Saturday, April 2, 2016

Exelon PEPCO Buyout, A Potential Lawsuit?

Many of us have been extremely disappointed by the Public Service Commission's 2 to 1 decision to move forward with Exelon's takeover of Pepco.  However we are not giving up yet, and below you will see a number of steps being taken and information for arguments to use in conducting the continued fight by you, our activists.  

[7/6/16]  Several new developments.  Councilman Vincent Orange has called for an Exelon hearing at 2pm, Wednesday, July 13, Rm 500 at the Wilson Bldg.  Call Faye Caldwell at 202-727-6683 to testify.  In addition to 10% rate increases caused by Exelon in Maryland, Pepco has now asked for an $85.5million increase in DC.  This totally wipes out the $79million in Exelon's promised benefits to DC people and organizations.  Hopefully, our Office of the People's Counsel and other appropriate organizations will fight this tooth and nail.  [Subsequent to loosing his Council post in the Primary Election, Orange was named head of the DC Chamber of Commerce.  He also wanted to remain on the Council until new members were seated in Jan. 2017.  Outrage over double dipping (2 salaries) and conflict of interest (C of C members have frequent business matters affected by Council votes) led to his speedy resignation from the Council.  He was replaced by Robert White who had won the Democrat primary and was subsequently elected on Nov. 8th by a wide majority.]

[6/15/16]   The Public Service Commission (PSC) will announce its decision on the request for reconsideration of the Exelon-Pepco merger on Friday, June 17 at 3 p.m.   Let's try to be there to show the PSC that we still care about this issue.  Please respond here if you can help pull together a plan for Friday.   RSVP here: wWWew5o8cT8mBCJH2
The PSC is at 1325 G Street, N.W. Suite 800.  Not surprisingly the PSC voted 3 to 0 to deny the request for reconsideration.  Chairwoman Betty Ann Kane supported this denial strictly on technical grounds as she said she still believes going to bed with Exelon is a very bad idea.

[6/6/16]  I recently came across this article on the subject of several NY lawmakers going to jail for conflict of interest by holding outside jobs and using them improperly to sway legislation.  The author then goes on to explain in considerable detail how Jack Evans (Ward 2 Councilman) was involved in helping the Exelon/Pepco deal succeed for big business.  A number of other earlier potential misuses of his influence for outside clients doing business with DC are also described.

[5/4/16]  Concerned scientists have new information on what may cause unexpected and unpredictable earthquakes in the eastern United States.  The link provide has many maps, detailed reporting, and many comments.

[4/28/16]  In an important development regarding the nuclear safety issue, 7 staff members of the Nuclear Regulatory Commission had petitioned the NRC to either fix serious electrical issues in almost all nuclear plants immediately, or else shut them down.  This link has a list of all major nuclear plants which are clickable for detailed information.  In addition to various Exelon plants our earthquake threatened North Anna plant in Virginia is listed.  Detailed comments point to serious issues with the competence, integrity, compliance, and transparency of the Nuclear Regulatory Commission.  Did our PSC receive tainted safety information?  Would this invalidate their decision.  Something for our Attorney General and People's Counsel to examine carefully.
     Here is a link regarding uranium enrichment services.  Not surprisingly companies like to develop these deposits in small job hungry communities.  I was surprised to discover that there are significant uranium deposits in an area of rural Virginia which the owner would love to develop.  I was not surprised to discover that Virginia Governor McAuliffe, is now facing a lawsuit to get rid of Virginia's current ban on uranium mining.  This rather technical article describes the geology and provides some of the reasons why Virginia decided to ban mining.  This site's most recent May 31, 2016 article includes current Exelon problems, especially in Illinois and with Three Mile Island plant in PA.  A number of other nuclear related articles follow.  This article describes a complex on again off again attempt by Exelon to operate or dismantle a nuclear plant to its own, but no one else's benefit.  Ten years from now will we discover that Exelon's invasion of the DC/MD was a first step toward gaining access to Virginia's major uranium deposit???

[4/22/16]  If you notice that your Pepco bill is a little lower this month, it is because the "Exelon Rate Credit" of $54.59 has been subtracted.  It is a little hard to figure out when you look at a bill, but look for the box on Page 2 called "Electric Distribution and SOS Supply Summary - Pepco."  The head of the Office of the People's Counsel, has weighed in with strong objections to the Public Service Commissions 2 to 1 approval of Exelon's buyout.
     Friday, the 22nd Ms. Mattavous-Frye filed an "application for reconsideration," asking the PSC to either reopen the case and permit all parties an opportunity to required by PSC rules, or reject the merger as "procedurally improper."
     Is Exelon rushing to pay the Pepco shareholders, and the ratepayers the $54.59 to make it legally more difficult to reverse their takeover of Pepco?

[4/20/16]  Already it begins.  Announcements of a rate hike of 10%  for PEPCO customers now owned by Exelon has been requested.  They say this is to make up for the cost of installing Smart Meters which was supposed to save money.  Something fishy here!  
     "'Today's announcement confirms what we had feared and why we're still fighting,' Anya Schoolman, executive director of the Community Power Network, a regional group opposing the merger, said in an email.  'Area ratepayers are going to [be] the ones who pay the price for Exelon's takeover of Pepco.'"  As many of us predicted all along.
     Among 90 angry comment to the story, this from starling 1
"'We thought it was prudent to hold off on filing [for a rate increase]...while the merger 
proceeding was ongoing to allow all all parties to focus their resources on the merger 
applications,' said Kevin McGowan, Pepco's vice president for regulatory policy.
     Translation:  We didn't want to admit what we really planned to do until after we got what 
we wanted."
     And Nosh 1 has this comment [for all those "civic" groups and businesses who greedily 
urged the DC Public Service Commission (and no doubt other PSCs) to approve the merger 
to ensure their little payoffs.  Will those goodies cover their future electric bills?]
     "Seriously?  I mean, everyone not on the take knew this merger would result in higher bills, 
despite [what] the $7billion 'merger-machine' was trying to cram down our throats.  Less 
competition, higher prices.  That was the motto of the opponents and that's what happens 
EVERY SINGLE TIME something like this happens.
     But I gotta admire the ballsy brass they have in asking for a rate hike less than 2 weeks 
after the merger goes through.  'This has absolutely nothing to do with the merger.'
     Yeah, OK...if that is true, then this happens to be the worst marketing timing snafu in 
corporate America.  You would think that one of the 12,000 employees of the company 
would have raised their hand at the meeting when this was being discussed and said, 'you 
know guys, we ust polished off this hard fought merger two weeks ago where we promised
everyone that it would benefit them with economies of scale and lower costs, maybe now is a 
bad time to try to do this?'
     But no...I am sure that conversation never happened." 

Exelon was so eager to get this officially packaged and delivered that within a week of the 
final DC PSC approval all the Pepco stockholders had been paid for their stock.  This does 
not mean we should stop engaging in the actions urged below.

[4/7/16]  An interesting campaign is developing as a followup from Power DC as one area to use to continue fighting Exelon's agenda.  This is also a worthwhile fight in its own right.  Councilmember Mary Cheh has introduced legislation to expand DC's Renewable Portfolio Standards to mandate a more ambitious target for the share of the Pepco standard offer that must come from renewables.  A coalition is forming around it to campaign for passage, which includes many members of Power DC.  Further action is planned soon, and I will announce it here when I know.

Dear activist friends, 
As you know, we received disappointing news last week. The Public Service Commission’s split decision to allow Exelon to take over Pepco was a shocking mistake. We are continuing the fight. But we can’t do it alone. That is why we are calling on Attorney General Karl Racine and the Office of the People’s Counsel to join us in challenging the Public Service Commission’s erroneous decision.

Grid 2.0 has filed a motion for the PSC to reconsider its decision. This automatically stays the Commission's ruling. Should the PSC reject this motion, (which we expect it will), we’ll still have an opportunity to appeal through the court system.

We know Exelon will fight our efforts tooth and nail, which is why we need the AG’s office and OPC to fulfill their role as public advocates and fight this bad decision with us.

Our fight against Exelon and for an affordable, reliable, and sustainable energy grid was always a long shot. That we’ve gotten this far is a testament to the support we’ve received from people like you. Attorney General Racine and the Office of People's Counsel have said this deal is not in the public interest. Ask them to stand up for their principals.

Thank you, Basev Sen

Dear Green Neighbors, by Basav Sen 
You've probably all heard the bad news - in a decision that defies logic, the Public Service Commission approved the Exelon-Pepco merger. Corrupt back-room deals and big money yet again triumphed over facts, reason, and democracy.

But it is most definitely not over yet. You'll be hearing lots more from Power DC over the next few months. 

First, we will be pressing the Attorney General and the Office of People's Counsel to do their job by appealing the decision to US District Court. Given the inconsistency of the PSC's process, we may have a chance there. 

I will send out an action alert going to the AG and the OPC soon.

Also, Power DC will drive individuals and organizations to support the Fair Elections campaign calling for public financing of elections as way to reduce the corrupting influence of big money in DC politics. (Making the shenanigans around the merger the poster-child for corruption in DC.) 

There are a couple of other follow-up steps as well, that I will inform the list about as we're closer to going public with it.

I'd just like to end by saying, don't feel discouraged! There's plenty we can still do to make Exelon profoundly regret ever trying to buy Pepco.

Question: Why is Green Neighbors opposed to the merger?  [Notes from their meeting of March 21, 2016]
Answer: Our group got involved in it because of Exelon’s record on solar. They have taken positions against net metering, in which a property owner installs solar panels and sells the excess energy back into the grid. Exelon has proposed penalizing people for installing solar panels. Exelon is also trying to kill the subsidies for wind energy at the federal level. Exelon is the biggest owner of nuclear facilities in the country, which gets huge subsidies. Then we found out about other issues: especially Exelon’s history of raising rates in other places, needing to make money to shore up their risky nuclear energy business by buying public utilities and jacking up rates.
When the PSC originally rejected the merger, the Mayor reached a backroom deal with the companies. The PSC was responding to that settlement.
Exelon as producer and not just distributor of energy is conflict of interest.
The Edison Electric Institute that Exelon is part of participates a lot with ALEC.  [This link explains why ALEC is such a bid thing.  A number of very informative comments here.  ALEC inspired "stand your ground law" helped kill Trevon Martin.]
27 out of 40 ANCs have passed resolutions against the merger.
DC Public Power has formed to try and get DC to have our own public utility. Mary Cheh has done a great job in exposing the problems with the Pepco-Exelon merger. She also put in an amendment to have a study on public power. It was rejected but she’s going to introduce it again.
If DC rejects the merger it will be dead in other jurisdictions – MD, DE and NJ.
(UPDATE: On March 23 the PSC reversed its original decision and approved the merger by a 2 to 1 vote. Power DC is coming up with action plans in response.)


[I tried to find the person who wrote this to ask permission to post, but no success.  I will be happy to edit, delete, or give credit.  I have no information on the accuracy of these projections but feel it states real potential issues which can make a good basis for further research and discussion.  By all means add comments if you have actual facts with sources.  Hopefully this is a worst case guess, and our situation will not be so bad as described here.  I asked several knowledgeable people to review this "failed" scenario, and include one evaluation immediately below the following.]

Thursday, March 3, 2016,  UTC-5, pat b wrote:  Irv asks "What a 'failed' merger DC looks like."  OK... That's a vague question, so I'll try and frame my answer.

"Assuming Exelon buys Pepco, for the price involved and assuming it was pretty close to the original deal in line with what the other states agreed to.   [Here is what is what might happen.  I have added additional comments in brackets. gla]

With Exelon HQ in Chicago, more and more Pepco managers are either pulled to Chicago to work direct for their bosses or removed and replaced by managers who come 'Seagulling' in..  The organization finds itself with less local management or the inability to make decisions in a timely manner, because Monday-Friday are Travel days...

The larger problem is that with management further away,  all the costs look higher and the problems smaller and with a 7 Billion dollar merger to pay for they need to cut costs at Pepco by 35%, so,  how do they do that?  Like all modern MBA's, they slash expenditures on spares, they sell off as many trucks and assets as they can to raise cash, they lay off  2nd, 3rd shift workers, who get shift differentials and union contracts, in favor
of more contract support from Asplundh and Walker, and the other contractors.    

Things will on a regular day be fine, but if you have a Derecho, well, 30 days to get power back on, will be normal....  because Pepco workers won't be around to work 2nd/3rd shift, and the contractors will be slicing between their contract work and Pepco support.  [If we have a major hurricane, Derecho, or snow/ice storm we will be less able to help neighboring states, and they will be less likely to help us.  Since Exelon is also likely to make cuts in MD, NJ, and DE, it could get really bad in an emergency.]  

Meanwhile,  with fewer managers around getting the business processes together especially, because Exelon will decide as part of the cost cuts to dump all the Pepco IT, so expect your billing to transition to Exelon IT.  Well, you think your bills are busted now on solar charges, imagine some pointy-haired boss in Chicago, trying to manage the DC SREC (Solar Renewable Energy Credit) program accounting....  [Darn, and we were just getting PEPCO to work with our solar people.]

So expect every month bills to be busted [have problems], and  you hit some 800 number that rolls to a call center in West Africa, because Bangalore is too expensive.

Now,  All Mergers are sold assuming revenue Growth and cost cuts,  so figure the Exelon biz plan assumes a ridiculous growth rate, say 11%/year.  Well, the reality is LED lighting, is slashing consumption by 20%, and small PV [solar] is chowing up [providing?] another 30% of demand, so Exelon has half the business base to load this onto to...  [A friend knowledgeable about solar had serious issues with these estimates and those below.]

So either your Grid fixed charges double or the cost of Electricity supplied doubles.  The second one is a death spiral,  because it makes PV (photo voltaic) look even better,  so, they have to jack Grid charges.  That has a big impact on the poor.  People with a studio, or a 1 BR start paying a lot more then someone with a Big house in Potomac,  proportionally,  and the person with a 1 acre lot has room for a 15 KW solar array and battery.  So expect to see more cost shifting into Dense urban areas, because they have less option to go solar...  [Actually, DC with many flat roofs and the height limitation has more solar suitable roofing than many urban areas.]

Finally and here is the real reason why Exelon is so desperate to do this merger......

Exelon has a bunch of nuke stations which are all headed into end of life [see figures for license expiration dates in Illinois]. Exelon has less then 33% the money needed to decommission them.  Decommissioning a nuke is the Hell phase of a nuke. It's all cost, zero revenue, it's long tedious and full of ways to get fines.  [And heaven help us if there is an accident.]

The Experience of decommissioning is that the actual costs over-run planned costs by 1.5-2.2  so in reality Exelon has very little money set aside towards these shutdowns, so what can they do?  Try and have a 'rate-base' that pays for that.   [That means US.] 

This is why Exelon cast their eyes at Pepco.  Big user base they can buy,  and force these costs onto the DC user base...

So what does a 'Failed' merger look like?  [Failed in the sense the merger happened but the results could be catastrophic.]

1) When a major storm hits ( Maine 1998 ice storm , Derecho  2012, 2013) the outages will be over a month, people will die, major services water, sewer, will be impacted, the National Guard will have to help out.    

2) Summer thunderstorms will lead to days long outages, not hours.  

3) Your bills will get regularly screwed up and the Customer service horror stories will rival Comcast.

4) Your grid fees will rise probably 2-3 times.

5) The cost of delivered energy will triple, so a KWH could cost 30 cents.  [Currently around 10 cents.]

Is that what you were looking for?"

 [As I said earlier I do NOT know if all this is likely or true, but fear it may be.  I also hope that the Public Service Commission has investigated all these risk factors, and is certain that NONE of this is likely to happen.]  Next you will find another interpretation of what bad things may happen.

Hi: I see a different scenario.
Exelon will not really be an absentee landlord. The folks that run the utility will be here in DC. But all the important decisions on policy and direction will be made in Chicago.  First, a lot of folks will get fired, and a lot of local contract will be dropped this has already happened.  They will save money by thinning out their emergency response crews. Why have a crew in Delaware and Philly and Baltimore and DC when they are all so close!  When the big storms hit [and the roads impassable] we will be screwed.
Then the political donations to their friends will start coming in.

Once Exelon locks up the political infrastructure and the Public Service Commissions in all the states, they will start passing rate cases to give themselves guaranteed 8% rates of return for big infrastructure projects that might or might not be needed.  [One such project is the DC plan to spend $3 billion to put ALL electrical lines underground.  Some undergrounding certainly makes sense, but there are parts of the city where homes are spread out and it would be cheaper to keep lines above ground and repair as needed.  This can become a major digging and paving boondoggle.  The important and much cheaper thing is to keep trees properly trimmed, whether by the utility or by DC's trained trimmers.]  

They will fight tenaciously to keep competition out of the market including Demand Side Management (DSM), local solar, local wind. They will do their best to kill Maryland's off shore wind program. They will undercut the DC SEU (Sustainable Energy Utility), they will fight to keep community solar and community owned micro-grids out of their jurisdictions. They will gradually change the rules of the PJM grid (a regional transmission organization) to give themselves more and more benefits for their "standby" nuclear power. They will fight efforts to bring large quantities of storage and Demand Side Management into our regional market because it would obviate the need for paying them for over-priced standby capacity. They will suck billions and billions of dollars out of our economy and use the money to fight clean energy everywhere.  The end results will be higher rates, worse reliability and the forestalling of the clean energy revolution. To the extent that we get clean energy, they will want to own it and make a guaranteed 8% rate of return on it.

I hope that both of these sets of predictions turn out to be wrong, but I am not holding my breath.
Exelon Boosts Guidance Despite Lower Profit [Exelon stockholders were so happy last October with the prospect of us paying their bills that stock price estimates rose even as profit sank 37%.]

Chicago-based power company reaffirms its commitment to buying Pepco Holdings

     Exelon Corp. lifted its yearly guidance as it posted better-than-expected adjusted earnings and revenue in the third quarter, even as profit sank 37%.
     The Chicago-based power company now estimates earnings in the range of $2.40 to $2.60 a share, up from previous guidance of $2.35 and $2.55 a share.
     Exelon has been expanding through acquisitions and reaffirmed its commitment to buying Pepco Holdings Inc., after utility...


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