Exelon executive: 600 positions identified for cuts under merger

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Exelon Corp. has identified some 600 corporate positions that would be eliminated under a merger with Baltimore's Constellation Energy Group, a top executive of the Chicago energy giant said Wednesday.

Exelon's chief operating officer, Christopher M. Crane, said the reductions would occur across both companies, but he did not detail the breakdown between Constellation and Exelon.


Crane said Wednesday that Baltimore would have fewer corporate employees after the merger than it does now under Constellation. A consultant for Exelon identified 631 positions across both companies that could be consolidated, according to documents filed with the Maryland Public Service Commission, which is reviewing the proposed $7.9 billion deal.

Energy analysts and critics of the merger have said they expected many of the merger-related cuts would occur in Baltimore since the new, combined company would be based in Chicago.


"Generally in mergers, they reduce jobs, and generally the headquarter cities benefit over non-headquarter cities," said Sen. Jim Rosapepe, a critic of the merger who, along with Sen. E.J. Pipkin, is to announce recommendations Thursday that they say will make the deal better for consumers.

"Common sense and history of most mergers suggest that power flows to the top," Rosapepe said.

In August, Crane said merger-related job cuts would be "most impactful" at Constellation's Baltimore headquarters and would affect legal, information technology, financial and other corporate departments.

"Overall, the synergies include … the combined two entities going down 600 positions," Crane said Wednesday during an exchange with attorney William Fields of the Maryland Office of People's Counsel.

The corporate jobs revelation was discussed during the third day of what could be 11 days of regulatory hearings by the PSC.

On Wednesday, Crane said executives were still sorting out where specific corporate functions would be carried out after the merger. Some positions would remain in Baltimore, while others would be eliminated or transferred to Exelon's headquarters in Chicago, Crane said.

Constellation employs about 10,000 workers, most of them in the Baltimore region. Of those, 3,500 work at the firm's regulated utility, Baltimore Gas and Electric. BGE would not be affected by the corporate consolidations and transfers. Constellation and Exelon have pledged not to lay off utility workers for at least two years after the merger is completed.

Exelon and Constellation executives insist that the merger would be "net jobs positive" for Baltimore, but critics have cast doubt on that assertion — saying that more than 1,000 construction jobs associated with Exelon's plans to build or renovate a building in downtown Baltimore would be temporary.


Also, Exelon plans to move 200 to 250 jobs from its Pennsylvania energy-trading operations to Baltimore, where the combined company plans to base Constellation's growing business of selling power to retail and wholesale customers.

Laura Duda, an Exelon spokeswoman, said the company expected the jobs impact in Maryland would be "increasingly positive over the long term" because the power-selling businesses would be based in Baltimore.

To minimize job losses, Duda said, open jobs across both companies would be eliminated first.

In making decisions on job reductions, Crane said, executives would examine retirement options for employees before determining who remained and who was best qualified.

Crane said Exelon would be forthcoming with details about potential job losses in Constellation's headquarters.

"We don't want to sugarcoat anything," he said. "If there's something that's impactful, we want to be the ones to tell you. We believe in transparency. We don't want to come in and try to pull the wool over anybody's eyes."


Constellation's CEO and chairman, Mayo A. Shattuck III, also testified Wednesday. Of the corporate job cuts, he said: "There's no doubt that there will be some redundancies. Our employees know that."

Crane and Shattuck also tried to reassure the state, consumer advocates and regulators that local management of BGE would be preserved, that Exelon executives would be responsive to Maryland officials, and that ratepayers and the state would benefit from the deal.

The $250 million incentive package offered by the companies includes a $100 rate credit to each of BGE's 1.1 million residential customers, as well as commitments to maintain charitable levels at $7 million annually over the next 10 years and to develop renewable energy in the state.

When asked by PSC Chairman Douglas R.M. Nazarian what would happen if the commission rejected the merger, Shattuck responded, "As you could guess, the repercussions associated with canceling the deal [are] significant."

While he said BGE's business would be fine, Shattuck said Constellation's stock would suffer and its credibility would take a hit.

"I think it would signal a very severe lack of strategic flexibility to the rest of our industry with respect to our options over some period of time," he said. "I think there would be some degree of concern as to whether we could pursue an independent strategy on the competitive side as clearly as ... our shareholders would like us to."


Crane and Shattuck wrapped up three days of testimony Wednesday. The proceedings are to continue Thursday with Exelon and BGE executives expected to take the stand.