(Photo by Rachel Sadon)

Last week, it seemed as though Pepco and Exelon snatched victory from the jaws of defeat—winning revised terms for a merger from the D.C. Public Services Commission. Now, those same terms may prevent the necessary government support to complete the deal.

Mayor Muriel Bowser, who negotiated the now-rejected settlement with the companies in October, opposes the deal as laid out by the PSC.

“The PSC’s counterproposal guts much needed protections against rate increases for D.C. residents and assistance for low-income D.C. rate payers. That is not a deal that I can support,” Bowser said in a statement.

This follows word from the Office of the People’s Counsel this morning that the new deal “eviscerates the benefits and protections essential to render the proposed merger in the public interest.”

Bloomberg explains the changes outlined by the PSC:

The alternative proposal would defer a decision on the allocation of $25.6 million of customer credits until Pepco’s next rate case, remove Exelon as the developer of a 5-megawatt solar facility at a D.C. water treatment plant, create a $32.8 million fund out of a promised $72.8 million in customer investments for upgrading Pepco’s distribution system and for energy-efficiency programs for low-income residents and strike provisions regarding Pepco developing microgrids.

According to Pepco, this isn’t necessarily the end of the line. “We continue to have conversations with the D.C. government and other settling parties about the Commission’s order and the new provisions. The discussions are ongoing, and we will provide an update at the appropriate time,” says Vincent Morris, Pepco’s regional communications director.

Advocates who oppose the deal want the mayor’s office to cut off these talks. “After a little more than a year, it is still clear that no amount of fiscal sweeteners, backroom deals or pro-Exelon television ads could distract from the obvious threats to consumer finances and the environment,” said Allison Fisher, outreach director for Public Citizen’s energy program. “It’s past time to put a stake in the heart of this proposal.”

This is just the latest twist for the merger. Last August, the PSC rejected a previous version of the merger, saying that “it is not in the best interest of the people of the District of Columbia.”

Then, Mayor Bowser’s administration, along with the OPC, D.C. Attorney General Karl Racine, and others, introduced a new iteration of the settlement that she said “puts District residents and ratepayers first—by delivering a public utility that is cost-effective, dependable and environmentally sound.” While the majority of the D.C. Council agreed, four councilmembers urged the PSC to reject the merger.

Activists claim that Bowser’s settlement is an example of pay-to-play politics, citing her administration’s dealings with Pepco—a $25 million naming rights deal and one of the land swaps that are paving the way for the D.C. United stadium at Buzzard Point—as the real reason for her support of the merger. They also worry that D.C. ratepayers could be on the hook if Exelon’s nuclear investments don’t pan out.

However, supporters of the deal say that it will lead to better service for customers.

At Friday’s PSC meeting, it seemed at first as though the commission was heeding the advice of the deal’s opponents—voting down the settlement 2-1. But a second vote followed, wherein the PSC offered new terms that would allow the merger to move forward. And now, opposition to those terms could prevent Chicago-based Exelon from purchasing D.C.’s energy distributor and becoming the country’s largest electric utility company.

Pepco’s stock has been down since this morning, when the OPC came out against the new deal.