Dive Brief:

• Maryland regulators have authorized the merger of Pepco Holdings and Exelon Corp., but added 46 conditions to the approval including bill credits and higher efficiency standards.
• The companies said they were pleased by the Public Service Commission's decision, and according to a release this morning have accepted the new conditions in their entirety.
• The merger still needs approval in the District of Columbia and Delaware, where last month the companies said they were altering residents to new merger conditions in the state. The merger has seen some of its stiffest opposition in the nation's capital.

Dive Insight:

Maryland has narrowly approved the merger of Pepco and Exelon, but the 3-2 vote attached almost four dozen conditions to the deal and the companies have issued a statement defending the benefit to customers and saying they will need to closely examine the order.

“We are pleased that the Maryland Public Service Commission has approved our merger. However, the Commission’s order modifies a number of the proposed conditions and we must carefully review it in its entirety," the companies said in a joint statement.

Regulators in March delayed a decision on the merger, taking up multiple days of settlement talks to address concerns the deal did not sufficiently benefit customers. The commission's order included conditions calling for higher reliability standards, a $100 rate credit for Delmarva and Pepco residential customers and $43.2 million for energy efficiency programs in Prince George’s and Montgomery Counties and the Delmarva Maryland service territory.

In a statement, regulators said a major condition requires Delmarva and Pepco to meet aggressive reliability performance standards from 2016 through 2020 within projected budget targets and subject to penalties for non-compliance.

“Exelon has demonstrated that it knows how to run electric and gas distribution companies; indeed it is nationally recognized for its standards of excellence," regulators said in the order. ”We find that this merger will enable Delmarva and Pepco in Maryland to improve their reliability performance more quickly than they would without the merger.” 

The merger still faces questions in the District of Columbia and Delaware; if ultimately approved it will combine Exelon’s three electric and gas utilities — BGE, ComEd and PECO — and Pepco Holdings’ three electric and gas utilities – Atlantic City Electric, Delmarva Power and Pepco — to create the largest utility company in the country.

The last regulatory hurdles for the merger may prove to be the most difficult, as the District of Columbia has proved to be a hotbed of discontent for the merger plans. POWER DC, a coalition of District activists and community leaders, began organizing against the acquisition in January, and since then nearly half of DC neighborhood governments and four DC Council members have come out against the merger. Last week, the coalition came together to protest the merger on the steps of the Wilson Building — the District's city hall — and called on D.C. and Delaware reguators to reject the deal. Public comment on the merger is slated to close in the nation's capital on May 27.

“By a 1-vote majority, Maryland’s Public Service Commission unfortunately opted to go against the counsel of its own staff, its Attorney General and the will of Maryland residents and ratepayers in approving the proposed Exelon-PEPCO merger," POWER DC said in a statement after the Maryland approval. "The District of Columbia will not do the same. The people of DC, its elected officials and its businesses know that this is a bad deal. We will fight to the last moment to protect our city from Exelon’s higher rates and opposition to clean energy.”