The merger's green lining

The Maryland Public Service Commission's ongoing review of the proposed merger of Constellation Energy Group and Exelon Corp. has uncovered numerous pros and cons for the Baltimore-area consumer, from the loss of a corporate headquarters to the proposed one-time $100 credit on consumer bills. Much more testimony remains to be heard. But if there's one wrinkle to emerge from last week's hearings that demands a PSC response, it's this: Exelon appears interested in investing more in Maryland-based renewable power.

That interest in renewable energy was signaled by Exelon Chief Operating Officer Christopher M. Crane when he testified to the PSC that he initially wanted to commit to spending more on renewable energy in the company's $250 million "incentive" package than did Constellation CEO Mayo A. Shattuck. It was then stated more explicitly in a subsequent meeting with The Sun's editorial board. Both executives said they could envision committing to a facility that produces more than the 25 megawatts of green energy and/or spending more than the $50 million that they have already proposed.

That may seem like a minor point in the review of a $7.9 billion merger, but if the deal is approved by the PSC — as industry analysts have universally predicted it will be — the opportunity exists for greatly expanding Maryland's green energy horizons without necessarily causing Baltimore Gas and Electric customers to miss out on the modest credit on their bills.

Constellation has already demonstrated a willingness to invest in solar power with its decision to build a 16.1 megawatt solar power plant at Mount St. Mary's University in Emmitsburg that will be Maryland's largest. The project was made possible by the University System of Maryland's decision to commit to buying power from the plant for the next 20 years.

The merger may offer an opportunity to create a facility two or three times as large. (In his meeting with Sun editors and writers, Mr. Crane did not reject the idea of building 40 megawatts of renewable energy capacity.) When added to other renewable projects on the drawing board — including the 20-megawatt project Maryland Solar is seeking to build at a state prison complex near Hagerstown — that would help put the state much closer to its goal of achieving 20 percent renewable energy by 2022.

Those projects, incidentally, would also include a proposed 10-megawatt biomass facility that would extract energy from poultry manure. The PSC is currently looking for companies interested in developing such a plan; Exelon and Constellation are interested (and their top executives say that's in addition to whatever investment in renewable power they agree to as part of the merger).

That solar energy would pique the interest of Constellation and Exelon should not come as any great surprise — even to those who equate "solar" with "political scandal" in light of the congressional investigation of Solyndra LLC, the failed California-based solar panel maker that received a $535 million federal loan guarantee.

In reality, the cost of solar installations has become increasingly competitive, thanks not only to federal and state tax credits and subsidies but reduced manufacturing costs and improved technology developed in recent years. Mr. Crane said he expects that trend to continue. Maryland is ranked among the top 10 states for the tremendous growth in solar installations this year.

Why push Exelon for greater investment in renewables? First, because the opportunity is there — and not just because Maryland regulators are seen as the key hurdle for the merger. Exelon is clearly unwilling to be pushed too far on many other issues; Mr. Crane flatly called the spinoff of BGE proposed by two state senators last week a "deal breaker."

The other reason for Exelon to do this is that it's an opportunity to generate jobs at a time when Maryland's economy could use them. That means not just the jobs building or staffing renewable energy-producing facilities (although hundreds of construction jobs may be involved) but those created in the future as these investments help position the state as a leader in the field and attract even more capital investment.

That would go a long way toward offsetting any economic downside from job reductions at Constellation's corporate headquarters associated with the merger over the next two years. And it also would help the state meet its energy needs in 2018 — the year analysts believe the demand for electricity in Maryland will exceed supply.

Most critical of all, the investment would move Maryland away from the polluting, coal-fired plants that generate much of the electricity BGE consumers use today. That would yield cleaner air and a substantially smaller local contribution of greenhouse gases.

Should the merger be approved by the PSC? On that essential question, more needs to be heard. But if the deal is ultimately approved, it should be with the condition that the two companies invest substantially more than $50 million in renewable energy, a potential win all around: for BGE customers, Maryland's economy and for Exelon.

Copyright © 2014, Los Angeles Times
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