CourierPostOnline

Watchdogs Try To Block Merger

They Oppose PSEG's Deal With Exelon

CourierPostOnline — Tuesday, March 29, 2005

By EILEEN STILWELL
Courier-Post
Staff

A coalition of state and national consumer advocacy groups united Monday to oppose the pending merger of Exelon Corp. and New Jersey's Public Service Enterprise Group Inc., which would create the nation's largest utility.

If the deal wins approval from the New Jersey Board of Public Utilities and the Federal Energy Regulatory Commission, the new entity, Exelon Electric & Gas, would serve about 9 million customers in New Jersey, Pennsylvania and Illinois. The merger also would establish Exelon as the largest U.S. producer of nuclear energy by consolidating PSEG's three nuclear reactors with Exelon's 17. Once the deal is completed, New Jersey is expected to lose about 900 jobs when headquarters shift from Newark to Chicago.

The advocacy groups, which claim to represent about 240,000 individuals and organizations, want the state utilities board to approve the merger only if it can establish a "positive benefit" for ratepayers.

"New Jersey ratepayers should not be up for sale to the highest bidder. We're counting on the New Jersey Board of Public Utilities to reject this buyout request if no consumer benefits can be demonstrated," said Suzanne Leta, energy associate for New Jersey Public Interest Research Group.

Leta said she does not expect the merger to meet the standard because according to her group's analysis, it will diminish competition, raise rates to cover the high cost of acquisition and dismantle New Jersey's regulatory power over PSEG's 3.6 million customers.

"Ratepayers beware," said Ev Liebman of NJ Citizen Action, the state's largest consumer watchdog organization.

"The proposed buyout of PSEG by Exelon is the latest and largest of a frenzy of mergers and acquisitions that have blanketed the industry," Liebman said. "Yet the outcome, both in New Jersey and other states, has resulted in meager and/or short-term cost savings for ratepayers."

The New Jersey Board of Public Utilities will conduct as many public hearings as necessary before making its decision, said Eric Hartsfield, board spokesman.

"We welcome the input, perspective and comments of all interested and concerned groups," said board President Jeanne Fox in a written statement released Monday.

"While the Board is required by law to examine the impact of the proposed merger on rates, competition, PSEG employees and system reliability, it may go above and beyond these factors if it deems such an analysis is appropriate and in the best interests of New Jersey ratepayers," she added.

The consumer groups filed a motion Monday with Administrative Law Judge Richard Magill in Newark seeking permission to intervene with the state utilities board before it decides the fate of the merger. Those groups and Public Citizen, a consumer rights organization based in Washington, D.C., also filed a motion to intervene with the Federal Energy Regulatory Commission, which also must approve the merger.

Tyson Slocum, research director for Public Citizen's energy program, accused the Federal Energy Regulatory Commission of "meeting secretly" with principals from both energy companies and violating federal law.

The Jan. 13 meeting in question was standard practice to encourage "potential merger partners to come in to make sure their application is complete," said Paul Rosengren, PSEG spokesman.

"Everything is legal. The rules are clear," he said.

The state Board of Public Utilities would still have oversight over PSEG's regulated gas and electric utility after the merger, said Rosengren.

PSEG expects the merger to be complete in the first quarter of next year.

"We think the impact on consumers will be positive. By sharing the companies' best practices, it will bring more energy to market and lower costs over time," said Rosengren.

Jennifer Medley, spokeswoman for Exelon, was unavailable for comment.

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