Exelon Corp. (NYSE: EXC), already the largest utility in the United States, had its $6.8 billion offer for Pepco Holdings Inc. (NYSE: POM) rejected Tuesday morning by the Washington, D.C., Public Service Commission. The Federal Energy Regulatory Commission (FERC) and regulators in Delaware, Maryland, New Jersey and Virginia had already given the deal a green light.

The District of Columbia is home-base for Pepco, and its regulators were the last ones from whom approval was required before the deal was done. The merger was first announced in April of 2014.

In a statement today, Exelon said:

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. We will review our options with respect to this decision and will respond once that process is complete.

Exelon’s utilities deliver electricity and natural gas to more than 7.8 million customers in central Maryland, northern Illinois and southeastern Pennsylvania. Pepco is one of the largest energy delivery companies in the Mid-Atlantic region, serving about 2 million customers in Delaware, the District of Columbia, Maryland and New Jersey.

This ruling can be appealed, and the companies have 30 days to request a reconsideration.

Exelon’s stock dropped 3.3% on the news, to $31.75, in a 52-week range of $30.63 to $38.93.

Pepco’s shares traded down about 15% to $22.95, after dipping to a new 52-week low of $21.61. The stock’s 52-week high is $27.65.

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