On June 17, 2016, the Public Service Commission of the District of Columbia (“DCPSC”) denied multiple applications for reconsideration of its March 23, 2016 order approving the merger (“Merger Order”) between Pepco Holdings, Inc. (“Pepco”) and Exelon Corporation (“Exelon”) (see March 29, 2016, edition of the WER). The applications for reconsideration had been filed by several opponents of the merger. Going forward, those opponents must decide if they want to pursue a judicial appeal of the Merger Order.
DCPSC’s denial of the applications for reconsideration is the latest action taken in a contentious proceeding that commenced in June 2014 when Pepco and Exelon filed their initial merger application. DCPSC denied the initial merger application in August 2015 on a finding that the proposed merger was not in the public interest. In February 2016, DCPSC denied a revised merger application on similar grounds, despite the revised proposal containing new concessions achieved through settlement negotiations between the applicants and the District of Columbia Government. In the February denial, DCPSC Commissioner Fort proposed alternative concessions that, if adopted by Pepco and Exelon, could potentially render the merger in the public interest. In March 2016, Pepco and Exelon filed revised merger terms adopting Commissioner Fort’s proposed concessions. DCPSC subsequently issued the Merger Order granting approval by a 2-1 vote.
Opponents of the merger sought reconsideration of the Merger Order on both procedural and substantive grounds. Opponents argued that DCPSC failed to provide full due process and “engaged in a pattern of procedural irregularity that produced a deeply flawed final order approving the merger based on the Commission’s own modification of [merger] terms . . .” Further, opponents asserted that DCPSC erred by failing to fully and clearly articulate the basis for departing from a number of previously expressed policies and to fully and clearly explain why previously-cited criticisms of the merger proposal are no longer of concern.
DCPSC rejected the opponents’ arguments. In doing so, DCPSC noted that the opponents’ arguments based on procedural due process have been waived due to failure to timely raise an objection to Pepco and Exelon’s February 2015 request for other relief. DCPSC emphasized that a party cannot seek reconsideration based on “newly raised arguments” that “with due diligence, could have been raised earlier in the proceeding.” Further, DCPSC found that it complied with procedural notice requirements and provided adequate time to consider comments on revised merger terms. Finally, DCPSC explained that it did not depart from any established policies and that it provided 69 findings of fact and five conclusions of law that support its determination that the merger proposal, as revised, “will benefit District ratepayers and the District rather than merely leave them unharmed, and when taken as a whole, is in the public interest.”
The DCPSC order is available here.