In addition, the administration wants to cap what Constellation charges for distributing electricity or delivering natural gas, and require the company to pay $200 million for a clean energy project such as expanding the smart grid that allows consumers to save power. It also wants Constellation to agree to implement procedures to protect BGE from financial problems at the parent company.
Constellation has had a rocky relationship with state officials for a number of years as rising electricity bills have put many of its customers in jeopardy of losing service. The tensions appeared to abate last year when the two sides struck a $2 billion settlement that was approved by the General Assembly and includes rebates, rate credits and other concessions.
O'Malley returned to Annapolis this year with a proposal to re-regulate electricity markets, a plan Constellation opposed. And Constellation got caught in a credit crisis, eventually agreeing late last year to the EDF deal instead of an offer from billionaire Warren Buffett to avert bankruptcy.
Under last year's settlement, lawmakers raised the cap that generally triggers the need for regulatory approval of transactions to those that involve at least 20 percent of Constellation's shares or control over more than one-fifth of the board.
James L. Connaughton, executive vice president for corporate affairs, public and environmental policy at Constellation, said EDF would own a 9 percent stake in Constellation stock and control 9 percent of the board once the transaction is complete. He noted that the company is now in better financial shape.
"We'll be OK," he said. "It's Maryland that loses if this deal doesn't go through."
But the PSC said it came to "exactly the opposite conclusion" because EDF would acquire Constellation assets - not voting interests. Therefore the "safe harbor" from regulatory scrutiny does not apply, the commission concluded. Under the EDF deal, the company would become a 49.99 percent owner of Constellation's nuclear facilities in Maryland and New York.
O'Malley, who has been traveling in Europe, indicated in a statement that his administration doesn't necessarily oppose the EDF deal and that the transaction could secure a more stable, cleaner energy future for the state.
But he said regulators must ensure that ratepayers and the utility are protected. He said he expects the PSC review to be done "in an expedited manner to accommodate Constellation and EDF's anticipated closing date this fall."
An EDF spokeswoman said that while the company disagrees with the PSC, it would continue to work to complete the transaction. Company officials say the EDF partnership would help Constellation move forward with building a nuclear reactor at Calvert Cliffs.
Constellation has secured approval for the deal from the Federal Energy Regulatory Commission and the New York Public Service Commission.
Utility battle
The ruling: The Maryland Public Service Commission will review Constellation's deal with EDF to determine whether it is in the public interest.
The response: Constellation sued to appeal the PSC order in Baltimore Circuit Court.
What's next: The first PSC hearing will be held June 17. Constellation has asked the court to expedite the proceedings.
