WASHINGTON — The D.C. Public Service Commission rejected the merger of Pepco Holdings and Exelon Corp. Tuesday.
The District’s decision to reject the merger may kill the $6.8 billion deal, which would create a massive energy provider — the largest in the Mid-Atlantic region — unless a compromise can be reached.
The commission found the proposed merger not to be in the public interest. PSC board member Betty Anne Kane said Tuesday that “this decision is forever,” and that it wasn’t enough for the companies to prove that the public wouldn’t be harmed by the deal; they had to prove the public would be helped.
Kane also said that the new company would present regulatory challenges.
“We found no benefit to District ratepayers in a new management structure that did not include the Pepco president, thereby diminishing the influence of Pepco,” she said. “Pepco would become a second-tier company in a much larger organization whose primary interest is production, not distribution.”
The rejection of the merger was met with cheers in the meeting room. Several members of the D.C. Council were against the deal and Councilwoman Mary Cheh tells WTOP that she was “deliriously happy” to hear that the merger had been rejected.
“The real beneficiaries of this, had this gone through, would have been the officers and shareholders of Pepco and the Exelon Corp.,” Cheh said.
Sandra Mattavous-Frye, people’s counsel for D.C., says that the decision is a win for consumers, who will retain more say over the public utility company. The move also allows local officials to push the company to add green jobs and renewable power sources.
The companies have 30 days to ask the commission to reconsider the decision. Exelon and Pepco said in a statement that they will consider their options.
“We are disappointed with the commission’s decision and believe it fails to recognize the benefits of the merger to the District of Columbia,” the statement said. “We continue to believe our proposal is in the public interest and provides direct and immediate long-term benefits to customers, enhances reliability and preserves our role as a community partner.”
The intended merger was announced last year; it had been under fire from a D.C.-based citizens’ advocacy group, environmentalists, longtime critics of Pepco and a group of local elected officials, green energy companies and local municipalities called the Coalition for Utility Reform.
This May, the Maryland Public Service Commission approved the deal, albeit with a long list of conditions and after a contentious process.
The merger, which would put all of Pepco Holding Inc.’s utilities in four states and D.C. under the control of Chicago-based Exelon, was approved by federal regulators plus state regulators in New Jersey, Delaware and Virginia.
WTOP’s Kate Ryan and The Associated Press contributed to this report.
Editor’s note: A previous version of this story incorrectly identified the value of the deal.