DC Mayor Muriel Bowser has backed Exelon Corp’s $6.4B takeover of Pepco, reversing course on her previous opposition to the proposed merger of the utility behemoths. The merger will now head back before the DC Public Service Commission, which unanimously rejected it back in August.
The PSC’s approval is the final hurdle to the merger, which has already been approved by the Justice Department, Federal Regulatory Commission and the states of Delaware, Maryland and New Jersey. The PSC had rejected it due to concerns that the deal was not in the best interests of ratepayers. They fear that the merger could halt progress towards alternative energy sources and that Pepco will become a second-tier company.
The Mayor came around to the deal after some tough negotiations yielded the desired results. “We kept negotiating until we got the deal that puts District residents and ratepayers first,” Bowser said. Exelon has committed to investing in DC to the tune of $78M, which will include job guarantees, ratepayer assistance and solar-energy subsidies. The Chicago-based company has also agreed to spend $17M on alternative energy.
As part of the deal, several of Exelon’s top corporate officers will have to move to DC within six months after the merger becomes official. Exelon would also move its entire Exelon Utilities division, now based in Philadelphia, to DC. According to SEC filings, the company will establish DC as its “co-Corporate Headquarters,” sharing the distinction with its longtime Chicago home.
The sheer size of the merger has attracted attention from environmentalists, attorneys and analysts across the country as well as from local business leaders and advocacy groups. AOBA of Metropolitan Washington, in a statement released to Bisnow, believes that any concerns with the merger have been addressed. “With the support of the DC government and Exelon, this agreement preserves and enhances the DC Public Service Commission’s stated policy to gradually end negative class rates of return that unduly burden commercial ratepayers," AOBA executive vice president Margaret “Peggy” Jeffers said.
There is no guarantee that the three-member PSC will approve the merger, but the utilities fave filed a motion to reopen the record. A meeting of the regulators has been scheduled for Wednesday, where they will presumably discuss the companies’ request. Should they decline to reopen the record, the settlement agreement would be filed by the companies as part of a new application. [WaPo]
