Maryland governor says he can't support US$7.9B Constellation-Exelon deal because it fails to show merger will benefit public interest, customers and not cause harm to state
December 9, 2011
– Maryland’s governor said he can’t support the proposed $7.9 billion takeover of Baltimore’s Constellation Energy by Chicago’s Exelon Corp. that is being considered by his state’s utility board.
Gov. Martin O’Malley wrote in a letter to The Baltimore Sun that Exelon has yet to offer a proposal showing the deal will benefit the public interest, customers of Constellation’s Baltimore Gas and Electric utility and not cause harm to the state. All three are required under state law.
Maryland stands to lose 600 jobs following the merger, while Constellation executives will make millions from a deal that will also move control of the company out of state, O’Malley added.
“Even with the best of intentions, executives out of state may not understand our challenges or even care about our state’s larger energy goals,” O’Malley wrote.
The companies said in filings with state regulators this week that they were increasing incentives in the deal, including rate credits for BGE customers and pledges to produce more renewable energy.
O’Malley, meanwhile, said that because Exelon has yet to offer a proposal that meets the three thresholds required by state law, his administration “cannot support the merger at this time.”
The governor also proposed the Maryland Public Service Commission require Exelon to increase contributions energy efficiency and protecting lower-income residents, ensure the combined company won’t drain revenues from BGE at the expense of reliable energy for state residents, and make a more substantial commitment to renewable energy.
The incentives detailed in the latest filings by the two companies now total more than $515 million, up from the initial $250 million package. In the latest filings, the two companies said they planned to build 55 megawatts of wind or solar energy in the state, up from an initial promise to build 25 megawatts of green energy generating capacity. The companies also committed to another 120 megawatts of new generation, mainly from new natural gas plants.
The Public Service Commission has authority over the deal because it regulates BGE, which serves more than a million customers in central Maryland. Federal regulators are also reviewing the proposed merger.
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