In a filing to the Public Service Commission of the District of Columbia today, Pepco Holdings and Exelon Corporation proposed three approaches to prevent loss of customer benefits.
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Those proposistion could allow the companies to complete the merger. The proposals offer the Commission considerable flexibility in determining how the funds are allocated to ensure the merger is in the public interest. The companies asked the Commission for a decision by April 7.
The merger settlement Pepco Holdings and Exelon reached with the DC government and others in October 2015 set aside $25.6 million to offset residential customer rate increases through March 2019.
However, in its February 26 order, the Commission removed that set-aside and concluded that the Commission should determine how those funds will be allocated across customer classes in the next Pepco rate case.
The alternative proposal in the companies’ filing addresses the settling parties’ concerns by reallocating a portion of the total customer benefits for a $45.6 million fund.
$25.6 million would preserve the original merger settlement’s rate credits for residential customers, including low-income households, to offset rate increases through March 2019.
$20 million would be used at the Commission’s discretion for purposes including rate credits for customers including commercial customers, additional low-income customer assistance or grid modernization.
Merging with Exelon also will lower Pepco’s costs, and Pepco will pass the money it saves on to consumers through rates lower than they would be if the merger does not occur - an estimated $51 million in savings over the first decade alone.
Pepco Holdings and Exelon have secured necessary regulatory approvals from the Federal Energy Regulatory Commission as well as commissions in Virginia, New Jersey, Maryland and Delaware, The District of Columbia Public Service Commission is the last remaining approval required.
Pursuant to the Letter Agreement, if Pepco Holdings violates the terms of the Letter Agreement, Exelon shall have the right to terminate the Merger Agreement, and Pepco Holdings would not be entitled to retain the $180 million reverse termination fee prepaid by Exelon through the purchase of an aggregate of 18,000 shares of Pepco Holdings preferred stock and reimbursement otherwise required under the Merger Agreement for up to $40 million for out-of-pocket expenses incurred by Pepco Holdings. ■