentary going around about this. There’s both some good and a some bad that goes with this decision, and your view of which is greater depends on your perspective.

    Above all, Exelon is a much better run company than PHI across the board. Exelon’s various electric distribution companies have much better reliability metrics than PHI did (as do most utilities), and Exelon has various economies of scale as a larger company that allow it to better plan and maintain its facilities. It is likely, although not guaranteed, that a successful merger would have resulted in more reliable service for Pepco customers over time. Conversely, the main reason that result would be achieved is through a more aggressive maintenance and asset upgrade and replacement program – many of Pepco’s frequent outages come from a bare-minimum program of system maintenance and a failure to identify and replace aging, high-risk assets in a timely manner. Doing that costs additional $$$, which go directly into your rates for distribution service. That being said, Pepco is a ruthless and profitable corporation, and they will make concessions to less reliable service where doing so is more profitable, although I would not expect so to the degree that Pepco is infamous for.

    With respect to renewable power, no company that owns traditional generation assets is going to be gung-ho about distributed solar integration – it cuts straight into their bottom line. That’s why we have the DC Public Service Commission, and to the extent that folks feel like Pepco hasn’t been good about supporting solar power, they need to lean on the DCPSC to hold Pepco’s feet to the fire to actually get people who want rooftop solar hooked up to the grid.

    Relatedly, there isn’t much difference between PHI or Exelon when it comes to how much of your power will come from renewable generation. For starters, everyone in DC is entitled to chose their generation supplier (, comparable programs in MD and VA). If you want your power to come from 100% wind generation, you’re free to do so at any time. If you haven’t selected a supplier, Pepco (regardless of ownership) actually goes out and purchases its generation from other utilities at the best available cost (regardless of source) on a semi-open market, and passes along the cost. The cost of that generation, regardless of who owns Pepco, is set to rise anyway due to a new market setup in the mid-Atlantic region, designed to provide more reliable generation in extreme scenarios such as the Polar Vortex ( But the rejection of the merger won’t have a significant impact on generation source.

    The whole cost-benefit analysis basically comes down to whether you want lower bills or more reliable service. Due to the need for an aggressive maintenance and replacement program, an approved merger would have been better service at a higher price. Rejection of the merger means the status quo.

    • This is the most intelligent thing I’ve read in three days. Thank you.

    • There’s some good information in your post, but I disagree on cost-benefit. You overlook the third leg of the stool. We trade off corporate profits against reliability (maintenance) against costs (as ratepayer). Without effective regulation in the monopoly of distribution we can readily have low reliability and high rates! (As you point out, Pepco kind of embodies this 🙂

    • If the Exelon/Pepco merger were to be approved, the energy provider and distribution company would be one in the same. This would cause a conflict between Exelon and DC’s growing solar-powered homes, businesses, schools, government buildings, and other entities. As these mergers become a reality across the country, communities have seen penalties come down on families and small businesses who have solar-powered homes. This comes in the form of increased energy bills (when they should be going down), and more economic disincentives to installing solar, and hurdles to getting panels connected to the grid. Having an Exelon/Pepco merger would lead DC down the same path toward fewer renewable energy options, just as our national energy economy is starting to diversify.

      • It’s not accurate to say that “the energy provider and distribution company would be one in the same.” The majority of Exelon’s generation fleet is far too geographically distant to serve Pepco customers, and moreover, Exelon doesn’t purchase power directly from units (even its own), but rather purchases capacity through an auction process overseen by a regional grid operator.

        I won’t pretend that US utilities welcome solar generation, but the “penalties” you describe, to the extent that they’re real, aren’t a function of utility mergers. All DC-area utilities, regardless of ownership structure, are bound by DC Public Service Commission/MDPSC/VA Corp. Commission rules which require them to accommodate rooftop solar on a non-discriminatory basis. The approval or disapproval of the merger won’t impact that one bit. As I noted above, to the extent that you feel like Pepco is dragging it’s feet in signing off on a particular solar installation at your home or business, there’s a process for complaining to the PSC about it.

  • I Dont Get It

    Pepco’s stock was down 16% today.

    • what don’t you get? why the stock was down? or why the merger was rejected? the stock dropping like a stone makes perfect sense to me since DC rejected the merger.

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