Breaking: Pa. PUC Sets OSBA Complaint Regarding Constellation-Exelon Merger for Hearing

updated 1:35 p.m. with statement from Chairman Powelson

The Pennsylvania PUC this morning granted a request from the Office of Small Business Advocate to have its complaint regarding the proposed merger of Constellation Energy and Exelon assigned to the Office of Administrative Law Judge for hearing.

"Our review of the pleadings filed thus far indicate that significant issues of fact exist with regard to the merits of OSBA's Complaint which are best handled in the context of an evidentiary hearing," the PUC said.

Through the complaint, OSBA sought an investigation into the proposed merger to determine the merger's potential impact on Pennsylvania's competitive retail electricity and natural gas markets; and if such investigation gives the Commission reason to believe that the merger will result in anticompetitive or discriminatory conduct, including the unlawful exercise of market power, which will prevent retail customers from obtaining the benefits of a properly functioning and workable competitive retail market, refer its findings to the appropriate regulatory bodies and intervene in proceedings initiated by those bodies.

The case is P-2011-2247936.

A statement from PUC Chairman Robert F. Powelson was later uploaded to the PUC site, and included the following: "Regardless of the outcome of the OSBA’s complaint, Governor Corbett and his administration, as well as this Commission, are closely monitoring the concessions made by Exelon and Constellation to achieve regulatory approvals in other jurisdictions. I wish to make it clear that these concessions should not be made at the expense of the Pennsylvania operations of either company. Pennsylvania has been diligent in providing an attractive business climate for both companies that has allowed their various enterprises to flourish, which is in direct contradiction to other jurisdictions. Simply put, Exelon and Constellation need to show the same commitment to Pennsylvania that Pennsylvania has shown to the companies."

The complaint was first reported by Matters (see 6/22).

"Each of the Companies is a self-proclaimed top 10 leader in the U.S. commercial and industrial retail electricity markets and each is licensed as both an EGS [electric generation supplier] and an NGS [natural gas supplier] in Pennsylvania. Thus, the proposed merger will result in the elimination of retail competition between two top 10 suppliers and a reduction in competitive choices for retail customers," OSBA said in its original petition.

"Although there may be a relatively large number of EGSs and NGSs licensed in Pennsylvania and some might argue that a merger resulting in the loss of only one would have little effect, considering only the number of suppliers is insufficient. To adequately evaluate the proposed merger's impact on the retail market, further Commission investigation is needed to determine the size of the market shares of Exelon and Constellation and the load profiles of the small business customers that they serve," OSBA added.

"The potential for the proposed merger to have an adverse impact on retail rates in the electricity market is especially significant. Exelon and Constellation are major generators of electricity and competitors, or potential competitors, in default service procurements throughout the Commonwealth. The proposed merger would eliminate Exelon as a wholesale competitor. Because of the potential for a resulting increase in default service rates, it is critical that small business customers have the option to solicit offers from as many EGSs as possible. The elimination of Exelon as an EGS would deprive small business customers of one of those options," OSBA said.