Friday, December 16, 2011

Maryland Governor Offers Deal on Exelon-Constellation Merger

Martin O'Malley
Maryland Governor Martin O’Malley has offered his blessing to the merger of Exelon and Constellation Energy in exchange for commitments for funding of a new gas power plant, a potential doubling of the state’s output of solar energy and seed money to begin developing offshore wind power.  This sounds a bit too good to be true.  But O’Malley believes his deal to support the takeover of Maryland’s largest utility would net the state $1 billion in investment and potentially 6,000 saved or created jobs.
Chicago-based Exelon, which runs utility Commonwealth Edison, would receive final approval next month from state regulators for its proposed $7.9 billion takeover of Constellation Energy and subsidiary Baltimore Gas & Electric.

Under the deal, Maryland’s PSC will retain authority to spin off BGE, mostly in the event of catastrophes, such as a nuclear accident at Constellation-owned Calvert Cliffs or an Exelon bankruptcy,
but also in the event of repeated violationsof state orders. The deal calls for Exelon to build 120 megawatts of naturalgas generation and 125 megawatts of renewable energy generation.  If the latter is done with landbased windmills, the state’s onshore generation of wind power energy would double.

The arrangement also requires 30 megawatts of new solar generation, which would nearly double Maryland’s output. The solar facility is expected to be built near Baltimore, and the power plant will be required to be built east of Frederick, near the state’s greatest area of energy demand. Half of the power must be online by the end of 2015, and the other half within 10 years.  This is wildly optimistic.

Without the deal, Maryland lacked incentives to make significant progress toward its goal of
producing 20 percent of its energy from renewable sources within 10 years. But even with the help, the state will require a major infusion of renewable power from offshore wind or some other means to meet that mark.

Exelon also has promised to provide $30 million for an offshore wind development fund. (Wash Post, 12/16/2011)

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