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Grassroots Activists In D.C. Take On A Corporate Titan

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Exelon is America’s largest producer of nuclear power. But its plants are several decades old now, and getting expensive to maintain. And the increasing cost competitiveness of solar means Exelon’s nuclear offerings just aren’t as appealing to consumers anymore. How’s the owner of an aging fleet of nuclear reactors support to ingratiate itself to profit-hungry shareholders in the face of looming obsolescence? Buy up America’s energy distribution network, piece by piece, and then sell itself its own power.

Well, that was Exelon’s initial plan, and it was working pretty well for a while. Over the last several years and without substantial opposition, Exelon expanded in size and geographic scope by acquiring several major regulated utility companies, including Baltimore Gas & Electric, Illinois’ Commonwealth Edison, and the Philadelphia Electric Company.

When Exelon announced its intention to acquire Pepco Holdings, Inc. — an energy distributor with customers in Delaware, Maryland, New Jersey, and Washington, D.C. — the merger’s completion seemed ordinary, even inevitable, and earned positive reviews from state and federal regulatory agencies. Public Service Commissions in Delaware and New Jersey gave the Exelon Pepco merger their blessing, as did the Federal Energy Regulatory Commission. The acquisition was “expected to be a done deal,” explains Tim Judson, Executive Director at the Nuclear Information and Resource Service.

But the terms of the merger simply did not sit right with diverse groups of grassroots activists in D.C., and they made up their minds to stop the transaction. One year after Pepco’s acquisition was announced, the deal’s fate remains uncertain and opposition in D.C. is stronger than ever. Here’s the unlikely story of how an organized citizen movement in our nation’s capital might very well succeed in defeating a corporate giant in its bid to become the largest energy producer and supplier in the United States of America.

A “militia of community activists” emerges

The Exelon Pepco merger was never a good deal for the District of Columbia. Exelon publicly stated its intention to fire people and would not commit to providing lower rates or even keeping to them the same for an initial time period. Exelon has a record of raising rates (at least four times in under three years at BG&E), and of working as a business and a lobbyist against the kind of energy policies District citizens favor by an overwhelming margin.

Quite literally, D.C. struggles to keeps its lights on. Snowstorms and thunderstormsregularly knock out power for District residents – sometimes for days at a time. Outages are so common, backup power generators are a standard feature outside the homes of elderly people across the city. Moreover, D.C.’s gas and electricity rates keep going up. Within the context of failing electrical infrastructure and soaring prices, solar energy has become immensely popular in the nation’s capital.

There are solar cooperatives in each of the District’s eight wards. To improve reliability and reduce costs on their electricity bills, D.C. residents are producing and consuming their own power. Anya Schoolman is the president of D.C. Solar United Neighbors (D.C. Sun), and serves in leadership positions with several organizations expanding consumer access to renewable energy in the United States. In D.C. alone, Schoolman has assisted more than 300 homeowners harness the benefits of solar power generation.

Today’s solar energy consumers aren’t your stereotypical tree huggers, according to Schoolman. Sure, many enthusiasts of renewable power are motivated by environmental concerns, but the reasons consumers in D.C. get into solar, Schoolman explains, are often more practical than any lofty concerns about, say, climate change. Regarding what gets D.C. consumers to go solar, Schoolman cites: “low costs, energy independence, local jobs, reliability, air pollution and high rates child asthma in D.C., and economic development.”

Whatever the source of their motivations, Schoolman and her colleagues at ad hoc organizing group Power D.C. have citizens fired up. Hundreds of angry D.C. residentsare turning out to Public Services Commission hearings, and Power D.C. makes sure sympathetic citizens who can’t attend meetings are signing petitions, sending letters, and otherwise engaging in the citizen-led, democratic movement to prevent Exelon from going full monopoly in the D.C. energy market.

Beyond a city-wide network of organized and informed solar power enthusiasts, Exelon has managed to pique the ire of D.C.’s broader environmental movement. Hugh Youngblood, board member and outgoing chair of the Sierra Club D.C. chapter, tells me he’s concerned about Exelon’s record of lobbying statehouses to thwart the advancement of renewable energy policy. “There is progressive, green energy policy in D.C.,” Youngblood tells me. “An Exelon takeover will slow down our city’s progress environmentally.”

Good governance types in D.C. are really mad about the Exelon Pepco merger, too. And good governance types in D.C. are perhaps the most hyper-organized of any state level jurisdiction in the nation. Each 2,000-person neighborhood receives its own Single Member District designation, to which it democratically elects a volunteerAdvisory Neighborhood Commissioner (ANC) to represent local interests (potholes, speeding, loud clanging at the horseshoe pit, etc.) to the city government. So-called ANC meetings are well-attended and lively events, and dozens of ANCs have voted on and passed formal resolutions opposing the Exelon Pepco merger.

Coordinating the revolt of D.C.’s neighborhoods against Exelon, industry titan, is Rob Robinson. He came to D.C. with the Jimmy Carter campaign, stayed on to work for Marion Barry, and has most recently been attending ANC and other community meetings all over the city preaching the gospel of Make Exelon Go Away.

I asked Robinson what drives him to educate and engage civic activist types in D.C. in taking on Exelon and Pepco. Robinson tells me he fears for the future of our city if the Exelon deal goes through. Sure, these Exelon guys have great projections about employment and so forth, Robinson explains but — if you look at how Exelon’s labor and consumer protection policies in other utility markets compare to what Exelon promised pre-acquisition — “they can’t show you an after picture.”

Robinson is skeptical of Pepco’s motivations in allowing the merger to go through. He cites the more than $1.1 billion (perhaps as high as $2.5 billion) markup of the transaction cost ($6.8 billion) relative to the actual stock value of the company (between $4.3 billion and $5.7 billion). For Pepco shareholders, the Exelon acquisition is a windfall. What’s more, Robinson tells me, Pepco has a track record of failing to deliver on promises of better service. As evidence, he cites a 2007 Pepco energy vision for the future, which Robinson describes as “aspirational and also bullshit.”

D.C.’s activist culture is not an accident; it’s a feature (not a bug) of the 1973 Home Rule Act, which finally allowed the population of our nation’s capital to vote for local elected officials, like the mayor. By design, the Home Rule Act compels citizens as even micro-level to play active roles in civic affairs.

Youngblood describes the grassroots infrastructure in D.C. as “like a militia of community activists.” When “crazy shit goes down,” Youngblood explains to me, D.C.’s activist bench is “ready to go to bat.”

Even given the city’s predisposition toward activism, something about the Exelon Pepco merger has D.C. especially riled up. A paltry six percent of District residents support the acquisition. “Nothing,” Akili West tells me, “has united the city the way opposition to the Exelon Pepco merger has.”

West is a founding board member of D.C. Sun, a cofounder of D.C.-based renewables company Reclamation Energy, and a community advocate with the Ward 8 Renewable Energy Cooperative. Ward 8 is home to D.C.’s highest concentration of poverty; it also houses some of the District’s most organized, vocal, and prominent activists in regional and national sustainable energy policy.

Fluctuations in energy prices affect Ward 8 more than anywhere else in the city, West tells me. For many, in D.C. energy independence via solar power isn’t a luxury; it’s the difference between whether families can afford to keep their lights on or off.

What’s next?

On the regulatory side of things, most — but not all — of the required governmental bodies have decided the Exelon Pepco merger is good with them. But there are some hold outs. Public Service Commissions in Maryland and the District of Columbia are still weighing the merits of the transaction, but are slated to come to some kind of verdict in the coming weeks, or even days.

If either Maryland or D.C. decide to formally oppose the Exelon Pepco merger, the whole deal can’t go through, for any states where Pepco has service. And in my opinion, that’s a good thing.

Beyond this specific transaction, however, the District of Columbia could take action to stop the kind of threat Exelon poses to our energy independence and economic development by passing a city-level version of the Holding Company Act (HCA).

Repealed in 2005, the HCA was a federal law, initially enacted under Franklin Delano Roosevelt, that effectively kept American energy producers from buying up the entire supply chain, thereby protecting consumers from monopoly pricing strategies inherent in highly consolidated industries.

The repeal of the HCA is precisely how Exelon M&A-ed its way to behemoth status. A GOP-led Congress isn’t likely to pass legislation protecting consumers from Big Business this session, but the progressive D.C. Council could stop not only Exelon’s existing Pepco takeover attempt — but also any future assaults by quasi-oligarchic energy corporations on its power supply — by passing its own version of the HCA.

Stopping the Exelon Pepco merger is of immediate concern to consumers in D.C. But in an anti-regulation policy environment, D.C. can continue to continue to expect takeover attempts of its public utilities by unprofitable, unregulated energy producers seeking consistent revenue streams and a broader customer base.

What then to do going forward? Energy lawyer Scott Hempling hopes the Exelon Pepco debacle prompts attention to merger policy beyond a transaction-specific level. Legislatively, Hempling would like the D.C. government to pass “a statute that describes the community’s vision for an idea of what a utility should be. Because otherwise the risk is that the [D.C. government] becomes a passenger in someone else’s airplane, an observer to corporate strategy rather than a planner for the public interest.”

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