Philadelphia Inquirer

Exelon/PSEG Merger — Too Little For Consumers

The Philadelphia Inquirer — Thursday, June 16, 2005

Editorial

Energy giant Exelon Corp. recently offered to sell off another 2.1 percent of its generating power so as to come in under weight for its merger with New Jersey's major utility. All told, the utility firm would whittle nearly 13 percent of its generating capacity to address competition concerns.

But the proposed marriage of Exelon, parent of Peco Energy Co., and New Jersey's Public Service Enterprise Group Inc., which serves two million Public Service Electric & Gas customers, still looks to spawn the proverbial 900-pound elephant.

The combined utility could retain such a firm grip on the regional electricity market that it could drive prices, and big-foot its competitors. At least, that's the strongly held view of consumer advocates on both sides of the Delaware pushing for a greater federal role in the proposed merger.

Exelon hasn't moved the needle much since its December announcement of plans to create the nation's largest utility. For consumers, the deal holds out only the vague promise of a stronger company - yet no tangible benefits. No rate cuts, no improved assistance programs for low-income customers, no firm pledges on retaining jobs in the Philadelphia region or North Jersey.

That's not to discount the value of bringing Exelon's expertise to operating PSE&G nuclear plants – facilities like the Hope Creek reactor, shut down twice in the last week over a steam-line leak. An Exelon partnership should enhance safety and efficiency there.

Consumers need to see substantial benefits that will reduce their utility costs. Unless the current outlook changes, utility regulators at both the state and federal level have a clear choice: Order that the merger do more – much more – for consumers, or reject it.

Regulators in both Harrisburg and at the Board of Public Utilities in Newark have launched months-long reviews of the proposed merger. At the Federal Energy Regulatory Commission, though, it's less clear that Washington intends to take a hands-on approach.

Calls for a full-blown FERC hearing on the merger make perfect sense, inasmuch as the combined utility would be so huge. Exelon opposes a FERC hearing. Indeed, its latest offer to spin off more generating power is contingent on there being no hearing. While FERC usually reviews mergers without a hearing, relying instead on written submissions, this merger merits a closer look.

Whatever federal regulators decide, the most important aspect of the Pennsylvania Public Utility Commission's review could be its directive that the utilities try to reach terms with consumer and other advocates opposing the merger. Those private talks should be the forum for more candor by the utilities on how much of the wealth they're willing to share with customers.

Don't tell consumers this merger will give them a warm glow. Tell them how much they're going to save on their electric and gas bills.

Public hearings will be held June 30, 2005: 10 a.m. in the Philadelphia Senior Center, 509 S. Broad St., and 3 p.m. at Community College of Philadelphia, 4725 Chestnut St.

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