Utility Holding Company Mergers: Are There Risks to Ratepayers?

Exelon, a holding company owning Commonwealth Edison (Illinois), Philadelphia Electric (Pennsylvania), and a host of non-utility affiliates, has proposed to acquire Constellation Energy Group, Inc., a holding company that owns Baltimore Gas & Electric and many other non-utility businesses.

I have filed testimony about the transaction, on behalf of the State of Maryland and the Maryland Energy Administration. Here's an excerpt:

"The aim of corporate structure regulation is to encourage transactions that serve the public interest and discourage transactions that do not. The public interest requires having a regulated utility in Maryland that is (a) healthy; (b) undistracted by activities unrelated to its obligation to serve; and that (c) plans, operates, and interacts with regulators and stakeholders independently of business objectives that could divert resources from that obligation."

"The proposed transaction between Exelon and Constellation moves in the other direction. It changes BGE's corporate family in ways that increase the probability of harming both BGE's ability to carry out its public service obligations independently of holding company priorities, and the Commission's ability to align BGE's interests with those obligations."