Constellation Purchases Retail Branch of Con Edison Solutions

On July 27, 2016, Constellation announced that it is purchasing the retail branch of Con Edison Solutions in order to continue to grow and expand within the United States energy deregulation market. This agreement is still under review and is expected to successfully close by the end of this year.

The Agreement Details

Neither Con Edison Solutions or Constellation have disclosed any of the agreement or contract’s specific details. However, the deal between the two companies ensures that Constellation will inherit Con Edison Solutions natural gas and retail electricity business. This means that over 560,000 residential, commercial, industrial and public sector customers in areas including the District of Columbia, Texas and 12 additional mid-Atlantic, Midwestern and Northeastern states will transfer over to Constellation Energy.

According to a press release published by Constellation, the company feels that Con Edison is known best for providing customers with products and services of great value. The acquisition will help to maintain those same values while providing customers with additional services and products at great prices. It will also help Constellation to move into markets and develop business within the retail electricity and natural gas industry.

It is important to note that the financial advisor to Con Edison Solutions regarding the contract is UBS investment bank. The agreement is also subject to all reporting and subject requirements under the Hart-Scott-Rodino Act.

Consolidated Edison Company Details

Consolidated Edison (also known as Con Ed, ConEdison or Con Edison) has approximately $36 billion in assets and brings in approximately $13 billion in annual revenue (2010) making it one of the biggest investor owned energy companies in America. They offer a large selection of services and products through its related energy companies including,

Con Edison Company of New York – This company provides steam, natural gas and electricity services to Westchester County and the city of New York.

Con Edison Transmission – This subsidiary invests in gas and electric projects to help give better access to the supply of energy.

Con Edison Solutions – This subsidiary offers energy products and services across the United States. It is the retail component to this company that Constellation has purchased or acquired. The retail business itself comes with about 85 employees, and in 2015, successfully delivered 1Bcf of natural gas and almost 14 Twh of electricity. It is the 16th largest residential electricity retailer and the 13th largest commercial and industrial retailer within the United States.

Con Edison Development – This subsidiary invests in projects that focus on energy infrastructure.

Con Edison Energy – This subsidiary provides electricity risk management and energy capacity services to wholesale customers.

Orange and Rockland Utilities – This subsidiary offers electricity services to 7 counties within northeastern Pennsylvania, New York and northern New Jersey.

Constellation Company Details

Constellation provides products and services for businesses and homes for many states within America. Their services and products include, energy management, renewable energy, electricity or power and natural gas. Their offers include integrated energy solutions to assist their customers in the management, consumption and purchase of energy. Currently, Constellation provides services to around 2 million business, public sector and residential customers. Their customers include many Fortune 100 companies.

Constellation merged with Exelon in 2012. Exelon aims to lead the energy industry in providing clean, reliable, innovative and affordable energy products. Together, they own more than 32,700 mWh of capacity. This makes them one of the United State’s lowest cost and cleanest power generators. In 2015, their combined revenue reached around $34.5 billion. Earlier in 2016, the company merged with Pepco for $6.8 billion. From the merger, Exelon gave Constellation a branch of Pepco called, Pepco Energy Services to manage (a similar subsidiary to Con Edison Solutions).

Community Choice Aggregation

This acquisition means that Constellation will take on a contract called, Community Choice Aggregation. This contract belonged to Con Edison Solutions and will continue to run within its New York territory. Community Choice Aggregation is currently available in 7 states and enables communities to invest in cleaner energy. In fact, Constellation already owns the contract for the territory for the New York State Electric & Gas Corporation.

Community Choice Aggregation also supports energy deregulation. Energy deregulation gives energy consumers the option to choose the company or organization that supplies electricity or natural gas. While not yet available in all states there are many including, New York, Pennsylvania and Texas that are subject to this law. Community Aggregation is one of the ways in which customers are encouraged to investigate their energy supply options, instead of simply sticking with their local utility. In addition, it gives Constellation the flexibility to deepen their commitment to making the supply of energy even more affordable for their customers.

Changes for Customers of Con Edison Solutions

This acquisition, once finalized, will have little impact on current customers. It is estimated that in 2017 (when the acquisition is officially approved), the retail electricity and natural gas supply business will switch over to, and operate under Constellation’s brand. Customers that fall under the umbrella of residential and commercial will not experience any service disruptions and all current or existing contracts will remain unaltered and unchanged.

Con Edison Solutions will continue to provide renewable and sustainable energy products and services for its government, residential, industrial and commercial customers. According to a grid edge analyst with GTM Research, the reason for this is because those specific types of clients require a much more comprehensive understanding of operational requirements and energy consumption for the customers. Competition is much more fierce in this area of the industry. Breaking up their business in this way means that Con Edison Solutions can direct more of their attention towards expanding or growing within this specific niche market. It also means that they can dedicate more time to the development of more energy efficient, sustainable and renewable energy.