As Utilities Seek Mergers, States Require More Renewable Energy

Want to merge? Only if you invest in more renewable energy, say some states, in what could become a trend.

In a time of dropping natural gas prices (because of oversupply) and constrained federal spending, renewable energy costs more for utilities, so they’re not rushing into new projects.

Except of course, if there’s something in it for them. That something is the urge to merge, and there are $31 billion in pending US mergers.

States that want more renewable energy are holding off  approving those mergers until they get more of that.

State law requires that mergers be approved only if they’re in the public interest, which usually means negotiating for lower electricity rates or customer rebates. 

But in Maryland, Governor O’Malley got $1 billion in in renewable energy projects for his state, seven times Exelon’s initial offer. In return for an additional 180 MW of wind, solar, and the state’s first plant that converts poultry waste to biofuels, he approved the $8 billion merger between Exelon Corp. and  Baltimore-based Constellation Energy.

"Five years ago, you wouldn’t have seen a renewable commitment as the core element of a merger settlement,"  Howard Learner, executive director of the Environmental Law and Policy Center in Chicago told Bloomberg. "That reflects the renewed importance that governors and states are putting on renewable development: it’s good for the environment and jobs."

Massachusetts is negotiating with Northeast Utilities which seeks to buy Boston- based Nstar on how the combined companies would contribute to the state’s renewable energy goals.

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