D.C. Mayor Muriel E. Bowser on Tuesday backed Exelon Corp.’s $6.4 billion takeover of Pepco, reversing her previous decision to oppose the giant utility merger.
The final call now goes back to the D.C. Public Service Commission, which unanimously rejected the proposed merger in August.
Bowser’s decision, which is critical to the utilities’ request for a rehearing by the District regulator, is sure to enrage environmentalists and please business leaders who have lobbied hard since the PSC struck down the proposal.
Bowser cast her endorsement as the result of tough negotiations.
“We knew that we had to do better for our city,” the mayor said. “The District deserves a healthy utility company that guarantees affordability, reliability and sustainability for ratepayers and taxpayers. We kept negotiating until we got the deal that puts District residents and ratepayers first.”
In announcing her support, Bowser was flanked by advocates for low-income residents, housing experts and Sandra Mattavous-Frye, the District’s people’s counsel and once the most outspoken critic of the merger.
Mattavous-Frye said the settlement offered “tangible, measurable” benefits to the District and that she could no longer oppose the deal in good conscience.
Even with broad support, there is no guarantee that the three-member PSC will be swayed by the mayor’s blessing. The utilities filed a motion Tuesday to reopen the record in the existing proceeding so the commission can consider the settlement agreement.
If the commission declines to reopen the record, the companies would file the settlement agreement as part of a new application.
The regulators have scheduled a meeting for Wednesday, where they will probably discuss the companies’ request for a second look.
In its rejection last summer, the PSC issued a broad ruling that simply stated that the deal was not in the best interests of ratepayers. The regulators feared that Pepco would become a second-tier company and that a merged entity could inhibit the District’s progress toward alternative energy sources.
Exelon chief executive Christopher M. Crane struck a conciliatory tone at Bowser’s announcement. “We really do appreciate the responsibility of serving the nation’s capital, and we consider it an honor,” Crane said. “We’re here to serve you, at the will of the commission.”
He is offering a grab bag of $78 million in goodies for the District, including ratepayer assistance, solar-energy subsidies and job guarantees.
The biggest chunk is $55 million to cushion the impact of utility costs on District residents, including a moratorium on rate increases through March 2019. The settlement calls for millions more in energy help for low-income and senior citizens, including a one-time $50 credit to residential ratepayers worth $14 million.
Chicago-based Exelon, which owns more nuclear plants than any other U.S. utility, has also agreed to spend $17 million on alternative energy, including $3.5 million to support D.C. solar projects and a commitment to buy 100 megawatts of wind power.
The utilities also promised improvements in reliability and technology, and would relocate 100 jobs from outside the District into the city. In addition, Exelon-Pepco would hire 102 union workers and protect the current Pepco workforce for five years.
Its opponents are not swayed. “Mayor Bowser is colluding with Exelon in a deal that puts corporate profits ahead of the public interest,” said Allison Fisher of Public Citizen’s Energy Program.
Anya Schoolman, president of DC Solar United Neighborhoods, said “the token renewable energy provisions in the Exelon settlement are a smoke screen that will allow the company to dismantle the progress the District has made to develop renewable energy.”
The mayor’s decision follows weeks of lobbying by opponents and proponents, including a group of business and civic leaders led by former mayor Anthony A. Williams, who supports the deal.
“The agreement delivers on Mayor Bowser’s commitment to improve affordability, reliability, and sustainability for ratepayers in the District,” Williams said in a statement released by the Federal City Council, a pro-business group where he serves as chief executive.
The PSC’s approval is the final hurdle to the merger, which has been approved by the Federal Energy Regulatory Commission, the Justice Department, and the states of Maryland, Delaware and New Jersey.
Because of its size, the proposal is being watched by environmentalists, utility and public-service attorneys, and financial analysts across the country.
“We will have to see if [Bowser’s support] breathes new life into the potential for winning approval,” said Paul Patterson, a utility analyst with Glenrock Associates. “This is the last domino to fall, if it were to fall. This has more twists and turns than a corkscrew.”