The Montgomery County Council introduced a resolution Tuesday that goes beyond conditions set in an agreement the county announced last week with Exelon concerning its proposed merger with local utility Pepco.
The resolution urges the Maryland Public Service Commission, which is evaluating the merger proposal, to force Exelon to hold down costs to ratepayers and commit to expanding renewable energy sources in the state.
Chicago-based Exelon is offering to purchase Pepco Holdings Inc. for about $6.8 billion. If the merger is approved, Exelon, which also owns Baltimore Gas and Electric, will own about 85 percent of the electricity distribution system in Maryland.
The resolution, which was drafted by Councilmember Roger Berliner’s staff, notes that opponents of the merger are concerned that Exelon will attempt to prop up its struggling nuclear power plants by charging ratepayers in Maryland more for electricity. Exelon’s power plants have suffered a sharp decline in revenue as cheap natural gas prices have led to more power being sold by other companies on the wholesale market, according to Crain’s Chicago Business, which examined Exelon’s profitability in a 2014 report.
At the council meeting Tuesday, Berliner said it’s important that the council “sets the record straight” about the deal the county agreed to with Exelon last week. That deal includes Exelon providing customer credits, investments in renewable energy and a commitment to enhance the local power network’s reliability in return for the county's support for the merger.
Berliner said Tuesday the council “to a person” urged County Executive Ike Leggett not to make the deal.
“It was simply the wrong deal,” Berliner said. He added that local ratepayers must not be “pawns” in Exelon’s plans to prop up its struggling nuclear power plants.
The Crain’s article notes that the proposed Pepco merger is part of Exelon’s latest business strategy to acquire businesses in the low-growth regulated power market where profits are predictable to hedge the volatile effects of the nuclear power market. Exelon owns 23 nuclear reactors at 14 locations in Illinois, Maryland, Nebraska, New Jersey, New York and Pennsylvania.
Opponents of the proposed merger have said that Exelon may raise rates here to help the company’s bottom line as it deals with losses at its nuclear power plants.
A similar point was made by Maryland Attorney General Brian Frosh in his case to oppose the merger. Environmental advocates such as the Chesapeake Climate Action Network are opposing the merger because they believe there are not enough concrete commitments from Exelon to develop new clean energy sources in the state.
Exelon has said the merger will result in smaller rate hikes for both Pepco and BGE customers and that they’ll commit to performance targets on reliability standards. Officials in Virginia and New Jersey, other states where Pepco operates, as well as the Federal Energy Regulatory Commission have approved the merger.
Berliner said the settlement with the county falls short of making the merger beneficial to Pepco’s customers.
“There are miles to go before this merger is in the public interest,” Berliner said.
