D.C. Halts Huge Energy Company Merger because of Threat to Growth of Renewable Energy Sources

Sunday, August 30, 2015

The purchase of an East Coast electric utility was halted Tuesday when the District of Columbia Public Service Commission blocked it, at least partly because of concerns that the new company would not focus on renewable energy.


Chicago-based Exelon, the parent company to Baltimore Gas and Electric, is attempting to take over Pepco, which supplies power in several mid-Atlantic states and Washington, D.C. For the merger to go through, the commissions governing public utilities in each of the six jurisdictions involved had to approve it. All but the District of Columbia gave their blessings to the deal, which is valued in excess of $6 billion.


Exelon is primarily a power-generation company with more nuclear plants than any other U.S. utility. The company has consistently fought renewable energy efforts and the rejection of the merger came as a welcome surprise to clean energy advocates.


“Exelon has a long history of using the company’s political influence to restrict renewable energy policies,” Gabe Elsner, executive director of the Energy & Policy Institute in Washington, D.C., told ThinkProgress. “If the D.C. PSC had approved the merger, Exelon would have been empowered to continue its anti-renewable campaign, but the PSC’s rejection of the merger could help ensure that these two states’ renewable energy policies remain in place and continue to support the growth of renewable energy industry in D.C. and Maryland.”


Loss of local control and the lack of evidence for promised service improvements also figured in the D.C. commission’s decision (pdf).


“The public policy of the District is that the local electric company should focus solely on providing safe, reliable and affordable distribution service to District residences, businesses and institutions,” wrote commission chairwoman Betty Ann Kane in her opinion. “The evidence in the record is that sale and change in control proposed in the merger would move us in the opposite direction.”


Exelon’s refusal to allow a Pepco member to serve on its executive committee would diminish Pepco’s influence in the restructured entity, said the three-member commission that unanimously voted to block Exelon’s application. “Pepco will become a second tier company in a much larger corporation whose primary interest is not in distribution, but in generation,” predicted the commission. “At a time of change in the energy field, Pepco’s ability to adapt will be constrained by an increased management bureaucracy.”


The commission said it considered the views of both proponents and opponents of the merger, including testimony from more than 3,000 non-profits, small businesses and residents.


The commission’s decision in the high-profile pending merger was reported to have taken all parties by surprise, from the power industry to renewable energy advocates. “Most people felt the best shot of stopping this merger was in Maryland, not D.C., so most of us were shocked when they voted unanimously” to deny the merger, Mike Tidwell, director of the Chesapeake Climate Action Network, told ThinkProgress. “What happened today is good for the long-term health of wind and solar.”


Exelon has 30 days to come back with a revised deal that addresses at least some of the District’s concerns. “Moving forward, we want to ensure that D.C. utility ratepayers receive quality service, that we maintain and grow jobs in the District, and that we keep D.C. on our continued path toward sustainability,” Washington Mayor Muriel Bowser said in a statement in support of the commission’s decision, according to The Washington Post.

-Steve Straehley, Danny Biederman


To Learn More:

D.C. Regulator Rejects Proposed Pepco-Exelon Merger (by Thomas Heath, Washington Post)

Exelon-Pepco Merger Rejected In D.C. (by Carrie Wells, Baltimore Sun)

After 4 States Approved a Big Utility Merger, D.C. Shocked Everyone by Denying It Over Clean Energy (by Ryan Koronowski, ThinkProgress)

Summary of Commission Decision (Public Service Commission of the District of Columbia) (pdf)


Leave a comment