(The Center Square) – Nuclear power giant Exelon Corp. approved a plan to separate its utility assets, such as Commonwealth Edison, from the power generation side of its company.
The original corporation will be branded Exelon Utilities. It will comprise the company’s six electric and gas utilities in multiple states. The corporation will maintain operations of Atlantic City Electric in southern New Jersey, BGE in central Maryland, ComEd in northern Illinois, Delmarva Power in Delaware and eastern Maryland, Pepco in Washington, D.C., and central Maryland, and PECO in southeastern Pennsylvania.
The utilities serve more than 10 million customers.
Spinning off from the company will be Exelon Generation representing one of the nation’s largest power generation entities. Its nuclear, wind, solar, natural gas and hydro assets are responsible for 31,000 megawatts of energy capacity.
“Our industry is changing at a rapid pace and our customers expect us to continuously innovate to stay ahead of growing demand for clean energy, evolving business conditions and changing technology,” said Christopher Crane, president and CEO of Exelon. “Now is the right time to take this step to best serve our customers, employees, community partners and shareholders. These are two strong, distinct businesses that will benefit from the strategic flexibility to focus on their unique customer, market and community priorities.”
One of Exelon’s utilities, Chicago-based ComEd, was swept up in a patronage scheme where top officials with the company admitted to a years-long attempt to curry favor with former Illinois House Speaker Michael Madigan. The former lawmaker maintains his innocence.
The relationship between public officials and heavily-regulated utilities that share a banner with power generation has recently raised questions about the motivation toward corrupt behavior. An October report from the nonprofit R Street Institute suggests the dynamic begets “rent-seeking” behavior that should be reformed.
Others who have been demanding the split in light of investigations into ComEd applaud the move.
“Exelon’s ownership of ComEd has created long-standing conflicts of interests and Illinois consumers have suffered as a result,” said Abe Scarr, director of PIRG Illinois. “Separating Exelon’s generation assets from its regulated utilities is good news for ComEd’s customers and the public. At the same time, Illinois policymakers should recognize that conflicts persist and take action to address them.”
Scarr said lawmakers should seek restitution for ComEd customers, restoring effective utility regulation by ending automatic rate hikes through formula rates, and reforming utility political influence by no longer allowing utilities to charge their customers for charitable contributions.
It establishes RemainCo as the parent company for Exelon’s transmission and distribution utilities,. It also launches Spinco, a generation company.
The split is expected to complete in early 2022.