US regulator rejects proposed $6.4-bn Exelon, Pepco merger

Within a week of Washington DC utilities regulator denying the proposed $6.4-billion merger of Exelon Corporation and Pepco Holdings Inc, the Public Service Commission (PSC) of the District of Columbia yesterday rejected the proposed merger.

Approval of the deal would have led to the creation of the US' largest utility.

Exelon, the leading US energy provider, posted 2014 revenues of approximately $27.4 billion.

The company conducts business in 48 states, the District of Columbia and Canada. Exelon's utilities deliver electricity and natural gas to over 7.8 million customers in central Maryland, northern Illinois and southeastern Pennsylvania.

Pepco Holdings, among the largest energy delivery companies in the Mid-Atlantic region, serves over 2 million customers in Delaware, the District of Columbia, Maryland and New Jersey.

The decision had come as a disappointment for the two companies but they would still be forging ahead.

"We have now received the Commission's order, and we remain convinced the decision fails to recognize the substantial immediate and long-term benefits of our merger proposal to citizens, businesses and communities in the District of Columbia," the two utilities said in a joint statement.

The statement continued, "We believe our merger proposal is in the public interest, and we will continue working to complete the merger, which all other jurisdictions have approved.

"Not completing our merger would deny customers in the District of Columbia -- as well as Delaware, Maryland and New Jersey -- hundreds of millions of dollars in direct financial benefits, improved reliability and storm response, renewable energy projects, and commitments that will preserve their local utility's role as a strong community partner and contributor to economic growth. We want to deliver these benefits to customers and will strive to make that happen."

The companies did not detail what step they would be taking next step, but they had 30 days from Thursday of last week to file a petition for reconsideration with the PSC. After receipt of the filing the commission had 30 days to grant or deny the request.

The commission could also do nothing, which was essentially a denial, according to a spokesman.

The utilities might appeal to the DC Court of Appeals, but not before they would rather exhaust their avenues with the city regulator first.

They could also file a new application with the PSC.

The Federal Energy Regulatory Commission, the Justice Department and regulators in Maryland, Delaware and New Jersey had also approved the merger, but opponents in the District had dug in.