Exelon Corp. and Pepco Holdings Inc. (PHI) have reached a settlement agreement with District of Columbia (DC) opponents to their planned merger.
The companies came up with a package of benefits to DC ratepayers and residents that includes commitments to provide bill credits, low-income assistance, fewer and shorter outages and investment in the local economy and job creation.
The settlement is with the DC government, the Office of the People's Counsel and the Office of the Attorney General of the District of Columbia, as well as the Apartment and Office Building Association of Metropolitan Washington, the DC Water and Sewer Authority, the National Consumer Law Center and the National Housing Trust.
The package was shaped to address the concerns articulated by the DC Public Service Commission (PSC) in its August order denying approval of the merger (see Daily GPI, Aug. 25). The PSC is the only holdout among parties whose approval is required for the merger to proceed. The settlement agreement requires PSC approval.
Exelon announced its purchase of PHI, the parent company of the Potomac Electric Power Co. (Pepco), in April 2014 (see Daily GPI, April 30, 2014), and the application seeking a change of control was filed two months later.
The $6.8 billion merger, which would create the top Mid-Atlantic electric and gas utility with close to 10 million customers, would combine Exelon's three electric and gas utilities -- Chicago's Commonwealth Edison Co., Baltimore's BGE and Philadelphia's PECO -- and PHI's three electric and gas utilities -- New Jersey's Atlantic City Electric, Delaware's Delmarva Power and Washington, DC, and Maryland's Pepco.
"We heard the Public Service Commission’s concerns loud and clear, and this new merger proposal presents greater benefits to the District," said Exelon CEO Chris Crane. "Our settlement includes more than 120 commitments to ensure the merger is unequivocally in the public interest."
Under the proposal, Exelon would more than double direct benefits to customers by providing $72.8 million for bill credits, low-income assistance, renewable energy and energy efficiency programs in DC. The funds are expected to offset distribution rate increases for residential customers through March 2019. Of the direct funds provided, $16.15 million would be used to help low-income customers.
Pepco and Exelon have committed to invest in advancing the District's long-term sustainability goals, including $3.5 million for new renewable energy and $3.5 million for energy efficiency programs. Exelon plans to significantly expand solar energy by developing up to 10 MW of generation and making it easier and faster for customers to install solar panels. Exelon would provide another $5 million to governmental entities to develop renewable energy and purchase 100 MW of wind energy. In addition, Pepco would work with the District to develop at least four microgrids.
The new package of benefits also includes commitments by Pepco Holdings and Exelon to promote local jobs and an additional $5.2 million for DC workforce development. Exelon also agreed to continue Pepco's support for the local community by guaranteeing charitable contributions of $19 million over 10 years to nonprofits that serve residents.