Maryland lawmakers want BGE separated from parent company

Two Maryland legislators are urging state officials to require that the state’s largest electricity provider become an independent company as a condition of a proposed merger involving its parent company.

In a letter to the state’s Public Service Commission, Senate Minority Leader E.J. Pipkin and Sen. James C. Rosapepe say spinning off Baltimore Gas and Electric Co. in the proposed merger between its Baltimore-based parent company, Constellation Energy, and Chicago-based Exelon Corp. would maintain local authority over BGE and reduce or prevent “monopoly power.”

The senators also say making BGE an independent company would prevent rate increases they expect to come from the merger.

The Public Service Commission is holding hearings this week to discuss the proposed $7.9 billion merger, in which Exelon would take over 78 percent ownership of Constellation. The commission is expected to make a decision on the purchase early next year.

“Your father’s BGE - that’s what the PSC can bring back to Maryland,” said Mr. Pipkin, Cecil Republican, and Mr. Rosapepe, Prince George’s Democrat, in a statement. “Lower electric rates, local control, and responsible management focused on reliable service and long-term investment, not short-term financial speculation.”

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State Sen. James C. Rosapepe (left) and Senate Minority Leader E.J. Pipkin ... more >

The senators for years have called for increased regulation of utility providers after a 1999 law deregulated state utilities. They argue that deregulation has failed to generate competition within the industry and, in fact, has allowed BGE and other major providers to raise rates while refusing to improve service or build new plants.

“At the end of the day, serving the retail customer is better left to the public utilities,” Mr. Pipkin said in the spring. “I’m for markets, but there is no market here.”

The Maryland Senate approved a bill in 2009 that would have re-regulated utilities, but it failed in the House. Momentum behind the cause has slowed in recent years as Gov. Martin O’Malley, a Democrat, has called on the PSC instead of legislators to bring back regulation.

Supporters of deregulation contend it will become more successful as customers become more aware of their energy choices, and that regulation would have little short-term effect.

Exelon officials have promised $250 million in incentives, including $100 rebates for BGE customers, as part of their merger with Constellation. Officials said this week that the deal could force the elimination of about 600 corporate jobs but that about 200 current jobs also could be moved from Pennsylvania to Baltimore.

PSC members did not comment Thursday on Mr. Pipkin and Mr. Rosapepe’s proposal. But Exelon CEO Christopher M. Crane told the Baltimore Sun any exclusion of BGE from the deal is “a non-starter” and that his company “would only want to merge the companies in their entirety.”

Exelon and Constellation shareholders are expected to vote on the full merger Nov. 17 at separate meetings in Chicago and New York.

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