Exelon to Pay $400,000 Under Settlement With Justice Dept.

Under a settlement with the U.S. Department of Justice, Exelon has agreed to make a civil payment of $400,000 to the United States Treasury to resolve allegations that Exelon violated a prior court order, which adopted conditions on its merger with Constellation, due to "inadvertent" errors which led Exelon to bid energy and/or capacity from certain generating units above cost, in contravention of the merger conditions.

The above-cost bidding for certain units had previously been addressed by the Maryland PSC and FERC (see prior story)

Under the settlement, Exelon asserts, and the United States Justice Department does not dispute, that the above-cost offers were inadvertent. Exelon has said that the incorrect offers resulted from legacy computer software program code in Constellation's software. While Exelon said that the offers were entered into the software at levels that did not violate the offer cap commitments, the software code overestimated the costs at full load operating conditions and thus communicated the offers to PJM at levels that exceeded the offer cap commitments under maximum load operating conditions

Exelon had previously taken certain remedial steps upon discovering the errors, including notifying market regulators of the offers, agreeing with market regulators to return any incremental revenues Exelon had earned and to redress any market harm, and implementing measures to ensure that no additional above-cost offers occurred.

The civil penalty of $400,000, separate and above the amounts that Exelon has already paid or committed to pay PJM and Maryland, constitutes disgorgement of profits and reimbursement to the United States for its attorneys fees and costs incurred during its investigation of the violations described above.

Civil No. 1:11-cv-02276