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On Monday, Exelon filed a request for the D.C. Public Service Commission (PSC) to reconsider its denial of the Chicago-based corporation’s bid to take over the District’s utility, Pepco Holdings Inc. At the same time, the mayor’s office issued a brief statement confirming that it is negotiating with Exelon on a new application that purportedly will address the shortcomings of Exelon’s previous proposal.

exelon sm black xThe PSC likely will dismiss Exelon’s tenuous request for a rehearing, which leads to the next step in the process: Exelon will resubmit the revamped proposal. It is unclear when this will happen, but when it does, we expect it to be wrapped up in a bow and heralded as Christmas comes early for the District. But ultimately – regardless of how much money Exelon offers Pepco shareholders, or how many concessions the company pledges to make – Exelon’s second takeover attempt, like its first, should fail. Here’s why:

1) The whole is greater than the sum of Exelon’s concessions:

Exelon bears the burden not only of proving that the takeover would not harm consumers, but that it would result in clear and tangible benefits to D.C. electricity customers. The PSC found that most of Exelon’s benefit claims were inflated, unsubstantiated or inadequate and that the deal could harm consumers and undermine D.C.’s sustainability goals.

In its second filing, Exelon is likely to promise whatever it thinks is necessary to get the deal done. But any new concessions Exelon offers would still be reviewed in the context of whether the acquisition as a whole is consistent with the public interest. The PSC was clear in its decision that this deal is fundamentally a bad fit for the District. New concessions would likely come in the form of short-term gains that would not mitigate the long-term risk of allowing the largest utility in the county – with its outdated business model – to swallow D.C.’s local utility.

2) Inherent conflicts:

By design, this acquisition cannot be in the public’s interest because Exelon’s business model – which seeks to increase profits and offset the heavy losses being incurred by its unregulated nuclear plants – is in conflict with the best interest of Pepco customers and is misaligned with the District’s clean energy goals.

Exelon CEO Chis Crane frequently alludes to energy efficiency and renewable energy as being counterproductive to Exelon’s bottom line and considers these technologies as incongruous and disruptive to Exelon’s business. As a result, Exelon is notoriously hostile to clean energy at the federal and state level. The PSC was right to illuminate this conflict and the threat to D.C.’s clean energy goals under an Exelon regime in its decision to reject the takeover.

Unless Exelon sells off its toxic generation business, the PSC should reject its revamped proposal on the same grounds.

3) Public opposition:

Thousands of public comments calling on the PSC to reject the deal were submitted into the record and hundreds of people turned out to public hearings to voice their opposition. In fact, in the announcement rejecting Exelon’s bid to acquire Pepco, regulators noted that the merger proceedings generated more interest and more active participation by the public – which largely opposes the merger – than any other proceeding in the commission’s 100-plus years of operations. Those that lined up behind Exelon did so out of financial interest, not public interest.

A number of groups that receive financial contributions from Pepco and have been promised that the money will keep coming in under an Exelon regime have supported the takeover. It is likely that these groups, at Exelon’s urging, will show up at the new rounds of hearings, but as before, the PSC should recognize this conflict of interest and elevate the public’s voice over those with financial ties to Pepco and Exelon.

4) Home ruled:

It’s incredible that a town that has fought so hard for local governance is considering a deal that would give away our decision-making power over our energy future to corporate executives located 700 miles away and make our local utility a second-tier company in a much larger corporation whose primary interest is in selling power, not providing the best value for its customers. Isn’t it bad enough that Congress controls our budget? Like the inherent conflicts of interest, the PSC should not find anything in Exelon’s new proposal to resolve this deal breaker.

 5) D.C. doesn’t need Exelon:

The District has had much to complain about with Pepco. That is not disputable, but Pepco has improved reliability in the past few years and is expected to meet advanced reliability standards established by the PSC. Exelon has offered no improvement beyond what Pepco is already on track to achieve. That’s because this deal has never been about making Pepco a better company for D.C. This deal is about Exelon reducing the risk of its failing generation business with a stable revenue stream – provided by Pepco customers.

Pepco was not for sale until Exelon approached the utility with an offer that included a $1.6 billion windfall for its shareholders. D.C. didn’t ask for Exelon and we still don’t need them.

D.C. decision-makers should continue to reject Exelon’s power grab. There is no fix that would make this deal good for D.C., the public opposes it and D.C. doesn’t need the merger to achieve reliable electricity service. Regulators got it right the first time. To continue entertaining this deal is a waste of precious resources and time for those tasked with protecting the public’s interest in this matter. It’s time to let D.C. residents get back to the business of building an affordable, reliable and clean power supply for the District.

Allison Fisher is the outreach director for the Climate and Energy Program


Business for Democracy

Amid the chaos of House Speaker John Boehner’s resignation, the Corporate Congress next week still will find time to undermine the public interest, with a particular emphasis on energy:

  • At 10 a.m. Tuesday, the U.S. Senate Environment & Public Works Committee will pick apart President Barack Obama’s efforts to make our air cleaner. According to the name of the hearing, lawmakers will focus on the economic implications of Obama’s “air agenda.” We expect they will downplay the benefits of pollutant-free air, such as fewer cases of asthma, respiratory illnesses and premature death.
  • At 10 a.m. Thursday, the Senate Banking, Housing & Urban Affairs Committee will mark up a bill to lift the country’s longtime ban on oil exports. As Public Citizen has told lawmakers (PDF), this is a bad idea. Lifting the export ban would erode domestic surplus stockpiles and allow domestic producers to sell oil oversees for higher prices than what they charge in the U.S. This would result in higher gasoline prices for U.S. motorists and small businesses. What’s more, ending the oil export ban would do little to advance perceived U.S. geopolitical interests regarding Russia, China and elements of the Middle East without simultaneously impacting energy supplies and prices in the U.S. market.

Budget riders

Regardless of who becomes the next House speaker, once Congress moves to adopt an omnibus funding package, it will be forced to grapple with an array of dangerous policy riders on appropriations bills – riders that have no business being attached to funding legislation.

Riders being proposed would jeopardize policies that restrain Wall Street abuses; guarantee clean air, food and water; ensure safe consumer products and continued access to vital health care services; keep homes and workplaces safe; prevent consumer rip-offs; and hold big corporations accountable for wrongdoing.

A coalition of 180 groups has urged (PDF) all 535 members of Congress and the White House to oppose spending bills that contain inappropriate and ideological policy riders. A separate coalition called on Obama to veto (PDF) any spending bills containing riders that would further weaken our nation’s campaign finance laws. Meanwhile, Public Citizen’s petition telling congressional leaders to pass a clean budget without riders has garnered more than 25,500 signatures.

Ohio Consumers are paying big for FirstEnergy’s maneuvers to profit from its failing and outdated business model.

Billion in Bailouts monopoly-money-firstenergy-bailout

Today, the Public Utilities Commission of Ohio will begin hearings on FirstEnergy’s proposal to guarantee profits for its oldest and dirtiest coal and nuclear plants.

Unable to compete in the energy market due to cleaner and more affordable resources like wind and solar, FirstEnergy is asking regulators to force regulated utilities to buy the entire output of FirstEnergy’s troubled nuclear and coal plants – Davis-Besse nuclear plant, Sammis coal plant as well as its share of coal-fired energy produced by the Ohio Valley Electric Corporation – and then sell the power into the marketplace. Customers would be charged for the difference between what the market will pay and the cost to operate the plants, plus profit. The scheme would be a bailout for FirstEnergy, impose a $3 billion dirty energy tax on customers and discourage investment in clean and efficient energy.  

Not only would the bailout proposal raise rates, it also would lock in the subsidy for 15 years. At a time when climate disruption demands that we phase out our old, dirty energy sources, FirstEnergy is asking customers to prop up theirs for years to come.

Further, the scheme would essentially circumvent the state’s deregulation laws – a policy FirstEnergy championed until it was no longer serving its bottom line. Deregulation, which split the distribution of power from the business of generating power so that utilities could sell energy into a competitive market, initially cost customers billions of dollars. FirstEnergy convinced the PUCO that it needed customers to absorb the debt (bail out) on its plants to be competitive in the new market system. FirstEnergy was allowed to charge Ohio electricity consumers $6.9 billion for its nuclear assets alone.

But FirstEnergy self-serving flip-flop on competition doesn’t end there.

Millions in Lost Efficiency Savings

Last year, FirstEnergy led the lobbying effort to freeze Ohio’s renewable and energy efficiency standards, claiming that they inhibited competition and inflated energy costs. The efficiency standard alone saved customers $1 billion since its implementation in 2009 and was on track to save billions more in coming years. In response to the freeze, FirstEnergy was the only utility in the state to take immediate steps to cut its efficiency programs, even though its own PUCO filings have consistently argued that its programs are cost-effective. For example, one document filed in 2012 projected savings of more than $100 million for FirstEnergy’s Ohio Edison customers.

And that still doesn’t complete FirstEnergy’s record on fleecing customers.

Millions in Overcharges

Two years ago, the company was penalized more than $40 million for overcharging its customers for renewable energy credits. The year before that, FirstEnergy gamed the capacity auction for the territory in which it operates to increase their profits through strategic closing of coal plants. Doing so created capacity shortages and prices increased for customers.

More Cost to Come?

Instead of innovating to meet the challenges of climate disruption and embracing the plummeting cost of clean energy, FirstEnergy is doubling down on coal and nuclear. And by doing so and resisting low cost tools like energy efficiency, FirstEnergy could make it harder and more costly for the state to comply with new federal carbon pollution goals.

It’s time to stop letting FirstEnergy call the shots on the Buckeye State’s energy future, a mistake that already has cost Ohio’s families and households and continues to threaten Ohio’s response to climate change.

Take action against FirstEnergy today:

Tell the Public Utilities Commission of Ohio (PUCO) to reject the bailout of FirstEnergy.

 Allison Fisher is the Outreach Director for Public Citizen’s Climate and Energy Program

"dr wolfe"Statement of Dr. Sidney Wolfe, Founder and Senior Adviser, Public Citizen’s Health Research Group

The U.S. Food and Drug Administration’s (FDA’s) decision to approve flibanserin as a treatment for women with hypoactive sexual desire presents serious dangers to women, with little benefit, and recklessly disregards the worrisome risk information in the agency’s briefing package to the advisory committees that met on June 4 to review the drug.

It would not be surprising that after enough women have been seriously harmed by the “irreversible, or life threatening injuries” about which the FDA is concerned, flibanserin will have to be taken off the market. It is unconscionable that the FDA does not have the courage to prevent such damage from a drug with such a high ratio of risks to benefits.

The FDA’s analysis showed that women using the drug had an average of only half to one more “satisfying sexual encounter” every month compared to those using a placebo.

Meanwhile, the FDA’s list of serious risks includes abnormally low blood pressure and fainting. The agency noted that these could be experienced when flibanserin is taken alone or with alcohol, and that these side effects “can result in serious, irreversible, or life threatening injuries.”

The agency also noted that a study showed taking the drug with alcohol consumed over 10 minutes led to drowsiness, low blood pressure when standing up, and fainting. Although the study subjects were predominantly male (23 of 25 subjects), the FDA stated that “[t]he effect of the combination of flibanserin and ethanol may be more pronounced in females.”

The FDA noted the difficulty of preventing alcohol use in women using the drug, saying that limits on such prevention would exist even with the implementation of a type of risk management plan intended to ensure that the benefits of prescription drugs outweigh their risks.

Unfortunately, we haven’t heard the last of this drug. Expect future news to include stories of women who are harmed needlessly by flibanserin and the eventual agency call for the manufacturer to pull it from pharmacy shelves.

In December 2013, Gilead received FDA approval for the first in a new generation of hepatitis C treatments. By all accounts, these treatments represent a cure for patients living with hepatitis C. Since the December release, Gilead’s pricing of its hepatitis C products as well as insurers’ efforts to hold down costs by restricting access to treatment have ignited a vigorous debate in the U.S. about the price of pharmaceuticals and access to medicines.

In light of the latest announcement of another quarter of astronomical profits for Gilead from its hepatitis C products, I decided to add up previous earnings to see how the company’s $11.2 billion acquisition of Pharmasset, in which Gilead acquired rights to sofosbuvir, has panned out for them so far:










Cumulative global earnings from both Harvoni and Sovaldi totaled a hair under $22 billion as of June 30. It’s safe to say that after just ~19 months from when Sovaldi first entered the US market, over the first week of July they surpassed the landmark of doubling what the company paid for Pharmasset in 2012.

The vast majority of those earnings have come from the U.S.:










Much of this burden has been borne by taxpayers and overextended government agencies. At the VA, the combination of the high prices of these products and a limited budget has led to restrictions in access. The VA spent $379 million on new hepatitis C treatments in FY2014. Thus far in 2015, they’ve spent $700 million, which was intended to last through the entire fiscal year but was completely exhausted as of June.

Of the 180,000 veterans enrolled in the VA who have been diagnosed with hepatitis C, 27,000 have been treated.  Counting the estimated 40,000 veterans under the VA’s care with hepatitis C who remain undiagnosed, 193,000 veterans remain to be treated.

At its peak, the VA was newly enrolling ~800 patients per week on HCV treatment. By June 10, that number was down to less than 300. Before the end of the month it fell to zero.

Last week, both houses of Congress approved legislation that will allow the VA to reallocate $500 million from the Veterans Choice Fund toward purchasing hepatitis C treatments. The VA estimates that it will be able to provide treatment to 13,600 veterans with that money, a little over $375 million of which will be spent on Gilead’s Harvoni.

If all goes as planned, by October of this year, the VA will have provided treatment to nearly 41,000 veterans at a cost of approximately $1.58 billion, but approximately 179,000 veterans with hepatitis C will remain to be treated. Assuming their procurement costs remain similar, providing treatment to all of the remaining 179,000 veterans will cost nearly $7 billion. Gilead’s executives will continue to make out like bandits.

However, the VA has the statutory authority under 28 USC 1498 to procure low-cost generics. Gilead’s Sovaldi, for example, is available in India for less than $1000 per course of treatment. Senator Sanders wrote the VA in May urging them to exercise this authority, but thus far they have not complied with the request.

On July 22, Sen. Sanders introduced legislation in committee that would require the VA to procure generics when the price of a medical device is excessive or presents a barrier to care, with compensation to the originating company for making use of its patented invention to be a reasonable and affordable royalty set by the secretary. The Senate Veterans Affairs Committee discussed Sanders’ proposal for 15 minutes, with many senators expressing curiosity or interest. Ultimately Sanders withdrew the proposal after Chairman Isakson and Ranking Member Blumenthal agreed to explore the issue in more depth at a future hearing.

By procuring generics, either through section 1498 authority or the enactment of Sen. Sanders’ legislation, the VA would accrue billions in savings which could be spent on hiring more doctors and providing other much needed services to veterans, while at the same time allowing the VA to accelerate veterans’ access to HCV treatment.

By any metric Gilead’s earnings from its line of hepatitis C treatments has been a windfall. Rather than continuing to pad the pockets of Gilead’s elite at the cost of other VA programs, the VA should move forward with 1498 and policymakers should give Sen. Sanders legislation serious consideration.

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