Officials cite concerns over possible Pepco-Exelon merger

WASHINGTON — Pepco and Chicago-based Exelon want to merge. On Tuesday, Pepco released a statement saying the two utilities have reached a settlement with Montgomery and Prince George’s counties that would benefit customers. Industry observers say that settlement is aimed at demonstrating the potential benefits of the merger.

Under the settlement, customers would get a one-time bill credit of $50, $50 million would be invested in increased reliability and alternative energy sources, and $57 million would be devoted to energy-efficiency programs in Prince George’s and Montgomery counties. There would also be $4 million dedicated to workforce development in both counties. The deal would also include plans to develop hiker-biker style trails along some of the Pepco transmission paths.

Montgomery County Executive Ike Leggett has been quoted by Pepco officials in the news release as saying the settlement a “good deal,” but Montgomery County Councilman Roger Berliner, who has been critical of Pepco in the past, says while the settlement has some positive features, it falls seriously short of being a good deal for rate payers. “This has raised big, big issues that go beyond reliability and this settlement does not address those big, big issues.”

Among Berliner’s concerns; what he calls Exelon’s “business bias towards its own nuclear power plants.” Exelon, Berliner says, has “a track record of supporting its nuclear power plants at the expense of renewable and distributed energy resources.” Berliner also points out that should the merger go through, Exelon would control nearly 80 percent of Maryland’s energy market.

On the plus side, Berliner says the proposal on improving reliability is a good thing. Although Pepco was already under pressure from regulators to improve reliability, Berliner says, “this accelerates the pace considerably.” Still, he’s against the settlement and the merger. And he’s not alone.

Paula Carmody, Maryland People’s Counsel, has filed a brief opposing the merger. And she says the settlement is a partial settlement—the state regulators, the Public Service Commission, has set up more hearings regarding the settlement. As Maryland’s regulators of utilities, the PSC has the authority to approve or deny both the settlement and the merger. Regarding the position of Prince George’s and Montgomery counties in settling with Pepco, Carmody says that doesn’t make the transaction a done deal. “The fact that certain parties have entered into a settlement to settle their specific issues does not decide the case.”

Regarding the $6.3 billion merger, Carmody says among the biggest concerns her office has is whether the merger is in the public interest. Like Berliner, Carmody sees potential problems, not just because Exelon would control so much of the Maryland energy market, but because the Illinois-based firm is a generator of energy, while Pepco is in the energy distribution market. The purchase of Pepco by Exelon, says Carmody, benefits Exelon because “it does offset a lot of the riskiness going on with their nuclear power plants, particularly in the state of Illinois.” But the benefit to the Pepco customer is, in Carmody’s view, questionable.

The Maryland Public Service Commission is expected to issue a decision on both the settlement and the merger in April.

Kate Ryan

As a member of the award-winning WTOP News, Kate is focused on state and local government. Her focus has always been on how decisions made in a council chamber or state house affect your house. She's also covered breaking news, education and more.

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