POM Pepco Holdings,

Pepco Holdings Inc. shares tumbled Tuesday as a settling party came out in opposition to its contested $6.8 billion merger with Exelon Corp.

The Office of the People's Counsel for the District of Columbia, a group representing ratepayers, rejected the Public Service Commission's revisions to the Pepco-Exelon settlement agreement. The group said the commission has taken away a principal benefit of the merger from residential electricity customers by removing the guarantee of no rate increases through March 2019.

Shares of Pepco skidded 10% to $23.88 midday.

On Friday, utility regulators for the District of Columbia voted 2-1 to reject a proposed settlement agreement offered by Exelon and others as an alternative to the commission's outright rejection of the transaction in August. But in another 2-1 vote, the commission then came back with an amended version of the settlement agreement it said would be acceptable, and gave the parties until March 11 to accept or reject its conditions.

Those who must now sign off on the amended settlement include groups representing utility ratepayers, the D.C. government and business interests including an association representing apartment and office building owners.

"The commission's order eviscerates the benefits and protections essential to render the proposed merger in the public interest by making changes to the $25.6 million rate offset provision for residential customers which was the single most critical provision I supported," said People's Counsel Sandra Mattavous-Frye.

"OPC has consistently focused throughout this long proceeding on ensuring that any outcome is in the best interest of ratepayers, and that the merger's claimed benefits will be meaningful and verifiable, particularly for our most vulnerable residential ratepayers for whom electric bills consume a whopping and disproportionate percentage of their income," she said.

A spokesman for Exelon said the company continues to have conversations with the D.C. government and other settling parties about the commission's order and the new provisions.

"The discussions are ongoing, and we will provide an update at the appropriate time," he said.

Write to Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

March 01, 2016 13:55 ET (18:55 GMT)

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