Maryland regulator OKs Exelon-Constellation merger

20 February 2012

The proposed merger of US utilities Exelon and Constellation Energy moved one step closer with the transaction being approved by the Maryland Public Service Commission (PSC). However, the Maryland regulator said that a number of conditions must be met.

The Commission's approval lists 40 conditions, including requirements that the new company create a $113.5 million Customer Investment Fund to invest in energy efficiency and low-income energy assistance and provide a $100 rate credit to residential customers of Baltimore Gas & Electric (BGE) within 90 days. The conditions also include enhanced ratepayer protections, such as the strengthening of certain aspects of BGE's existing ring-fencing conditions and safeguards against the new company's ability to increase wholesale electricity prices by exerting market power.

The Maryland PSC noted "the enormous size of the merger and the significant benefits and responsibilities Exelon will receive as a result." The Commission said that the utilities had ten days to notify it in writing "if they reject the terms set forth and decide not to move forward with the merger."

Exelon and Constellation said that the PSC's order adds new conditions, but retains many of the terms of the settlement reached in December by the companies, the State of Maryland, the Maryland Energy Administration, the City of Baltimore and the Baltimore Building and Construction Trade Council. Current Exelon president and COO Chris Crane commented: "We are pleased that the Maryland PSC has approved our merger with Constellation, and we accept the additional conditions that the Commission has imposed." Crane will become president and CEO of Exelon upon closing the merger.

Exelon and Constellation Energy announced plans for a $7.9 billion merger in April 2011. Under the name Exelon, the resulting firm will be America's largest generator of nuclear power by an even greater margin. The proposed merger has been approved by shareholders of both Exelon and Constellation. Required regulatory approvals or reviews have been completed by the New York Public Service Commission, the Public Utility Commission of Texas, and the Department of Justice. Last week the Nuclear Regulatory Commission gave its approval for the merger, including the transfer of the operating licences for five nuclear power plants and two used fuel storage facilities from Constellation to Exelon.

However, the merger still requires regulatory approval by the Federal Energy Regulatory Commission (FERC). The two companies filed a request for FERC approval in May 2011 in which they said they would divest three of Constellation's non-nuclear power plants totalling 2648 MWe.

Researched and written
by World Nuclear News