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April 28, 2011

'Benefits' for Maryland, including $100 BGE rebate

Constellation's board is selling one of Maryland's heritage companies to Chicago-based Exelon, so it is quite sensitive about trying to show how this is a great development for Baltimore. It's not a great development for Baltimore. However the merger announcement includes several paragraphs on purported upsides for Maryland, including a $100 rebate for each residential BGE customer.

The combined company would commit to $10 million in charitable giving in Maryland for a decade after the merger. It would spend $50 million to build 25 megawatts of renewable electricity generation in the state and $10 million on developing Maryland electric-vehicle infrastructure. The news release says "the growth engine of the combined company will be headquartered in Baltimore," meaning Exelon's power marketing division will be combined with Constellation's and based here, and the companies' renewable energy operation will be based here. And: "To house the expanded Baltimore commercial and renewable energy headquarters, the new company intends to build or substantially renovate a state-of-the-art Leadership in Energy and Environmental Design (LEED) office center in Baltimore."

Total benefits for Maryland, the companies claim, are $250 million. Despite all the talk about growth, however, Constellation may end up having fewer employees in Baltimore. Mergers like this make money for shareholders through efficiencies, and efficiencies usually include layoffs.

The Maryland Public Service Commission will almost certainly seek more than $100 from this for each BGE customer. And it's not at all clear that this deal, like previous Constellation or BGE combinations, won't founder on the shoals of PSC demands.

The bigwigs are having a conference all at 10, which I'll be liveblogging.

Posted by Jay Hancock at 8:06 AM | | Comments (12)
Categories: BGE/electricity
        

Comments

All the bigwigs (BGE and O'Malley) will move on and we the people will be left, once again, paying the price.

So much for light posting.

Instead of $100 million for charities how about rate relief of $100 million for Maryland customers and let us take care of the charities?

Thanks Jay Hancock. We need your ear to report the truth. BGE has robbed the citizens for the last five years.

I agree with Electric Man,,,,,,,,,,,,please do not go anywhere , we need you here very much , not only your facts but your insight keeps us informed,,,,,,,,,,,,,,,,

The biggest benefit to MD would be Shattuck moving to Chicago so he can destroy a couple of their fortune 500 companies, rather than refocusing on what's left of our puny corporate headquarters base left here now that he has singlehandedly taken out two of the three (Alex Brown and Constellation) we had in ten years.

Very good point, John.

Why do they assume we want them to spend hundreds of millions on charities and electric car research?

Let other companies who actually want results (and not just to make a show of their generosity) make those investments. Give us the lower prices.

If you are BGE customer that uses a provider other than Constellation, say Washington or Dominion, do you still get the $100?

John J. Walters - They are just stating that they are comitted to the charitable contributions that many non-profits (espcially the United Way of Central MD) rely on each year. CEG will always be in a bad position...damned if you do and damned if you don't. If they don't allocate money for these electric car research then people would complain that they have all this money and need to use it for research, blah blah blah.

Sounds like this deal should pass PSC approval, but you never know in this messed up state...everyone will want a piece of the pie.

Good riddance to him and his wife who can now hawk her exercise videos in Chicagoland.

I feel sorry for the BGE employees who will now lose their jobs as this guy makes his millions and shafts his employees at CEG/BGE and ex employees at AlexBrown.

you and Bob Irsay are perfect...

hmmm I think Irsay was from the Chicago area...

You think the rates are bad now, wait until exelon gets in there. Plus all of our friends and relatives getting laid off. More bankruptcies for baltimore?

This adds further confusion to our choice of who to buy our electricity from. The "price to compare" that we see posted at the utility websites is meaningless. Deregulation sucks!

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.
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