Thursday, June 01, 2006
Feds OK Exelon-PSEG merger, N.J. advocate against it
The federal Nuclear Regulatory Commission this week approved a merger between Public Service Enterprise Group Inc. and Exelon Corp.The $12 billion stock deal, proposed in December, would make Exelon Electric & Gas the nation's largest electric company. The new company would provide power to 18 million people in Illinois, New Jersey and Pennsylvania.
Exelon already owns PECO Energy Co., formerly the Philadelphia Electric Co.
The NRC's blessing means Chicago-based Exelon can operate the four nuclear plants which Newark-based PSEG has a majority stake. They are: Hope Creek and the two Salem plants, all in Lower Alloways Creek, N.J., and Peach Bottom Atomic Power Station in Delta, Pa.
Commission spokesman Neil Sheehan told the Associated Press that the only criteria under consideration was whether Exelon, already the nation's largest owner of nuclear plants, could afford to safely operate and eventually decommission the four new plants.
Not whether they should operate the plants. Ronald Chen, New Jersey's public advocate, doesn't think so.
"This merger puts New Jersey consumers at great risk," Chen said last month, noting it would give the combined company such a large market share - an estimated 56 percent of all power generation on the eastern U.S. - that it could drive up energy prices for all New Jerseyans.
New Jersey's Division of Rate Counsel, which serves under Chen, has asked an administrative law judge to reject or make significant modifications to the proposed merger.
Among the rate counsel's key concerns: the merger proposal doesn't include a provision for a rate freeze or rate reductions, assistance for low-income ratepayers would disappear and there are no guarantees about customer service or reliability.
In order to get similar regulator approval in Pennsylvania last year, Exelon reached a settlement with critics which included the city of Philadelphia, labor and advocacy groups, and the state Department of Environmental Protection - Exelon promised to provide $120 million over four years in rate discounts for customers and cap its rates through the end of 2010.
After that, all bets are off and the company already plans to file for a rate increase in New Jersey.
Yet, based on the settlement, Pennsylvania administrative law judge Marlane R. Chestnut found the merger "is in the public interest, provides substantial, affirmative benefits, and is not likely to result in anticompetitive or discriminatory conduct or the unlawful exercise of market power in the retail electric and natural gas markets."
Not in Chen's eyes.
Chen said the offer "failed to even come close to offering New Jersey families and businesses the rate relief they deserve." If spread over four years, the rate counsel estimates a savings of about $12 a year per household.
PSEG spokesman Paul Rosengren said there was no way to calculate savings yet, but ratepayers are certain to see more savings under the proposed merger than without it.
The merger could also result in the loss of up to 950 jobs in New Jersey, Chen said.The administrative law judge is expected to make a recommendation to the New Jersey Board of Public Utilities on the deal sometime this month. The board's is expected to take until late summer to make its decision.
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This work is licensed under a Creative Commons Attribution 2.5 License.
This work is licensed under a Creative Commons Attribution 2.5 License.
