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On Tuesday, Oct. 6, Pepco Holdings Inc. and Exelon Corporation announced that they have reached a newly-inked settlement with D.C. Mayor Muriel Bowser and others on the companies’ proposed $6.8 billion merger.
They anticipate that the new agreement will pave the way for the District’s Public Service Commission [PSC] to approve the settlement package.
Last August, the PSC rejected the merger in an order that laid out its specific concerns as to why the deal did not appear to be in the best interest of District consumers. However, after the PSC rejected the earlier proposal on Aug. 25, Exelon and Pepco went back to the drawing board. Federal regulators had already signed off on the deal, as did public service commissions in Delaware, Virginia, New Jersey and Maryland.
During Tuesday’s announcement, Bowser said while she originally supported the PSC’s initial rejection, she later chose to negotiate a new agreement.
“We have all had concerns about the long-term health and reliability of Pepco,” she said “So the District kept the conversations with Pepco and Exelon going. We knew we had to do better for our city. My team negotiated a deal that puts District residents and ratepayers first – by delivering a public utility that is cost-effective, dependable and environmentally sound.”
Others joining Bowser and signing on to the settlement include: the Office of the People’s Counsel, the Apartment and Office Building Association of Metropolitan Washington, the District of Columbia Water and Sewer Authority, the National Consumer Law Center, the National Housing Trust and the Office of the Attorney General of the District of Columbia.
“Having achieved significant, immediate, tangible monetary benefits for our residents – and keeping in mind that the public will again have an opportunity to weigh in with the Public Service Commission on this revised merger plan – the office of the Attorney General is of the view that the settlement agreement is in the public interest,” said D.C. Attorney General Karl A. Racine in a released statement.
“This agreement contains improved benefits with regard to sustainable, renewable energy production as well as enforcement and oversight mechanisms to ensure that Pepco and Exelon live up to their end of the bargain,” he said.
The new package of benefits includes commitments to provide low-income assistance, fewer and shorter outages, bill credits, a cleaner, greener District and investment in local jobs and D.C.’s economy.
Representatives from Pepco and Exelon spoke to members of the press on Oct. 6 to discuss the details of the settlement. Those on hand included: Donna Cooper, Pepco region president; Wendy Stark, Pepco Holdings deputy general counsel; Melissa Sherrod, Exelon vice president of corporate affairs; and Paul Bonney, Exelon senior vice president and deputy general counsel.
“We do not expect what happened previously to effect this review,” Bonney said. “It will be a merging of the process we went through and we’re asking them [the PSC] to consider this settlement. We propose a schedule in that filing where we will have a decision three months from today. All parties will have a full opportunity to express their concerns.”
Chris Crane, president and CEO of Exelon, said the new merger proposal presents greater benefits to the District.
“Our settlement includes more than 120 commitments to ensure the merger is unequivocally in the public interest,” he said.
Under the new proposal, Exelon will more than double direct benefits to customers by providing $72.8 million for bill credits, low-income assistance, renewable energy and energy efficiency programs in the District. These funds are expected to offset distribution rate increases for residential customers through March 2019. Of the direct funds provided, $16.15 million would be used to help low-income customers.
Todd Nedwick, Housing and Energy Efficiency Policy Director, National Housing Trust, said, “The settlement provides meaningful benefits to vulnerable, low-income District residents. [It] provides at least $6.75 million for energy efficiency retrofits to make multifamily homes healthy and affordable. Energy efficiency in affordable housing lowers utility costs, keeps housing affordable and reduces greenhouse gases [result in] a triple win.”
In addition, the new proposal will expand solar energy in the District by developing up to 10 megawatts [MW] of new solar generation and making it easier and faster for customers to install solar panels. Exelon will provide another $5 million of capital to governmental entities to develop renewable energy in the District and will purchase 100 MW of wind energy.
Still, not everyone believes the new proposal will be good for the District.
“This settlement does nothing to change the fundamental conflict of interest identified by the PSC in their unanimous rejection of the bad deal,” said Anya Schoolman, president of the DC SUN. “Allowing Exelon to take over Pepco will take money out of the pockets of D.C. ratepayers while providing them no tangible benefit. The token renewable energy provisions are a smokescreen that will allow the company to dismantle the progress the District has made to develop renewable energy.”
WI staff writer Sarafina Wright contributed to this article.
WI staff writer Sarafina Wright contributed to this article.