Constellation/Exelon Say No Adverse Impact on SOS, Maryland Retail Market from Merger

May 26, 2011
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"[I]f a proposed merger does not adversely affect wholesale market competition, it is unlikely to adversely affect retail market competition," Dr. Joe Pace of Navigant Economics said in testimony supporting the merger application of Exelon and Constellation Energy before the Maryland PSC (Case 9271).

Although the testimony does address SOS and retail markets to a slightly greater extent that the companies' application at FERC, the ultimate conclusion that the retail market will not be negatively affected again largely remains on the premise that Exelon Energy was not likely not enter the Maryland retail market, and thus the merger does not eliminate a competitor.

"[T]here is nothing to suggest that Exelon is likely to become a significant potential competitor for non-residential customers in Maryland absent the Merger," Pace said.

"There is no basis for expecting Exelon Energy to be a substantial competitor in Maryland's retail electric markets absent the proposed Merger. The Merger will not eliminate an actual competitor in Maryland, nor will it eliminate a significant potential competitor," Pace continued.

"The Merger will not have an adverse effect on Maryland's SOS bidding process because it will not adversely affect wholesale competition in PJM, and because it will not eliminate an actual or significant potential competitor in the SOS auctions," Pace added.

"[I]f the wholesale electric market is workably competitive, the SOS procurement also should be workably competitive, as long as state regulators guard against self-dealing by the local utility (favoring affiliated generators or marketers), and do not impose terms unnecessarily discouraging supplier participation in the procurement process," Pace testified.

"[T]here is no evidence that the Merger will have any material impact on bidding for Maryland SOS loads. Exelon has not participated in any of Maryland's SOS auctions in the past, and I understand that it has no plans to do so in the foreseeable future," Pace said.

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