Exelon Corp.'s bid to buy Pepco Holdings Inc. hit a snag after utilities regulators in the District of Columbia thumbed down the proposal saying possible benefits to consumers are outweighed by the potential harm the deal may cause.
Reuters reported that both companies have 30 days to appeal the decision and secure the final nod for the deal, which has been approved by regulators in four other states. It added that the shares of Pepco and Exelon dropped, with the release of the Washington D.C. Public Service Commission's decision. Exelon shares closed 6.9 percent lower at $30.40, while Pepco ended 16.5 percent down at $22.51.
"The commission concluded that, taken as a whole, the transaction as proposed by Exelon and Pepco is not in the public interest," the Agence France Press quoted an agency statement saying.
In addition, Reuters also mentioned that the companies, which expressed disappointment with the decision, may seek remedy from the D.C. Court of Appeals if the commission rejects their plea for reconsideration, or the firms may pass another application. The deal was first announced in April 2014 with Chicago-based Exelon saying it has agreed to buy Pepco for $6.83 billion in cash.
The deal would create one of the largest energy utilities in the United States but has been opposed by advocacy and environmentalist groups, concerned that the merged company might make power rates expensive and limit investments in renewable energy, Reuters said. The commission received inputs from more than 3,000 residents, non-profits, small businesses, and views from government bodies, AFP added.
The Reuters report said the deal has been given the green light by the U.S. Federal Energy Regulatory Commission as well regulators in Delaware, Maryland, New Jersey Jersey and Virginia. It said the entities provide energy, electricity and natural gas to almost 10 million combined customers in those areas.
The report also mentioned that it is unclear whether the D.C. commission's decision would impact a separate review of the deal by the Justice Department.
