Md. PSC Staff: Exelon-Constellation Settlement with State Addresses Market Power Concerns

A settlement among Exelon, Constellation, and Gov. Martin O'Malley, which includes requirements for Exelon to build up to 300 MW of new in-state generation (see 12/12), "adequately address all of the market power concerns," raised in prior PSC Staff testimony, Staff said in supplemental testimony filed this morning.

"The Applicants have committed to build a sufficient additional amount of new generation capacity to address the concerns raised in my prior testimony and at the hearing regarding the retirement risks associated with two of the facilities proposed for divestiture; a sufficient amount of the additional generation is located in the appropriate relevant geographic markets; and the diverse type of new generation will also have not only procompetitive effects, but much of this new capacity is also consistent with the Commission's policy objective of increasing the use of renewable sources of electricity. I also conclude that the Applicants' ownership of this additional generation does not raise any new market power concerns," Staff's witness said.

"Since the Applicants' proposed new generation capacity will increase the aggregate amount of supply in the market, this increased supply will provide unambiguous procompetitive benefits by reducing both energy and capacity prices in Maryland. Moreover, there is no evidence to suggest that this additional supply would have resulted absent the merger," Staff's witness said.

The new generation, "will provide additional peaking capacity from conventional gas-fired generation to further enhance reliability and reduce the risk of price spikes during periods of high load or transmission constraints," Staff's witness added.