Exelon, Constellation Reach Merger Settlement

December 15, 2011

Governor O’Malley Reaches Settlement in Exelon/Constellation Merger, Including Over $1 Billion in Investments in Maryland and 285-300 MW of New Energy Generation in the State

Governor Martin O’Malley today announced that the State of Maryland and the Maryland Energy Administration have reached a settlementwith Exelon Corporation, Constellation Energy, and Baltimore Gas and Electric that will infuse over $1 billion in investment into the Maryland economy over the next decade and create more than 6,000 jobs.  The settlement is significantly larger than that originally proposed by Exelon in its filing with the Public Service Commission (“PSC”) in May.  Specifically, the investment represents a four-fold increase over Exelon’s initial merger proposal, from $270 million to over $1 billion; the total megawatts of energy generation to be built increased substantially from 25 MW to 285-300 MW; and the job creation numbers more than doubled, from 2,440 to more than 6,000. The settlement also retains the PSC’s ability to spin-off BGE at some later date, if Exelon experiences significant financial difficulty, experiences a nuclear disaster, or repeatedly violates PSC Orders.  Most importantly, in the State’s opinion, the proposed settlement now meets the statutory standard of providing benefits, ensuring no harm, and being in the public interest.

The settlement was filed with the PSC on December 15th and must be approved by the Commission.  “I recognize and respect the PSC’s independent authority in this proceeding, and trust that they will scrutinize the proposed settlement to ensure that it meets the requisite standard,” said Governor O’Malley.  A decision from the PSC is required by January 5th, unless Exelon consents to an extension.

“Though I opposed this merger for many months, I have joined this settlement with Exelon today because I believe the company has met the high bar that I demanded,” said Governor O’Malley. “The settlement represents a unique opportunity for the State of Maryland to benefit from this transaction, creating over 6,000 new jobs, providing $60 million for our low-to-moderate income neighbors, nearly doubling our solar installations, potentially doubling our land-based wind generation, creating the first animal-waste to energy facility in the State, and creating an offshore wind development fund. We accomplished all of this while ensuring that BGE remains a locally-managed utility protected from the risks inherent from a large holding company. This deal represents an unprecedented commitment on Exelon’s part to become part of Maryland’s future. I look forward to working in partnership and welcoming Exelon to our State.”

The settlement provides benefits to BGE ratepayers, including a $100 credit for every residential electricity ratepayer, a $10 million credit towards EmPower Maryland programs, a $10 million contribution to the Electric Universal Service Program, which assists low-income ratepayers with their electricity bills, and a $50 million contribution to weatherize homes of low-to-moderate income families.

It also protects BGE ratepayers against harm as a result of the merger, because the settlement enhances existing ring-fencing provisions to protect BGE in the event of an Exelon bankruptcy. The settlement also requires a majority of the BGE Board of Directors to live or work in the BGE service territory.

Lastly, the settlement ensures that the transaction will be in the public interest by requiring investments of more than $1 billion in Maryland over the next decade, creating over 6,000 jobs. The settlement will significantly increase Maryland’s Tier 1 renewable energy generation capacity and create the first new gas-fired electricity generation plant built in Maryland in nearly a decade. It will provide Maryland with the substantial environmental benefits that come with clean generation, including avoiding 260,545 metric tons of carbon emissions, or the equivalent of taking over 50,000 cars off the road, as well as the enhancements to the water quality in the Chesapeake Bay that accompany an investment in animal waste-fueled generation. The settlement will also provide funding for offshore wind research and development.

The $50 million commitment to weatherization efforts comes “at a critical time,” said Secretary of the Department of Housing and Community Development Raymond Skinner. “As American Recovery and Reinvestment Act funds draw to a close, the monies obtained in this settlement allow us to continue the critical work of ensuring 12,500 of our neighbors are able to live in energy-efficient homes.” Similarly, the $10 million contributed to the Electric Universal Service Plan will provide assistance to an additional 22,000 families in paying their electricity bills.

The renewable and conventional energy generation commitments represent a significant commitment on Exelon’s part. “Maryland has long-prioritized home-grown electricity,” said Malcolm Woolf, director of the Maryland Energy Administration. “The natural gas plant will add much needed supply to help ease Maryland’s most congested area, and the company’s renewable energy commitments significantly advance our efforts to promote a clean and sustainable energy future.”

“Governor O’Malley has achieved fairness for ratepayers and a big leap forward for the environment with this agreement,” said Mike Tidwell, director of the Chesapeake Climate Action Network. “Future Marylanders will look back on this date as a real turning point for clean air and the fight against global warming.”

“Maryland voters elected the Governor and their legislators on the promise of a clean energy economy.” said Karla Raettig, executive director of the Maryland League of Conservation Voters. “This settlement will help meet that promise and we are pleased Maryland is getting ahead of the curve on offshore wind.”

“Today’s announcement is a significant step toward developing clean energy here in Maryland,” said Josh Tulkin, director of the Maryland Sierra Club. “We applaud Governor O’Malley’s leadership in bringing good jobs and clean energy to Maryland families. This announcement sets the stage for a time when we no longer have to rely on dirty and dangerous energy sources like Baltimore’s Crane and Wagner coal-fired power plants.”

Highlights of Settlement


  • $100 credit for every residential electricity ratepayer.
  • $10 million to EmPower Maryland – more than double the original offer.
  • $10 million to Electric Universal Service Program – double the original offer and would allow awards to 22,470 families (based on average award size).
  • $50 million to weatherization efforts at DHCD – no offer in the original proposal and would pay for approximately 12,500 weatherization improvements for low to moderate income families.

No Harm:

  • PSC retains jurisdiction to spin off BGE in certain instances in the future, including Exelon bankruptcy, nuclear accident, and repeated violation of PSC Orders.
  • Strengthened ring-fencing provisions.
  • BGE board must contain a majority of individuals that live or work in BGE territory, as well as two independent members.
  • Market power concerns addressed through agreement with PJM Independent Market Monitor, as well as additional 150 MW of new generation (natural gas and solar).

Public Interest:

  • $30 million to offshore wind development fund, enabling the State to assist in cost of permitting offshore wind farm, thereby becoming first, or one of first, in country to reach this mark. An additional $2 million to public universities in Maryland to fund wind energy research.
  • 120 MW of new natural gas generation, which would mark the first non-renewable build of that size since 2003.
  • 125 MW of non-solar Tier I generation, which, if all land-based wind, would double the State’s wind resources.
  • 30 MW of solar generation, nearly doubling the State’s solar resources.
  • Subsidy of up to $90 million towards the State’s current RFP for 10 MW of animal-waste fueled generation, enabling development of the State’s first such project.
  • New headquarters building in downtown Baltimore anchored by long-term lease.

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