AG Madigan asks feds to probe Exelon-Constellation power merger
Illinois Attorney General Lisa Madigan asked the U.S. Federal Energy Regulatory Commission to examine how Exelon Corp.'s $7.98 billion takeover of Constellation Energy Group Inc. might affect the state's power markets.
Madigan asked the agency to reject an agreement between Exelon and the PJM Interconnection LLC, the largest U.S. power market overseeing electricity flow across a region that covers all or parts of 13 states and the District of Columbia.
In a filing late yesterday, Madigan called on the federal energy commission, which regulates transmission and the wholesale electricity market, to order hearings into the merger's impact on Northern Illinois, Chicago-based Exelon's home territory.
The deal also has drawn fire in Maryland, where attorneys for the state have been grilling executives of Exelon and Baltimore-based Constellation in hearings before public regulators this week.
While the company is still reviewing Madigan's filing, “we firmly believe that we have satisfied the commission's market- concentration tests and fully mitigated any market-power concerns,” Exelon spokesman Paul Elsberg said in a telephone interview yesterday.
Madigan is among the first to question whether the merger might impair competition in Illinois, where Constellation sells electricity to consumers on the retail market but doesn't own power plants.
‘Not Surprising'
“Given the adversarial role that the attorney general has traditionally played in Illinois with respect to utilities, it's not surprising to see her office take a position” on the merger, said Paul Patterson, a New York City-based analyst with Glenrock Associates, in a telephone interview yesterday.
Exelon proposed divesting three Baltimore-area plants, which have a combined capacity of 2,648 megawatts, when the merger was announced on April 28. It agreed last month not to sell the plants to companies that already own some generation in the PJM market to avoid giving them more clout in the nation's largest wholesale power market.
Constellation “is one of the few major suppliers” to Illinois Power Agency, a state agency responsible for purchasing power for customers who don't have access to the retail electricity market in Illinois, Madigan said.
By taking Constellation out of the market, Madigan contends the merger will have repercussions for Illinois that deserve closer study, although the state has no formal oversight of the merger.
Madigan described northern Illinois, where power generation is dominated by Exelon's nuclear plants, as “a market with few existing competitive constraints.”
Exelon aims to wrap up regulatory approvals of the merger and close the deal during the first quarter of 2012, chief executive John Rowe told analysts during the company's third- quarter earnings call, Oct. 28.