Pepco and Exelon will press an appeal to the D.C. Public Service Commission to reconsider their proposed $6.4 billion merger following last week’s rejection by the three-member regulatory panel.
“We remain convinced the decision fails to recognize the substantial immediate and long-term benefits of our merger proposal to citizens, businesses and communities in the District of Columbia,” the two utilities said in a joint statement Monday. “We believe our merger proposal is in the public interest, and we will continue working to complete the merger, which all other jurisdictions have approved.”
The companies did not detail their next step, but they have 30 days from Thursday of last week to file a petition to the PSC for reconsideration. Once the commission receives the filing, it has 30 days to grant or deny the request. The commission can also do nothing, which is essentially a denial, according to a spokesman.
If the PSC agrees to take up the reconsideration, it typically will detail the next steps in its response.
A spokesman for Pepco Holdings declined to comment.
The utilities may appeal to the D.C. Court of Appeals, but not before they exhaust their avenues with the city regulator. They can also file a new application with the PSC.
The merger has been approved by the Federal Energy Regulatory Commission; the Justice Department; and regulators in Maryland, Delaware and New Jersey. But opponents in the District have dug in.
“We still think it’s a bad deal,” said Matt Gravatt, the chair of the D.C. chapter of the Sierra Club, which was part of a coalition that opposed the proposed merger. “I don’t anticipate our position changing. [The initial application] didn’t advance the environmental and clean-energy goals that D.C. has embraced.”
Business groups applaud Pepco’s commitment to pursuing the deal.
“There’s room to secure a fair deal for the ratepayer that would allow the region to benefit from a strong and committed utility partner,” said Kevin Clinton, chief operating officer of the Federal City Counsel, a pro-business D.C. civic organization. “A merged company will be more reliable and a stronger local partner.”
The companies announced in April 2014 that Chicago-based nuclear energy giant Exelon would be acquiring Pepco in an all-cash transaction, which is a $2.5 billion premium above the value of the Washington-based utility’s assets before the announcement.
Exelon has tried to sweeten the deal with commitments such as maintaining local operational headquarters, including the District, where the utility promised no merger-related job losses for at least two years, keeping two key local executives in charge and an increase in charitable donations for the next decade above Pepco’s 2013 level of $1.6 million per year.
The utilities also agreed to reliability improvements, including a project to run some power lines underground. The utility agreed to pay up to $5.6 million in penalties if it does not achieve certain reliability objectives.