Gov. Martin O'Malley's administration is seeking ratepayer relief and other concessions from Constellation Energy Group as part of behind-the-scenes negotiations related to the Baltimore company's proposed deal to sell half its nuclear power business to a French utility.
According to internal correspondence obtained by The Baltimore Sun, O'Malley's office and Constellation may be nearing a settlement agreement that could include immediate electricity price reductions for strapped consumers, longer-term discounts and commitments that the company will make investments in environmentally friendly energy projects.
But the talks that have been continuing for months appear to have hit a snag recently as O'Malley's office balked at a potential $87 million payout to Constellation Chief Executive Officer Mayo A. Shattuck III. Such a payout would be triggered by so-called change in control - such as a sale of the entire company - and Shattuck's termination.
The deal with Electricite de France does not meet those conditions and is not a change in control, and thus Shattuck is not eligible for a large payment, according to Constellation.
"We are not prepared to see sums of this magnitude leave the company for a single individual at ratepayer expense," Michael R. Enright, O'Malley's chief of staff, wrote in a letter dated last week to a Constellation executive. Enright indicated that concerns about compensation would have to be addressed for the settlement negotiations to be successful.
The negotiations are separate from a case concerning the Constellation-EDF deal currently before the Public Service Commission, the state's top energy regulator. The transaction is considered crucial to Constellation's financial well-being, and a settlement with concessions could bolster its PSC case.
"It's not unusual in these types of circumstances that there would be parallel discussions with the goal of resolving any outstanding issues or concerns," Constellation spokesman Rob Gould said.
PSC Chairman Doug Nazarian, who was out of state, could not be reached for comment Thursday.
O'Malley spokesman Rick Abbruzzese declined to comment on the size of any potential rate reduction or other matters, citing continuing negotiations.
In December, Constellation scrapped a $4.7 billion deal with billionaire Warren Buffett's MidAmerican Energy Holdings Co. in favor of an investment by EDF. Constellation had looked to Buffett to help it avert bankruptcy amid a serious credit shortage.
