After Exelon-Constellation Settlement, Rosapepe Still Pushes for BGE Spinoff

Maryland Gov. Martin O'Malley this week announced an agreement with Exelon Corp. regarding the takeover of the Constellation Energy Group.

The deal, according to an analysis in the Baltimore Sun, includes more generation of electricity, plus a greater commitment to renewable energy, energy efficiency and low-income customers.

The agreement also calls for the Public Service Commission to hold hearings to force Exelon to spin off Baltimore, Gas and Electric Corp. (BGE) under certain circumstances, such as an Exelon bankruptcy or major credit downgrade.

Sen. Jim Rosapepe (D-District 21), who represents portions of Odenton, has been pushing for BGE to be spun off as a condition of the merger. In a letter to O'Malley, he reiterated that desire.

Here's the full text of his letter, which was co-signed by Sen. E.J. Pipkin (R-District 36).

Dear Mr. Collins:

We write today to reiterate our proposal to require spin off of BGE as a condition of the Exelon and Constellation merger. Today’s announcement of a settlement proposal by Exelon and the State of Maryland does not in any way reduce the importance of a BGE spin off with lower regulated power rates.
As you will recall from our November 3 letter, we believe that the proposed merger of Constellation Energy and Exelon provides the opportunity to bring back “your father’s BGE”: lower rates and more reliable service.
The PSC can comply with the law, reduce rates for consumers, improve the reliability of power, and assure long term stability for energy supply and electric rates by conditioning approval of the merger on the following:

• Spinoff of BG&E as an independent, publicy-traded, Baltimore-based company.
• A long-term contact between BGE and Constellation for 500 Mw of Calvert Cliffs’ capacity (about 25%) at regulated rates saving Standard Offer Service (SOS) customers a minimum of 15% per year.
• Commitment by the newly independent BGE to construct its own natural gas-fired electricity plants, or other economical alternatives, under regulated rates for needed additional base load generation.

Thank you for your consideration of our recommendations and let us know if you have questions. We can be reached at 410-841-3141. Jeff Hooke, a local investment banker who worked with us in preparing this proposal, can be reached at jeff.hooke@focusbankers.com or 301-850-2532.