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SEC Filing: Constellation Energy Provides Update on Merger With Exelon
Posted July 13, 2011
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Frequently Asked Questions were posted on a Constellation Energy internal website dedicated to the merger with Exelon.
As a reminder, the merger approval and integration planning process will require several months. We ask for your patience and understanding as we work through all of the issues that pertain to our employees and companies. For now, it is important that each of us stays focused on meeting our business objectives and makes safety a priority every day.
General
1. NEW Q: Regulatory hurdles in Maryland have made it difficult to close previous proposed mergers. Any thoughts on why the outcome might be different this time around?
A: The merger will bring a package of benefits valued at more than $250 million to the State of Maryland, the City of Baltimore and BGE residential gas and electric customers. Specifically, two growing parts of the combined corporation will be headquartered in Baltimore. Exelon's Power Team will combine with Constellation's power marketing and retail/wholesale business under the Constellation brand. This customer-driven business is expected to be the major growth engine in the new company. In addition, Baltimore will be home to both companies' renewable energy businesses. To house these operations, the new company intends to build or substantially renovate a state-of-the art Leadership in Energy and Environmental Design (LEED) corporate office building in Baltimore. The transaction will also benefit Maryland's economy and energy infrastructure: $5 million will be provided for the State of Maryland's Electric Universal Service Program (EUSP); $4 million will be provided to support the objectives of the EmPower Maryland Energy Efficiency Act; $10 million will be provided to help spur development of electric vehicle infrastructure in Maryland; and at least $45 million will be invested to develop 25 megawatts of renewable energy in the state. Along with a $100 rate credit that will be provided to each BGE residential customer, the total benefits will be more than $250 million.
2. NEW Q: What's the timeline? When will we know?
A: The merger is expected to be completed during the first quarter 2012. The merger integration process is only in the early stages and much is yet to be decided. Constellation Energy and Exelon recently announced the start of the integration planning process, specifically, the formation of Core and Business Area Integration teams. Those teams will guide the process, analyze the two companies' functional organizations and design what the post-merger organization will look like. The Integration teams are committed to timely and open communication and will update employees on decisions throughout the process.
HR/Benefits/Staffing
1. NEW Q: Will Constellation have a job center to help us find new employment? How do we go about collecting unemployment? What kind of medical insurance can we get while out of work?
A: All of these issues will be addressed as part of the integration process, which is currently underway.
2. NEW Q. Will there be a hiring freeze at Constellation Energy?
A: No. As a reminder, we will continue to follow the managed hiring process that has been in place for quite some time. This process keeps our focus on leveraging our internal talent across the company while being prudent and thoughtful about the skills we may need to bring into the company.
Business Unit
BGE
1. NEW Q: What is EUSP?
A: The Electric Universal Service Program (EUSP) is a state program that provides assistance with electric bills (electric only). EUSP includes two components: 1) Bill assistance grant-requires customer to go on budget billing and reduces the monthly payment customers would otherwise make.
2) Arrearage program-gives customer a grant of up to $2,000 to pay off arrearages. A qualifying customer is eligible for arrearage help once every seven years.
Power Generation
1. NEW Q: What is the plant sale timeline vs. T&SS timeline?
A: The process of divesting the three Baltimore coal plants will not begin until the merger is closed. Close is not expected to occur until the first quarter of 2012. The companies have committed that within 180 days after the closing of the transaction, the combined company will enter into contracts to divest the three Constellation Energy coal plants (Brandon Shores, H.A. Wagner, and C.P. Crane).
As far as the Technical and Support Services (TSS) and other groups, which provide support to the Baltimore coal plants, it has not yet been determined whether these groups will be included in the plant divestiture. In the next few months, we expect to have more clarity around the specifics of the divestiture.
2. NEW Q: What long term options will I have post merger?
A: The Exelon-Constellation merger is primarily driven by strategic fit, rather than synergies. But, as is the case with most mergers and acquisitions, at least part of the rationale for combining operations is to increase efficiency, which is accomplished in part by reducing overlapping or redundant functions. The two companies anticipate some consolidation at the corporate levels, and from integrating the two companies' trading platforms, but are focused primarily on eliminating open positions to minimize direct impact on employees. We can't specify the number of positions at this point. Beyond that, as an employee of the number one competitive energy products and services supplier, number two residential electricity and gas distribution company, and number one competitive power generator with more than 34 GW of power generation, there should be growth opportunities for employees post-merger.
CENG
1. NEW Q: What should I do as a CENG employee concerning the proposed merger with Exelon?
A: CENG employees should remain focused on those items within their control-personal and nuclear safety, operating the fleet exceptionally well, taking care of our environment, staying engaged in helping CENG be successful, and ensuring the general public is safe.
2. NEW Q: There are several fleet initiatives going on now. Will they be paused due to the merger?
A: The proposed merger is not expected to affect CENG's day-to-day operations; therefore, we will continue to move forward with fleet initiatives. If appropriate, CENG leadership will assess fleet initiatives to determine if existing or planned projects need to be modified.
3. NEW Q: CENG employees currently share documents with peers at Exelon, can we still do this?
A: If employees were permitted to share the information in the past, they can continue to share it now; if information was not shared in the past then it should not be shared now. Employees need to continue to treat CENG documents as confidential and proprietary. If an employee would like to share a contract or purchase order etc., they must first contact legal for approval.
4. NEW Q: Will CENG's fleet outage schedule change?
A: CENG will continue to use the current outage schedule that has been developed and approved.
5. NEW Q: Are there similarities and differences between Exelon's and CENG's organizational charts, Eplan and CAP programs?
A: There are both similarities and differences between the Exelon and CENG fleets. When appropriate, both companies will share best practices.
6. NEW Q: What will happen to the support services CENG receives from CE?
A: CENG will continue to receive support services from CE during the transition. The integration process will address the support services currently provided by CE.
7. NEW Q: Is UniStar part of the proposed merger?
A: UniStar is not affected since it is solely owned by EDF.
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