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The opposition’s view of the Exelon/Pepco merger, and how you can weigh in

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Pepco 1Andrea Molod, one of ANC 3F’s new commissioners and the owner of a rooftop solar system, will introduce a resolution at 3F’s meeting Tuesday recommending that DC’s regulators reject the Exelon-Pepco merger.

Molod invited an opponent of the merger to speak at the commission’s January 20th meeting. She recaps the presentation below:

Pepco and Exelon must seek approval from the DC Public Service Commission (Formal Case No. 1119), and Robert Robinson, a member of the Grid 2.0 Working Group, explained that the PSC can only approve the proposed merger if it is determined to be “in the public interest.”

Robinson said he objects to the merger due to the negative impact on DC rates, the distribution system’s reliability, and ratepayers’ exposure to risks from Exelon’s unregulated power. After giving some historical background, Robinson summarized “who gets what” from the Exelon-Pepco merger, which is costing Exelon approximately $6.8 billion. Fundamentally,

  • PHI shareholders and executives are getting approximately $1.2 billion to $2.5 billion (depending on how the accounting is done) in the form of a premium stock price.
  • Exelon gets the assets of Pepco, the absence of the voice of their shareholders, and a virtually captive and non-competitive revenue base of ratepayers.
  • District of Columbia ratepayers get $50 per household.

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    According to Robinson, PHI and Exelon executives claim that the merger benefits Pepco ratepayers because of the economies of scale; that is, the reduction of costs because the electric power is being purchased in bulk. However, he pointed out that Pepco and Exelon do not propose to pass these savings on to ratepayers, according to the filing documents before the PSC. Rather, Exelon’s profits on rate payments would increase.

    From the perspective of the renewable energy community, the merger compromises the progress made in the last decade advancing the District’s solar energy laws. The problem, Robinson explained, is that Exelon opposes laws that enable its customers to produce their own solar. The company has advocated and made contributions to fight accommodations for “rooftop solar” in states like Illinois, New York, Massachusetts, Pennsylvania, Maryland and Ohio through groups like the American Legislative Exchange Council (ALEC), their wholly-owned Nuclear Matters and the Edison Electric Institute.

    The bottom line, said Robinson, is that the proposed sale is a step backward for DC residents hoping to see lower costs through the adoption of energy efficiency and renewable energy.

    “This deal locks DC into an obsolete regulatory model of consistently higher electric prices and distribution rates. How does this serve the public interest? Why should we be the solution to Exelon’s appetite for more revenues to shore up its nuclear business and higher profits for its shareholders?” asked Robinson.

    The public interest, he said, would be better served using 21st century technologies, energy efficiency and renewables to make electricity cheaper – and cleaner. This is what cities like Austin, Texas and Chattanooga, Tennessee and states like New York, Massachusetts and Connecticut and California, Hawaii and Washington states are doing, and that is the goal for the District of Columbia.

    What do YOU think? The DC Public Service Commission is expected to make its ruling sometime this spring, and is currently accepting comments at [email protected]. For those opposed, PowerDC.org has a form you can fill out and send to the commission.

    Further reading:

  • Power DC, a coalition of local groups opposing the Exelon takeover.
  • A Washington Post op-ed opposing the merger.
  • A statement opposing the merger from the Office of the People’s Counsel, a DC government office that represents DC energy workers and customers.
  • The Baltimore Sun’s coverage includes concessions Maryland regulators could seek from Exelon.
  • The Washington Post’s coverage of a DC Council hearing on the proposed merger, chaired by Mary Cheh.
  • Pepco and Exelon’s PHITomorrow.com has its own news links and updates on the merger process.

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    Testimony and comments before the DC Public Service Commission:

  • Testimony of Grid 2.0’s expert witness, attorney Scott Hempling. Hempling is an expert on utility mergers and acquisitions and an adjunct professor at the Georgetown University School of Law.
  • Testimony of Larry Martin, of Grid 2.0 Working Group, a member of the DC Chapter of the Sierra Club.
  • Testimony of Jerome Paige, on behalf of the Grid 2.0 Working Group. Paige is an economist and expert witness on economic impacts in utility proceedings.
  • Testimony of Anya Schoolman, founder of DC Solar United Neighborhoods (DC SUN), on behalf of DC SUN. DC SUN is the group that is responsible for much of the enabling legislation and community programs that have opened access to solar power in DC and are making it affordable. You will note that public information from Exelon that has been obtained by DC SUN and included in this testimony has been redacted by the PSC at the request of Exelon!
  • Comments on the merger from the Independent Market Monitor for PJM Interconnection, one of the US’s Independent Systems Operators. It operates the electric power system serving all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

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    Comments

    1. Please realize that many PHI people will lose their jobs. That is taxes, money they won’t spend, etc. etc.

      What about the people on the unemployment line while the execs and shareholders are floating in money.

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