The Environmental Law & Policy Center issued a statement yesterday charging that Exelon’s announcement that it plans to buy Integrys Energy Services, "raises anti-competitive concerns for Northern Illinois consumers."

"We have serious questions about whether Exelon’s purchase of Integrys Energy Services will reduce competition in the Northern Illinois retail electricity market, leading to higher utility bills and fewer renewable energy opportunities for consumers," Howard Learner, Executive Director of the Environmental Law & Policy Center said.

Retail market concentration is a novel issue, and heretofore has never been seriously considered, due in no small part to the dominance of incumbent default service providers, which pales in comparison to any concentration of retail suppliers fighting to serve only the 10-30% of the total distribution customer base which has switched.

In Illinois, however, this issue could have traction, due to the dominance of opt-out municipal aggregation, which has pushed the number of ComEd residential customers on competitive supply to 70%.

Accordingly, federal agencies, namely DOJ and the FTC, which have generally not concerned themselves with the retail market given that retail mergers have generally involved small fish (in comparison to the dominant default provider), may now see a retail merger as meriting scrutiny.

Indeed, the ICC's Office of Retail Market Development has noted that the ComEd residential market is "moderately concentrated" on an Herfindahl-Hirschman Index basis

Some 66% of the ComEd residential market was served by the three largest suppliers in May 2014. To the extent Constellation and Integrys Energy Services are two of these three suppliers, that could exacerbate market concentration concerns.

In the ComEd residential market, only twelve suppliers, of 50 active in the residential market, have more than 23,000 residential customers.

Learner continued:

"Exelon is the parent company of both Commonwealth Edison and Constellation Energy, which compete for retail electric consumers with Integrys Energy Services in Northern Illinois. If combined, these companies appear to control more than half of the retail electricity market in Northern Illinois. This market concentration could become even greater as First Energy [sic] has publicly stated that it is scaling back its retail electricity business."

"One of the promises of deregulation in Illinois was a competitive retail electricity services market that would benefit consumers. We’re concerned that this new acquisition by Exelon appears to reduce competition and increase the concentration of market power. We urge the U.S. Department of Justice, Federal Energy Regulatory Commission, Illinois Commerce Commission and other federal and state agencies to carefully investigate, review and determine the potential anti-competitive impacts of Exelon’s announced new acquisition of Integrys Energy Services," Learner said.