Opposing sides lobby D.C. mayor on Exelon-Pepco deal

D.C. Politics

Opposing sides lobby D.C. mayor on Exelon-Pepco deal

Council member Mary Cheh (D-Ward 3) speaks at a rally against the Pepco-Exelon merger outside the Wilson building. (Aaron Davis/The Washington Post)

By Aaron C. Davis and Thomas Heath September 17 at 9:30 PM

An intense round of final lobbying spilled into public view Thursday with bullhorns, chants and admonitions from the city’s biggest names in business and politics over whether Exelon, a giant in nuclear energy, should be allowed to take over Pepco, the District’s century-old electric company.

And the target of all that lobbying was D.C. Mayor Muriel E. Bowser (D). In private meetings, a group of Bowser’s top deputies have in recent weeks agonized over whether a new round of concessions from the energy companies might allow the mayor to support the proposed $6.4 billion merger, administration officials said.

On one side, Bowser faces the District’s business and political establishments, which back the complicated deal. On the other side, environmentalists, community organizers and the city’s advocate for ratepayers have urged her to reject any last-minute, “backroom deal.”

“Don’t let Exelon buy Muriel Bowser,” environmentalists chanted Thursday in Freedom Plaza outside the John A. Wilson Building, which houses the mayor’s office.

[D.C.
regulator rejects proposed Exelon-Pepco merger
]

Opponents of the $6.4 billion Pepco-Exelon merger. (Aaron Davis/The Washington Post)

But a mile north, surrounded by dozens of city business and nonprofit leaders, former mayor Anthony A. Williams, a mentor for Bowser, held a news conference to publicly urge her to not “embarrass the city” and to find a path forward. “I’m an environmentalist,” he said, “and I don’t see what the big deal is.”

The increasingly forceful and public appeals Thursday amounted to 11th-hour lobbying for Bowser to either overturn or hold firm on the decision of the D.C. Public Service Commission, which last month denied Chicago-based Exelon’s proposed takeover of Pepco Holdings.

In ruling against the deal, the PSC said it was not in the best interest of ratepayers or a city that has committed to using more green energy. But Exelon and Pepco have vowed to appeal the ruling in a little over a week’s time.

If Bowser, who controls future appointments to the commission, throws her support behind a revamped deal, it would make it hard for those city regulators to reject it. Industry watchers say the mayor’s support would also increase the likelihood that Exelon and Pepco prevail in court despite remaining objections from the PSC. The companies have already secured support from federal regulators as well as the states of Maryland, Delaware and New Jersey.

Bowser’s head of the office of legal counsel, Mark Tuohey, and her city administrator, Rashad Young, have been leading internal discussions about whether a revamped deal is possible, according to three administration officials who spoke on the condition of anonymity because the negotiations are private.

Bowser issued a statement last month saying that she supported the commission’s decision to reject the deal, but she left some wiggle room to reconsider, saying that she would be focused on what’s best for ratepayers and the city.

In a statement, Bowser spokesman Michael Czin said, “We continue to hear from both sides and our position hasn’t changed — any merger has to be in the best interest of District residents and taxpayers.”

Two people close to Bowser and familiar with the negotiations said Pepco has warned the mayor that rate increases may be necessary if a merger does not win approval. The mayor’s senior adviser, Beverly Perry, is a former Pepco vice president. Pepco stockholders would be paid a premium if the merger goes through. The administration has said Perry recused herself from the issue.

Karyl Leggio, a finance professor specializing in utilities at Loyola University’s Sellinger School of Business in Baltimore, said that if an amended, more generous deal is approved by the PSC, it could mean rate reductions for Pepco customers and probably improved service.

“If the deal doesn’t go through,” said Leggio, “whether Pepco as a stand-alone entity can improve the quality of service and keep rates low is an unknown question.”

Leggio said there appears to be a recent trend in which utilities have sweetened their offers to regulators after a first application to merge was refused.

Pepco has not made a rate request since before the acquisition was announced in April 2014, which probably means that the utility will be seeking considerable increases from regulators if the deal fails.

A spokesman for the three-member PSC said Pepco and Exelon have until Sept. 28 to file a request for reconsideration.

In a joint statement last month, the utilities said they plan to file a request.

“We remain convinced our merger proposal is in the public interest, and we will continue working to complete the merger,” the statement said.

The commission has 30 days to grant or deny the application, or not act at all. Not acting within its 30 days is a denial by the PSC.

If the reconsideration is denied, the utilities can make an appeal to the courts.

Outside the John A. Wilson Building on Thursday, more than 150 environmentalists, community activists, clergy and D.C. Council members urged Bowser to be a bulwark and employed her campaign mantra of trying to help more families reach the middle class as their defense for standing firm against the merger.

A top advocate for low-income tenants and another for families struggling in poverty outlined Exelon rate increases in cities where the energy giant has taken over smaller utilities.

“This will force more people out of Washington, D.C.,” said Jim McGrath, head of the Tenants Association.

Others pulled at Bowser’s commitment to fuel D.C. buildings on wind energy, which has won her accolades from the Obama administration.

“We just have two words for Mayor Bowser: Madam Mayor, stand firm,” said the Rev. Earl D. Trent, pastor of the Florida Avenue Baptist Church, which claims to be the first house of worship in the city to install solar panels on its roof. “Stand firm, do not settle for the quick fix. . . . Stand firm for clean, affordable energy. . . . We have a planet to take care of, we have a climate to take care of.”

D.C. Council member Mary M. Cheh (D-Ward 3) said she wanted to see more transparency and warned of shady politics afoot in the Wilson Building.

“Slithering around the District building and other parts of our government are Exelon and Pepco representatives who are trying to work out some deal that will steal from us the victory that we won on the merits before the Public Service Commission,” Cheh said.

She and more than a dozen other speakers railed against a recent Exelon-Pepco ad campaign that promised more jobs and better security for ratepayers as “lies.”

“We’re told we’re going to have more jobs; we’re going to have fewer jobs,” she said. “We are told we are going to . . . save money, don’t you believe it. We are going to pay higher rates.”

Williams, whom several in the crowd cast as a lobbyist for Exelon, said in an interview that he has not registered as a lobbyist and is not taking any money from Exelon or Pepco. He appeared with more than 30 heads of businesses and nonprofit groups, including the heads of the United Way of the National Capital Region and the Salvation Army. Nearly all of the civic leaders said Pepco had provided important philanthropic contributions that could be jeopardized if the deal is not approved. Exelon has committed to continuing Pepco’s community grants and donations for at least 10 years.

Williams pointed to his role as executive director of the pro-business Federal City Council and said the nonprofit group is taking a stand for what its members believe is best for the District, including on the score of the environment.

A Pepco left weakened by a failed merger attempt may struggle to meet shareholder expectations, he said, and lose the wherewithal to continue supporting environmental efforts.

“Bringing Exelon here is important for the District. It’s going to allow us to grow our economy and allow us to do the things we’ve talked about in terms of equity, business opportunities, environmental conservation and cleanup.”

Paul T. Ridzon, vice president of the utilities group with KeyBanc Capital Markets, recently upgraded Pepco Holdings to overweight, based on his belief that the D.C. regulator’s order against the proposed merger was not insurmountable.

If the merger does not go through, Ridzon said, “it’s a missed opportunity.”

Exelon “has a strong balance sheet. They could clearly fix some of the problems Pepco has been experiencing. They have a good track record in Chicago.”

Asked what would happen if the deal does not go through, Ridzon said one only has to look at what happened to the price of Pepco shares the day the PSC rejected the application.

They dropped 16 percent that day.

DISB Approves Rates for 2016 Health Plan Offerings on DC Health Link

For Immediate Release
Sept. 15, 2015
Contact: Kate Hartig, (202) 442-7753
kathryn.hartig

DISB Approves Rates for 2016 Health Plan Offerings on DC Health Link

Department negotiates lower and more competitive rates for District residents and small businesses through its rate review process

Washington, D.C. – The D.C. Department of Insurance, Securities and Banking (DISB) approved health insurance plan rates for the District of Columbia’s health insurance marketplace, DC Health Link, for plan year 2016.

As a result of DISB’s rate review process, all insurers offering plans on DC Health Link lowered their proposed rate increases – some by as much as 10 percent. The average increase in 2016 premiums across all insurers is 4.25% for individuals and 4.74% for small group plans. The most popular individual and small group plans from 2015 are increasing 4.3% and 4.1%, respectively.

“The 2016 approved rates are a reflection of DISB’s rigorous rate review process and the willingness of insurance companies to compete for District business,” said Acting Commissioner Stephen C. Taylor. “We are very appreciative of the D.C. Health Benefit Exchange Authority for its invaluable input and assistance during this important process, and we remain committed to ensuring DC Health Link rates continue to be among the best in the country in terms of cost and value.”

The chart below shows changes in rates from the insurance companies’ proposed filings compared to the approved rates following DISB’s rate review process. (If you can’t see the chart below, please visit this link to view online.)

As insurers enter the third year of DC Health Link, they have refined their plan offerings based on market experience – from 301 plans in 2014, 227 in 2015 and 162 for 2016. For individuals, 26 plans will be available: Kaiser (11) and CareFirst (15). In the small business market, 136 plans will be available: CareFirst (53), United (41), Kaiser (24) and Aetna (18).

Open enrollment on DC Health Link begins Nov. 1 and runs through Jan. 31, 2016. For more information about the approved 2016 health insurance plan rates including the rate filings and other charts, follow this link.