Possible energy merger troubles some lawmakers

Md. legislators question Constellation's devotion to helping poor pay their bills

February 03, 2006|By ANDREW A. GREEN | ANDREW A. GREEN,SUN REPORTER

Legislators said yesterday that they fear BGE's parent corporation will lower its commitment to local philanthropy -- especially to helping the poor pay their electric bills -- if it is allowed to merge with a Florida power company.

After a briefing on the proposed merger between Baltimore-based Constellation Energy and FPL Group Inc. of Juno Beach, three state senators said they are concerned that the new company would focus too much on its national energy trading business and not enough on its residential customers in Maryland.

"The problem is [that] their customers, my constituents, are last in their priorities," said Sen. Leo E. Green, a Prince George's County Democrat. "It burns me that they haven't done anything to address the poor."

FOR THE RECORD - An article in Friday's metro section incorrectly stated the amount of additional aid BGE's parent company, Constellation Energy, has pledged to a fund that pays the energy bills of low-income customers. The company announced in November that it will spend $26 million in the coming years on assistance and energy conservation measures for the needy, with about $2 million of that over two years going to the Fuel Fund.
The Sun regrets the errors.

Green and others said the issue is of great importance because rate caps that have been in effect for several years will be lifted this summer, raising the prospect of a 70 percent increase or more in residential electric bills.

Constellation spokesman Rob Gould said the company has committed to maintaining its overall level of charitable giving in Maryland for at least 10 years, though the donations to particular programs might change.

He said the company is concerned about the effects of rising energy prices and, as a result, announced in November an extra $26 million this year for the Fuel Fund, which helps pay the bills of needy customers.

"There is a continuing commitment to focus on philanthropy, charitable giving," Gould said. "That is without question going to continue for 10 years at the same level, or more."

The two companies announced in December that they intended to merge in an $11.5 billion deal that would create the nation's second-largest energy company. The General Assembly does not have a direct say in the deal, but it cannot go forward without the approval of the state Public Service Commission and federal regulators. .

Company officials also briefed members of the House of Delegates yesterday. The legislators said they worry that customer service, particularly in the case of widespread power outages, would suffer in a combined company.

But Thomas F. Brady, Constellation's vice president for corporate strategy, said the new company would have more manpower to deal with such emergencies.

While the merger and the lifting of rate caps are not directly related, delegates said they expect constituents won't see the distinction.

"I understand as part of the merger, some very generous benefits are going to the executives, parachutes for lack of a better word," said Del. Carolyn J. Krysiak, a Baltimore Democrat. "How do we explain that to the public? ... Why [do] they have to raise our rates if they have so much money?"

Brady said the executives' compensation packages are in line with industry standards and low compared with other industries.

Legislators have no role in approving the merger, but Sen. Thomas M. "Mac" Middleton, a Charles County Democrat and chairman of the finance committee, said they will still have to deal with the perception among constituents that the new company does not care about them.

"People have to pay high property taxes as their assessments go through the roof. They're paying more at the pump for gas. Home heating oil and natural gas are going up out of control, and now electric prices are going up?" Middleton said. "There's an angry constituent out there. They're going to ask us, `How did you let this happen?'"

andy.green@baltsun.com

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