www.baltimoresun.com/business/bs-bz-ceg-merger-good-jobs-proposal-20110809,0,750907.story

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Critic of Constellation deal wants $810 million in incentives

Good Jobs Better Baltimore to present proposal to Constellation

By Hanah Cho, The Baltimore Sun

7:30 AM EDT, August 9, 2011

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A critic of Constellation Energy Group's proposed merger with Chicago-based Exelon Corp. wants the two firms to provide $810 million in incentives to Maryland ratepayers and other stakeholders as part of the power companies' deal.

The proposal by Good Jobs Better Baltimore is more than three times the $250 million incentive package Constellation and Exelon have offered to convince Maryland lawmakers, ratepayers and regulators that the $7.9 billion deal is in the public's interest.

The coalition of unions, community organizers and advocacy groups is expected to present its proposal at a meeting Tuesday with Constellation CEO Mayo A. Shattuck III and other executives.

James L. Connaughton, Constellation's executive vice president of corporate affairs and public and environmental policy, said Monday that Shattuck welcomed the meeting.

"Our CEO reached out to meet with the group in order to personally hear their views and in return describe in greater detail the many benefits that our partnership with Exelon will bring to Maryland," he said.

Connaughton said the company was confident the regulatory review before the Maryland Public Service Commission would "demonstrate that the merger will be good for our customers, for jobs and for Baltimore."

But Good Jobs Better Baltimore, a party in the regulatory process, says the proposed marriage between Constellation and Exelon does not benefit ratepayers or the state.

"The merger will make some money for people, so why not let your customers also benefit?" said Alicia Champlin, an activist with the group who plans to attend the meeting.

Good Jobs Better Baltimore calculated an alternative package, which represents what it says are the costs BGE customers paid in excess of the average charges paid by customers of other major utilities nationwide in 2009, when rates peaked.

The main piece of Good Jobs Better Baltimore's proposal is a $500, one-time rate credit for 1.1 million residential customers of Baltimore Gas and Electric Co., Constellation's regulated utility.

Constellation and Exelon have proposed a $100 rate credit for BGE customers.

Good Jobs Better Baltimore is also asking for long-term rate relief in the form of partial re-regulation of the state's electricity market. The group said the details of how that would work would be left up to the Public Service Commission, the state's energy regulator.

The group's proposal also includes:

•Fifty million dollars for the state's Electric Universal Service Program to help low-income residents, compared with the companies' proposed $5 million.

•Fifty million dollars for Maryland's EmPower energy efficiency efforts. Constellation and Exelon have offered $4 million.

•Ten million dollars in annual charitable giving in the Baltimore region for 10 years. The two companies' plan is to commit $10 million to communities across the country, including $7 million in Baltimore and Maryland, for a decade.

Asked whether the group's proposal was unrealistic, Good Jobs Better Baltimore's spokeswoman, Julie Ferris, said, "The truth is they will make money off the merger whether they give $250 million or $810 million."

Gaining approval by the PSC is expected to be the deal's toughest regulatory hurdle. Maryland regulators thwarted an earlier proposed sale of Constellation.

The proposed merger also needs approval from federal regulators, including the Nuclear Regulatory Commission and the Federal Energy Regulatory Commission.

The Maryland Office of People's Counsel, which represents state consumers in utility issues, joined with its Pennsylvania counterpart to object to the proposed deal over concerns that the combined company would have too much control of electricity prices on the grid that serves much of the mid-Atlantic region.

hanah.cho@baltsun.com