PSC considers its right to review Constellation deal

Commission seeks documents on merger with French company to see whether it has jurisdiction

December 20, 2008|By Liz F. Kay | Liz F. Kay,

The Maryland Public Service Commission asked for documents related to Constellation Energy Group's proposed $4.5 billion nuclear energy partnership with a French utility yesterday, to determine whether state regulators have the authority to review the transaction, a process that could complicate the deal.

At a commission hearing, lawyers for the Maryland Energy Administration and the state attorney general's office argued that the panel has jurisdiction under a state law granting it authority to review transactions that give a person substantial influence over regulated utilities.

Constellation is the parent company to BGE, the area's primary electric and gas utility. At the very least, said Assistant Attorney General Joshua N. Auerbach, the commission has authority to review the transaction to determine whether it has jurisdiction.

"They can't decide whether they have jurisdiction until they have the facts about this transaction," he said.

The commission was scheduled yesterday to discuss the sale of Constellation to Warren Buffett's MidAmerican Energy Holdings Co., a deal that dissolved Wednesday when the partnership with Paris-based Electricite de France was announced. Instead, commissioners agreed to suspend the review and asked for documents related to EDF.

A state lawmaker, meanwhile, urged the commission to review the MidAmerican deal anyway, to determine the propriety of $593 million in termination fees Constellation paid Buffett's company as a price for backing out of the takeover.

"The PSC should now investigate every aspect of Constellation's mismanagement, including the excessive, sweetheart 'breakup fee' to MidAmerican and condition approval of the deal on re-regulation that shares the benefits of EDF's investment with hard-pressed ratepayers," Sen. Jim Rosapepe, a Prince George's and Anne Arundel County Democrat, said in a statement released yesterday.

"If there is a legal loophole which would block the PSC from reviewing the deal and protecting ratepayers, I'm optimistic the Maryland legislature would move promptly to close it," Rosapepe said.

Constellation spokesman Robert Gould said the company intends to cooperate fully with the PSC, adding: "We will be providing information to the commission as early as next week."

Constellation attorney Deborah Jennings said at the hearing that regulatory issues are different than they would have been under the MidAmerican purchase, because EDF is not being granted any authority over BGE.

"Its sphere of influence will be in respect to the nuclear side," she said.

Baltimore Sun reporter Robert Little contributed to this article.

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