Brief

Updated: Exelon, DC mayor reach settlement on Pepco merger

Dive Brief:

  • Exelon Corp. has come to a tentative settlement agreement with District of Columbia Mayor Muriel Bowser's (D) administration on its proposed $6.8 billion acquisition of Pepco Holdings, sources with knowledge of the negotiations told Utility Dive on Friday.
  • The D.C. Public Service Commission rejected the company's initial merger proposal in August, citing an "inherent conflict of interest" between Exelon's business model and the city's clean energy goals. Exelon has since appealed the decision.
  • Details on the deal have not been publicly released, but sources say many of the changes from Exelon's initial merger proposal are similar to the four dozen changes it agreed to in Maryland in exchange for regulatory approval. 
  • On Sep. 28, the mayor's office confirmed that it was holding "substantive discussions" behind closed doors with Exelon representatives to design a merger deal more appealing to regulators. The PSC still has to approve any deal. 

Dive Insight:

Not even a week after the D.C. Mayor's office announced it was in talks with Exelon to hammer out a merger proposal that could pass muster with regulators, the city government appears to have reached a deal. 

Sources said City Administrator Rashad Young has struck a draft deal with Exelon to send to the D.C. PSC. Exelon's hope is that the new conditions on the merger will persuade intervenors and the commissioners to support the acquisition on appeal. 

Details on the deal have not been publicly released, but sources say many of the changes are similar to the 46 merger conditions that Exelon agreed to in Maryland. Among them is a commitment from Exelon to establish a second headquarters in Washington, where Pepco is now located, Bloomberg reports.

The new proposal does not, however, address the "inherent conflict of interest" regulators cited between the company's generation portfolio and the city's clean energy goals, according to sources.

City officials would not confirm or deny the existence of a settlement when reached on Friday. A spokesperson for the mayor's office told Utility Dive they had no new information on the talks. Exelon issued a similar statement, saying that "because settlement negotiations are confidential, we are not in a position to provide further details."

"Since the PSC explained why it didn’t approve the merger in August, we’ve worked hard to address the concerns – and we are working to respond in settlement discussions with the District of Columbia government and other parties," spokesperson Paul Adams wrote to Utility Dive. 

In August, D.C. regulators rejected Exelon's initial merger proposal, becoming the first regulatory body to do so. The merger had already been approved by FERC and the utility regulators in Maryland, Virginia, Delaware and New Jersey. 

After the rejection, Exelon mounted a public relations offensive in the District, enlisting well-liked former Mayor Anthony Williams to publicly call for Bowser, a former political mentee, to support the merger and cooperate with the Chicago-based company.

On Friday, the PSC pushed back a vote until Wednesday, Oct. 7, to decide whether to stay or extend its reconsideration of the proceedings. That decision gave the utility more time to negotiate a settlement with the mayor's office.

Editor's Note: This post has been updated to reflect newly-reported material on the draft settlement agreement.

 

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