PSC should be skeptical of Constellation-Exelon merger

Mergers, Acquisitions and TakeoversRestructuring and RecapitalizationUnemployment and LayoffsJobs and WorkplaceLitigation and RegulationJob Layoffs

If you drove around many Baltimore neighborhoods during the recent heat wave, you saw the people out on their porches. It's not because we have no air conditioning. It's because we can't afford to turn it on.

All across Baltimore, crippling energy bills have become a fact of life. Over the last decade, Baltimore Gas & Electric (BGE) raised our electric rates 104 percent — the highest rate hike of any major utility in America.

I hope Maryland regulators keep that fact firmly in mind as they begin hearings Tuesday on the proposed merger between BGE's parent company, Constellation Energy, and the Exelon Corp. of Chicago.

Constellation executives have promised that the merger with out-of-state Exelon will be a good thing for Maryland. But back in 1999, when utility executives were pushing energy deregulation in our state, they also promised it would be good for us. Instead, after deregulation passed, we've seen Maryland saddled with some of the highest energy costs in the country.

We need to look more skeptically at the energy executives' promises this time around. There are major problems with this merger that Maryland's Public Service Commission (PSC) needs to fix:

•BGE customers are promised a one-time, $100 credit if the merger goes through, but that doesn't begin to make up for our highest-in-the-nation rate hikes. BGE ratepayers deserve real and permanent relief from the sky-high bills we've been paying.

•While this deal offers very little to consumers, it could prove incredibly lucrative for Constellation CEO Mayo A. Shattuck III, who could walk away from the merged company with a $20.5 million payout.

•When first announcing the merger, Constellation and Exelon promised to give $10 million annually to local charities over the next 10 years. But they cut that to just $7 million in their merger application with the PSC. If they're reneging on promises before the merger is even approved, what can we expect if they seal the deal?

•The companies have made a "no-layoff" pledge. But that no-layoff promise applies only to BGE, not Constellation, and only for two years. How do we know that thousands of good Baltimore jobs at Constellation won't be lost? And what will happen at BGE after that two-year window closes?

At the moment, Constellation executives are trying to alleviate concerns about the merger by noting that BGE rates have, for the first time in years, been easing a bit. But remember that back in 1999, deregulation was sold by putting a temporary cap on rates. Once that cap was lifted, rates jumped through the roof.

I fear the Constellation-Exelon merger is the latest in a long string of corporate deals that enrich top executives but leave Baltimore residents even worse off. Constellation is Baltimore's last Fortune 500 Company, and this merger would move the combined company's headquarters to Chicago. How can that be a good thing for our city?

Baltimore is already hurting. Twenty-one percent of city residents are unemployed or unable to find full-time work, the highest rate among big East Coast cities. How will we solve our unemployment crisis if thousands of good jobs are lost or shifted to Chicago?

Fortunately, Baltimore residents don't have to sit idly by and let this merger proceed. Despite deregulation, the PSC still has the power to block this merger — and we as citizens have the right to be part of the process. Good Jobs Better Baltimore, the community-labor coalition I belong to, has petitioned to be a party to the merger hearings. And we're advocating a different energy future for Baltimore.

Constellation and Exelon have made noises about creating new green-energy jobs. But we need a rock-solid commitment that those new jobs will be created in the immediate future. And that Constellation jobs won't be shipped off to Chicago in the meantime.

We believe Baltimore residents should be served by a locally controlled utility that provides affordable, reliable energy for customers — not by a distant corporation that generates windfall profits for executives. Baltimore deserves better than the deal that Constellation and Exelon are selling. We shouldn't be forced to flee from sweltering homes anymore.

Byron Beckford, a BGE customer who lives in Northwood is an activist with Good Jobs Better Baltimore, a coalition of community organizations, unions and religious groups. His email is byron.beckford@goodjobsbetterbaltimore.org.

Copyright © 2014, Los Angeles Times
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