Md. PSC Head Asks Exelon Exec. About Company's Past
BALTIMORE (AP) -- Maryland's top utility regulator questioned Exelon's president Wednesday about the company's past, asking if it would be good corporate citizen if a proposed $7.9 billion takeover of Constellation Energy is approved.
Maryland Public Service Commission Chairman Douglas Nazarian first asked Exelon President and Chief Operating Officer Christopher Crane about Exelon's 2007 funding of a group called Citizens Organized for Reliable Energy, which lobbied for higher electricity prices while the company was seeking higher rates during deregulation.
"Is that consistent with being a good neighbor?" Nazarian asked.
"I think it was not done transparently, I don't know the details," Crane responded, adding he was not a member of senior Exelon management at the time but remembered it being a trying time for the company's ComEd utility.
Nazarian then asked about an $800 million settlement on allegations the company manipulated the wholesale market.
Crane said the settlement was debated greatly among Exelon senior management between those who thought it was too much and those who wanted to settle and put the issue behind the company as it restructured.
"It was not because we had done something illegal in the markets," Crane said. "It was `How do we get through the restructuring?""
The PSC chairman noted Exelon's current CEO was in the post at the time, but Crane said much of the company's board had changed since then.
Turning his attention to Constellation CEO Mayo Shattuck, Nazarian asked what would happen if the commission rules against the deal.
Shattuck said Constellation's regulated utility, Baltimore Gas and Electric, would be fine because of corporate safeguards instituted to protect it from risks incurred by Constellation's unregulated units, which generate and trade power. However, Shattuck, who testified earlier that the deal had the potential to turn Baltimore into a national energy center, said rejection of the deal would have severe repercussions for Constellation, and could affect employment, noting the business had grown from nothing to $10 billion.
"Instead of being a growth company, perhaps we're not a growth company," Shattuck said, adding later that Constellation needed balance sheet support from a company like Exelon to continue growing.
Crane and Shattuck ended three long days of testimony in a crowded hearing room with Nazarian's questioning. They were the first of what are expected to be dozens of witnesses over 11 days to help commissioners decide whether the proposed sale is in the public interest. Gov. Martin O'Malley's administration has said it opposes the deal unless changes are made, because it would pose a risk for BGE customers. The state is also seeking a significantly higher renewable-energy commitment from the two companies.
The deal includes a $100 credit for each BGE residential customer, a promise to build 25 megawatts of renewable energy in the state and a new Constellation headquarters in Baltimore.
Earlier, Crane and Shattuck were questioned for several hours by attorney William Fields of the Office of the People's Counsel, which represents consumers before the commission.
Fields asked about estimates the merger would lead to about 600 redundant positions, and the executives said the two companies are working to ease the impact in Maryland. Crane noted that 200 positions are being moved from Pennsylvania to Maryland under the proposed merger. Some of those positions are currently vacant and others may be eliminated through early retirement, Crane said.
Crane responded sharply at one point to questioning by Fields about whether the building of the Baltimore headquarters would provide any benefit to the company.
"We don't need to build that building, we can have those 1,000 jobs in Kennett Square, Pa.," Crane responded.
The Exelon executive said the headquarters is bringing investment and keeping jobs in Maryland at the expense of the company. Crane said Exelon was emptying leased space at its nuclear headquarters in Chicago and probably would not be able to sublet the space because of security concerns.
Shattuck said there was no doubt there are redundancies in the two companies.
"What is not as clear is who's the best" at each position, the Constellation executive said, adding the objective was to be jobs-neutral.
Crane said the combined company would first look at who wants to retire "and then pick the best remaining people." "But we're still designing and working that whole thing out," Crane added.
(Copyright 2011 by The Associated Press. All Rights Reserved.)
