Federal agency should reject Constellation-Calpine merger proposal, OPC tells federal agency
BALTIMORE – A proposed merger combining two of the nation’s largest generating companies should be rejected, the Office of People’s Counsel told federal regulators this week. The merger would adversely affect competition in the regional generation markets operated by PJM Interconnection, LLC, impacting wholesale energy prices to the detriment of Maryland’s residential utility customers, OPC told the Federal Energy Regulatory Commission in its protest of the merger application.
“The PJM markets are already dominated by large corporations that control much of the generation in the region,” Maryland People’s Counsel David S. Lapp said. “The combined company would increase the generation market concentration and, with it, the risks of anti-competitive conduct that harms customers.”
Constellation and its affiliates already own 20,203 megawatts of generation capacity in PJM, while Calpine companies own 5,341 megawatts. The companies’ merger application, which FERC must approve, acknowledges repeated violations of market power screening tests and proposes to sell some plants to address those violations. But those plans are insufficient to protect customers, in part because the combination of Calpine’s fossil fuel plants with Constellation’s nuclear plants would increase the company’s ability to manipulate prices, OPC said.
“If approved as proposed, the merger would adversely affect consumers in the region, including Maryland consumers, because it would increase the surviving company’s ability to exercise market power,” OPC’s filing said. The merger would incentivize and facilitate opportunities for anticompetitive conduct, such as the withholding of supply, OPC said.
OPC asked FERC to reject the merger application outright or hold an evidentiary hearing because it would harm competition and because the companies have not met their burden of proving the merger meets federal standards for determining whether it is in the public interest.
Other consumer advocates and PJM’s Independent Market Monitor separately filed protests challenging the merger transaction.
The Maryland Office of People’s Counsel is an independent state agency that represents Maryland’s residential consumers of electric, natural gas, telecommunications, private water and certain transportation matters before the Public Service Commission, federal regulatory agencies and the courts.
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