PSC denies utility request

Constellation, FPL lose bid to speed up merger hearings

September 02, 2006|By Paul Adams | Paul Adams,Sun reporter

The Public Service Commission has rejected Constellation Energy Group's request to accelerate hearings on its proposed merger with a Florida utility owner, saying consumer advocates and other parties concerned about the $11 billion deal need the extra time to prepare their arguments in the case.

The decision filed late Thursday means the Baltimore energy company and FPL Group Inc., of Juno Beach, Fla., will miss a self-imposed Dec. 31 deadline to get the deal completed.

The PSC is sticking with a schedule it adopted in August that allows hearings in November and a decision in February.

The merger agreement signed by the two companies extends to June 30 if regulatory approval spills into next year. However, the delay marks the latest setback for the merger, which has been at the center of a fiery debate over a 72 percent electric rate increase for customers of Constellation's Baltimore Gas and Electric utility.

It also means it may take longer before BGE customers see any of the $60 million in annual merger-related savings Constellation promised to provide as part of a plan to reduce rates over a 10-year period.

"We're disappointed in the PSC's decision, but we'll work with the schedule as outlined by the commission," said Rob Gould, a spokesman for the company.

The merger schedule is further complicated by a legal dispute over the makeup of the PSC.

Lawmakers passed legislation in June partially deferring BGE's rate increase and firing the remaining four commissioners, who were seen as being too cozy with the utilities they regulate. A new panel was supposed to take up the merger investigation and a series of studies probing the structure of Maryland's electric industry.

PSC Chairman Kenneth D. Schisler challenged the firings and the Maryland Court of Appeals granted him a temporary injunction until it makes a final ruling on the matter. The PSC remains in limbo while the court deliberates, and it's unclear whether the ruling would affect the hearing schedule.

Hearings on the merger originally were to begin in July, but those plans were scuttled because the legislation passed in June required the companies to prove that the deal would provide a net benefit to consumers. The previous standard only required the companies to prove that consumers would not be harmed.

In light of the new standard, the PSC required all parties in the case to start from scratch with new testimony.

But in asking for a faster schedule last month, Constellation argued that consumer advocates and others who might argue against the merger have had since January to collect evidence to support their arguments.

The company also said that approval by the end of the year would allow it to begin providing merger savings just as customers were set to begin paying back money they owe BGE as a result of the rate-deferral plan approved by lawmakers.

In rejecting Constellation's motion, the PSC said the magnitude of the likely evidence necessitated the longer schedule.

Theresa Czarski, deputy people's counsel, said she "would have been very surprised if they [the commission] shortened the schedule given all of the circumstances in this case." The people's counsel is an independent state agency that represents utility customers.

paul.adams@baltsun.com

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