5 Lessons Learned from the Pepco-Exelon Merger Battle in D.C.

This case study analyzes the $6.8 billion merger between Exelon and Pepco Holdings, which created the largest utility in the United States. The document uses the contentious approval process in the District of Columbia to identify five broader trends in the U.S. power sector: increased utility consolidation to hedge against volatile wholesale markets, disputes over microgrid ownership, the criticality of rate design equity, the rise of mobilized customer constituencies, and the proliferation of state-level power sector transformation proceedings.

• The $6.8 billion merger of Exelon and Pepco Holdings created the largest utility in the United States, serving 2.2 million customers across Maryland, Delaware, New Jersey, and the District of Columbia.
• Exelon pursued the acquisition of Pepco's regulated business to diversify its portfolio and reduce financial exposure to competitive wholesale power markets, where low natural gas prices have eroded profits for power plant owners.
• The merger proceedings in D.C. highlighted a conflict over microgrid ownership; while a settlement required Pepco to develop four microgrids within five years, the Commission and entities like the General Services Administration (GSA) expressed concerns that utility ownership could undermine grid neutrality and competition.
• Rate design equity was a primary point of contention in the D.C. approval process. A proposed $25.6 million rate relief fund for residential customers (averaging a $57 one-time credit) was contested by the Commission because it excluded non-residential customers.
• The merger process demonstrated the growing political power of local customers, specifically through the 'Power DC' coalition, which mobilized neighborhood-level support and influenced D.C. City Council members to oppose the merger terms.
• The D.C. merger order allocated $21.5 million to support the Commission's expenses and pilot projects for a grid modernization proceeding titled "Investigation into Modernizing the Energy Delivery Structure for Increased Sustainability."

APA

RMI (2016). 5 Lessons Learned from the Pepco-Exelon Merger Battle in D.C. https://rmi.org/resources/5-lessons-learned-pepco-exelon-merger-battle-d-c/

Chicago

RMI. 5 Lessons Learned from the Pepco-Exelon Merger Battle in D.C. 2016. https://rmi.org/resources/5-lessons-learned-pepco-exelon-merger-battle-d-c/.

Wikipedia

{{cite report |author=RMI |title=5 Lessons Learned from the Pepco-Exelon Merger Battle in D.C. |date=30 March 2016 |url=https://rmi.org/resources/5-lessons-learned-pepco-exelon-merger-battle-d-c/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2016lessons, author = {{RMI}}, title = {{5 Lessons Learned from the Pepco-Exelon Merger Battle in D.C.}}, institution = {RMI}, year = {2016}, month = mar, url = {https://rmi.org/resources/5-lessons-learned-pepco-exelon-merger-battle-d-c/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }