Pro Bono Representation Helps Protect the Public Interest in Proposed Utility Company Merger

Kaye Scholer successfully represented pro bono client DC Solar United Neighborhoods (DC Sun) in its opposition to the proposed $6.8 billion market-changing merger between regional utility companies Exelon Corp. and Pepco Holdings Inc. (PHI). On August 25, the DC Public Service Commission agreed with DC Sun, a Washington, DC-based citizen coalition supporting solar power in the nation’s capital, and several other community groups representing the area’s electricity customers and rejected the merger application as “not in the public interest.” The proposed merger would have consolidated utilities providing power for customers in five mid-Atlantic states stretching from New Jersey to Virginia, as well as in Chicago, most of northern Illinois, and Washington, DC, thereby creating the largest US utility.

The proposed merger and the opposition to it garnered significant press attention. DC Sun’s successful opposition in this David-and-Goliath confrontation is significant because Washington, DC was the last jurisdiction to rule on the merger, which had already been approved by five other regulatory agencies, and its negative decision has the ability to nix the merger entirely.

According to DC-based special counsel Randy Speck, who led the Kaye Scholer team, our client argued that because Exelon—unlike PHI—owns extensive energy-generation assets, it will have a potential conflict of interest with DC-area utility ratepayers who are seeking to expand local renewable generation.

“Our concern was that rather than having a utility that was focused on and supportive of the expansion of renewable generation, we would have, under their proposed merger, a utility that has at least divided loyalties,” he said.

Concerns about the potential to suppress the proliferation of renewable energy sources was particularly pertinent, Speck noted, because the DC Public Service Commission is the only regulatory agency of all the ones involved with reviewing the merger that is required by statute to weigh environmental factors in its decision.

In addition to Randy, the Kaye Scholer team included DC-based associates Ali Wright and Cara Spencer.