Pepco and Exelon have gained the support of two crucial Maryland counties in the companies’ push toward completion of their proposed $6.4 billion merger.
The utilities this week said they have reached a settlement agreement with Montgomery and Prince George’s counties — home to 75 percent of Pepco’s Maryland customers — in their proceedings before the Maryland Public Service Commission, which is reviewing the proposed deal.
The endorsement includes a commitment to enhanced reliability, bigger bill credits, energy-efficiency money for low-income ratepayers and money to stimulate solar power. The agreement comes at a vital time for the utilities, which must get the approval of the PSC to create what would be one of the largest utilities in the United States.
“This agreement is a good deal for Montgomery County,” Montgomery County Executive Isiah Leggett (D) said in a statement.
The settlement comes after an announcement two weeks ago that the utilities would increase the amount of their proposed “customer investment fund” in Maryland from $40 million to $94.4 million.
Maryland Attorney General Brian E. Frosh this month came out against the proposal in a 60-page brief filed with the PSC, arguing that the merger would harm customers and was not in the public interest. Frosh warned that the deal could hinder efforts to improve service reliability and noted that rate hikes are probably in the future.
Frosh is not alone in his opposition. Doubts have been raised in the District, which also must approve the merger. D.C. Council members Mary M. Cheh (D-Ward 3), Elissa Silverman (I-At Large) and Charles Allen (D-Ward 6) have submitted a letter to the city’s Public Service Commission expressing “grave doubts” about the merger.
“District ratepayers and the District as a whole will achieve no net benefit, and will be at substantial risk of higher prices, lost jobs, distant governance, and a marked reversal of progressive environmental initiatives,” according to the letter made public Wednesday.
Some Maryland opponents of the proposed merger said their minds were not changed by the news of the latest settlement with the Maryland counties.
“In other mergers across the country, utilities make major, concrete commitments to develop wind and solar power,” said Mike Tidwell, director of the Chesapeake Climate Action Network, which backs clean energy solutions. “This proposed merger has almost none of that.”
Pepco spokeswoman Courtney Nogas said the utilities are committed to clean energy.
“The package we are offering represents our commitment to further modernize our grid to incorporate more renewable energy, distributed generation and other technology that will help make energy cleaner, more reliable and affordable going forward,” Nogas said.
The agreement designates $36.8 million of the $94.4 million customer investment fund to bill credits equaling about $50 for every Pepco and Delmarva Power customer in the state. The remainder would go toward energy efficiency programs designated by Montgomery, Prince George’s and state regulators. At least 20 percent of the energy efficiency fund would be used to help low- and moderate-income customers.
The companies also would create a $50 million fund to stimulate investment in solar power, microgrids and other green technologies, and they pledged to develop 15 megawatts of solar generation, with 5 megawatts each in Montgomery, Prince George’s and the Delmarva Power territory in Maryland. Prince George’s agreed to purchase an additional 5 megawatts of electricity generated by solar projects. The power would initially be provided to the county free of charge for a set period of time.
In the District, Pepco said the companies had also enhanced their committments.
“We have increased the proposed value of the customer investment fund to $33.75 million, and another $51.2 million in projected merger savings over 10 years will flow back to District customers through rates lower than they would be without the merger. We also have enhanced our reliability performance commitments to meet or exceed the PSC’s current standards and have proposed Exelon be subject to enhanced financial penalties of up to $5.6 million on an annual basis if it falls short of these goals.”
The two companies announced April 30 that Chicago-based energy giant Exelon would be acquiring Pepco in an all-cash transaction. Pepco has more than 2 million customers in an arc stretching from the District and the Maryland suburbs to the Delaware shore and New Jersey.