Regulator rejects $6.8 bn Exelon-Pepco merger

The utilities regulator in the US capital rejected Tuesday the proposed merger of power companies Exelon and Pepco Holdings, saying it was not in the public's interest.

The Washington DC Public Service Commission said it opposed the plan after weighing public input that included written testimony from more than 3,000 residents, non-profits and small businesses and views from government bodies.

"The commission concluded that, taken as a whole, the transaction as proposed by Exelon and Pepco is not in the public interest," the independent agency said in a statement.

The two companies agreed in April 2014 that Chicago-based Exelon would acquire Pepco for $6.83 billion in cash.

Pepco provides energy to Washington and the eastern states of Delaware, Maryland, and New Jersey.

Combined, the two companies would serve around 10 million customers: Exelon already provides electricity and natural gas to more than 6.6 million clients in Maryland, Illinois and Pennsylvania.

Exelon and Pepco have 30 days to ask the agency to reconsider its decision, the Commission said, noting that Washington is the only jurisdiction to have rejected the application.

The tie-up already has been approved by the Federal Energy Regulatory Commission and by Delaware, Maryland and New Jersey.

"The public policy of the District is that the local electric company should focus solely on providing safe, reliable and affordable distribution service to District residences, businesses and institutions," said Betty Ann Kane, Commission chair, in the statement.

"The evidence in the record is that sale and change in control proposed in the merger would move us in the opposite direction."

The two companies said they were reviewing their options.

"We are disappointed with the Commission's decision and believe it fails to recognize the benefits of the merger to the District of Columbia and its residents and businesses," they said in a joint statement.

Pepco shares plunged after the DC rejection, shedding 15.8 percent at $22.70 in afternoon trade, while Exelon lost 4.5 percent at $31.18.