Electric M&A: The merger with PSE&G may herald a new industry structure, squarely at odds with regional markets.
Bruce W. Radford is editor-in-chief of Public Utilities Fortnightly. He can be reached at firstname.lastname@example.org.
Call it the merger that broke the bank.
The marriage between Exelon and PSEG, owner of the utility Public Service Electric & Gas (PSE&G), formally proposed in February in papers filed at the Federal Energy Regulatory Commission (FERC), would create the largest electric utility in the United States.
The combined assets (prior to any divestitures to ease the shock) would total a quarter again larger than Duke Energy (number two), 60 percent larger than Dominion Resources, and nearly twice the size of American Electric Power. The new firm (Exelon Electric & Gas, or EEG) would claim roughly one-and-a-half times the annual revenues of Southern Co. (or Duke, or Dominion). Meanwhile, the two EEG partners promise great efficiencies from the deal, coming from huge economies of scale and the consolidation of nuclear resources under one roof, under the leadership of Exelon’s claimed world-class nuclear expertise. (See FERC Docket No. EC05-43, application filed Feb. 4, 2005, comments filed Apr. 11, 2005.)
The policy implications could loom even larger, however.