by Andrea Molod
ANC 3F05 commissioner
You may have heard that the DC Public Service Commission voted to reject Pepco’s merger with Exelon. But that’s not the whole story.
On February 26th, the PSC voted 2-1 to reject the settlement agreement worked out with Mayor Muriel Bowser. However, the commission voted again, 2-1, to approve a new settlement agreement submitted by Public Service Commissioner Joanne Doddy Fort.
The new settlement terms represent a substantial step backwards in protections for ratepayers.
Gone is the four-year rate freeze for residential ratepayers.
Gone is the funding for the Low Income Home Energy Assistance Program.
Gone is the funding for the DC Sustainable Energy Trust Fund (energy efficiency programs).
Gone is the money for the Renewable Energy Development Fund (support solar, in particular for low income households).
Gone is the money for the DC Green Building Fund (expand use of green energy).
Gone is the commitment to build four microgrids (modern technology).
Gone, in addition to the affordability provisions, is the ability of our elected officials to determine how the monies meant to offset the negative impacts of the takeover are spent. Instead, the new settlement terms put the monies into the hands of the Public Services Commission to use for grid reliability and modernization projects.
The settling parties (the District of Columbia government, the Office of the People’s Counsel, the Apartment and Office Building Association of Metropolitan Washington, District of Columbia Water and Sewer Authority, the National Consumer Law Center, National Housing Trust, and National Housing Trust – Enterprise Preservation Corporation) must come back within 14 days of the PSC’s vote with a decision about whether to accept these new terms (See the press release and the full text of the order.
In August 2015, the PSC rejected the proposed takeover of Pepco Holdings, Inc. by the Chicago-based utility giant Exelon, articulating in a lengthy order and in the executive summary that the deal is “not in the public interest.”
In October, the mayor’s office announced that a settlement had been reached with executives of Exelon and Pepco and the PSC voted to reopen the case based on this “Nonunanimous Settlement Agreement.” At that time the District Government and the Office of the People’s Counsel signed on to the settlement, touting the many additional benefits for District ratepayers it contained relative to the original takeover proposal.
Although the settlement agreement contained improved provisions for DC ratepayers, it still fell short of conditions that would be in the public interest, as explained in my October 28th article for Forest Hills Connection.
The revised settlement terms
The “alternative terms” proposed in PSC order remove most of the “affordability” benefits of the mayor’s settlement agreement, and many of the provisions related to energy sustainability, as listed above. Many objections about the inherent conflict of interest and the ability of the PSC to control such a huge entity are still there, but linchpins of mayor’s deal are gone.
The Customer Base Rate Credit, connected to an approximately $25 million fund designed to offset the cost of rate increases, was originally for residential ratepayers only and originally included a four-year rate freeze. In the new settlement there is no longer a rate freeze and the $25 million offset is now extended to all ratepayers, thus substantially diluting the duration of the cost savings. The residential rebate of $50 per household is the sole affordability provision that remains.
You can still make your voice heard, along with the Mayor and the People’s Counsel
The parties to the settlement must either agree to the terms of the new settlement by March 11th or file for “relief” (essentially the negotiations continue). The settling parties that represent us are the District Government, including Mayor Muriel Bowser, Director of the District Department of the Environment, Tommy Wells, and District Attorney Karl Racine, and the People’s Counsel, Sandra Mattavous-Frye.
“The PSC’s counterproposal guts much needed protections against rate increases for DC residents and assistance for low-income DC rate payers,” said Bowser. “That is not a deal that I can support.”
Sandra-Mattavous Frye similarly said, “The Commission’s order eviscerates the benefits and protections essential to render the proposed merger in the public interest by making changes to the $25.6 million rate offset provision for residential customers, which was the single most critical provision I supported.”
“It removes a benefit essential to the justness and reasonableness of the merger for District residential customers, and therefore cannot be supported by the Office,” Mattavous-Frye.
A particularly clear statement was made by the spokeswoman for Mattavous-Frye, who said the People’s Counsel had no counteroffer and wanted the parties to return to the agreement that the regulators found untenable.
And Attorney General Racine last week told The Washington Post that “the credits to insulate residents from increases through 2019 were an ‘essential protection’ in the deal.” According to Racine, “given that that provision is now in doubt, the benefit to residential ratepayers also now is in doubt.”
There is still a small window for you to voice your opinion! Let the mayor and the Office of the People’s Council know you want them to say no to the merger. You can send your own email or use the form letter at PowerDC.org/take-action.