The long-running effort to merge Delmarva Power parent Pepco with much larger Exelon hit another snag this week when regulators in Washington, DC again rejected the deal.
However, The Washington Post, however, reports that deal is not dead, with the door still open to further compromises.
The Public Service Commission of the District of Columbia has rejected the deal twice, even though Exelon and Pepco came up with revisions.
A major objection to the deal seems to be a perceived conflict of interest between Exelon’s utility and energy generation businesses that includes the nation’s largest collection of nuclear power plants. Exelon says the businesses run separately.
The fear is that nuclear-driven Exelon, like a few utilities in the western U.S., might work to quash efforts to expand use of solar, through hook-up fees to the grid.
Pepco is a collection of utilities that were acquired by the Washington, D.C.-based company that was assembled by then Delmarva Power CEO Howard Cosgrove.
Delmarva Power went on to acquire Conowingo Electric in Maryland and Atlantic City Electric as well as electrical and mechanical contracting companies. All were renamed Conectiv.
When Pepco acquired Conectiv, the utilities, with the exception of Conowingo, went back to their previous names and the company sold off all electrical generation, energy trading and contracting assets.
At various points, some have speculated that Exelon might walk away That was what happened with a failed merger effort between Exelon and Public Service Electric and Gas in New Jersey.
The utility, which already owns PECO in the Delaware Valley and BG&E in the Baltimore region, has continued to agree to comprises that have led to approval by nearly all regulators.
However, in the District of Columbia, alternative energy activists and others have managed to convinced regulators that the deal is bad for customers.
One option would be to take the Pepco utility in the Washington, D.C. area out of the deal. Under that scenario, PEPCO could emerge as a financially weak entity that would be vulnerable to a changing energy market and regulators less willing to grant rate increases.
In Delaware and elsewhere, regulators have slashed rate increase requests by Pepco entities, despite claims that the revenue is needed to improve reliability.
