Selling Ceg's Deal

Top Constellation Energy Officials Tell Psc That French Connection Won't Influence Bge

April 28, 2009|By Robert Little | Robert Little,robert.little@baltsun.com

Top executives of Constellation Energy Group took the unusual step of appearing before state utility regulators Monday, hoping to ensure approval of the deal that helped rescue the firm from bankruptcy.

Chief Executive Officer Mayo A. Shattuck III and Vice Chairman Michael J. Wallace testified before the state Public Service Commission in favor of Constellation's $4.5 billion nuclear energy partnership with the French utility Electricite de France.

The deal with EDF gives the French company a 49.99 percent stake in Constellation's nuclear power business.

The commission is considering whether the deal affects Baltimore Gas and Electric Co., Constellation's public utility subsidiary, and whether it should be subject to government oversight.

Shattuck, seated at a table more typically occupied by subordinates and attorneys, made clear that Constellation believes the deal is purely a business arrangement, not a matter for utility regulators.

"It is not our view that it has any effect on BGE whatsoever," Shattuck said.

Under questioning from an attorney representing the state, Shattuck said Constellation officials are so certain the deal does not give the French company "undue influence" that they scarcely studied the question.

"It was not necessary," Shattuck said. "We've gone to great lengths to try to structure this transaction so that there is no influence over BGE."

Others at the hearing were not as certain.

"We believe very strongly that there is evidence there to show an opportunity for substantial influence," said Maryland People's Counsel Paula Carmody.

Members of the commission offered little hint yesterday how they plan to vote on the matter in coming weeks, but the outcome is far from irrelevant. Constellation's deal with EDF, which superseded a takeover deal with billionaire investor Warren Buffett last year, was struck as the company faced bankruptcy because of a crippling credit shortage in its commodities trading division.

The deal with EDF was key in stabilizing the Baltimore company's stock and assuaging credit rating agencies. But Shattuck argued that the deal leaves Constellation and BGE fully in charge.

"There's no mystery as to why the number is 49.99 percent, " Shattuck said. "Constellation is the company making the decisions. We're the ones with the operating license; we're the ones who are going to be running the plants."

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