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Frosh urges PSC to reject Exelon-Pepco merger

Maryland Attorney General Brian Frosh became the latest voice to oppose the proposed merger between Baltimore Gas and Electric parent Exelon Corp. and Pepco Holdings.

Chicago-based Exelon is seeking approval from the Maryland Public Service Commission and other regulatory agencies to buy Pepco Holdings for $6.9 billion. Various groups, including the Maryland Office of Peoples' Counsel, have called for the merger to be rejected, while the PSC staff believes it shouldn't be approved without concessions from the utility giant.

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Frosh and his office, serving as legal counsel for the state and the Maryland Energy Administration, called for the merger to be rejected in a filing Tuesday. The PSC must rule on the proposed merger by April 8, and can only approve it if it finds the merger is in the public interest.

The merger does not meet the public interest standard, Frosh and his team wrote in the filing, arguing it "introduces substantial potential harms" to Pepco Holdings customers and the state, without "tangible" benefits.

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"The merger enjoys no support from the State or numerous affected stakeholders," Frosh wrote. "The only significant benefits accrue to Exelon and PHI shareholders and corporate officers — not the State or Maryland customers."

While Exelon has promised to improve Pepco reliability, Frosh wrote that the evidence the company presented showed that reliability would not improve as a result of the merger and may even suffer as projects Pepco had in the pipeline may be delayed. Frosh also wrote that the projected job loss from combining the two utilities would hurt the state's economy.

Frosh also was skeptical of Exelon's assertion that the merger would result in smaller future rate hikes for both Pepco and BGE customers.

"Exelon's focus is on increasing profits and offsetting the heavy losses being incurred by its unregulated generation," he wrote.

cwells@baltsun.com


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