The Federal Energy Regulatory Commission and the Maryland Public Service Commission have approved the merger of Baltimore Gas and Electric Co. and Potomac Electric Power Co. to form Constellation Energy Corp.
However, the stiff terms for approval (em including mandatory rate cuts (em have prompted the utilities to claim they might abandon the merger.
In mid-April, the FERC found the merger consistent with the public interest, upon an examination of the merger's three-fold effects on competition, rates and state and federal regulation, as required under the FERC's recent merger policy statement in Order No. 592. Docket Nos. EC96-10- 000 and ER96-784-000, April 16, 1997 (F.E.R.C.).
At the state level, however, the Maryland PSC directed the new company to reduce rates by $56 million: a decrease of $44 million for BG&E's Maryland customers and $12 million for PEPCO's Maryland customers. It ordered Constellation's base rates frozen for three years, and required that one-half of any earnings of more than a 11.4-percent return on equity be returned to customers. Case No. 8725, Order No. 73405 (Md.P.S.C.).