By Michael Mariotte

This building–an artist’s rendition–doesn’t actually exist. Yet. But now that Exelon is the nation’s largest electric utility, who knows what it could do?

Exelon has long been the nation’s largest nuclear power utility. Now it is the nation’s largest electric utility, period.

Yesterday, the Washington, D.C. Public Service Commission, which had twice rejected the proposed merger of Exelon and D.C.’s local utility Pepco, voted 2-1 to approve the merger. Within hours, Exelon and Pepco had filed the necessary paperwork to close down Pepco and have it subsumed by Exelon.

The vote was shocking. Last month, the PSC had again rejected the merger, but proposed terms that it would find acceptable enough that it would approve the merger without another vote if all parties agreed to them. Only Pepco and Exelon agreed to the terms; D.C. Mayor Muriel Bowser, the People’s Counsel, the federal General Services Administration and the rest of the intervenors in the case rejected the terms.

Yesterday, the PSC approved the merger on its terms anyway–to the great joy of portions of the D.C. business community, which, as the Washington Post reported, “lobbied hard for the merger.”

The Post also reported that rate increases can be expected to occur immediately–as early as this summer. The entire point of the merger, from Exelon’s standpoint, is for the company to take the tidy and essentially guaranteed profits from the regulated and lucrative Pepco market and use them to resume payouts to its shareholders, which were suspended because of losses from Exelon’s failing nuclear power business. In other words, DC ratepayers will be bailing out Exelon’s nuclear losses. But Exelon isn’t willing to settle for simply tidy profits; thus the prospect of immediate rate increases and many more to come in ensuing years.

Ratepayers in other states, where Exelon has been seeking bailouts for its uneconomic reactors, shouldn’t expect any kind of relief however. Exelon will certainly continue pressing for large bailouts everywhere it has reactors; while there may a limit to its corporate greed, that hasn’t been proven yet.

The ramifications of the decision go well beyond D.C. however. A vote to deny the merger would have overturned earlier votes by FERC and regulators in Maryland, Delaware and New Jersey, all states in which Pepco has at least some presence (in Maryland, quite a large presence) to approve the merger. It would have scuttled the entire deal. You can see why the big business community’s lobbying was intense.

It’s possible, however, that Exelon and Pepco may have been a little premature in filing the papers to dissolve Pepco and become one big dysfunctional family. Opponents of the merger still have the opportunity to challenge the vote, and at least some of them, including Power DC–the umbrella group, including NIRS, that has led the opposition–are examining the available options. But whether the resources are available to mount an effective challenge is an open question.

PSC Chair Betty Ann Kane, who steadfastly opposed the merger throughout the process, hinted in her dissenting …read more

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