Mar

23

 This is a nit in the world of markets, but today might represent a continuation of an interesting trend. In short, the market and DC's utility regulator see the same world differently.

Twice before, DC regulators spurned EXC's attempt to gobble up POM. Twice before, the market guessed wrong. Moments before DC's regulators announced their decision, equity markets projected an approval.

The markets were right. The regulators were wrong. Moments after DC's announcement, POM crashed. Consumers were denied the benefits of a stable utility.

Today, DC regulators plan to announce their new decision. For the first time, the market is pricing POM with an ~ 80 percent probability that DC regulators will reject EXC's proposal.

This is supposedly EXC's last attempt. If DC's regulators reject EXC's third offer, EXC will either appeal to the federal courts or take their toys and go home.

Are the markets right? Are regulators foolish? Will POM jump?

I don't have answers except to point out the obvious: At midday there will be volatility around EXC and POM.

If DC rejects the merger again, POM is a dead company. No utility will attempt to acquire them. Their regulators will prevent growth. Shareholders could lose dividends. Consumers could lose reliability.

Enjoy the entertainment. Enjoy the day. DC's cherry blossoms are out in full bloom


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