In the press release announcing its planned $7.9 billion acquisition of Baltimore, Maryland-based Constellation Energy, Chicago-based Exelon promised to spend $64 million over several years to spur energy efficiency, electric vehicle and renewable energy initiatives in Maryland.
When pressed for details this week about one of the largest U.S. utility mergers ever, however, company spokesman Paul Elsberg would only state in an email to TheEnergyFix that “Exelon is excited about these programs and intends to work collaboratively with interested local parties to determine what shape the programs will take. That said, it is too early in the process to discuss the plans in any detail.” Elsberg said Exelon is “evaluating sites” for renewable energy projects but would not elaborate.
For some interested parties, $64 million — less than 1% of the estimated value of the deal – over an undefined time span is nowhere near enough to justify earning regulatory approval in Maryland given the profits to be made using their combined operation and footprints (at right) and the very strong desire by executives of both companies to top off their careers with significant payoffs and other benefits.
With Maryland’s economy — and many other states — facing a second-dip of a now almost assured double-dip recession in the U.S., there are a few investments by Exelon-Constellation Energy that would:
a) make this transaction truly in the public interest;
b) benefit the state’s fledgling green economy with more jobs;
c) provide more resources to restore the Chesapeake Bay; and
d) empower Marylanders to save money on their energy bills, not just provide ratepayers of Constellation’s Baltimore Gas & Electric (BGE) utility with a one-time payoff of $100.
Here are just a three examples of what more can and should be done as conditions to the merger’s approval by the Maryland Public Service Commission. Each would help achieve the four benefits outlined above. Comments are welcome as to what more could be done to make this a win-win for all parties involved, including the companies.
1. Dedicate $5 million each for the next 10 years to the Maryland Clean Energy Center to achieve its mission and coordinate additional state and federal clean energy programs that are not best administered by the Maryland Energy Administration along with the associated funds. The Maryland Clean Energy Center, which holds its second Maryland Clean Energy Summit Aug. 25-27 in North Bethesda, MD, was charged in January 2009 with the “mission of transforming the energy economy in the State of Maryland by dramatically increasing clean energy jobs, technical innovations, entrepreneurial business and consumer adoption of products and services.”
Despite efforts in the 2011 General Assembly, efforts to secure sustainable funding fell short. (Disclosure: TheEnergyFix.com founder Jim Pierobon served as the Center’s Director of Communications from October 2010 to June 2011.)
2. Agree with supporters of Maryland’s promising offshore wind potential to major elements of a power purchase agreement (PPA). Such an agreement would effectively commit Exelon / Baltimore Gas & Electric (Constellation’s regulated utility) to purchasing a significant amount of electricity from the wind turbines proven to be viable offshore Ocean City, MD. With a PPA in hand, developers can then raise the money to build a large wind ‘farm’ and Maryland would stand a reasonable chance of attracting the manufacturing and / or assembly facilities located close to Ocean City.
3. Replenish funds from Maryland’s share of proceeds from allowance auctions by the Regional Greenhouse Gas Initiative (RRGI). Maryland and other states have drawn on those proceeds to fund other programs including those that help pay utility bills for low-income ratepayers. Restoring those monies for their the purposes spelled out in Maryland’s 2009 Greenhouse Gas Reduction Act would breathe new life into waning state solar and other renewable energy grant programs. (Disclosure: Pierobon previously served in senior marketing capacities at Rockville, MD-based Standard Solar.)
With each passing week, opposition is materializing that present increasingly taller hurdles to the merger’s approval. The Maryland Office of People’s Counsel and the Pennsylvania Office of Consumer Advocate have filed a joint protest in the merger case at the U.S. Federal Energy Regulatory Commission (FERC) challenging the companies’ market power analysis and resolution as “insufficient.” Both agencies have opined that the merger would have “unacceptable impacts on competition” in their states.
This week, an organization calling itself Good Jobs Better Baltimore opposed the merger on grounds that the companies can do a LOT more to make it truly in the public interest and met with Constellation CEO Mayo Shattuck. While some of their ‘asks’ are unrealistic (e.g. re-regulating the state’s electric power industry), some can be packaged as initiatives that could garner significant public support or ward off opposition, including $50 million on the EmPOWER Maryland program, not the $4 million Exelon and Constellation proposed.
Still to be heard from are Maryland’s potential influential environmental interest groups. The Chesapeake Climate Action Network, Environmental Integrity Project, Environment Maryland, Maryland League of Conservation Voters and The Sierra Club’s Maryland Chapter have not said publicly what they want in an detail.
Of all the regulatory approvals needed, gaining permission from the MD PSC is expected to be the deal’s toughest hurdle. Maryland regulators thwarted an earlier proposed sale of Constellation to FPL Group. A second previous bid for Constellation, led by investor Warren Buffet — actually to bail out the company — fell apart. All the more reason Constellation executives don’t want to strike out on bid number three. It may be their last chance before restless shareholders put someone else in charge.
The stage is set for backroom negotiations and perhaps some public fireworks to begin this fall including these formal hearings:
- Monday, Oct. 31: evidenciary hearing at the MD PSC in Baltimore:
- Tuesday, Nov. 29; Thursday, Dec. 1; and Monday, Dec. 5: public hearings at locations to be determined.