Dive Brief:

• Hearings at the District of Columbia Public Service Commission kick off today as regulators will consider for the second time whether to allow Exelon Corp. to acquire Pepco Holdings and take over the utility serving the city's residents.
• Washington, D.C. regulators rejected Exelon's initial merger proposal in August, but Mayor Muriel Bowser's office reached a settlement with the companies that could help push the deal through. Opponents say the deal doesn't address the core concerns raised by regulators and merger critics and question the negotiation process for the deal, some calling it a "return of pay-to-play politics" in the city.
• The $6.8 billion merger would create the largest utility in the United States and has already been approved by federal regulators and as well as Maryland, Virginia, Delaware and New Jersey. Approval by the D.C. regulators is the final hurdle for the merger to clear before closing.

Dive Insight:

Regulators in the nation's capital kick off a second set of hearings today to evaluate Exelon's proposal to purchase Pepco, the city's sole power provider, and form the nation's largest utility by customer base.

While regulators rejected an initial proposal in August, citing an "inherent conflict of interest" between Exelon's business model and the District's energy goals, the companies quickly hammered out a deal with Mayor Bowser's office and a group of merger opponents, hoping to pressure regulators for approval.

While the settlement similar to one reached in Maryland, and includes assurances of more corporate presence in the city, opponents are now questioning how the arrangement was reached. In October, Utility Dive was the first to report that the company had reached a settlement with the mayor's office, including raising its financial commitment to District ratepayers from $14 million to $78 million.

Those questioning the deal, however, have called for an investigation of Mayor Bowser's decision, saying it appears closely related to the timing of a $25 million contribution that Pepco made to the District government to help offset costs to build a new stadium for D.C. United, the city's Major League Soccer team.

There have also been questions about Exelon contributions to a now-shuttered Bowser political action committee called FreshPAC. 

Pepco has expressed optimism for the deal's chances, and spokesperson Myra Oppel said most members of the city council support the deal. “It’s clear the small, vocal minority who continue to oppose the merger are becoming increasingly desperate in their last-ditch attempts to disrupt it,” Oppel told the Washington Post last month.

A live stream of the hearing is available here.