Exelon Corp. is seeking regulatory approval to buy Constellation Energy, parent of BGE. As I wrote on Sunday, the deal raises all kinds of concerns. Among them is the quasi-monopoly power that the combined company would gain in the mid-Atlantic generation market. The combined company would own quite a bit of generation capacity in Maryland, Pennsylvania and New Jersey.

To try to overcome sure objections from antitrust regulators, Constellation and Exelon agreed to sell off three of Constellation's older, coal-fired generation plans: Brandon Shores, CP Crane and HA Wagner. Joseph Bowring, who runs the independent market-monitor operation for the mid-Atlantic grid, objected that market concentration in the region might not be improved and could even worsen if the plants were sold to a third company that also owned plants in the area.

Now, in a letter to regulators, Bowring says the companies have agreed to a bunch of restrictions that would cause Bowring to drop his objections. The chief restriction is a list of companies to whom the coal plants cannnot be sold, including AEP, First Energy, Dominion, GenOn, Calpine and PPL. This significantly reduces the potential bidders and, if anything, may increase the uncertainty for the people working at those plants.

The other thing to note about the agreement is that, once again, it erodes any notion that the PJM wholesale market is efficient, free or fair. In addition to restrictions on who can buy the plants, Constellation and Exelon agreed to a bunch of fussy rules about bidding behavior etc. over the next 10 years.

Among them: The combined company has to "calculate its RPM auction Market Seller Offer Caps, as that term is defined in Attachment DD of the PJM Tariff, using the methodolgies set forth in Attachment DD of the PJM tariff." Energy bids from non-nuclear units "will be consistent with the physical capabilities of the units." (This rule all by itself is quite telling.) Offers from peaking gas units must calculate unit costs "in accordance with the PJM Cost Development Guidelines as set forth in PJM Manual No. 15, plus (2) the higher of ten percent of such costs or the applicable percentage of cost permitted under the PJM Tariff to the extent a unit is a frequently mitigated unit, plus (3) an adder not to exceed $1.00/MHw."

A real market wouldn't require a bunch of Calvinball rules and a bunch of bureaucrats to administer them.