By Jamie Smith Hopkins, The Baltimore Sun
5:49 PM EDT, April 12, 2013
In the year since Exelon Corp. acquired Baltimore's Constellation Energy Group, the company has donated more than $300,000 to first-responders in the region. It is handing out thousands of free trees to Baltimore Gas and Electric Co. customers. It is helping fund energy-efficient homes for low-income residents.
That's much like the year before the merger, nonprofits say.
"They're carrying out their volunteer commitments at a very high level," said Elise Lee, chief development officer for United Way of Central Maryland. "Their corporate giving has remained the same."
That was the deal.
When Exelon asked state regulators for permission to acquire Constellation, the Chicago company said it would continue Constellation's recent levels of charitable giving for a decade. That would average $7 million a year in Maryland, Exelon said.
The state's Public Service Commission cemented the offer as a requirement, making it a condition — among others — of a merger that many, including Gov. Martin O'Malley, initially opposed. Commissioners saw value in maintaining the status quo, but they didn't bubble over with enthusiasm about the amount. In their approval of the merger last year, they said they hoped "that Exelon's charitable investments in Maryland will grow over time."
For local nonprofits, the status quo sometimes comes as a relief, even without adjustments for inflation.
When a sizable company is gobbled up by an out-of-town behemoth, anxiety ripples through the charitable community. Big corporations are often big philanthropic players, and they tend to focus their largesse close to headquarters. When Constellation was a stand-alone company, the lion's share of its giving stayed in Maryland.
A generation of consolidation in banking, insurance and other industries has left the Baltimore area with fewer headquarters and more back offices. The philanthropic effect of that shift isn't easy to measure, but nonprofit expert Lester M. Salamon said the concern over the loss of headquarters is not unfounded.
"When you look across the country at the communities that have really the most vibrant foundation and giving activity, they tend to be places that have significant numbers of headquarters locations," said Salamon, director of the Johns Hopkins Center for Civil Society Studies. "I'm thinking of Pittsburgh, I'm thinking of Cleveland, I'm thinking of Chicago."
The headquarters effect reaches beyond dollars donated, he said: Executives join nonprofit boards, work on community projects and can use their influence to get ambitious revitalization efforts off the ground.
"They play a whole range of community roles that few people besides the CEO of a company can play," Salamon said. "When you get a branch manager, you can't get the same leverage as you can with the CEO."
Exelon's takeover of Constellation resulted in the loss of the city's only Fortune 500 firm. On the jobs front, Exelon employed 83 fewer people in the state than Constellation did as of last August, the latest numbers available. Many lost headquarters jobs were replaced by the transfer of other jobs to Baltimore from Pennsylvania.
Exelon is building a new office tower at Harbor Point and made other commitments to invest in the state, such as agreeing to develop up to 300 megawatts of power generation in Maryland, half of it from renewable resources such as wind and solar.
Patrick Rooney, associate dean for academic affairs and research at the Indiana University School of Philanthropy, said it is not typical for a corporation to give an upfront promise of a specific level of contributions after a merger.
But most companies aren't running a regulated utility that counts everyone in town as its customer base and requires state approval for a merger.
Good Jobs Better Baltimore, a coalition of community groups, labor unions and churches, argued during the merger hearings that Constellation enriched itself at customers' expense through electricity rates that were too high. The group proposed a much higher package of community benefits than ultimately was approved, including $10 million a year in Maryland donations.
That is the amount Exelon promised before later proposing $7 million a year, according to Good Jobs Better Baltimore.
Exelon said at the time that the $10 million figure referred to total Constellation giving, locally and nationally. Constellation donated nearly $7 million in Maryland in 2010, Exelon told state regulators.
Now, a year after the deal closed, Exelon officials say the company takes community involvement seriously in all its locations. They point to PECO, the company's Pennsylvania utility, as an example of philanthropic commitment.
Exelon, created by the merger of Chicago's Unicom and PECO in 2000, said it promised to maintain giving of about $3.2 million in Philadelphia through 2003. PECO said its giving has risen since. It expects to donate $5.5 million this year, on par with the past two.
There's no plan for a pullback in Maryland contributions after the mandate expires, Exelon said.
"Even after the 10 years is done, we'll still be in the community, doing the good work that we do," said Steve Solomon, Exelon's vice president of corporate relations.
BGE's CEO, Kenneth W. DeFontes Jr., said the utility has prided itself on community involvement for so long that "it's part of our DNA." BGE employees sit on more than 75 boards in the region and last year logged 18,500 hours of volunteering, the company said.
"We believe we have an obligation for giving back to the community," said DeFontes, chairman of the Baltimore Symphony Orchestra and a member of the Economic Alliance of Greater Baltimore's board. It "helps us invigorate and improve the community in which we serve, and it also helps us get our message out about the things we care about. It really makes sense for us to do this."
In the 12 months since the merger, Exelon contributed just over the mandated $7 million in Maryland — most of it through its Constellation and BGE units.
BGE used to handle donations itself, years ago. After the reorganization that created Constellation, the new parent company took the lead. But now the pendulum is swinging back to BGE, which is gearing up to field most of the funding requests.
BGE officials say they are focusing donations in five areas: the environment, energy efficiency, education and the arts, economic and community development, and emergency response.
The 9,000 trees BGE is giving out first-come, first-served — via http://www.arborday.org/bge — fit into the first category. But the utility said customers also can save energy, and money, with well-placed shade.
Habitat for Humanity of the Chesapeake, which builds affordable housing in the region, is another BGE beneficiary.
Last month, the utility pledged $300,000 over three years to help build energy-efficient Habitat homes, a follow to a five-year, $500,000 grant from Constellation. A BGE executive sits on Habitat's board. The charity regularly gets construction help from BGE volunteers.
The company's contributions to first-responders, meanwhile, were parceled out across the region in grants of up to $10,000.
The Baltimore Fire Department got 1,000 smoke alarms to install in homes. The Hereford Volunteer Fire Company in Monkton replaced the rusted-out bed of a pickup truck it uses to fight brush fires. North Point-Edgemere Volunteer Fire Department is putting its $10,000 toward the nearly $250,000 cost of replacing its 27-year-old fire rescue boat.
Joe Walters, a lieutenant at the North Point-Edgemere department, said he's grateful for the support. Firehouses have always relied on community donations, but it's hard these days, he said. Residents and small businesses are strapped.
"The money from fundraising has dwindled," he said.
Conditions of the merger
Maryland's Public Service Commission imposed several conditions on Exelon's takeover of Constellation Energy. Among them:
•Maintain $7 million in annual charitable contributions in Maryland for a decade.
•Develop up to 300 megawatts of new energy generation in Maryland, with more than half coming from renewable resources such as solar and wind.
•Provide $30 million to create an offshore wind development fund.
•Not lay off BGE employees for two years.
•Pay Baltimore Gas and Electric residential customers a rebate of $100 each, amounting to $112 million.
•Create a $113.5 million consumer investment fund that would help BGE customers with weatherization and energy efficiency programs and provide financial aid for low-income ratepayers.
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