Exelon sweetens deal for Pepco customers in merger proposal

The ground and first floor of the Exelon tower is under construction at Silo Point.

Exelon Corp. has offered to more than double what it will spend on Pepco Holdings customers in Maryland as it seeks regulatory approval to acquire the utility.

Chicago-based Exelon, the parent company of Baltimore Gas and Electric, is seeking approval from the Maryland Public Service Commission to buy Pepco Holdings in a $6.9 billion deal, creating what would be one of the largest utilities in the country.


Exelon and Pepco Holdings initially proposed a "customer investment fund" of $100 million in potential bill credits, energy efficiency or low-income assistance programs for Pepco Holdings' customers across three states and the District of Columbia. In Maryland, the amount would have been $40 million, or more than $50 per customer.

On Wednesday, the companies announced that they would increase the fund in Maryland to $94.4 million, or about $128 a customer. The Maryland PSC, which must rule on the proposed merger by early April, would make the final decision on how the money would be spent on bill credits or other programs.


Exelon spokesman Paul Adams said the increased customer investment fund is similar to sweetened deals offered in New Jersey, whose public service commission approved the deal; in Delaware, where a settlement agreement was reached between the companies and stakeholders; and in the District of Columbia, where the deal has not yet been approved.

The total amount offered to Pepco Holdings ratepayers through customer investment funds and other commitments now totals about $247 million.

The merger, first proposed in 2014, does not include benefits such as bill credits for BGE customers, but Exelon officials have said the money that can be saved by combining some of the operations of the two largest utilities in Maryland could mean smaller rate increases for BGE and Pepco customers in the future. The companies also say the merger would mean that crews could respond more quickly during power outages.

Paula M. Carmody, director of the Maryland Office of People's Counsel, who is charged with advocating for the state's consumers, said she is reviewing Exelon's filing but is not sure the proposal did anything to change her opposition to the merger.

"In the long term, we think this is bad for customers and for the public interest," Carmody said. "At present, we're not persuaded that the changes address those concerns."

Carmody said her concerns about the merger — which center around what she believes would be Exelon's undue influence and the notion that one company would control electric service for 80 percent of Marylanders — are "structural" and might not be able to be lessened by a larger customer investment fund or other commitment.