Exelon’s $6.9 billion purchase of Washington-area utility Pepco is facing its first major challenge a month after it won approval from D.C. regulators.
Consumer advocacy group Public Citizen, with solar energy proponents D.C. Solar United Neighborhoods (DC SUN), teamed up Friday to challenge D.C.’s final approval of the plan, while threatening to take the matter to a federal appeals court if D.C. regulators don’t correct themselves.
“Exelon’s takeover of Pepco is bad deal for the District and was only made possible by a faulty and irregular decision-making process,” said David Arkush, the managing director of Public Citizen’s Climate Program. “Our position is simple: If the commission corrects its errors, it will no longer be able justify its decision to approve the takeover.”
The groups filed their challenge with the D.C. Public Service Commission that approved the merger in March. The groups argue that the commission began to err after it first rejected the merger proposal in August.
“On Aug. 27, after more than a year of careful deliberation, the PSC rejected the proposed takeover of Pepco by Exelon,” the groups said. “The rejection order provided a clear and thorough analysis supporting the commission’s decision that allowing Exelon to acquire Pepco is not in the public interest.”
But since that order, the commission “has engaged in a pattern of procedural irregularity, internal contradiction and flawed reasoning, which led to its contentious 2-1 vote on March 23 to approve the transaction.” The challenge comes several days after Pepco asked Maryland regulators for a rate increase of 10 percent, or about $16 a month for the average home. Pepco is expected to also ask for a rate increase in the District.
The District was the last regional government required to approve the merger, which resulted in the creation of one of the largest utility companies in the country.
Friday’s challenge presses the commission to redo its economic analysis, and answer a number of questions, which if the regulators do properly would lead them to reject the deal, the groups say.
The challenge says the commission denied the public the right to comment on the proposed settlement by giving them a much shorter notice period of 12 days, rather than the 45 that District law requires.
They also say the commission contradicted its own orders in the case without adequate explanation. In addition, the regulators “applied the wrong standard” to determine the public’s interest in the final decision. The commission also placed the burden of persuasion on the wrong parties “and failed to make an independent finding that the acquisition terms as a whole are in the public interest.”
They also say Exelon has been playing “fast and loose” with the commission’s process and must be reined in quickly.
The groups argue that all actions to consummate the merger should immediately be placed on hold now that parties are challenging the deal within the designated 30 days set by the commission.
Public Citizen pointed out that Friday marks the deadline for filing for reconsideration, in which the commission has five days to respond.
The groups said they will appeal if the “PSC fails to correct its decision.”
