Bloomberg.com

PSEG Deal Would Be Bad For Consumers, Watchdog Groups Say

Bloomberg.com — Saturday, March 26, 2005

By JIM POLSON
BLOOMBERG NEWS

Exelon Corp.'s proposed $12.8 billion purchase of Public Service Enterprise Group Inc., owner of New Jersey's largest utility, would give the company too much control of the region's power market, consumer groups said.

New Jersey Public Interest Research Group, New Jersey Citizen Action and Public Citizen plan filings with state and federal utility regulators on March 28 that oppose the combination. They contend that Chicago-based Exelon would own enough power plants to inhibit competition and drive up prices, NJPIRG spokeswoman Suzanne Leta said this week.

Exelon, owner of Philadelphia's utility, has offered to sell coal-, gas- and oil-fired plants that can generate 2,900 megawatts of power and place 2,600 megawatts of nuclear generation under long-term contracts. The offer is meant to satisfy Federal Energy Regulatory Commission restrictions on how much generation a single company owns in one region.

That's "wholly inadequate," Leta said. "The federal standards are not stringent enough, and they don't look at Exelon's power marketing business, which adds to their influence."

Exelon needs FERC approval to complete the purchase. The New Jersey utilities and Exelon's Philadelphia unit are both in the eastern section of PJM Interconnection LLC. PJM as a whole stretches from Delaware to Chicago and is the country's biggest power market.

The consumer groups plan to present their challenges to the acquisition on Monday at an 11 a.m. press conference in Trenton.

Exelon rivals including FirstEnergy Corp., owner of New Jersey's No. 2 utility, Consolidated Edison Inc., owner of New York City's utility, and the power-marketing unit of Dynegy Inc. have also asked to intervene in the federal proceeding. None have yet raised objections.

New Jersey's residential power costs are set in annual auctions in which suppliers bid to provide the electricity that utilities expect to need.

Any increase in wholesale prices will trickle down to customers, Leta said.

The consumer groups will petition the New Jersey Board of Public Utilities to reject the purchase on grounds that it will cost consumers money, she said.

The combined company, to be called Exelon Electric & Gas Corp., would sell power to 7 million homes and businesses and natural gas to 2 million in New Jersey, Illinois, and Pennsylvania.

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