Tag Archives: Pepco

Exelon: now the nation’s largest electric utility

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?

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 opinion that the merger itself may be illegal. Wrote Kane,

“Indeed, developments in the record since my “No” vote on February 26, 2016 give me even stronger reasons to find that the takeover of the District’s electric distribution company by a multi-faceted vertically integrated generation-focused holding company, as proposed in the order before us, benefits Pepco and Exelon shareholders but does not provide sustainable benefits to District ratepayers, places Pepco within a structure that is contrary to District law and policy, and should be rejected.”

The long PSC process–it first voted to oppose the merger last August–has been tainted by the whiffs of potential scandal involving various parties throughout. And while the majority of the PSC spelled out its thinking on the merger itself in its final decision,  the final vote, which was scheduled, cancelled, and re-scheduled in rather helter-skelter fashion at the last minute, raises questions that the decision does not address. The PSC needs to be more transparent and clear and explain what happened in these past few weeks and how it determined to approve the merger over the opposition of nearly every party involved.

When we last wrote about the merger following February’s PSC vote,  we included a timeline of major events leading up to the decision. But subsequent research revealed that we left some key items out, so here is the full timeline of events known of to date:

April of 2015: FreshPAC launched. Close allies of the Mayor launch a highly controversial political action committee called FreshPAC. A quirk in DC campaign laws allows unlimited contributions to the super PAC from companies and businesses, including those with business before the Mayor and City Council. The PAC is highly criticized by the media, voters, and members of the City Council as a fund that appears open to abuse and pay-to-play politics.

August 25, 2015: Exelon-Pepco merger rejected. The DC Public Service Commission unanimously rejects the proposed Pepco-Exelon merger as a fundamental “conflict of interest.”

September 18, 2015: Pepco pays Mayor’s office $25 million in “Soccergate” deal. Pepco gives the Office of the Mayor $25 million in cash for vague naming rights of property adjacent to the proposed new soccer stadium at Buzzard Point. The structure of the deal is highly unusual. Researchers have not been able to find another deal like it in the country. Not only is all the money paid up front, at a very high price (proportionally more than the Verizon Center naming rights deal), but the brevity and minimized complexity of the two-page legal agreement is virtually unprecedented.

September 19, 2015: Exelon presents merger “settlement” financial terms the day after “Soccergate” payment. Documents released under the Freedom of Information Act show that, the very next day after the soccer deal, Exelon submits new financial information to the Mayor’s office for settlement purposes.

Sept. 30 2015: Exelon hires FreshPAC chairman Chico Horton to lobby city officials (Horton’s disclosure filing). It is the first time that Horton or the law firm he works for (Graves, Horton, Askew & Jenkins, LLC) has ever filed a lobbyist registration in the District of Columbia.

Sept. 30: DC files eminent domain for land at Buzzard Pointthe last land acquisition necessary for the DC United soccer stadium project to proceed–with $21 million from the Pepco naming rights deal.

Oct. 1: FreshPAC receives its largest number and total amount of contributions at a fundraiser.

Oct. 6 – Mayor Bowser signs the settlement with Exelon and Pepco.

Oct. 10: FreshPAC receives another large haul in contributions from businesses.

Oct. 16: Exelon files with PSC its request for expedited review of the settlement agreement with Mayor Bowser.

Oct. 20: DC City Council introduces PAC reform bill.

Nov. 7: Mayor goes to China with FreshPAC donors. Mayor Muriel Bowser makes a high-profile visit to China, to encourage international investment in the District of Columbia. She brings with her representatives of two businesses whose owners made contributions to FreshPAC on October 1.

November 10, 2015: FreshPAC is disbanded after widespread criticism. Critics charged it represented a pay-to-play PAC that tarnished DC politics and the Mayor’s public integrity. Exelon continues to refuse to say whether it was asked to donate to FreshPAC while working with the Mayor’s office on a settlement that would give the company its prized $6.8 billion merger.

December 16, 2015: WAMU reveals that former FreshPAC chair registered to lobby for Exelon on the merger. News breaks that Chico Horton, the director of FreshPAC, registered to lobby for Exelon on the merger on September 30, 2015 – the same time that Exelon was negotiating a settlement with the mayor and while FreshPAC was still active and soliciting huge donations from businesses.

January 2016: Chico Horton, the Exelon lobbyist, says he did no “lobbying.” The former head of Bowser’s FreshPAC declares that he did no lobbying – zero – for Exelon during the intense autumn negotiations between Exelon and the Mayor’s office, despite registering as an Exelon lobbyist. Horton said he simply gave the company “strategic advice” that did not officially constitute lobbying.

February 2016: Documents indicate Mayor’s office misled the public on merger negotiations. Documents released under the Freedom of Information Act indicate that the Mayor’s office repeatedly misled the public as to who in her administration actually coordinated and led the merger settlement negotiations between the city and Exelon. The Mayor claimed and still claims that City Administrator Rashad Young and Tommy Wells, head of the Department of the Environment and Energy, led the negotiations. But FOIA documents show that they were informed of key settlement terms after the deal had been negotiated by others close to the Mayor. Who actually led those talks, and what connection to Exelon or Pepco the city negotiators might have had, is still not known. But it was not Wells or Young, as was claimed. Why the discrepancy?

February 26, 2016: PSC gives conditional approval to the merger. Little substantive changes were required on top of the Mayor’s wholly inadequate settlement. Opponents assert the merger is still a fundamental “conflict of interest” and the process was clearly influenced by big-money “pay-to-play” politics.

Michael  Mariotte

March 24, 2016

Permalink: https://safeenergy.org/2016/03/24/exelon-now-the-nations-largest/

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One More Chance to Defeat Exelon Bid for an Energy Mega-Monopoly

exelonpavilionOn Friday, the District of Columbia’s utility regulators dealt what may end up being a fatal blow to Exelon’s bid to buy local utility Pepco and become the largest utility in the country. Or maybe not. In a complex decision that almost literally gave those of us in the room whiplash, the Public Service Commission:

• Rejected a controversial deal submitted by the corporations and DC’s Mayor, Muriel Bowser, and agreed to by several other parties. To which the whole room cheered.
• And then immediately after, the commission offered amended terms by a 2-1 vote. If all of the parties accept the terms within two weeks, the PSC would automatically approve Exelon’s purchase of Pepco, with no further review or vote required.

This set off a lot of speculation about how quickly or easily the deal would be approved. We are happy to report that hasty judgments that Exelon would quickly achieve victory are far from true. If even one of the nine parties backs out, the deal could be dead, or be subject to further review.

NIRS and the PowerDC coalition are encouraging DC residents to write to Mayor Bowser, DC Attorney General Carl Racine, and People’s Counsel Sandra Mattavous-Frye, urging them to reject the PSC’s terms and, effectively, back out of the settlement.

And there are plenty of reasons for them to do it. But first a little refresher on why this is so important for those concerned about clean energy and a nuclear-free, carbon-free future.

Exelon is by far the largest nuclear power plant operator in the country, running 23 reactors in six states and holding an ownership stake in two others, plus five shutdown reactors. Over one-fourth of Exelon’s reactors are unprofitable and losing millions of dollars each year, placing them at imminent risk of retirement. Given that nuclear power is the core of Exelon’s business, it is under pressure to boost its bottom line by whatever means necessary.

Hence, the company is pushing legislators and regulators from Illinois to New York to DC to deliver massive subsidies for nuclear power plants. And it has stepped up its attacks on renewable energy in the same fashion: blocking renewable energy legislation in Illinois for the last two years, and trying to kill federal renewable energy programs.

But Wall Street has also been telling Exelon it needs to shift away from nuclear power. And that is why, in 2014, it offered Pepco a deal it couldn’t refuse: to buy out the company and its shareholders to the tune of $6.8 billion, 25% more than the company’s stock was worth. Pepco was literally the best option for Exelon: with 2 million captive ratepayers, and adjacent to utilities it already owned in Pennsylvania and Maryland, Pepco would give Exelon an unprecedented regional monopoly.

The problem: people in Maryland and DC have been fighting for renewable energy and real climate justice policies for years. They knew Exelon would be a disaster for consumers and the environment alike. And with vigorous grassroots organizing and legal interventions, we won round one. After Maryland only narrowly approved the deal (with over 50 pages of conditions), DC’s Public Service Commission rejected it in August, pointing out Exelon’s long track record opposing renewable energy, the loss of local control with a utility headquartered in Chicago, and the company’s inherent conflict of interest in selling its nuclear power at the highest price possible.

That set off a desperate effort by Exelon and Pepco to seek out a settlement with the city government. The Mayor’s decision to go along with Exelon at the same time that Pepco gave the city $25 million for a soccer stadium and Exelon hired the chairman of her political action committee as a lobbyist have raised serious concerns about corruption (see the timeline below). If Exelon’s takeover of Pepco were the clean energy equivalent of the Titanic, then the equivalent of rearranging the deck chairs rather than heading to the lifeboats.

The terms offered by the PSC are actually worse – even for the Mayor and other officials who joined the settlement:
• $28 million in bill credits intended to lessen the impact of Exelon rate hikes until 2019 on residential customers are now out the window. PSC says it will apply the credits to all customers (businesses and government). Residential customers would see their bills go up long before the Mayor’s re-election campaign in 2018.
• $9 million toward low-income customer assistance, also gone.
• Other monies that the Mayor would have had the discretion to spend on renewable energy projects (or not) would now be under the PSC’s authority, to prevent the Mayor from diverting them to other budgetary purposes.

These happen to be the very terms district officials were using to justify their support for the deal. Without them, Exelon’s rate hikes mean nothing but misery to district ratepayers. That would have been the case long-term anyway, but now the Mayor and others will be exposed to the political repercussions of supporting Exelon. So it is really down to whether Exelon’s corporate influence is more powerful than the threat of an angry electorate.

There are other significant terms, too, including forcing Exelon to bid out micro-grid and solar projects to competitive providers, rather than being able to own and profit from them itself. Exelon could probably live with that. Also, the PSC’s chair, Betty Anne Kane, issued a strong and principled minority opinion opposing the terms offered by the other two commissioners. Kane reiterated the view that the Exelon-Pepco deal is inherently flawed, both because of the inevitable loss of local control and Exelon’s fundamental conflict of interest in being both the utility and a major nuclear generator.

Before the PSC decisions, Exelon had said it would walk away from the deal if it wasn’t decided by March 4. Now we’ll see if that’s true.

And here is a timeline of Exelon’s and Pepco’s scandal-ridden effort to squeeze their rotten deal through. (Timeline compiled by NIRS and Chesapeake Climate Action Network from news reports and public documents.)

SUMMARY OF SCANDAL-PLAGUED EVENTS LEADING UP TO FINAL EXELON-PEPCO MERGER DECISION

April of 2015: FreshPAC launched. Close allies of the Mayor launch a highly controversial political action committee called FreshPAC. A quirk in DC campaign laws allows unlimited contributions to the super PAC from companies and businesses, including those with business before the Mayor and City Council. The PAC is highly criticized by the media, voters, and members of the City Council as a fund that appears open to abuse and pay-to-play politics.

August 25, 2015: Exelon-Pepco merger rejected. The DC Public Service Commission unanimously rejects the proposed Pepco-Exelon merger as a fundamental “conflict of interest.”

September 18, 2015: Pepco pays Mayor’s office $25 million in “Soccergate” deal. Pepco gives the Office of the Mayor $25 million in cash for vague naming rights of property adjacent to the proposed new soccer stadium at Buzzard Point. The structure of the deal is highly unusual. Researchers have not been able to find another deal like it in the country. Not only is all the money paid up front, at a very high price (proportionally more than the Verizon Center naming rights deal), but the brevity and minimized complexity of the two-page legal agreement is virtually unprecedented.

September 19, 2015: Exelon presents merger “settlement” financial terms the day after “Soccergate” payment. Documents released under the Freedom of Information Act show that, the very next day after the soccer deal, Exelon submits new financial information to the Mayor’s office for settlement purposes.

November 10, 2015: FreshPAC is disbanded after widespread criticism. Critics charged it represented a pay-to-play PAC that tarnished DC politics and the Mayor’s public integrity. Exelon continues to refuse to say whether it was asked to donate to FreshPAC while working with the Mayor’s office on a settlement that would give the company its prized $6.8 billion merger.

December 16, 2015: WAMU reveals that former FreshPAC chair registered to lobby for Exelon on the merger. News breaks that Chico Horton, the director of FreshPAC, registered to lobby for Exelon on the merger on September 30, 2015 – the same time that Exelon was negotiating a settlement with the mayor and while FreshPAC was still active and soliciting huge donations from businesses.

January 2016: Chico Horton, the Exelon lobbyist, says he did no “lobbying.” The former head of Bowser’s FreshPAC declares that he did no lobbying – zero – for Exelon during the intense autumn negotiations between Exelon and the Mayor’s office, despite registering as an Exelon lobbyist. Horton said he simply gave the company “strategic advice” that did not officially constitute lobbying.

February 2016: Documents indicate Mayor’s office misled the public on merger negotiations. Documents released under the Freedom of Information Act indicate that the Mayor’s office repeatedly misled the public as to who in her administration actually coordinated and led the merger settlement negotiations between the city and Exelon. The Mayor claimed and still claims that City Administrator Rashad Young and Tommy Wells, head of the Department of the Environment and Energy, led the negotiations. But FOIA documents show that they were informed of key settlement terms after the deal had been negotiated by others close to the Mayor. Who actually led those talks, and what connection to Exelon or Pepco the city negotiators might have had, is still not known. But it was not Wells or Young, as was claimed. Why the discrepancy?

February 26, 2016: PSC gives conditional approval to the merger. Little substantive changes were required on top of the Mayor’s wholly inadequate settlement. Opponents assert the merger is still a fundamental “conflict of interest” and the process was clearly influenced by big-money “pay-to-play” politics.

Tim Judson

February 29, 2016

Permalink: https://safeenergy.org/2016/02/29/one-more-chance-to-defeat-exelon/

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Revisiting the pawn/toast prognostication as more reactors close

Another one bites the dust: New York's Fitzpatrick reactor will close permanently next year.

Another one bites the dust: New York’s Fukushima-clone Fitzpatrick reactor will close permanently next year.

In mid-September, I wrote a piece delving into prognostication–always a dangerous endeavor–identifying (with tongue slightly in cheek) the nation’s most troubled nuclear reactors and dividing them into two piles: pawn or toast. Toast was those reactors most likely to shut down; pawn indicated that while on the precipice, the utilities would go to great lengths to avoid shutting them down.

Only six weeks or so later, enough has happened to revisit that list and see how we’ve done. Continue reading

More woes for Exelon as DC PSC rejects its takeover of Pepco

cnbcexelonfallIt hasn’t been a very good week at Exelon headquarters near Chicago. First, four of its reactors–from New Jersey to Illinois, couldn’t clear the PJM capacity auction, putting their future in jeopardy. And this morning came the worst news of all for the company: The Washington DC Public Service Commission unanimously rejected its attempt to take over the local utility Pepco.

Even though four states and FERC (Federal Energy Regulatory Commission) had already approved the deal, approval from all jurisdictions involved is essential to allowing the deal to go through, so DC’s action–if it stands–will kill the deal entirely. ; Continue reading

Oops! Real reason for Exelon-Pepco merger inadvertently revealed

exelonpepcobaltsuncorrectionOops. Exelon’s nuclear cat was inadvertently let out of its radioactive bag by the Baltimore Sun today.

The Sun was supposed to run an ad last Thursday in support of the proposed takeover of mid-Atlantic utility Pepco by Exelon. The ad was supposed to show that some sort of local coalition of community groups support the merger.

But the Sun ran the wrong ad. Continue reading

Exelon’s proposed takeover of Pepco: what’s at stake

exelonpavilion

Exelon’s attempt to take over the mid-Atlantic utility Pepco is running into obstacles in DC, Maryland and Delaware. The merger may be critical to Exelon’s long-term survival.

Exelon is the nation’s largest nuclear power utility, but burdened by a bevy of uneconomic nuclear reactors, it hasn’t been performing well financially in recent years and was forced to slash dividends to its shareholders a couple years ago–which it still hasn’t been able to resume. Wall Street took notice, and essentially told Exelon it had to diversify and expand its non-generation business.  Continue reading

It’s put up or shut up time for Exelon

Exelon's Dresden nuclear complex (Unit 1, on the right, has been closed since 1978) may--or may not--be one of Exelon's supposed uneconomic nuclear plants.

Exelon’s Dresden nuclear complex (Unit 1, on the right, has been closed since 1978) may–or may not–be one of Exelon’s supposed uneconomic nuclear plants.

For a year now, Exelon has been complaining–loudly–that some of its Illinois reactors are uneconomic (though it hasn’t necessarily been consistent about which ones those are). And the nuclear giant has threatened to close some of these reactors if it can’t get some form of bailout (a word Exelon despises, but is nonetheless accurate). Of course, there are many who would feel much better if those threats were actually promises…. Continue reading