A new report from the Maryland Public Policy Institute concludes that the proposed merger between energy companies Pepco Holdings, Inc., and Exelon is in the public interest and would benefit Maryland ratepayers as well as the state’s business climate. The $6.8 billion merger awaits approval from the Maryland Public Service Commission (PSC), which is required to act by April 8. The report, authored by Visiting Fellow Nicolas Loris, can be found at this link.

“Maryland’s PSC should recognize the broad benefits this merger would generate for Maryland’s ratepayers, power supply and economy,” said Christopher B. Summers, president of the Institute. “Approving this merger would be a welcome shift away from the state’s misguided and costly energy policies over the last eight years toward a stronger business climate and more resilient power supply.”

The Institute’s report finds that the merger will three key benefits for Maryland:

Improved Reliability: Exelon and Pepco have committed to provide Maryland with more reliable power, promising to cut power outages by 40 percent and restore power 43 percent faster compared to the 2011–2013 period. The company agreed to pay substantial fines should Exelon fail to meet those commitments.

Customer Investments:  Exelon is offering $94.4 million—$128 a customer—for its customer investment fund, in which Maryland’s Public Service Commission would dictate how the funds are spent, such as rate credits or low-income assistance.

Big Economic Impact:  In total, the merger would lead to the creation of an estimated

6,300–7,000 indirect jobs and up to $623 million in economic impact for Maryland within six years of the merger closing. Furthermore, approving the merger could signal the end of Maryland’s weak business climate. The nonpartisan Tax Foundation’s 2015 State Business Climate Tax Index ranks Maryland 40^th out of 50 states.  Denying the Pepco-Exelon merger, especially when Delaware, New Jersey, and Virginia have all approved, will perpetuate this problem, making Maryland worse off economically.  Not only would the merger approval help promote a better business climate, but so can the promise of a more efficient and reliable grid that is more responsive to outages. Businesses stand to lose a lot of money during power outages; thus having a more robust electricity system is an enticing asset for business location.

About the Maryland Public Policy Institute: Founded in 2001, the Maryland Public Policy Institute is a nonpartisan public policy research and education organization that focuses on state policy issues. The Institute’s mission is to formulate and promote public policies at all levels of government based on principles of free enterprise, limited government, and civil society.  Learn more at www.mdpolicy.org.