The Washington D.C. Public Service Commission, which rejected the deal in August, agreed to reconsider after Exelon pledged to increase its proposed investment in the district to US$78 million from US$14 million.
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Baltimore Gas and Electric Co. owner Exelon Corp. closed its merger with Washington-area utility Pepco Holdings on Wednesday, hours after District of Columbia regulators reversed course and voted 2-1 to approve the union. It previously had gained approval from federal regulators in Maryland, New Jersey, Virginia, and Delaware.
Exelon’s strengths such as its compelling growth in net income, attractive valuation levels, good cash flow from operations, solid stock price performance and impressive record of earnings per share growth outweigh the fact that the company shows low profit margins.
The D.C. commission concluded that the merger would be in the public interest, given agreements the companies have made for energy efficiency and conservation programs, putting aside money for consumer initiatives and modernizing the electric grid. The news sent Pepco shares on an upward run, gaining 27 percent after the news of the favorable vote broke.
Pepco spokesperson Vince Morris said the company is reviewing the PSC order. “Once we’ve had a chance to do so, we will have more to say about what it means and next steps”, he said in an email.
The effect of that money would hold down residential power rates until 2019.
Opponents of the deal plan to continue pursuing a legal challenge to Maryland’s approval of the merger, Carmody said.
The proposal was part of a larger trend of utilities undertaking strategies that lower their exposure in competitive power markets in favor of owning regulated utilities that have more predictable, if lower, revenue streams.
The merger had been closely watched by environmentalists, utility and public-service attorneys, and financial analysts across the country.
Exelon’s Mr. Elsberg said the latest regulatory action raises the cost of the merger.
Pepco began as a subsidiary of a Washington streetcar company, selling excess power to other streetcar operators.
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Exelon Corporation, a utility services holding company, engages in the energy generation and delivery businesses in the United States.
