Philadelphia Inquirer

Exelon's $12 Billion Deal For PSEG Is Opposed By Consumer Groups

The Philadelphia Inquirer — Tuesday, March 29, 2005

By Suzette Parmley
Inquirer Staff Writer

TRENTON — The proposed $12 billion acquisition of Public Service Enterprise Group Inc. by Exelon Corp. has prompted opposition from a coalition of consumer groups from New Jersey, Pennsylvania and Illinois, where the companies operate.

The groups filed a motion for intervention and request for a hearing with the U.S. Federal Energy Regulatory Commission yesterday, saying the pending transaction to create the nation's largest energy company was anticompetitive. Opponents say the deal would leave the nearly two million Public Service Electric & Gas consumers and 1.4 million Exelon users in the region vulnerable to rate hikes and less reliable service.

"The intent is to stop the merger because we don't think the merger is going to provide any benefits to consumers," said Tyson Slocum of Public Citizen, a consumer-rights organization based in Washington that is one of the groups involved in filing the motion.

PSEG is New Jersey's last major energy company based in the state. If the acquisition is approved, Chicago-based Exelon will control all four of New Jersey's nuclear power plants and several other generating plants.

The consumer groups contend that the state Board of Public Utility's authority will be usurped by a utility company in Illinois.

"New Jersey shouldn't have out-of-state CEOs and shareholders making decisions about when and how our lights go on," said Suzanne Leta, energy associate with New Jersey Public Interest Group, a nonprofit advocacy organization with 25,000 members in the state.

Jennifer Medley, a spokeswoman for Exelon, said the merger would not change the BPU's role.

The New Jersey BPU, the Pennsylvania Public Utility Commission and FERC are to decide on the merits of Exelon's buyout proposal. The deadline for the public to submit comments to FERC is April 13. The consumer groups are urging all three agencies to reject it.

Consumer activists say the merger will concentrate market power, allowing the bigger company to charge higher wholesale prices, which will translate into higher retail rates for consumers.

"The merger will result with Exelon controlling too many power plants, making it easier for them to price out consumers," Slocum said.

Medley, the Exelon spokeswoman, said: "Over time, the savings that result with the merger will offset our ongoing rise in costs that we incur and the investments we make to provide service."

PSEG spokesman Paul Rosengren added: "If Exelon is able to get our nuclear plants running at the same capacity as their own nuclear fleet, it would bring significant energy to the market and put downward pressure on wholesale prices."

The consumer groups also took issue with what they say were private meetings between the FERC commissioners and executives with Exelon and PSEG on Jan. 13.

"Those meetings were in violation of federal law," Slocum said. "Federal law is very clear that if you are public company about to file something before FERC, you can't meet in private with commissioners."

Rosengren said the groups "have their facts wrong."

"It's a standard FERC practice, not just to permit, but to encourage potential merger groups to meet with them," he said. "There are strict rules after the filing about the kind of contact that you can and can't have, and we followed those rules."

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