“Mayor Bowser to Announce Negotiated Settlement for Pepco-Exelon Merger”


So much for the Pepco-Exelon Merger being rejected by the D.C. Public Service Commission…from a press release:

“Today at 4:30 p.m., Mayor Muriel Bowser, the People’s Counsel, the Attorney General and other stakeholders will be joined by Exelon Corporation and Pepco Holdings, Inc. to announce a settlement in the Exelon-Pepco merger negotiations. The agreement delivers on Mayor Bowser’s commitment to improve affordability, reliability and sustainability for ratepayers in the District.

The new agreement increases Exelon’s originally proposed investment in the District from $14 million to $78 million. The settlement will be put forth to the Public Service Commission for public review and comment.”

19 Comment

  • GDoN?

    • Bad deal. A few tens of millions to buy off bowser is chump change for a company that lost $5 billion in market cap when the deal was rejected. This does nothing to address the market power concerns of having a single utility dominate the interstate power market that dc and neighboring states are part of, which will allow Exelon to extract many times larger rents from the dc population than they are offering in this deal.

      The renewable energy provisions in the deal are also worthless: scamming people with pointless microgrids that throw away all the value provided by the bulk power system, a meaningless commitment to “assist in the development of up to 10 MW of solar” (0 MW counts as “up to” 10 MW, “assist” can mean anything, and the U.S. Is installing 1000 times more solar this year alone), a $5 million market-rate loan for RE development (a loan that costs Exelon nothing because a utility’s cost of capital is very low), and a solicitation (but not an actual commitment to purchase anything) within 5 years by any Exelon company (including their wind development arm or any of their other utilities that are buying wind anyway) to buy up to 100 MW of wind. All totally worthless. With Exelon executives moving to dc as part of the deal you can bet they will be back on the Hill within days of the deal being approved, lobbying against renewable energy. Hard to imagine, but Exelon is even worse than Pepco.

      • Exelon doesn’t “dominate” the interstate power market in any way, shape, or form. Far more generation is sold in the PJM market area (which includes DC) by Duke, AES, Allegheny, and American Electric Power, and all DC residents have the right to select their generation supplier, including 100% wind if they so chose. Pepco was actually quite effective in meeting their obligations for supporting customer-owned rooftop solar (something like 98% of interconnection requests completed within the statutory timeframe last year), so I think it’s a fair concern that Exelon won’t be as prompt.

  • thebear

    Ratepayers are going to be left holding the bag. She should have maintained the PSC’s rejection. Mark my word, things will unravel and we’ll be right back where we were in terms of pre-derecho reliability and condition of plant within 5 years. They’ll be begging for significant rate hikes “because we didn’t realize how bad it really was.” Or, “we never said we would do x, y, or z, as part of the deal we suckered you with.”

  • I’ll reiterate what I posted back when the PSC originally rejected the deal, since once again there’s a fair amount of low-information commentary going around. This deal will likely result in more reliable service at a somewhat higher rate, relative to the alternative of allowing PEPCO to retain ownership. PEPCO is an extraordinarily poorly managed utility, and frequently is among the worst in the US in reliability metrics because they do not conduct a sufficiently robust maintenance program, and only replace old and out-of-date components when absolutely necessary. Exelon is much better run in these regards, but conducting better maintenance and replacement programs costs more money, which flow into our rates. It will be important to examine the final deal to see the scope and duration of the “hold harmless” commitments Exelon has made to forgo or reduce rate increases in the coming years. On the whole, I personally am glad that the deal will go through and that the mayor’s office has extracted additional concessions – DC will likely end up with the best deal among the states which have approved this merger. However, other folks are certainly entitled to prefer lower rates and thus, to oppose the merger. It’s just important to remember that the alternative is continued PEPCO ownership.

    • Exelon is seeking a merger BECAUSE their existing nuclear-focused strategy is a hemorrhaging money. Where will all this extra money for repairs come from? Oh that’s right- increased rates. Plus now there’s $60 million extra in “grease the skids” money that needs to be paid back.

      So now DC will have little oversight of a national company that will have little to no motivation in improving service and reliability, while having a disincentive to continue to support green energy growth.

      And lastly, Pepco’s messaging that they couldn’t continue their charitable giving if this merger didn’t go through was completely disgusting. Way to pray on the fears of the poor just to make sure your buyout goes through.

      • While it’s true that Exelon’s nuclear fleet is in real trouble, that has essentially nothing to do with DC or with the distribution infrastructure here. PEPCO (and now, presumably, Exelon) charge rates to DC customers based on the cost plus return on equity of operating their facilities in DC. Utilities of all types do not (and are not allowed to) cross-subsidize different parts of their operations. I did note that the merger will likely result in increased rates, but its essentially impossible to evaluate how that increase might play out without seeing the full deal, and in particular, the hold harmless commitments.

        The DCPSC will retain precisely the same level of control over Exelon as it did over PEPCO, most notably though the authority to approve or deny the rates that Exelon wants to charge DC customers, and through ensuring that Exelon complies with the relevant requirements for supporting rooftop solar.

        • While they can’t cross-subsidize various components, they can make sure that the distribution side is run in a way that favors their in-house generation. I’m sure you’ll see a very slow walk or attempted reversal on home-solar or at the minimum lots of additional red-tape for folks looking that route. As we’ve all seen, there are ways to comply w/ the letter of the law w/o actually following through w/ the intent.

    • Nice concern trolling with the reliability issue.

      It doesn’t take much to understand that it’s not a great idea to expand a monopoly.

      • It’s not concern trolling, it’s just a fact that Exelon’s distribution systems are consistently much more reliable than Pepco’s. Now, that doesn’t guarantee that Exelon will be able to improve the Pepco system to the point where its as reliable as the rest of Exelon’s operating companies. You’re also free to decide that you’d prefer somewhat lower rates for less reliable service.

  • The public service commission is designed to protect the public yet the government is going to override their recommendation? How does that make sense?

    • The government cannot override the PSC’s decision. This is the mayor’s office endorsing the merger, but it’s still up to the PSC whether or not to approve it.

  • Bowser is completely useless. Instead of protecting residents’ interests, she pulls this. Oh well, only 3 more years?

    • You are surprised? Mayor Empty Suit is exactly what we expected her to be, yet the gullible fools in this city voted for her. Next I expect a wholehearted embracing of a football team mascot along with a giant giveaway to get them to move back into the city.

  • I chose wind power, but it is billed through Pepco. Will such contracts hold in the new regime?

    • LOL. You fell for that BS mailer they sent? You know it’s just away to raise rates by calling it “clean energy” right? The “wind” energy is still coming from power plants, they just spend YOUR money to offset it with “carbon credits”. Sorry you got scammed.

      • That’s not true. The power generators are required to publish their actual fuel mix, so it’s easy enough to check. If you use Washington gas as your gas supplier you can choose to have them buy carbon credits to offset your use, but if you choose 100% ind for your electric supplier then there is actual wind power being generated.

      • ^ what he said. Your right to chose your generation supplier is a function of DC law, and that won’t change regardless of who owns the local distribution system. And no, Pepco doesn’t buy “carbon offsets”, they’re actually required to obtain the requisite percentage of their generation based on what consumers decide.

  • Sold out again by mayor who can not think that the residents of this city matters. How many shekels of silver did she and others get for this capitulation. In Maryland their electric bill has already increased by 30 percent and God knows how much will ours increased by. In time our children will bear the cost supposedly negotiated by the elected mayor.

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