A local advocate for reliable electricity is skeptical that the sale of Pepco to Chicago-based Exelon Corp. will actually improve power service.
“Any company that could acquire Pepco has got to be better than what we have,” said Abbe Milstein, founder of Powerupmontco, an online group that shares information on electric reliability and performance. “The question is: ‘Are we going to go from the frying pan into the fire?’”
Pepco Holdings Inc. plans to sell to Exelon Corp., the Chicago-based parent company of Baltimore Gas and Electric for $6.83 billion, all-cash. Pepco announced the acquisition by Exelon on April 30.
Just because the much larger Exelon would own Pepco, does not mean service will improve for the thousands of customers who struggle with unreliable power, Milstein said.
BGE, Milstein noted, is the utility responsible for the leaking power known as contact voltage that took the life of a Baltimore-area teen in 2006.
Deanna Camille Green, then 14, was killed when she touched a fence that was coursing with 277 volts of electricity from faults in underground wires.
“That is a big problem and a very scary problem,” Milstein said. “These are the kinds of things these companies need to address. The infrastructure is deteriorating right in front of us.”
BGE was acquired by Exelon in 2012.
Milstein said the sale does open the door for Montgomery County to push the Maryland Public Service Commission to tie high reliability, improved infrastructure and positive returns to the customer to the deal.
Unfortunately, Pepco’s pending rate hike request with the PSC — the company has asked the commission for $43.3 million more, which would add $4.80 to the average customer’s monthly bill — has Milstein less than optimistic the county will go to bat for consumers in the deal.
But County Councilman Roger Berliner has proposed a council resolution urging the commission condition any approval of the sale on “obtaining substantial ratepayer benefits, including, but not limited to, top quartile performance in three years and tying rate recovery to Exelon’s performance.”
In a letter to his council colleagues Berliner said, “I don’t need to tell you — or our constituents — how long all of us have suffered from unacceptably poor service. Not when we endured five years in a row of lowest quartile performance. Fortunately, Exelon does have a better track record when it comes to reliability and is in a stronger financial position than Pepco. But we should not cross our fingers when it comes to improved service. Our state regulators should insist upon it.”
As part of the acquisition, Exelon and Pepco Holdings have committed to build on the improvements to service reliability that Pepco says it has already achieved for its customers, according to a company news release.
Exelon will provide an aggregate $100 million, or about $50 per customer, to a customer investment fund that Pepco Holdings utilities’ will use as each state public service commission deems appropriate for customer benefits, such as rate credits, assistance for low income customers and energy efficiency measures, the release said.
Approval is required from Pepco’s stockholders as well as the Federal Energy Regulatory Commission, the District of Columbia Public Service Commission, the Maryland Public Service Commission and the state commissions of New Jersey and Delaware before the companies can close on the sale.
According to Pepco Holdings, the companies anticipate closing in the second or third quarter of 2015.