In a big win to Power DC and it’s coalition of grassroots energy activists, DC’s Public Service Commission rejects the merger between Exelon and Pepco. More than 3,000 residents, small businesses and non-profits submitted testimony on both sides. There were four community hearings and comments from 26 Advisory Neighborhood Commissions, several smart-energy groups, and at least six members of the D.C. Council. In the end, the D.C. Public Service Commission denied Chicago-based Exelon’s proposed $6.4 billion takeover of Pepco Holdings.
The three-member commission unanimously rejected the utilities’ application, saying it was not in the best interests of the ratepayers and that there was no evidence the combination would improve the reliability of service. But according to the Washington Post article D.C. Regulator Rejects Proposed Exelon-Pepco Merger, proponents may still hold out hope of making a deal in the future. On the hand, the article DC Regulators Reject Exelon-Pepco Merger in Utility Dive, points out a few reasons why this may be unlikely.
For the record, the press release from DC’s Public Service Commission reads as follows:
Commission Denies Pepco/Exelon Merger Application
(Washington, D.C.) Today, the Public Service Commission of the District of Columbia (“Commission”) voted to deny an application for acquisition of Pepco Holdings, Inc. (PHI) by Exelon Corporation as not being in the public interest. In determining whether the Proposed Merger is in the public interest pursuant to D.C. Code §§ 34-504 and 34-1001, the Commission first considered the effect of the Proposed Merger transaction on each of the seven public interest factors. This included the effects of the transaction on ratepayers and shareholders, on competition in the local retail and wholesale markets and on conservation of natural resources and preservation of environmental quality. In doing so, the Commission identified how the effects of the Proposed Merger on each of the seven public interest factors would benefit or harm the public (including Pepco, District ratepayers, and the District community). The Commission then used its findings to assess the transaction as a whole. The Commission concluded that, taken as a whole, the transaction as proposed by Exelon and Pepco is not in the public interest. In a separate opinion, Commissioner Phillips concurred in part and dissented in part.
Exelon announced its purchase of PHI, the parent company of the Potomac Electric Power Company (“Pepco”), on April 30, 2014, and the application seeking a change of control was filed on June 18, 2014. Parties to the proceeding included the Office of the People’s Counsel, the District of Columbia Government, the Apartment and Office Building Association of Metropolitan Washington, D.C. Solar United Neighborhood, District of Columbia Water and Sewer Authority, the General Services Administration, GRID2.0 Working Group, and others. Over 3,000 residents, non-profits and small businesses submitted written testimony on the merger, both in support and in opposition. In addition, the Commission held four community hearings in which 178 participants submitted testimony. Further, the Commission received comments from 26 Advisory Neighborhood Commissions and several members of the D.C. Council.
Chairman Kane stated, “The public policy of the District is that the local electric company should focus solely on providing safe, reliable and affordable distribution service to District residences, businesses and institutions. The evidence in the record is that sale and change in control proposed in the merger would move us in the opposite direction.”
Commissioner Fort agreed, stating that “The Proposed Merger would diminish Pepco’s ability to directly raise issues that address the needs of District ratepayers while posing regulatory challenges for the Commission and the interested parties who participate in Commission proceedings.”
Commissioner Phillips stated, “I agree with my colleagues that the merger application as filed is a bad deal for the District. However, I am disappointed in the loss of the many opportunities that could have achieved benefits for our local communities and across the region.”
In other jurisdictions, the application for the merger of PHI and Exelon has been approved, including Virginia, New Jersey, Delaware, Maryland, and the Federal Energy Regulatory Commission. The only jurisdiction to deny the application is the District of Columbia. Pepco and Exelon have 30 days to ask the Commission to reconsider its decision.
The Public Service Commission of the District of Columbia is an independent agency established by Congress in 1913 to regulate electric, natural gas, and telecommunications companies in the District of Columbia.
It has long been a tenet of American society that income disparity is more acceptable provided that there is a reasonable chance that someone who starts poor can make their way up the economic ladder to at least middle class status through education and work. This is the premise of the American dream and of a society based on the principle of meritocracy. In this post we use DC taxpayer data to analyze income mobility, the extent to which an individual’s income changes over time. This data allows us to determine the probability of an individual moving up the rungs of the economic ladder. The analysis also determines how far up one is likely to move up the economic ladder, starting at the bottom.
We focus initially on singles since income mobility is easier to define for a single individual than for married couples, where income is defined on an aggregate basis. For a married couple, upward mobility could be the result of various outcomes- both spouses moving up the ladder simultaneously, one spouse moving up the ladder and the other remaining steady, or some other combination.
We examined mobility for singles by looking at where individuals stood on the economic ladder in 2002 and compared this to where they ended up in 2012. The percentage of filers who changed positions on the ladder measures the probability of moving on the ladder.
Here’s how to interpret the results shown in the matrix below:
Reading across starting from the top row, 39 percent of individuals who were in the bottom 20 percent of the income distribution in 2002 remained in the bottom twenty percent in 2012, 28 percent moved up one rung of the ladder to the second quintile (20th to 40th percentile), 15 percent to the third quintile and so on for the other quintiles. Similarly for the second row, 18 percent of individuals who were in the second quintile in 2002 fell down the ladder ending up in the lowest quintile in 2012, 35 percent remained in the same quintile and so on. Shaded boxes in yellow denote no change in income status, blue shading denotes upward mobility and red denotes downwards mobility.
Income Mobility: Chances of Moving on the Economic Ladder by Income Range, 2002-2012
Source: DC Income Tax Data 2002-2012, DISTRICTMEASURED.COM
Highlights
Thirty nine percent of singles who started poor (in the lowest quintile) remained poor after a decade.
The median age for filers stuck at the bottom was 49 years. Given that these individuals are well into their career paths, the chances of their income prospects improving in the next ten years are likely to be small.
Twenty eight percent who started at the bottom moved up one rung of the ladder, and 33 percent from the lowest quintile made it to middle class status or higher (40th percentile and higher).
For those starting in the second quintile in 2002, the chance of moving up to middle class status one decade later was 47 percent.
The likelihood of remaining in the middle class in 2012 for those already in the middle class in 2002 was greater than 25 percent.
On March 20, 2015, the CEO of Exelon Chris Crane will testify before the DC Public Service Commission about his company’s efforts to buy Pepco Holdings, a company that owns three distribution utilities serving customers in Virginia, New Jersey, Maryland, Delaware, and the District of Columbia. According to Wikipedia, Exelon Corporation produces, trades and distributes energy in 47 states, the District of Columbia and Canada. If the deal goes through, Exelon will become (if it isn’t already) the largest competitive U.S. power generator and the dominant utility in our region. Little wonder that the DC Office of the People’s Counsel (OPC) considers the proposed merger to be “by far the most significant undertaking in the local electric industry since Pepco’s divestiture of its generation plants in 2000.”
The sustainability contingent of DC’s progressive community has come together to oppose this merger under the umbrella organization Power DC. We should know in the next few weeks whether their efforts will prove effective. I for one am on the edge of my seat. Although, I’ve been receiving emails from progressive list serves for months about this issue, I’m still trying to get my head around the deal itself and what it would take to stop it.
Stop it, you ask? We live in a capitalist country where corporations have the same rights, if not responsibilities, as citizens. As long as they have the money, what’s to stop them? Well, some things that we all agree everybody needs in order to promote the general welfare—schools, healthcare for the poor, roads, public utilities, etc—are regulated by the government. So, if the government and presumably its citizens don’t approve, then no merger. Where do things stand now?
The hoops that must be navigated in order for the merger to take place include approval from the Federal Energy Regulatory Commission, which will weigh Exelon’s potential market power, an antitrust review by the Justice Department and the Federal Trade Commission, as well as approval by the public service commissions in the three states where Pepco operates and the District of Columbia. The deal has already been approved by the Federal Energy Regulatory Commission, which seems to suggest that federal regulators consider a lot of market power a good thing, given Exelon’s size that is. The Public Service Commissions of Delaware and New Jersey are also on board. The Maryland Public Service Commission came out against the initial proposal but Exelon has filed an appeal.
The DC Public Service Commission is still considering it but before they can approve the deal, Exelon needs to prove that it will benefit Pepco customers. So, what would we get out of the deal? If you happen to be a Pepco shareholder than the deal is good for you, at least financially. Exelon is offering Pepco $6.8 billion dollars despite the fact that Pepco is only worth $4.3 billion, which sounds hinky to me. So, I turned to the comprehensive reporting on this issue provided by the Grist and Utility Dive. Here’s what I learned that makes this merger more than palatable for Exelon’s shareholders.
Exelon makes the majority of its money via a sizable fleet of nuclear power plants. In 2013, 81 percent of the electricity it produced was nuclear, which accounted for some 60 percent of it’s revenue. Thanks to competitive pressure from cheap natural gas, rising renewables, and stagnant electricity demand, Exelon’s revenues have declined by about 40% in recent years. What’s the fix? Acquire distribution utilities like Pepco with a large customer base (Pepco Holdings, Inc., serves about 2 million customers) and a more stable and predictable revenue stream. If the merger goes through, all of these new customers will help to shore up Exelon and by extension the nuclear power industry. Hey, at least it’s not fossil fuels, right?
What’s most troubling to the sustainable-development contingent of DC’s progressive community is that all the work they’ve put into trying to make DC green may be put at risk by this merger. Thanks to their efforts, the District of Columbia’s official Sustainable D.C. plan calls for 50 percent renewable energy, a 50 percent decline in energy use, and a five-fold expansion of green jobs by 2032. If history is any judge, Exelon will do little to support DC’s efforts to promote sustainable energy and may in fact do what it can to put the kibosh on the whole thing. Evidence of their pro-nuclear, anti-renewable lobbying efforts are pretty numerous, but the Nuclear Information and Resource Service’s report Killing the Competition: The Nuclear Power Agenda to Block Climate Action, Stop Renewable Energy and Subsidize Old Reactors is pretty comprehensive.
Is an unwillingness to support renewable energy necessarily bad? You and I may roll our eyes at this question, but Exelon has only to prove to the District’s Public Service Commission that the merger will benefit Pepco customers, not that it will support renewable energy, especially when doing so will impact negatively on its bottom line. To that end, Exelon has agreed to set up a $100 million customer investment fund which would give Pepco customers benefits such as rate credits, assistance for low income customers and energy efficiency measures. Sounds like a lot but that comes out to $50 per customer and there’s a good chance that would be delivered in the form of a one-time rebate.
But $50 may not be all that customers get out of the deal. Plans for improved service and reliability detailed in Exelon’s proposal, sound great. Certainly, no one denies that Pepco struggles more than other utilities with downed power lines and outages. Not surprisingly, DC’s sustainability activists prefer that we support Pepco in their efforts to improve their service rather than turn over energy distribution to a Chicago-Based firm over which we will have little control.
Expose residents and businesses to rate increases aimed at supporting Exelon’s struggling business model
Undermine the District of Columbia’s renewable energy initiatives
Expose Pepco customers to long-term risks significantly larger than the short-term protections and public benefits claimed by Exelon.
Despite the chorus of opposition, the jury is still out on what the DC Public Service Commission will decide. Activists in opposition are working to get the DC City Council and Mayor Muriel Bowser to officially oppose the merger. It’s possible that Pepco Board members, which include such regional heavy hitters as Lawrence Nussdorf, chief operating officer of the construction giant Clark Enterprises; Terence Golden, founder of Bailey Capital and former chairman of Host Hotels and Resorts; and Barbara Krumsiek, president of Calvert Investments are lobbying in the other direction. Who wins will have implications nationwide for the future of public utilities and attempts to push slow-moving energy policies towards a more sustainable future.
On Friday December 6, 2013 activists from Washington, DC, Maryland, and Virginia gathered near the headquarters to make a statement to passerbys about the National Security Agency, the US’s principal spy agency conducting warrantless, unconstitutional dragnet surveillance on all Americans and much of the world: CLOSE THE NSA. and SAVE AMERICA.
It isn’t enough to be outraged. Times like this require concerted, committed, and focused grassroots [creative] action. With Bill of Rights Day approaching on December 15 speak out, and for millions of others whose rights are being trampled by the emerging surveillance state. There has never been a better time to raise your voice!
Organizations represented during the banner drop include:
Bill of Rights Defense Committee
CODEPINK: Women for Peace
Montgomery County Civil Rights Coalition
Restore the Fourth
We Act Radio
Filmed by Robin Bell
Edited by Adwoa Masozi
Music by Petteri Sainio
The Washington Peace Center hosted an Activist Awardees Reunion Party on July 12, 2011. Past Awardees gathered to network, strategize and celebrate successes with the WPC. Here are some highlights from the event. Many thanks to all our supporters who made the evening a special and joyous occasion.
Special thanks to the Empower DC Grassroots Media Project for providing equipment to document the event. Also, a special shout out to performers David Thurston, Lacy MacAuley, Head-Roc and Fire In The River for providing inspirational music and spoken word. As always, many thanks to Busboys and Poets for providing the perfect venue for activists to gather!
Nominations now open for 2011 Activist Awards Gala! Who do you think made a big impact this year? Visit us online and submit your nomination.
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