The D.C. Public Service Commission on Wednesday began several days of hearings to determine whether it will reverse itself and approve a proposed $6.4 billion merger between utilities Exelon and Pepco.
The three commission members burrowed deeply into the language and technicalities of the contentious deal. Analysts, environmentalists and industry experts from across the country are closely watching the hearings because of the merger’s size and the effect it can have on other potential mergers.
For most of the day, the questioning was friendly but occasionally dry and highly technical, delving into obscure topics such as wind credits, workforce development, synergies, microgrids and other minutiae.
“The PSC commissioners’ questions so far seem to be quite thorough and detail-specific, suggesting that their minds might be far from made up,” said Paul Patterson, a utilities analyst with Glenrock Associates who is following the merger closely.
The District regulator is the only barrier to creating the Mid-Atlantic region’s largest electric utility, which reaches across the District and several states including New Jersey, Maryland, Delaware and Pennsylvania. Exelon also serves Illinois.
The panel in August denied Chicago-based Exelon’s proposed takeover of District-based Pepco, a major setback for the giant utility marriage.
Following the rejection, Exelon and Pepco requested a rehearing. The utilities persuaded D.C. Mayor Muriel E. Bowser (D) to reverse her opposition and to support the deal by enhancing their benefits to the city, now totaling $78 million. The new package includes more ratepayer assistance, solar-energy subsidies and job guarantees.
PSC Chairman Betty Ann Kane and her fellow members, Joanne Doddy Fort and Willie L. Phillips, spent several hours questioning the merger’s details.
Witnesses included Tommy Wells, director of the D.C. Department of Energy and Environment; Exelon chief integration officer Carim V. Khouzami; and Pepco’s David Velazquez, executive vice president of power delivery. Velazquez is to become chief executive of Pepco after the merger, replacing Joe Rigby.
Kane and her colleagues wanted to make sure that the money Exelon proposed for alternative energy would be used for that purpose. They also asked specific questions on what kind of jobs would be guaranteed, what the makeup of the new company would look like and how the ratepayer assistance would work.
Opponents urged the PSC not to be swayed by Exelon’s concessions.
“The commission should not be misled by the essentially trivial, short-term payments that Exelon can easily afford to make so that it can appropriate the District’s electric franchise and then milk its customers for generations to come,” said Randall Speck, a lawyer with D.C. Solar United Neighborhoods, reading an opening statement.
Pepco issued a statement Wednesday, saying: “We believe the facts will show that this merger is in the public interest and will benefit customers and the community. The merger will provide a significant package of benefits to District residents including bill credits, low-income assistance, fewer and shorter outages, a cleaner and greener D.C., and investment in local jobs and the local economy.”
Testimony is to resume Thursday with an Exelon-Pepco witness testifying on the economic effect of the merger. The commissioners will begin deliberations after the public record closes Dec. 18.
A decision is expected in the first quarter of next year.