NEW YORK (The Deal) -- Washington D.C. Mayor Muriel Bowser announced the District of Columbia has reached a settlement in negotiations with Pepco Holdings (POM) and Exelon (EXC - Get Report) , whose $6.8 billion merger was rejected by the district's Public Service Commission in August.
The agreement reached Tuesday with the companies increases Exelon's originally proposed investment in the district from $14 million to $78 million.
"The district deserves a healthy utility company that guarantees affordability, reliability and sustainability for residents and ratepayers," Bowser said.
The proposal next goes to the Public Service Commission for public review and comment. If approved by the PSC, the settlement will provide Exelon with the last regulatory approval necessary for it to consummate the merger.
Exelon will establish the district as its co-corporate headquarters and the headquarters of Exelon Utilities for at least a decade. The district will continue to be the headquarters for Pepco Holdings. The company will dedicate $5.2 million to establish a district workforce training program that will provide a nationally recognized certification for a positions that range from underground and overhead distribution, transmission line workers, substation technicians and green jobs.
The deal also requires Exelon to commit $25.6 million to protect ratepayers from previously scheduled rate increases through March 2019. Exelon also will distribute $14 million among residential customers within 60 days of the closing the merger in order to provide a one-time credit of about $50 for the average ratepayer.
For low-income residents and seniors, $6.75 million will be set aside to weatherize their homes and $9 million will be allotted to supplement the district's Low-Income Home Energy Assistance Program. The investment is projected to keep the fund, which typically runs out of money each year, solvent through 2018. In addition, Exelon will dedicate $400,000 to forgive any existing customer debts that are more than two years old, reducing the burden on the district's most vulnerable residents.
To better utilize renewable natural resources, preserve environmental quality and promote energy efficiency, Exelon will provide $3.5 million to the Sustainable Energy Trust Fund to create energy efficiency projects in businesses and residences. Another $3.5 million will go to the Renewable Energy Development Fund to support solar projects in the District, especially projects for low-income families. In addition, Exelon will develop 10 megawatts of solar generation in the district and will not transfer the cost of commercial solar development to ratepayers either through distribution or transmission rates.
Exelon will purchase 100 megawatts of wind power per year and will dedicate $10 million to the district's Green Building Fund, more than quadrupling the existing fund. The fund's aim is to expand the use of green energy and clean water in the district-through investments in new technologies, more resilient infrastructure, and pilot projects.
To improve reliability and service, Exelon has agreed to pay penalties if specific commitments are not met. Pepco also will work with the fistrict to develop four microgrids to improve reliability and allow for on-site electric generation and strengthen the grid interconnection process for customers who create their own energy through solar and other means.
Exelon and Pepco also agreed to support new technologies and policies to modernize the District of Columbia's energy delivery so that it is more reliable, efficient, cost effective and interactive. The companies will relocate 100 positions to the District of Columbia from outside the district and will hire at least 102 union workers in the district and protect the current workforce capacity for at least five years.
Finally, Exelon agreed to maintain Pepco's $1.9 million in annual charitable giving.
Sandra Mattavous-Frye, the District's People's Counsel and a participant in the mayor's effort to reach a settlement, said the companies have made agreements that will provide lasting, tangible benefits to district ratepayers and residents. " It is good for everyday consumers," she said. "Just as important, the proposal also promotes major renewable and sustainable energy policies."
Consumer advocacy group's lambasted the proposal. Allison Fisher, outreach director for Public Citizen's Energy Program, said the settlement "puts corporate profits ahead of the public interest."
"The new settlement terms are only modest, superficial changes that fall far short of the PSC's mandate that the merger serve the public interest," she said in a prepared statement. "The small changes fail to effectively counter the acquisition's fatal flaw: Exelon's business model and practices are at odds with Pepco's ability to serve D.C.'s consumers."
She said Exelon is using the merger to balance losses in its wholesale power plant division with Pepco's guaranteed revenue.