Capital Buzz: Pepco outlines how merger will reduce outages


Bethesda merchant banker Greg Rosenbaum, above, along with two partners, has purchased the Dayton Dragons minor league baseball team. (Dayton Dragons Professional Baseball Team/Dayton Dragons Professional Baseball Team)

There are some bold predictions being offered as part of the merger application filed last week by Chicago-based Exelon and Pepco Holdings with the Maryland Public Service Commission.

Pepco’s deputy general counsel, Wendy Stark, said in an interview that Maryland’s 537,000 Pepco utility customers are going to get better service in the form of fewer and shorter power outages.

That will translate into better economic output for the entire region, because fewer and shorter outages mean businesses stay open longer. Remember last winter’s power outages from snow storms?

“Suddenly, businesses don’t have to close because the power is out,” said Stark, who is charged with handling the regulatory approval process for Pepco. “The restaurants stay open. The grocery stores keep selling food. Gas stations keep pumping gas, medical practices treat patients and businesses keep serving their customers — all without interruption.”

Stark said Pepco’s customers in Montgomery and Prince George’s counties suffer an average of 1.62 power interruptions each year, based on data from 2011 to 2013 (that includes the 2012 apocalyptic derecho). Stark said the new merger will reduce the number of outages on average to 1 per year by 2020.

How?

“We will be able to learn from each other and determine the best ways to design and operate our systems,” she said. “Utilities use different construction methods. We will be able to analyze these and see which works best. Utilities are designed differently, and they don’t typically share that detailed information. We will now have greater access to that kind of information that before would not have been shared.

“We also will continue our ongoing reliability work doing such things as replacing poles, upgrading poles and wires, installing automated switches to mitigate the number of customers affected by an outage, and using different materials such as replacing wooden cross arms with fiberglass cross arms.”

The other trick will be reducing the duration of outages from just under three hours for the average customer (176 minutes) to just over 1.5 hours (101 minutes), also by 2020. She said the company can do that by drawing on Exelon, which is a massive utility with millions of dollars worth of equipment and hundreds of repairman surrounding the Washington region.

When the lights go out, “we are going to pull in crews from Exelon utilities in Philadelphia and Baltimore to restore service here,” Stark said. “There is real economic benefit in improved reliability.”

The Buzz hears:

Paul Singh’s Crystal City-based Disruption Corp. is now selling advice to people and companies interested in investing in start-ups. Singh recently filed with the Virginia regulators to act as a investment adviser. In addition, Disruption is selling research reports on private market opportunities, and investing via the company’s equity arm, Crystal Tech Fund. Singh was founding partner of Silicon Valley’s 500Startups before moving back to Virginia last year.

Former Washington entrepreneur and one-time Washington Capitals co-owner Jon Ledecky is buying a minority stake in the New York Islanders from current owner Charles Wang. In two years, according to reports, Ledecky and fellow investor Scott Malkin will buy the rest of the franchise from Wang, the billionaire founder of Computer Associates. Through a business associate, Ledecky declined comment at this time. But he had previously released a statement saying, “We are pleased to have the opportunity to become partners in the New York Islanders with Charles, and to pursue our shared dream of winning a fifth Stanley Cup for the greatest fans in the NHL,” according to a report by Newsday. Forbes ranks the Islanders as one of the NHL’s least valuable franchises, with an estimated value of $195 million. That number will likely increase significantly with the team’s relocation to the Brooklyn Barclays Center for the 2015-16 season. The Washington Capitals are estimated to be worth more than twice the Islanders: $414 million.

District-based Kit Check, which automates the replenishment of hospital medication kits, announced the addition of two sales veterans. Kevin Henry joins Kit Check from CareFusion, where he has served as a senior sales consultant. Henry will be responsible for Kit Check’s Florida, Alabama and Mississippi territory. John Muldoon joins Kit Check from Axion Health. Muldoon will head sales in the Southwest. Kit Check earlier this year moved from Rosslyn into a 6,384 square-foot building near the District’s Chinatown neighborhood.

Speaking of buying professional sports teams, Bethesda investor (and baseball fanatic) Greg Rosenbaum and partners Nick Sakellariadis and Mike Savit, on Aug. 14 finalized their purchase of the Dayton Dragons, the Class A Midwest League affiliate of the Cincinnati Reds. The transaction received approvals from the Midwest League, Minor League Baseball and Major League Baseball.

“We are delighted,” Rosenbaum, 61, said in an e-mail. “This is one of the gems of minor league baseball, and we look forward to a long-term relationship with the team, the management and, most importantly, the fans, whose support has resulted in selling out every game since the team moved to Dayton 15 years ago.”

Don’t look for Rosenbaum — who has Washington Nationals season tickets and a suite at Nationals Park — to be hanging around Washington in the near future. His Dragons are 2.5 games out of a playoff spot with 15 games remaining. He said he will be in Dayton screaming like mad to help his guys get over the top.

Rosenbaum is president of Bethesda-based Palisades Associates, a merchant banking firm. He was a member of a group that tried to buy the Nationals, only to lose out to Theodore Lerner and his family.

Thomas Heath is a local business reporter and columnist, writing about entrepreneurs and various companies big and small in the Washington Metropolitan area. Previously, he wrote about the business of sports for The Post’s sports section for most of a decade.
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