Exelon and Pepco announced Tuesday morning they have reached a deal with Montgomery County regarding the utilities’ merger plans.
The deal was made in partnership with Prince George’s County. It includes a $50 per Pepco customer credit, $57 million for energy efficiency programs in Montgomery and Prince George’s counties, a $50 million investment in solar energy and commitments to speed up reliability improvements. The deal also allows for the development of recreational trails along certain Pepco right-of-ways.
The deal is subject to approval by the Maryland Public Service Commission (PSC), which is evaluating the proposed $6.8 billion merger between the Washington, D.C.-based Pepco and Chicago-based Exelon. If the merger is approved by the commission, Exelon will own about 85 percent of the electricity distribution system in Maryland.
“This agreement is a good deal for Montgomery County. Our residents deserve a top-performing utility that is accountable to customers,” Montgomery County Executive Ike Leggett said in a statement announcing the deal. “Exelon and Pepco Holdings are committing to reduce both the frequency and duration of outages and to bring Pepco’s reliability into the top quartile, or face financial penalties if they fall short.”
A major point in the county’s initial opposition to the merger concerned establishing financial penalties if the merged utility failed to provide first-rate reliability. According to the agreement, the merged utility must achieve first-quartile reliability compared to similar utilities, or else face financial penalties.
The county also lobbied for a $110 customer credit as part of the deal. The announced agreement includes a $50 credit instead and also directs 20 percent of the $57 million in energy efficiency funds toward low- and moderate-income customers.
The merger proposal has been controversial in Maryland, but it has already been approved in Washington, D.C., Delaware, New Jersey and Virginia, the other states where Pepco and its sister company, Delmarva Power, operate.
Last month, Maryland Attorney General Brian Frosh called for the merger to be rejected. In a filing with the PSC, Frosh wrote that the merger may cause delays in reliability-related projects and a loss of jobs.
Shortly after, Exelon increased its financial commitment to a proposed customer service investment fund from $40 million to $94.4 million. The fund is proposed to pay for customer credits and the energy efficiency projects.
The Coalition for Utility Reform, a group of environmental groups, businesses, think tanks and elected officials in Montgomery and Prince George’s counties, which was formed by Montgomery Council member Roger Berliner, has also opposed the deal and pressed for the merged utility’s performance to be tied to profits.
Berliner issued a statement Tuesday morning saying the agreement doesn't contain "critical concessions by Exelon."
"The overarching issue that Exelon’s settlements have thus far failed to address is Exelon’s track record of supporting its nuclear power plants at the expense of renewable and distributed energy resources," Berliner said in the statement. "Unless Exelon is prepared to demonstrate that in return for becoming the largest energy player in the Mid-Atlantic region, it will be the greenest energy player in the region, it is very doubtful that the merger will be approved, notwithstanding the settlement with the County."
Berliner noted that the state, the Office of People's Counsel and the Maryland Public Service Commission staff have all opposed the merger as "contrary to the public interest."
Environmental and citizen advocacy groups including Public Citizen, the Maryland Sierra Club and the Chesapeake Climate Action Network have opposed the merger because they believe it will create a near-monopoly on the state’s utility market and restrict Maryland’s ability to transition to clean energy sources such as solar and wind power.
