As District regulators start probing the Pepco-Exelon deal, a coalition of environmental, political and consumer activist groups is raising concerns about the proposed $6.8 billion merger that would swallow D.C.’s homegrown electric utility.
The D.C. Public Service Commission on Wednesday evening held the first of four public hearings on Pepco’s proposed acquisition by Exelon, a larger Chicago-based firm. The hearing attracted many dozens of witnesses and stretched over five hours.
Before Wednesday’s hearing, a coalition calling itself “Power D.C.” unveiled a campaign seeking to derail the merger, which the group says will result in higher bills and lower reliability for Pepco customers. The coalition includes 20 groups, including the Sierra Club, the D.C. Environmental Network, Public Citizen, D.C. Working Families and the Statehood Green Party.
“The merger reverses the District’s progress on local renewable energy and energy efficiency, and it moves decision making for the District’s grid from here in D.C. to a powerful corporation’s headquarters in Chicago,” says Power D.C.’s Web site. “Exelon’s corporate interests are not aligned with the policy objectives of the District of Columbia, and Exelon’s acquisition of Pepco is not in the public interest.”
When the proposed merger was announced in April, Exelon and Pepco said the deal would benefit customers in part by providing $100 million in benefits to be spent across the Pepco Holdings territory in not only D.C., but Maryland, Delaware and New Jersey.
Those benefits, the companies said, could include bill credits, efficiency improvements or other measures approved by state-level regulators. The companies also said the merger would improve efforts already underway to improve reliability for Pepco customers, including better recovery efforts after large storms, and would result in “more opportunities” for Pepco employees.
Pepco spokeswoman Myra Oppel said in a statement that the merger continues to be a good deal and that both companies “are open to feedback and discussions with all stakeholders.”
“That said,” she continued, “we believe that the facts — which are available in the testimony we’ve filed with the commission and other information we have provided — will show that this merger is in the public interest and will benefit customers and the community.”
The merger plan has already come under fire in D.C. from People’s Counsel Sandra Mattavous-Frye, a public ratepayer advocate, who said last month that any benefit from the $14 million the merged utility proposes to spend in the District “is consumed by the uncertainty (and risk) associated with the three ‘R’s: Reliability, Rates and Renewables — all major areas where this application falls short.”
While consumer advocates in the Power D.C. coalition are concerned about more distant management and the potential for rate hikes, environmental advocates are concerned about Exelon’s large portfolio of nuclear power plants and what they deem an uncertain commitment to renewable energy.
Chris Weiss of the D.C. Environmental Network said the District has set ambitious renewable energy goals in its citywide sustainability plan and in legislated portfolio standards. And the city has started to embrace “distributed power” models like the much-touted Mount Pleasant Solar Energy Cooperative, which allows homeowners to use their own solar energy and even sell it back to the grid.
“What we’ve seen with Exelon’s business model is that they really don’t believe in distributed energy,” Weiss said. Instead, he said, Exelon appears to be focused on maintaining its nuclear and fossil-fuel generation business, whereas Pepco has been out of the generation business for years.
Said Oppel, “Like Pepco, Exelon is committed to conducting its business in ways that minimize environmental impacts, and renewables are a critical component of its efforts to advance clean energy.”
James Dinegar, president of the Greater Washington Board of Trade, also testified in support of the merger. He explained Thursday that joining with the larger Exelon would allow Pepco to recommit to improving its reliability and that it reflects larger trends in the electric industry.
“Exelon is the biggest and the best in the industry, and it gives you those advantages,” he said. “I’m as nostalgic as the next guy, but … this is what growth, progress and success looks like.”
There was some community testimony in support of the merger, as well. Maria Gomez, the founder and chief executive of Mary’s Center, a family clinic in Adams Morgan, said she told the commission about Pepco’s efforts to restore power to her clinic during the 2010 blizzard, saving hundreds of thousands of dollars worth of vaccines. She said she’d pressed Pepco and Exelon officials on whether they would maintain their charitable and community commitments and was satisfied with the responses she’d heard.
In an interview Thursday, Gomez said she and others would “keep a watchful eye” should the merger move forward: “If we see anything that deviates from they’ve promised, we’ll call them on it,” she said. “I’ll be the first one to do it.”
Both companies’ boards have approved the merger, as has the Federal Energy Regulatory Commission. But it still has to pass muster with state-level regulatory bodies in Maryland, Delaware, New Jersey and the District.
The approval process is being watched particularly closely in Maryland, whose regulators are considered the most aggressive of those evaluating the deal. A report commissioned by the Maryland Public Service Commission concluded this month that the customer investments proposed there were deeply insufficient, according to a Baltimore Sun report.
The review process in the District will culminate in a weeklong evidentiary hearing, scheduled for Feb. 9 through 13, where the commission will determine whether the merger is in the best interests of ratepayers, shareholders and the District at large. A determination on the merger will be issued at a subsequent date.
The D.C. Public Service Commission has scheduled three public hearings before then, all at 6 p.m.:
• Jan. 6, Thurgood Marshall Academy, 2427 Martin Luther King Jr. Ave. SE
• Jan. 12 — Southwest Library, 900 Wesley Place SW
• Jan. 20 — University of the District of Columbia Community College, 801 North Capitol St. NE
Correction, 5:35 p.m.: This post initially reported only two dozen witnesses testified Wednesday. That was based on a list of “walk-in” witnesses provided by the Public Service Commission; more than 60 more had pre-registered for the hearing.