In August 2015, the District of Columbia Public Service Commission shocked many observers by rejecting Exelon’s bid to purchase Pepco Holdings, after the deal had already been approved by federal regulators and three other neighboring states.
D.C. regulators surprised onlookers again when they rejected the merger in February, throwing out a settlement agreement negotiated by D.C. Mayor Muriel Bowser. Then in March, after nearly two years of negotiations, regulators finally approved the deal, clearing the way for Exelon to become the largest utility in the country, despite continued opposition.
The battle still isn’t over. Several groups, including the D.C. Office of People’s Counsel, are challenging the PSC order. But for now, the merger continues to move forward. As it progresses, it’s worth recalling that a small group of advocates in Washington, D.C. -- with just $100,000 in funding -- nearly thwarted a $6.8 billion deal, against all odds.
“We were surprised when we won -- when [regulators] turned down the mergers the first two times. And we were surprised again when they approved their own revised settlement over the objections of everyone except for Exelon,” said Anya Schoolman, founder and executive director of Community Power Network, a national nonprofit that helps communities build and promote local renewable energy projects and policies.
Schoolman played a key role in mobilizing against the Exelon-Pepco merger as president of D.C. Solar United Neighborhoods (DC SUN), a city-wide organization ofsolarco-ops under the Community Power Network. Like other opponents, DC SUN was wary of Exelon’s size and doubted the utility’s support for developing clean energy resources.
Schoolman recently wrote a paper summarizing the years-long advocacy campaign and lessons learned throughout the process. The case study demonstrates how utility customers can be organized into a powerful constituency, which may be relevant to other energy sector campaigns around the country.
Build a real, strong base
What was unique about the DC SUN campaign is that it wasn’t driven by solar companies or climate activists, although it was closely allied with those groups. Instead, the movement was driven primarily by consumers.
“Our work is focused on organizing a class of ratepayers, who are solar homeowners, to be politically active,” said Schoolman. “I don’t think it’s at all specific to D.C. What’s specific is the conscious, intentional organizing of people who have solar homes to be politically engaged in energy policy.”
DC SUN isn’t the only organization to engage directly with solar consumers, but it had the unique advantage of long-term community ties and access to a network of solar co-ops -- which are, by nature, diverse and policy-savvy collectives. DC SUN partnered with other community-based organizations, and by mid-2015, four of nine D.C. City Council members had come out against the merger. According to Schoolman, this was the definition of grassroots organizing.
“It really wasn’t that we were creating the appearance of a movement. It’s that a movement existed, and we were trying to give it some sort of form and structure so it had more of an impact,” she said.
That’s one of the main lessons Schoolman took away from the campaign: build on a real base of activists who are well-educated, passionate solar supporters with a direct stake in their community’s energy future.
Empower coalition members
Another takeaway from the Exelon case is to empower coalition members. Fueled by DC SUN’s network of co-op leaders, a diverse group of activists came together against the merger as an ad hoc coalition called PowerDC. All of PowerDC’s key strategic decisions were made by consensus, according to Schoolman.
“While not as efficient as a top-down, centrally planned campaign implemented by a single organization, this open and democratic process allowed us to keep and build the trust of allied groups and individual advocates,” she wrote.
This unity, particularly between clean energy and consumer groups, proved to be key. The two groups stuck together, advocating for their combined platform of solutions, even when proposals cropped up that seemed to pit one group against the other. Schoolman said she doesn’t buy the often-cited utility argument that solar is bad for consumers. She does know that many people struggle to pay their electricity bills, and believes the transition to a clean energy economy can lower costs and increase equity, having seen it happen first-hand.
“We’ve spent time building those relationships [with low-income groups] in D.C. in a real way, not in a window-dressing way,” said Schoolman. “That’s why in D.C. we pushed so hard for community solar, because we wanted to expand access to solar to everyone, not just people who have roofs.”
DC SUN was already working with low-income housing advisors, ratepayer advocates, tenant advocates and others through its work on community solar. So when the Exelon merger cropped up with the threat of raising rates, it was a natural convergence of consumer and clean energy interests.
Shortly after the merger was approved, Pepco filed for a 5.25 percent across-the-board rate increase in D.C., bringing in $85.5 million for the utility. In Maryland, Pepco sought a 10 percent rate increase.
Rates, reliability and renewables
Through the campaign experience, Schoolman found that maintaining a robust and clear communications message was another important organizational tool. PowerDC came up with the tagline “rates, reliability, renewables and home rule” and adhered to that message throughout the negotiations. Over time, this mantra made its way into PSC documents and decision-making.
Challenging key decision-makers also proved to be effective. Advocates took Mayor Bowser to task after discovering Pepco gave D.C. $25 million to build a soccer stadium just days before the mayor reversed her opinion and decided to support the Pepco merger. Finally, Schoolman found that fighting for deeper issues is what kept activists engaged.
“Although at face value it appeared that the opposition to Exelon was driven by local citizens that did not want a large, out-of-state company taking over, in reality the issue at hand went much deeper than just an opposition to the merging of two companies,” Schoolman wrote. “At stake was (and is) the future of how our energy system is structure, how it’s managed, and, ultimately, who benefits from this system. And this is an ongoing issue that we continue to engage on multiple levels.”
For Schoolman, the Exelon-Pepco campaign is only the beginning of a much larger fight over the future of the U.S. energy system. DC SUN is already engaged in grid modernization proceedings in D.C. and Maryland where the group is looking for new ways to promote its “rates, reliability and renewable energy” agenda with the deployment of new technologies, such as programmable thermostats. The group is also looking to engage on net metering and the competitive ownership of microgrids, energy storage and demand management.
Several other states are also going through power sector reforms, or are likely to begin the process in the coming months. As opposed to fighting for a specific solar policy or carbon reduction measure, Schoolman wants to see customer choice as a top priority.
Putting the public before profits
“The current system is not necessarily one we want to preserve…if the majority of profit and benefit is going to shareholders as opposed to ratepayers,” she said. “What we’re saying is that the ratepayers have paid for this [electricity] system and will continue pay for it, and so their needs and priorities need to be front and center.”
“What Exelon is looking at is whether or not they can make their next dividend and their rating on Wall Street,” she added. “It’s certainly not specific to Exelon; it’s all investor-owned utilities. Over time, especially if utilities get bigger and more consolidated, that [profit] becomes more of a focus as opposed to serving ratepayers, which is why they were created.”
With more utility mergers and power sector transitions on the horizon, Schoolman believes now is a pivotal time to build on existing momentum. The Exelon case shows that utilities can no longer expect to enact new policies by winning over a few established groups; they have to engage with and appease the broader public. In many places, that will mean making greater commitments to renewable energy and other advanced technologies.
“There’s a lot of policy being made, and historically the public hasn’t really been involved,” said Schoolman. “So I think that’s what was one of the main points for me -- not only was the public involved [in the Exelon campaign], but the public fundamentally changed the proceeding and the public is going to stay involved.”
“If someone is changing the rules around them, they want a say in what the rules will be,” she said.