Why I Oppose the Exelon Merger
By Anya Schoolman
In late June, the giant nuclear electricity company Exelon announced plans to buy control of Pepco the local electricity utility that has long served Maryland and Washington. Combined with Exelon’s 2012 takeover of Baltimore Gas and Electric, the new deal will make the Chicago-based behemoth the dominant utility in our region. Combined with Exelon’s recent takeovers of utilities in Chicago and Philadelphia, the deal will make Exelon the biggest power distributor in America.
The Public Service Commissions in both the District and Maryland must approve the deal for it to go through. To do so, the PSCs are required to find that a deal serves the “public interest.” These proceedings will take place over the next six months.
My group, DC Solar United Neighborhoods (DC SUN), strongly believes this deal is bad for the citizens of the District. It will likely lead to higher prices and a lower quality of service. Worse, it will almost definitely lead to major new restrictions on the ability of local citizens to build out new solar, wind, and other alternative electricity technologies. We therefore have called on our Public Service Commission to stand up for the public interest, and to block this deal.
DC SUN represents thousands of families, businesses, and community organizations that share our vision that solar can help make our city a more vibrant, equitable, and healthy place to live. Hundreds of these families, in every ward in the city, have already installed solar panels on their homes. We believe local solar and wind is the best way to hedge against rising energy prices, reduce air pollution, address our urgent childhood asthma health crisis, build the economic base of our city, create good local jobs, and help address the urgent issue of climate change.
DC SUN has proven these technologies are ready today. We strongly believe that, given a fair playing field, alternative technologies can generate up to a third of the city’s energy by 2030.
We also know, from our long experience working closely with Pepco, that reaching such a goal requires a fair playing field, in which technologies like nuclear or coal are not forced onto local ratepayers. And it requires a local utility ready to engage with the public as a true civic partner, willing to work carefully through the complex challenge of integrating solar, wind, geothermal, conservation, demand-side-management, and storage.
Sadly, we see no evidence that Exelon is up to the task. Worse, based on the company’s history and interests, we believe Exelon will fight to make sure we never achieve our goals.
Exelon is the biggest nuclear power plant owner in the United States. It’s main goal, therefore, is to sell nuclear power. The company has a long record of opposing incentives for renewable energy. This includes its recent vociferous opposition to the federal production tax credit for wind energy. And it includes the recent use of hardball tactics in Illinois to block a broadly supported effort to expand the solar market in that state.
One of the distinguishing characteristics of nuclear power plants is they always generate the same amount of energy, no matter what time of day or night, no matter whether it’s winter or summer. The owners of nuclear power plants, like the owners of old coal fired plants, must always sell their entire large “base load” of electricity in order to make money. This means nuclear energy ― unlike natural gas ― does not fit well with the dynamic, resilient, distributed, renewable-friendly grid of the near future. Exelon, in other words, has a direct financial interest in seeing our vision for the future fail.
Our second big fear is that Exelon is already too powerful politically. Even before this deal, the company was already one of the largest generators of electricity, and distributors of electricity, in the nation. In fact, citizens in Florida already rejected the company’s effort to buy Florida Power & Light for precisely this reason. So too the citizens of New Jersey, when Exelon attempted to take over a giant utility there, in a $17 billion deal.
Unfortunately, when Exelon moved two years ago to buy Constellation, which controls BG&E, the Maryland Public Service Commission did not protect Maryland citizens. The Maryland PSC failed to act even though Constellation was already the nation’s largest competitive supplier of electricity to large commercial and industrial customers and the nation’s largest wholesale power seller, even before it was sold to Exelon. If Exelon is allowed to buy out Pepco as well, the citizens of DC and Maryland will face a utility that is even bigger and more aggressive. The company will also have even greater ability to manipulate our governments.
Exelon already spends millions of dollars every year on lobbying and direct campaign contributions, so too in Maryland. After buying Constellation, Exelon immediately jumped to the number one position in political lobbying, spending some $400,000 between November 2012 and April 2013. And the company spent this money in ways that directly harm the public interest, for example by opposing wind power and stronger safety standards for gas pipelines.
Worse, Exelon uses its political power to promote an untrue – and entirely cynical, and manipulative, view of who subsidizes whom in the business of generating and distributing electricity. Exelon claims to be in favor of “competitive markets” and says it opposes “subsidies” for renewable energy like solar and wind. Yet in the real world, there is no sector of the electricity industry that has benefitted from more federal subsidies than nuclear. And thanks to laws like the Price Anderson Act ― which exempts nuclear energy providers from liability for nuclear spills and meltdowns ― such grossly unfair and unsafe subsidies continues to be very much the case today.
Renewables need a fair field on which to play, one not dominated by a giant self-interested monopolist free to spend its publicly guaranteed profits on protecting its incumbent position.
The time has come for the citizens of Washington and Maryland to remember that our electrical utility business is based on a very explicit social contract. We citizens licensed these monopolies and gave them permission to charge rates that guarantee a stable rate of return. In exchange, the executives and shareholders obligated themselves to serve the public interest first ― as the public determines that interest. Exelon wants us to forget the existence of this contract. We the citizens of Washington and Maryland have not merely a right but a duty to enforce this contract. Our freedom to build the electricity system that we want ― and that we need for the 21st century ― depends on it.
About the Author
Anya Schoolman is the President of DC Solar United Neighborhoods. She received the White House Champion of Change Award for Solar Deployment earlier this year. She grew up in Washington DC and attended Deal Jr. High School and Wilson HS. She has been helping homes, businesses and non-profits go solar in DC since 2009.