Photo by Justin Hoffmann

Photo by Justin Hoffmann

This post has been updated with additional comments on the decision

For the second time, D.C.’s Public Service Commission rejected the proposed merger of Pepco and Exelon in a 2-1 vote. But a commissioner proposed alternative terms, which will now be sent back to the companies, that were approved in a separate 2-1 vote.

Commissioner Joanne Doddy Fort laid out four changes to the proposed acquisition, which include removing Exelon as the developer for solar projects and adding additional penalties for non-compliance. If the utilities agree to the revised terms in 14 days or less, the deal will be considered done without another PSC vote.

Commissioner Willie Phillips voted in favor of the new terms, though he made it clear that he believes the original agreement was sufficient. Chairwoman Betty Ann Kane dissented, arguing that the deal has structural problems that are not in the public interest. In accepting the merger, the “commission will forever be playing whack-a-mole” to protect ratepayers, she said.

The District’s PSC is the final hurdle for the Chicago-based Exelon to purchase Pepco and become the country’s largest electric utility company. New Jersey, Virginia, Maryland, Delaware, and federal energy regulators have all approved the merger.

Amid a chorus of opposition from activists and some councilmembers, the D.C. Public Service Commission originally rejected the deal in August, saying that “it is not in the best interest of the people of the District of Columbia.”

But a month and a half later, Mayor Muriel Bowser announced that she had reached a settlement in support of the merger.

The administration said the new agreement increased the deal’s concessions from $14 million to $78 million; opponents argued the changes were superficial and didn’t address underlying concerns. Since then, there’s been fierce lobbying from both sides.

The deal also got tangled up in political scandal, with opponents requesting an investigation into several of Pepco’s dealings with the administration—including a vague $25 million naming rights deal and the hiring of a then-FreshPAC official to lobby for the deal.

Activists have already expressed dismay about the PSC’s decision. “Although the commission agreed the merger should be denied, its 14 day last chance fix-it proposal is a band-aid on a problem that cannot be fixed. This is an extremely disappointing outcome for the District of Columbia and our entire region,” said Ben Delman the communications manager for D.C. Sun. “In the end, we fear that the corrupting influence of corporate money on our elected officials won the day—again.”

But investors had other thoughts:

Exelon is reviewing the new terms before making a decision. “The Commission’s order prescribes new provisions that we and the settling parties must carefully review to determine whether they are acceptable,” said Exelon spokesman Paul Elsberg.”Once we have had a chance to study the order and confer with the settling parties, we will have more to say about what it means and our next steps.”

Some have speculated, though, that the terms will be acceptable to the utilities.

“The proposed changes are so minor that the PSC is essentially approving the merger,” said Councilmember Elissa Silverman, calling the changes “lipstick on a pig.”

A spokesperson with the mayor’s office said they are looking over the new agreement before issuing a statement.

The General Services Administration, once one of the biggest entities to oppose to the deal, has come around. “We urge the Settling Parties to accept the new conditions proposed by the Commission in response to our stated concerns. As the single largest commercial ratepayer in the District, GSA will continue to advocate on behalf of federal taxpayers,” the federal agency said in a statement.

Filed Under: exelon, merger, pepco, pepco-exelon, PSC, public service commission, utility,