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| Pepco-Exelon merger rejected in the District; scramble is on to save the deal | |
| (35 minutes later) | |
| District regulators rejected a controversial merger of Pepco and Chicago-based Exelon on Friday, dashing plans to create the nation’s largest electric utility . | District regulators rejected a controversial merger of Pepco and Chicago-based Exelon on Friday, dashing plans to create the nation’s largest electric utility . |
| The $6.8-billion deal fell apart after regulators said there was no evidence that Pepco couldn’t perform adequately without the merger with Exelon. | The $6.8-billion deal fell apart after regulators said there was no evidence that Pepco couldn’t perform adequately without the merger with Exelon. |
| The D.C. Public Service Commission voted 2-1 to reject the settlement terms negotiated by Mayor Muriel E. Bowser’s office, saying that an “inherit conflict of interest” remains in putting the city’s electricity distribution in the hands of an out-of-town power generator. | The D.C. Public Service Commission voted 2-1 to reject the settlement terms negotiated by Mayor Muriel E. Bowser’s office, saying that an “inherit conflict of interest” remains in putting the city’s electricity distribution in the hands of an out-of-town power generator. |
| “The fact remains unchanged from the original application that the takeover of Pepco will entangle the company in an ownership structure that is an inherit conflict of interest and that it takes it in the opposite direction from its sole focus of being a distribution company that is required” under District law, said PSC Chairwoman Betty Ann Kane. | “The fact remains unchanged from the original application that the takeover of Pepco will entangle the company in an ownership structure that is an inherit conflict of interest and that it takes it in the opposite direction from its sole focus of being a distribution company that is required” under District law, said PSC Chairwoman Betty Ann Kane. |
| The commission did vote to give Pepco and Exelon a chance to consider reapplying within 14 days if they would agree to strict new conditions. Pepco officials said Friday they were reviewing the terms to figure out if the could meet them. | The commission did vote to give Pepco and Exelon a chance to consider reapplying within 14 days if they would agree to strict new conditions. Pepco officials said Friday they were reviewing the terms to figure out if the could meet them. |
| It was not immediately clear if Exelon would consider such changes. The company’s chief executive recently told investors during a conference call that if the merger was not approved by early March that Exelon would abandon the effort. Any major changes to the deal would also potentially put Exelon on the hook to match the offer to other states that have already signed off, including Maryland, New Jersey and Delaware. | It was not immediately clear if Exelon would consider such changes. The company’s chief executive recently told investors during a conference call that if the merger was not approved by early March that Exelon would abandon the effort. Any major changes to the deal would also potentially put Exelon on the hook to match the offer to other states that have already signed off, including Maryland, New Jersey and Delaware. |
| Kane said she did not buy the argument that Pepco would become a weakened company and be unable to fulfill its mission without a merger. | Kane said she did not buy the argument that Pepco would become a weakened company and be unable to fulfill its mission without a merger. |
| The decision was a major loss for nuclear-energy giant Exelon, and for proponents of the deal who said the company’s deep pockets would bring capital and long-term stability to customers of Pepco, which has for many years struggled with a dismal record of reliability and in keeping the lights on D.C. suburbs after storms. | The decision was a major loss for nuclear-energy giant Exelon, and for proponents of the deal who said the company’s deep pockets would bring capital and long-term stability to customers of Pepco, which has for many years struggled with a dismal record of reliability and in keeping the lights on D.C. suburbs after storms. |
| Exelon had promised to finish reliability improvements to Pepco’s system in D.C. and in Maryland, and would freeze rate increases for four years. After that, residents could have faced balloon increases of multiple years’ of increases at once. | Exelon had promised to finish reliability improvements to Pepco’s system in D.C. and in Maryland, and would freeze rate increases for four years. After that, residents could have faced balloon increases of multiple years’ of increases at once. |
| And in Baltimore and other cities were Exelon has moved in, reviews of performance and customer service haver so far been mixed. | And in Baltimore and other cities were Exelon has moved in, reviews of performance and customer service haver so far been mixed. |
| Politically, the commission’s decision could have lasting reverberations for Bowser, who had revived the deal last August after the Public Service Commission unanimously rejected it, saying it would hinder the capital city’s stated goal of encouraging more green energy production. | Politically, the commission’s decision could have lasting reverberations for Bowser, who had revived the deal last August after the Public Service Commission unanimously rejected it, saying it would hinder the capital city’s stated goal of encouraging more green energy production. |
| Bowser’s top aides held private negotiations with Exelon after the PSC’s rejection. She won concessions, convinced other critics to drop their opposition and then announced she would back the plan after earlier saying she had reservations. | Bowser’s top aides held private negotiations with Exelon after the PSC’s rejection. She won concessions, convinced other critics to drop their opposition and then announced she would back the plan after earlier saying she had reservations. |
| Her about-face prompted the PSC to reopen the case. The mayor’s effort drew rebukes from local and national environmental groups, but also won her praise from the city’s business community, which said it feared a weakened utility from a failed merger attempt. | Her about-face prompted the PSC to reopen the case. The mayor’s effort drew rebukes from local and national environmental groups, but also won her praise from the city’s business community, which said it feared a weakened utility from a failed merger attempt. |
| Many environmental groups opposed the deal because they believed it would hinder the migration toward renewable energies. | Many environmental groups opposed the deal because they believed it would hinder the migration toward renewable energies. |
| Because of its size, an approval would have changed the national utility landscape, with the new combined company becoming the largest electric utility nationwide as measured by the number of customers. | Because of its size, an approval would have changed the national utility landscape, with the new combined company becoming the largest electric utility nationwide as measured by the number of customers. |
| The deal’s ups and downs during a nearly two-year approval process had been closely watched by environmentalists, utility and public-service attorneys, and financial analysts across the country. | The deal’s ups and downs during a nearly two-year approval process had been closely watched by environmentalists, utility and public-service attorneys, and financial analysts across the country. |