On July 20, 2017, the D.C. Court of Appeals (the "Court") upheld the Public Service Commission of the District of Columbia's (the "DCPSC") approval of the merger between Exelon Corporation and Pepco Holdings, Inc. ("Applicants"). Specifically, the Court held that the DCPSC provided adequate notice to the public of hearings on the merger and the DCPSC adequately explained how its decisions were in the public interest.
In June 2014, Applicants filed their initial merger application. After the DCPSC denied the initial merger application, Applicants filed to reopen the record in October 2015 requesting that the DCPSC consider whether a settlement agreement (the "Settlement") executed by Applicants, the D.C. Office of the People's Counsel ("OPC"), and the District of Columbia government (the "District") was in the public interest. Although the DCPSC reopened the record for the limited purpose of determining whether the Settlement was in the public interest, it ultimately rejected the Settlement in February 2016. However, in the February 2016 order, DCPSC Commissioner Joanne Doddy Fort proposed revisions to the Settlement which she believed would render it consistent with the public interest (the "Revised Settlement"). In response, Applicants filed a request for relief, asking the DCPSC to approve the merger in accordance with either the terms of the Settlement, the terms of the Revised Settlement, or the terms of an alternate proposal. In March 2016, the DCPSC approved the merger under the terms of the Revised Settlement. In June 2016, the DCPSC denied requests for reconsideration filed by OPC, the District, and DC Solar United Neighborhoods jointly with Public Citizen, Inc. ("DC SUN"; collectively, "Petitioners") (see June 29, 2016 edition of the WER).
Petitioners subsequently petitioned the Court for review of the DCPSC's orders. In particular, Petitioners argued, among other things, that (1) the DCPSC's notice of public hearings on the Settlement was inadequate; (2) the DCPSC should have conducted further discovery and hearings prior to approving the merger; (3) the DCPSC lacked authority to require or suggest changes to the Settlement; (4) the DCPSC did not clearly state how the Revised Settlement is consistent with the public interest; and (5) the DCPSC did not adequately explain its decision to revise certain provisions of the Settlement.
In its opinion, the Court affirmed the DCPSC's approval of Applicants' merger application. In doing so, the Court held that the DCPSC provided reasonable notice of hearings on the Settlement and that if DC SUN or OPC thought that further discovery and hearings were necessary, they should have raised those issues prior to the DCPSC approving the merger. Further, the Court held that the DCPSC has authority to require changes to a proposed merger or recommend alternative terms in rejecting a settlement. In addition, the Court held that, although the DCPSC's explanation of how the Revised Settlement is in the public interest was spaced across various orders, the orders taken as a whole demonstrate that the DCPSC adequately explained its approval of the Revised Settlement. Finally, the Court concluded that the DCPSC adequately explained its decision to revise certain provisions of the Settlement.
A copy of the Court's opinion is available here.
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