Draft Order Provides Pennsylvania Won't Review Competitiveness of Retail Market in Light of Exelon-Constellation Merger

A recommended decision from a Pennsylvania ALJ would deny a request from the Office of Small Business Advocate to initiate an investigation into the potential impacts of the Constellation-Exelon merger on Pennsylvania's retail electricity market

Pennsylvania PUC approval of the merger was not required, and the merger has already been completed. However, OSBA in 2011 had sought an order from the PUC requesting that the PUC open a proceeding to examine the merger's impact on the retail market, as OSBA cited market power concerns.

The PUC, in response, opened a proceeding to investigate OSBA's request for the Commission to initiate an investigation into the effect of the merger on the competitive retail market, but did not open an investigation of the merger itself.

"Thus, the core issue to be resolved in this case is: whether the OSBA has shown good cause for the Commission to investigate the Exelon-Constellation merger on the basis that the merger impacts the proper functioning of the retail electric market through anti-competitive or discriminatory conduct. This is the sole issue to be resolved in this proceeding," the ALJ explained.

In the recommended decision, the ALJ found that, "No evidence was presented in this proceeding that would support findings of anti-competitive or discriminatory conduct on the part of the Companies resulting in the unlawful exercise of market power that would prevent retail electricity customers in the Commonwealth from obtaining the benefits of a properly functioning and workable competitive retail electricity market."

Additionally, the ALJ said that no evidence was presented that warrants the initiation of an investigation under Section 2811(b) of the Public Utility Code, having to do with market power remediation under Pennsylvania's Electricity Generation Customer Choice and Competition Act.

"The burden in this proceeding under both 66 Pa. C.S. § 332(a) and 66 Pa. C.S. § 2811(b) is upon the OSBA to show good cause why the requested investigation should be instituted. The OSBA has not met that burden, and the Commission is under no statutory obligation to initiate an investigation into possible effects of the merger on the competitive retail electricity market. It is recommended that the OSBA's Petition be denied," the ALJ said.

Docket: P-2011-2247936