A proposed merger between Pepco and Exelon was blocked Tuesday by regulators in D.C.
The three-member D.C. Public Service Commission voted unanimously to reject the merger, which had already been approved by several surrounding states.
Commission Chair Betty Ann Kane said the companies did not meet their burden of showing that the proposed merger would benefit the public.
Pepco and Exelon have 30 days to appear.
In April 2014, Chicago-based Exelon Corporation announced that it planned to buy Pepco Holdings Inc. for $6.83 billion to create a large electric and gas utility in the Mid-Atlantic region. The utility would have served about 10 million customers.
The deal would have combined Exelon Corp.'s top three electric and gas utilities -- BGE in the Baltimore area, ComEd in Chicago, and PECO in Philadelphia -- with Pepco's Atlantic City Electric, Delmarva Power, and Pepco in D.C and Maryland.
Pepco stock dropped nearly 17 percent in the wake of the announcement, MarketWatch.com reported.
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Pepco and Exelon released a joint statement Tuesday, which says in part: "We are disappointed with the Commission's decision and believe it fails to recognize the benefits of the merger to the District of Columbia and its residents and businesses. We continue to believe our proposal is in the public interest and provides direct immediate and long-term benefits to customers, enhances reliability and preserves our role as a community partner."
The companies said they are reviewing their options.
Greater Washington Board of Trade Chairman Anthony T. Pierce called the decision a missed opportunity and noted, regarding concerns about electric rates, the commission has the authority approve them. Board of Trade President and CEO James C. Dinegar said the decision blocks access to resources during outages as well as improved reliability and innovation.
In a statement Tuesday, the Chesapeake Climate Action Network -- a group that campaigned against the merger in Maryland -- called the ruling a "major victory."
"In the end, all of Exelon's money, lawyers and lobbyists couldn't mask the overwhelming facts, confirmed today by the D.C. PSC, that this deal would be a boon for Exelon and Pepco shareholders and bad for virtually everyone else," said Mike Tidwell, director of the organization, in the statement.
In April 2014, Exelon President and CEO Chris Crane told media outlets that the deal made "enormous sense."
"Exelon and Pepco Holdings have a compelling strategic rationale for merging, given our geographic proximity and similar utility business models," Crane said in a release.
Pepco Holdings Chairman, President and CEO Joseph Rigby said in 2014 that being part of Exelon would be helpful to Pepco Holdings utilities and their customers during major storms.
Pepco previously came under fire for power outages in the wake of 2012's violent derecho storm in the D.C. area, which left thousands of customers sweltering for days during the intense heat wave that followed.
Since then, Pepco focused on infrastructure upgrades and tree trimming, and the company has said it's greatly improved customer satisfaction and reduced outages.
"We're proud of these achievements, and they did not go unnoticed," Rigby said in April 2014. He said Exelon was "better scaled" to invest in infrastructure and communities.
But dozens of demonstrators gathered in Baltimore in February to protest the proposed merger, which would have created a single dominant energy provider in the Mid-Atlantic region.
"The proposed merger is directly counter to the competitive marketplace and is bad for consumers, because it could reduce reliability, raise rates and risk public safety," said Emily Scarr of the Maryland Public Interest Research Group.
