Constellation Energy Group?s pending merger with Florida-based FPL Group is provoking some to question the overall benefits of corporate consolidation.
“It?s not clear that such mergers really stimulate competition,” said Michael Bradley, professor of economics at the University of Maryland, Baltimore County.
While in theory such mergers are supposed to increase the efficiency of an industry and lower prices, in reality, this rarely happens, he said.
“Instead of creating more competition, some mergers can create a very closed market,” Bradley said.
George Georgiou, a Towson University economics professor who specializes in energy, also questions the economic benefit of energy company mergers.
“The other side is that now they then control a larger power market and can set the prices,” he said.
This is exactly one of the objections state legislators like state Sen. James Brochin, who represents Timonium, has with Constellation?s pending merger.
Brochin, who is calling for a special legislative session to block the merger, believes that Constellation should be made to pay back the appreciation it made by buying its power plants from the state when the industry was deregulated.
“Those plants are worth five times what Constellation paid for them,” Brochin said.
Brochin has sent a letter to the state?s House and Senate leadership asking them to petition Gov. Robert Ehrlich to convene a special session of the assembly.
He hopes to recover the funds from the plant sales from Constellation in order to lower the 72 percent gas and electric rate increase that goes into effect this summer.
“The consensus among members is that we want to go back,” Brochin said.
