PGW Files Testimony Opposing Exelon/PSEG Utilities Merger; Expert Witness Warns of Ability and Incentive to Artificially Inflate Prices.
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PGW PGW Philadelphia Gas Works
PGW Publishers Group West
PGW Precision Guided Weapons
PGW Payment Gateway
PGW Pressure Gas Welding
PGW Pesticides in Ground Water
PGW Parallel Gap Welding
PGW Propylene glycol/water
PGW Project on Girls and Women FILES TESTIMONY OPPOSING EXELON/PSEG UTILITIES MERGER; EXPERT WITNESS WARNS OF ABILITY AND INCENTIVE TO ARTIFICIALLY INFLATE PRICES
Philadelphia Gas Works a manufactory of gas, with all the machinery and appurtenances; a place where gas is generated for lighting cities.
See also: Gas (PGW) filed written testimony today with the New Jersey Board of Public Utilities The New Jersey Board of Public Utilities (NJBPU) is a regulatory authority in New Jersey charged with the responsibility of seeing that "safe, adequate, and proper utility services are provided at reasonable rates for customers in New Jersey. , joining scores of interveners opposing the pending merger between Exelon and Public Service Enterprise Group (PSEG PSEG Public Service Enterprise Group ), which would create the single largest and most powerful utility in the country. PGW's testimony, provided by Paul R. Carpenter, an expert witness who is known as one of the foremost authorities on the California energy crisis, raised serious concerns about the merger.
"The Board should be concerned with the impacts of the proposed Exelon/PSEG merger on wholesale electric and gas markets, including vertical issues - the merged entity's ability and incentive to raise prices in gas markets in order to benefit in the electricity market. An exercise of vertical market power would deny customers the benefits of retail competition in both gas and electricity markets. I believe that the merger will affect competition negatively and will harm the public interest by denying customers and competitive suppliers the benefits of competition(1)," said Carpenter.
"The proposed merger would put millions of people at serious risk for out-of-control electric and gas prices throughout the entire region," said Steven P. Hershey, vice president of community initiatives at PGW. "Because of the way the entire Pennsylvania, New Jersey, Maryland (PJM PJM Pacific Journal of Mathematics
PJM Project Manager
PJM Puerto Jimenez, Costa Rica (Airport code)
PJM Pennsylvania New Jersey Maryland Interconnection LLC (Mid-Atlantic region power pool) ) energy grid works, the impact of this merger would extend far beyond New Jersey. Clearly, PGW customers and PGW itself are at risk as we face the serious danger that competitive markets designed to protect utility customers could be severely damaged."
In testimony filed today and in former testimony presented in writing to the Pennsylvania Public Utilities Commission, Carpenter supports his assessment of the merger's dangers with the following statements:
--"The incentive of the merged entity to raise the price of gas derives from its substantial baseload power generation capacity....Since natural gas fired generation is "on the margin" during 60 percent of the peak hours peak hours npl, peak period
n → horas fpl punta
peak hours peak npl → heures fpl d'affluence or de pointe
....an increase in the price of gas during those hours would directly translate into the market price of electricity to the benefit of the merged entity's baseload generation."(2)
--The danger of volatility in the gas market "is a lesson that was learned painfully during the summer of 2000 in California, when interruptible transportation failed to substitute for the firm capacity that was withheld from the market on the El Paso Natural Gas El Paso Natural Gas is a system of natural gas pipelines that brings gas from the Permian Basin in Texas and the San Juan Basin in New Mexico and Colorado to West Texas, New Mexico, Nevada, California and Arizona. It also exports some natural gas to Mexico. pipeline."(3)
Dozens of organizations, concerned citizen groups and antitrust experts are also raising serious concerns over the Exelon/PSEG merger. Diana Moss, a member of the American Antitrust Institute, wrote "any way you cut it, if Exelon/PSEG exercises its hefty market power, consumers in PJM are likely to suffer through higher electricity prices."(4) Labor unions also weighed in today with written testimony underscoring major concerns over the loss of jobs (see www.local601.org), while consumer groups including New Jersey Citizen Action and New Jersey PIRG PIRG Public Interest Research Group protested the lack of competition (see www.fightthepowergrab.com.).
Paul R. Carpenter is principal and vice chairman of The Brattle brat·tle Scots
1. A rattling or clattering sound.
2. A movement that produces such a sound.
intr.v. Group, an economic and management consulting firm which specializes in the fields of industrial organization, finance and energy and regulatory economics. He has testified before federal and state regulatory commissions including the Federal Energy Regulatory Commission The Federal Energy Regulatory Commission (FERC) is the United States federal agency with jurisdiction over electricity sales, wholesale electric rates, hydroelectric licensing, natural gas pricing, and oil pipeline rates. and the California Public Utilities Commission The California Public Utilities Commission (CPUC; also often commonly referred to as simply the PUC)  is a state Public Utilities Commission which regulates privately-owned utilities in the state of California, including electric power, , in federal court, and before Congress, on issues of pricing, competition and regulatory issues. A full copy of his testimony to the New Jersey Board of Public Utilities can be found at: www.energymerger.org.
For more information on PGW's perspectives on the merger, contact Steven P. Hershey at 215-684-6668.
(1) PGW Statement, Docket No. EM05020106, page 12, lines 19-22 (2) PGW Statement, Docket No. EM05020106, page 5, lines 22-28 (3) PGW Statement, Docket No. EM05020106, page 40, lines 26-29 (4) Balance of Power, The Deal.com, Nov 4, 2005