Exelon Closes in on $6.8 Billion Pepco Deal With Settlementby , , and
Exelon would boost customer investment fund to $72.8 million
People's counsel and attorney general agree to settlement
Exelon Corp. moved a step closer to completing its $6.8 billion takeover of utility Pepco Holdings Inc. by announcing a settlement with Washington’s mayor.
As part of the pact, Exelon would move the headquarters of its corporate strategy and utility operations to the U.S. capital, more than double a customer investment fund to $72.8 million and contribute $5.2 million to workforce development programs, a company filing shows. It would also buy 100 megawatts of power from wind farms, Mayor Muriel Bowser, joined by the district people’s counsel and attorney general, said at a press conference in Washington Tuesday.
The mayor’s backing is a step forward in Exelon’s efforts to resurrect its bid for Pepco. The District of Columbia Public Service Commission rejected the deal in August, saying the terms wouldn’t benefit customers. Exelon would become the nation’s biggest utility by customer count should it win its appeal of the commission’s decision. The agency’s approval would be the last regulatory hurdle for Exelon to complete the transaction.
“We have all had concerns about the long-term health and reliability of Pepco,” Bowser said at the press conference, adding that the district went back to the negotiating table to get a better deal. “We knew we had to do better for our city.”
Pepco shares rose 0.6 percent to $26.38 at the close Wednesday in New York after increasing 3.2 percent yesterday. Exelon fell 0.3 percent to $30.13.
Exelon and Pepco said in a joint filing with the utility commission Tuesday that the settlement would deliver an immediate bill credit to residential customers. Exelon would also add at least 100 new jobs for the district and increase charitable contributions as part of the deal.
Support for the settlement wasn’t unanimous. It includes the people’s counsel, the attorney general, the National Consumer Law Center and the National Housing Trust, among others. The D.C. Public Service Commission will give parties until Oct. 16 to comment on the request by the utilities to consider the settlement, according to an order issued Wednesday by the agency.
Some local clean energy groups and officials said they opposed the new pact, saying Exelon’s business model of selling more of its nuclear power is at odds with Washington’s goal of producing more of its own green energy.
“This settlement does nothing to change the fundamental conflict of interest
identified by our public service commission in their unanimous rejection of
this deal,” Anya Schoolman, executive director of merger opponent DC Solar United Neighborhoods said in a conference call Tuesday.
“They have put a little dress on this deal, and it’s fancy, it looks nice,” said D.C. Council Member Mary Cheh, who opposes the takeover. “But in a couple of years, then you’ll see the reality of what this deal means to us, and it’s not good.”
Exelon said it has committed to building up to 10 megawatts of solar power in Washington and will speed the connection times for residents who want to install solar panels on their homes.
The two companies asked the commission to reconsider its previous rejection of the tie-up without requiring them to file a new merger application. Should a new request be necessary, they asked that the commission make a final determination within 150 days.
Exelon Chief Executive Officer Chris Crane has said he wants to add Pepco’s predictable utility revenue to the company’s portfolio, shrinking its reliance on power sold into competitive wholesale markets by Exelon’s nuclear business, the nation’s largest. With Pepco, Exelon would own utilities in cities including Washington, Chicago, Baltimore and Philadelphia.
“We heard the Public Service Commission’s concerns loud and clear, and this new merger proposal presents greater benefits to the district,” Crane said in a statement on Tuesday. “Our settlement includes more than 120 commitments to ensure the merger is unequivocally in the public interest.”