A settlement with Exelon Corp. over its proposed $7.9 billion takeover of Baltimore's Constellation Energy Group Inc. will mean much more investment and jobs for Maryland than the company initially proposed, Gov. Martin O'Malley announced Thursday.
Exelon's investment would grow from $270 million to more than $1 billion over the next decade, under the settlement outlined by the governor. It also requires between 285 and 300 megawatts of energy generation to be built, compared to the 25 megawatts initially proposed.
"The biggest difference was the new generation here domestically," O'Malley said at a news conference in Annapolis. "It's 10 times as much new generation as was originally proposed, and it's doubling, in essence, of our renewable energy here in our state in a very short horizon, relatively speaking."
O'Malley, a Democrat, opposed the company's initial proposal because he said it did not go far enough to benefit ratepayers or the public interest and ensure the state would not be harmed - three requirements under state law. The governor said he believes the enhanced proposal now meets state standards for approving a merger.
The settlement, which still must be approved by the Maryland Public Service Commission, includes a $100 credit for BGE ratepayers and provides $60 million for low-to-moderate income residents, the governor said. The deal calls for a $10 million contribution to the Electric Universal Service Program, which assists low-income ratepayers with electricity bills, and includes a $50 million contribution to weatherize homes of low-to-moderate income families.
The details are contained in a proposed settlement for an active PSC proceeding. The PSC, which could still make changes to the deal, has a Jan. 5 deadline to decide on the merger. The PSC has five members. All of them have been appointed or reappointed by O'Malley.
Exelon President Christopher Crane said the merger is a major objective of Exelon's growth strategy. He said the company has been in discussions with the state, the city of Baltimore and others to understand their needs and expectations.
"As a result, we enhanced the already robust package of benefits that the merger will provide for the State of Maryland and BGE customers," Crane said in a statement.
O'Malley said the settlement also would nearly double the state's solar energy installations and potentially double land-based wind generation, and it would create the state's first facility to convert animal waste to energy. The agreement includes a provision to create the first new gas-electricity generation plant built in Maryland in nearly a decade.
The deal also would set up a $32 million fund to develop offshore wind as lawmakers prepare to take up legislation that stalled in the last regular legislative session to spur offshore wind development off the coast of Ocean City.
"It means Maryland is one step closer to developing a home-grown manufacturing base for wind turbines and an overall economy that helps solve global warming," said Mike Tidwell, director of the Chesapeake Climate Action Network.
The Maryland Office of People's Counsel, which represents Maryland's residential electricity consumers, had wanted a $200 rebate for BGE ratepayers. Paula Carmody, who heads the agency, did not immediately return a call seeking comment.
Exelon also would build a new 400,000-square-foot office in Baltimore under the settlement. The governor estimated the settlement will boost job creation numbers from 2,440 in the company's initial proposal to more than 6,000.
The settlement also keeps the PSC's ability to spin-off BGE, if Exelon runs into significant financial problems, experiences a nuclear disaster or repeatedly violates PSC orders.
The PSC has authority over the deal because it regulates BGE, which services more than a million customers in central Maryland. Federal regulators also are reviewing the proposal.
Electricite de France, a French energy firm, has spoken out against the merger. EDF, which is one of Constellation's largest shareholders and owns nearly half of the company's energy unit, has said the merger would inhibit development and growth of the Constellation Energy Nuclear Group.