Pepco Exelon Merger: DC Ratepayers Shouldn't Count on That 50 Dollar Check

Marc Battle, Vice President at the Potomac Electric Power Company (PEPCO), told a meeting of Advisory Neighborhood Commission (ANC) 1B/U Street February 5 that PEPCO customers should not count on getting a rumored $50 rebate check as a result of the proposed merger between PEPCO and Chicago-based energy giant Exelon Corporation, "the nation's leading competitive energy provider".

Battle told the ANC that the proposed terms for the merger, now being considered by the DC Public Service Commission, included a $14 million settlement. The Public Service Commission may dispose of as it pleases, and Battle thought it would be better spent in other ways.

"The settlement would be more effectively used as a block, not a fifty dollar credit," Battle said.

Talk of a fifty dollar check was in the air at the meeting as Robert Robinson of the Grid 2.0 Working Group, which opposes the merger, told the ANC that a $50 check and a three-year rate freeze are the only benefits District ratepayers would be likely to receive from the deal.

"The ratepayers become a cash cow," Robinson said. "We get fifty dollar benefit, that's all."

Exelon executives have already promised a $50 rebate for Maryland Pepco customers, according to a report in the Baltimore Sun.

Robinson told the ANC that the beneficiaries of the most lucrative portion of the deal will be shareholders and company executives, who will get to share a premium estimated at $1.2 - 2.5 billion.

"What does Exelon get from that? The shareholders go away," Robinson said.

To keep the meeting down to a manageable length, all presenters were given a limited amount of time, and then asked politely but firmly to wrap up when their time expired. This rule became even more necessary when it was revealed (in mid-discussion of the merger) that the room where the ANC was meeting at the Banneker Community Center (2500 Georgia Avenue) needed to be vacated at 9pm so it could be used as an emergency overnight shelter for the area homeless who were gathered outside waiting in the cold.

ANC1B Chair James Turner (district 09) told Robinson the discussion would have to wrap up. There would be no vote that evening, Turner said. The deadline for comment was March 26, so further discussion and a vote on a resolution, if any, could take place at the next ANC meeting (tentatively scheduled for Thursday, March 5, at a location to be determined).

Robinson looked extremely unhappy at this news and indicated he had not said all he wanted to. He also told the ANC that a comment made closer to the Public Service Commission deadline was likely to have much less impact than a comment now. Nevertheless, the portion of the meeting dedicated to this issue was closed after PEPCO Vice President Battle got to make remarks, including those mentioned at the top of this post.

Battle also said that the DC Public Service Commission would be starting hearings on the matter on Monday, February 9.

"These hearings are long, tedious, complicated, but important," Battle said.

See the DC Public Service Commission's case file on Pepco-Exelon merger here.

See a Washington City Paper article from yesterday concerning a new public opinion poll about the merger here.

The arithmetic of the proposed rebate check: The settlement is $14 million. Pepco said on its web site that it had 255,000 customers in DC in 2010. Today, it's probably a higher number. Fourteen million divided by 255,000 is a little over $54.90.

Pepco Exelon Merger: Charm Offensive Comes to ANCs

Representatives of the Potomac Electric Power Company (PEPCO) and Chicago-based energy giant Exelon are appearing at ANC meetings to brief about the proposed purchase of PEPCO Holdings by Exelon, and to say the purchase is in the public interest. Executives of PEPCO and Exelon appeared at the regular monthly meetings of Advisory Neighborhood Commission (ANC) 2F/Logan Circle and 1B/U Street on June 4 and 5, respectively.

PEPCO Regional President Donna Cooper and Exelon Investor Relations Director Melissa Sherrod spoke to ANC2F, while PEPCO Regional Vice-President Marc Battle spoke to ANC1B.

Exelon announced the $6.8 billion purchase on April 30. See an article about the deal from the Forbes magazine website here.

PEPCO Holdings also operates Delmarva Power & Light Company and Atlantic City Electric Company. The two companies will have to receive permission to merge from many government agencies, including public service commissions in DC, Maryland, and Virginia, and from the New Jersey Department of Law and Public Safety.

Cooper told ANC2F the local filing would be in mid-June.

The two presentations were largely the same. The companies must demonstrate the sale will benefit the public. The PEPCO name and local headquarters will remain the same, and all labor agreements will be honored for two years. The new company will be committed to a major project of burying electric power lines underground.

At ANC1B, a commissioner asked where the burying of lines will take place.

Battle apologized in advance for a vague answer, and then said the burying of lines would take place in "areas of greatest need".

"When it's done, outages will be reduced by 90 percent," Battle said.

Battle estimated the merger of the two companies would save $50 million per year by increased efficiencies in executive leadership and front office, including downsizing legal departments and accounting. In response to Commissioner questioning, Battle said he did not anticipate anybody involved with getting power to customers (e.g., technicians, maintenance personnel) would get laid off.

At ANC2F, a member of the audience asked what percent of the electricity Exelon now generates comes from nuclear power. Melissa Sherrod put the amount at about 60 percent, and said Exelon is the largest nuclear operator in the US.

"We made a conscious decision to divest from coal," Sherrod said.

At the same meeting, Cooper spoke about her background. She is originally from South Carolina, she came "from academia", and has been working for PEPCO for six years. She also said she had worked for the DC Council.

A 2007 Washington Post article notes the appointment of a Donna Cooper to the staff of Mayor Vincent Grey as Director of Policy. Cooper also worked for former Councilmember Vincent Orange, the article says.

Nevertheless, some of the older people in the audience had a difficult time believing Cooper was President of PEPCO, perhaps because she is youthful-looking.

"You are President of PEPCO?" one asked incredulously.

Cooper confirmed she was, in fact, President of PEPCO.

A Washington Post article here speculates on what the proposed merger might mean for PEPCO customers.