Exelon Shouldn't Force New Jersey On Merger

CourierPostOnline — Wednesday, August 2, 2006

If the state Board of Public Utilities believes the sale of PSEG isn't in the public's interest, it must not sign off on the sale.

The New Jersey Board of Public Utilities should not let itself be forced into rubber-stamping the merger between electricity giants Exelon and New Jersey-based PSEG.

If this deal is going to be bad for New Jerseyans who get their electricity from PSEG, as well as those who do not, and there's evidence that it will be, the BPU shouldn't approve the merger.

Monday, Exelon's chairman offered an ultimatum, saying the state utilities board can take Exelon's offer for PSEG within about a week or leave it. The BPU should leave it.

By its own guidelines, the BPU can only approve such mergers if they have a positive impact on the state and its electricity users. That positive impact can be measured in four areas: competition, rates, reliability and jobs.

There's no question this merger would reduce competition by creating a huge company that controls a greater amount of the power plants in the mid-Atlantic region, giving Exelon the potential to act like a monopoly.

State Public Advocate Ronald K. Chen cited that in his appeal to the BPU to reject the merger.

Job loss

Also, about 950 workers would lose their jobs in the merger from Exelon closing PSEG's Newark headquarters and moving those operations to Chicago.

So on those two fronts, there's little question this deal isn't in the state's interest.

Then there's the question of electricity rates and reliability.

Exelon sweetened its nearly two-year-old offer to buy PSEG Monday.

Instead of setting aside $120 million for consumer rate reductions, economic development or infrastructure improvements, Exelon now says it will offer $600 million. Exelon also made some rather vague offers to freeze PSEG's request for a rate increase on electricity and settle a PSEG request for a hike on gas rates, but gave no indication of how long the freeze would last or how it would settle the gas rate hike.

Not enough

But, frankly, these extra incentives could be little more than a drop in the bucket compared to the impact this deal could have on New Jersey businesses and residents and their electricity bills.

The BPU's staff has estimated this takeover could cost New Jersey electricity ratepayers about $2.3 billion each year – about $45 more, per month, on people's electric bills.

Such an increase would be catastrophic for tens of thousands of lower-income and retired New Jerseyans on fixed incomes. And even for those who can afford it, paying $45 more each month for electricity certainly isn't in their best interest.

Because of this potential hike, the coalition opposing this merger is wide-ranging and includes many businesses worried that a steep increase in electricity could harm their business and put more New Jerseyans at risk of losing their jobs. The New Jersey Large Energy Users Coalition – which includes big employers such as Bristol-Myers Squibb, the Pathmark supermarkets, Schering-Plough Corp. and 19 other companies – opposes the merger.

Also opposing the sale of PSEG is the New Jersey Public Interest Research Group; the Chemistry Council of New Jersey, which also represents business interests; the New Jersey Tenants Organization and the Sierra Club.

And as for the reliability (how often there are power outages and how long do they last), according to the nonprofit New Jersey Citizen Action, Exelon's subsidaries in Illinois and Pennsylvania have poor customer satisfaction ratings. PSEG, on the other hand, has the best reliability of any power company in New Jersey, according to a New Jersey Citizen Action report.

Exelon officials may be desperate for this merger to happen. But, frankly, the BPU shouldn't feel pressured to OK the sale of PSEG if it doesn't believe New Jerseyans will benefit. And, as it stands, there's far too much evidence suggesting New Jerseyans won't benefit to approve this deal.

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