This may go down in D.C. history as the utilities war that never ends.
On Friday, the Office of the People’s Counsel announced it had submitted an application to the Public Service Commission, asking it to reconsider its recent 2-1 decision to approve the controversial merger of power companies Pepco and Exelon. The PSC ruled last month that the proposed merger was sufficiently in the public interest. Sandra Mattavous-Frye, the head of OPC, says in a statement that she has serious concerns over how the merger was handled as well as its future implications.
“I strongly believe that the manner in which the decision was reached was legally flawed,” Mattavous-Frye said. “If the flaws in [the PSC’s] order are not corrected, it will erode the trust and confidence of consumers and all parties that practice before this Commission.”
OPC is calling for the PSC to allow “all parties” to comment on the decision by reopening the record in the case, or reject Pepco and Exelon’s “unilateral request for the adoption of new merger terms as being procedurally improper.” From the file:
“OPC demonstrates that the errors underlying [the PSC’s order] create a procedural and regulatory quagmire by ushering in an unprecedented level of regulatory ambiguity going forward. [The order] creates serious concerns for litigants appearing before the Commission with respect to how the Commission interprets the plain language of its regulations and orders, what the Commission considers meaningful due process, and whether the Commission’s interpretation of [a certain rule] exposes settling parties to undue risk of being stuck with concessions offered in settlement while being denied bargained-for benefits. For example, OPC fought for and obtained a residential only rate credit which was removed from the settlement by the Commission. However, the nefarious effect of [the order] becomes even more pronounced when juxtaposed against the rapidly evolving electric industry in the District of Columbia.”
“We will respond to filing asking for reconsideration by the PSC,” a Pepco-Exelon spokesperson said in a statement. “However, we believe that after two years of exhaustive consideration, public input and discussion, the Commission’s actions and ruling were appropriate, reasonable, and based on serving the public interest. We have closed the merger and have moved forward as one company.”
City Desk has reached out to the lone-dissenter in the order, Commissioner Betty Ann Kane. A PSC spokesperson says that “the matter is still pending before the Commission so we are unable to comment. Today was the last day to file, so now the Commission has 30 days to respond.”
You can read OPC’s 46-page application below:
Update 5:05 p.m.: Advocacy groups DC SUN and Public Citizen—which have opposed the merger—also filed a separate, joint motion for the PSC to reconsider its approval on Friday.
“Exelon’s takeover of Pepco is a bad deal for the District and was only made possible by a faulty and irregular decision-making process,” David Arkush, of Public Citizen, said in a statement. “Our position is simple: If the commission corrects its errors, it will no longer be able to justify its decision to approve the takeover.”
“The Commission failed to produce a clear, reasoned decision demonstrating that its conclusions are based on substantial evidence,” the document reads. “Even attempting to understand why the Commission believes Exelon’s acquisition of Pepco is in the public interest requires reading at least three and as many as five separate opinions. Further, those opinions contain critical internal contradictions and gaps in the Commission’s reasoning and supporting evidence for its ultimate decision approving the deal.”
You can read the group’s motion here.
Update 5:50 p.m.: The D.C. Attorney General’s Office also filed a motion for reconsideration today. In it, the office argues:
“At its core, [the PSC’s order] deprives the Settling Parties, including the District Government, of the benefits of the bargains they reached through arm’s-length negotiations and submitted to the Commission as an unalterable proposed resolution of this proceeding. In addition, the Order will have a chilling effect on future settlement negotiations because parties will fear that, in agreeing to proposed settlement terms, they run the risk of the Commission proposing and approving alternative settlement terms without the parties’ consent. For these reasons, the Commission should reconsider and vacate [the order.]”
“We believe the Public Service Commission exceeded its authority, failed to follow their own procedural rules, and denied the District due process when it approved merger terms acceptable to Pepco and Exelon but opposed by the overwhelming majority of the other parties involved,” Attorney General Karl Racine said in a statement. “The agreement that the Mayor, our office, and the Office of the People’s Counsel helped broker last fall was the product of an arduous negotiation process. We urge the Commission to vacate its approval of the merger and, following proper input from all parties, reinstate the protections for residential ratepayers in the District as well as the other significant benefits that were in the original settlement agreement.”
At-Large Councilmember Elissa Silverman, who along with a handful of other Councilmembers had strenuously criticized the proposed merger, told City Desk in a statement: “The legal questions raised by the Office of People’s Counsel need to be addressed. The merger is the most important case before the Public Service Commission in years. It’s critical that we make the right decision—a decision that is truly in District residents’ best interest—in the right way. I strongly encourage the Public Service Commission to reconsider.”
OAG’s motion follows below:
Photo by Darrow Montgomery