Package includes 285-300 MW of new generation in Maryland
More than half of new generation will be renewable
Merger now expected to create more than 6,000 jobs
CHICAGO AND BALTIMORE - Exelon Corporation (NYSE:EXC), Constellation Energy (NYSE:CEG) and Baltimore Gas and Electric Company today announced that, in connection with their proposed merger, they have reached a settlement with the State of Maryland, the Maryland Energy Administration (MEA), the City of Baltimore and the Baltimore Building and Construction Trades Council. The settlement agreement includes an expanded package of benefits for Maryland, the City of Baltimore and BGE customers - now totaling more than $1 billion and expected to create more than 6,000 jobs statewide.
"Completing our merger with Constellation is a major objective of Exelon's growth strategy, and we are pleased to announce this settlement today," said Exelon President and COO Christopher M. Crane. "We recognize that addressing the reasonable interests of the State of Maryland is an important element of the merger approval process. We listened carefully to questions posed by the Maryland Public Service Commission and the other parties during our merger proceeding, and we've been engaged in discussions with the State of Maryland, City of Baltimore and others to understand their needs and expectations for this merger. As a result, we enhanced the already robust package of benefits that the merger will provide for the State of Maryland and BGE customers."
In the settlement, Exelon commits to:
• Develop 285-300 megawatts (MW) of new generation in Maryland, including 165-180 MW of renewable generation and 120 MW of gas-fired generation. The new generation projects will be built within the state, are expected to create more than 2,800 local jobs, and will benefit BGE customers and the public by helping Maryland transition toward renewable forms of electricity. The total investment in energy generation is at least $625 million.
• Contribute $32 million for offshore wind research and development - Exelon will assist the State of Maryland in its efforts to develop a major offshore wind energy project. Of the $32 million, $2 million will be awarded to a Maryland institution of higher learning to facilitate research on wind energy applications. This initiative is expected to create about 430 jobs in Maryland.
• Provide $50 million to weatherize and provide energy-conservation measures for 12,500 low-to-moderate income homes, helping make up for cuts in federal funding for this purpose. This initiative is expected to create nearly 500 jobs in Maryland.
• Further measures to preserve BGE as a leading Maryland company - Exelon will take numerous steps to ensure BGE remains a strong company, responsive to the Maryland communities it serves as well as its employees. Among the commitments included in the settlement is BGE maintaining its capital and operations and maintenance spending and paying no dividends to Exelon through 2014, to continue to support its high level of investment in smart meters, reliability and other key initiatives.
"The Exelon-Constellation merger, once completed, will serve as the catalyst for a wide array of energy initiatives in Maryland," said Mayo A. Shattuck III, chairman, president and CEO of Constellation. "In turn, these will create jobs and economic activity in the state, while helping Maryland achieve its clean energy and environmental goals."
The 285-300 MW of new generation offered by the companies as part of this settlement includes 165-180 MW of renewables, including wind, solar and energy generated from poultry litter; this represents 140 MW of renewables above the companies' original 25 MW proposal. It also includes 120 MW of natural gas generation developed by 2015. As an added benefit, the poultry litter project is expected to reduce pollution negatively affecting Chesapeake Bay.
Additionally, the settlement includes commitments previously put forth by Exelon and Constellation, including:
• $112 million to fund a $100 rate credit for each BGE residential customer within 90 days after consummating the merger
• $95-120 million for the construction of a new headquarters building in downtown Baltimore
• A $10 million contribution toward the Electric Universal Service Program
• A $10 million contribution toward EmPower Maryland energy-efficiency programs
In addition, the companies have committed to maintain charitable giving at an average level of $7 million per year for at least 10 years, for a total of $70 million.
"Exelon continues to serve as an economic engine making large-scale investments and contributions in the key states where it operates," said Crane. "Under the merger settlement we are announcing today, so long as it is approved, Exelon will be able to play a similar economic investment role in Maryland. We are hopeful other parties will review this offer and join in the settlement."
The settlement requires approval by the Maryland Public Service Commission (PSC), and a filing seeking the PSC's approval will be made shortly.
In addition to the companies' merger filing with the Maryland PSC, Exelon and Constellation made other regulatory filings in support of their proposed merger. On Aug. 3, the Public Utility Commission of Texas approved the merger. The merger also requires regulatory approvals by the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission, the New York State Public Service Commission and the Department of Justice. Shareholders of both companies overwhelmingly approved the transaction on Nov. 17. Pending all required approvals, Exelon and Constellation expect to complete their merger in early 2012.