DC rejects Exelon-Pepco merger; Del. terms blocked

Counterparts in Maryland, Virginia, Delaware and New Jersey all approved the merger previously, as did the Federal Energy Regulatory Commission.

The DCPSC-an independent agency established by Congress to regulate electric, natural gas, and telecommunications companies in the District of Columbia-is the only jurisdiction to deny the application.

Utility regulators for the District of Columbia on Tuesday rejected Exelon Corp.’s $6.8 billion bid to purchase Pepco Holdings Inc., which would have created one massive power utility company serving customers across several states.

Tuesday’s vote on the three-member D.C. commission was two to one, the Washington City Paper reported.

Commission chairman Betty Ann Kane said the companies did not meet their burden of showing that the proposed merger would benefit the public, and she said the new company would present regulatory challenges. While the merger would offer some benefits, Kane said some factors could prove harmful to the District.

Perhaps most significantly, the PSC wrote in a summary of its order that Exelon’s vertically-integrated structure and its large generation fleet, with many old and unprofitable nuclear plants, could seriously inhibit the District’s environmental goals. “It would have exposed D.C. residents and businesses to the risk of steeply rising electricity bills”.

Pepco’s shares traded down about 15% to $22.95, after dipping to a new 52-week low of $21.61. They also felt that “management bureaucracy” could constrain Pepco from adapting to current changes in the energy industry. “We will review our options with respect to this decision and will respond once that process is complete”, they said. It was originally announced in April 2014.

“Thousands of those customers, dozens of Advisory Neighborhood Commissions, and at least six D.C. Councilmembers strongly opposed Exelon’s acquisition of Pepco because it is not in the public interest of the District”, the organization said in a statement following the decision.