An improved Exelon-Pepco deal
When the D.C. Public Service Commission in August rejected the merger of our companies, Exelon and Pepco, we got the message loud and clear.
Since then, we have worked hard to better understand the District’s priorities and have listened to the regulators’ concerns. We were pleased to work with D.C. Mayor Muriel E. Bowser (D) and other District leaders to reach a settlement with significantly enhanced benefits. We remain committed to completing this merger and bringing these benefits to D.C. customers and communities.
Our new proposal has more than 120 commitments to address each of the commission’s concerns and ensure the merger is in the public interest. It more than doubles direct benefits for D.C. customers and provides residential bill credits, low-income assistance, fewer and shorter outages, cleaner and greener energy and investments in local jobs and the local economy.
The proposal makes electricity more affordable for customers. Of the $78 million in funds we have offered to provide, $25.6 million will offset distribution rate increases for residential customers through 2019, $14 million will go to a one-time direct bill credit of more than $50 for every residential customer, and $16.15 million will fund low-income energy assistance.
Contrary to some reports, Exelon and Pepco strongly support sustainability and renewable energy. We plan to significantly expand solar energy in the District by developing up to 10 megawatts of new solar-power generation and making it easier for customers to go solar. We’re offering $7 million to fund renewable-energy and energy-efficiency programs. We have committed to providing $10 million to the District’s Green Building Fund, purchasing 100 megawatts of wind energy and working with the District to develop at least four microgrids.
Together, we’ll also improve reliable service for Pepco customers — or face significant financial penalties. Exelon crews and resources can be made available to help with storm restoration in the District, meaning shorter outages after severe weather. We’ll also hire more union employees and invest $5.2 million in workforce development.
The merger will leave Pepco a financially stronger utility with more resources, improved stability and greater contributions to the economic and community growth of the region.
We’d like to clear up some misconceptions about customer rates after the merger. Rates will be lower than they would be without the merger, because, in addition to the rate credits offered in the settlement, bringing the companies together will result in cost savings that will be passed along to customers.
Pepco’s rates are set by the Public Service Commission, not by the utility. Even after our two companies become one, the commission will continue to regulate Pepco and control its rates. And Pepco will continue to purchase power for its customers the same way — from a variety of suppliers in a competitive market based on the lowest price. Exelon cannot pass on any costs from its power plants or other businesses to Pepco customers. The commission would never allow that — nor would Exelon attempt it.
While the merger will enhance Pepco’s ability to deliver reliable service, the stakes are high if the merger is not completed. Pepco’s parent company, Pepco Holdings, would have to consider taking action to address its financial condition, including reexamining its infrastructure spending and reducing expenses. Further, if the merger does not occur, Pepco Holdings would have limited resources to pursue the District’s energy-related goals.
We have a lot to offer D.C. residents and businesses. The merger with Exelon is the only way to bring these meaningful benefits to this vibrant city.
We hope that when the commission weighs the pros and cons, it will recognize what many D.C. business and community leaders see and support: that this merger does no harm and offers benefits too substantial and valuable to reject.