Chicago Tribune

N.J. Advocacy Groups State Case Against Expected Exelon Merger

The Chicago Tribune — Tuesday, March 29, 2005

By Robert Manor
Tribune staff reporter

Public advocacy groups in New Jersey say the pending merger of Exelon Corp. with that state's largest utility will lead to higher electricity rates and poorer service.

Public Citizen, the New Jersey Public Interest Research Group and New Jersey Citizen Action filed protests Monday with New Jersey regulators asking them to block the merger of Exelon and Public Service Enterprise Group Inc.

Chicago-based Exelon's $13 billion stock acquisition of Public Service Enterprise Group would make it the largest utility in the nation, with annual revenue of $27 billion and net earnings of $3.2 billion.

That worries opponents of the merger. "The main objection is that this is going to decrease competition," said Tyson Slocum, research director of energy at Public Citizen. "That is going to lead to higher rates for consumers."

Opponents also fear that service and reliability will decline under Exelon's leadership.

An Exelon spokeswoman said consumers will eventually save money as a result of the deal.

"The synergies will result in lower rates," said Jennifer Medley, who added that Exelon has invested heavily in infrastructure, spending more than $3 billion since 2001 to improve reliability.

Exelon, parent of Commonwealth Edison, has talked of a rate freeze or other financial benefit for New Jersey ratepayers if the merger is allowed to proceed. But opponents say that is not enough.

"We don't think that a temporary rate benefit is going to be a long-term solution," said Deepa Mehta, a regional organizer with the New Jersey Public Interest Research Group.

"Exelon's buy-out bid offers no evidence that this merger is in the public's interest," said Ev Liebman, program director for New Jersey Citizens Action.

In their filing with the New Jersey Board of Public Utilities, the advocacy groups noted that "if the merger is approved, Exelon will control all four of New Jersey's nuclear power plants, as well as numerous other generating plants."

That would give the company too much power to set prices, they said.

The merger will add 2 million electricity customers in New Jersey to the 5.1 million Exelon serves in Illinois and Pennsylvania. Reflecting the 1.6 million natural gas consumers in New Jersey that will be added to its 460,000 in Pennsylvania, the company will be renamed Exelon Electric & Gas but still will be based in Chicago.

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