O'Malley foe Constellation hires his brother-in-law

May 08, 2011|By Jay Hancock

Max Curran is doubly qualified to lead the legal fight to get the sale of Constellation Energy and BGE through the Maryland Public Service Commission.

First, he once was a commissioner himself. Second, a few months ago he succeeded in shepherding a similar deal though the same body. A PSC that had previously balked at approving the sale of Maryland utilities to out-of-state corporations did just that, signing off on the purchase of Potomac Edison and parent Allegheny Energy by Ohio-based FirstEnergy.

Curran is also the brother-in-law of the Maryland governor who has been at war with Constellation and its utility, Baltimore Gas & Electric, for five years.

Now you know why they call it Smalltimore! Which factor weighed heaviest in the decision by Constellation and merger partner Exelon to hire Curran instead of, say, DLA Piper, a previous Constellation adviser, only the companies know. (Saul Ewing, Curran's firm, had previously worked for Exelon, so perhaps that was a factor, too.)

The hookup isn't a conflict of interest for Gov. Martin O'Malley or anybody else under the state's ethics law. But it at least bears the appearance of another attempt by Constellation boss Mayo A. Shattuck III to butter up the governor.

Two weeks ago, Shattuck and the rest of the board agreed to sell Constellation to Chicago-based Exelon Corp. Almost the first thing stock analysts wanted to know was how in the world the deal could get done, given Constellation's O'Malley troubles.

Constellation's 2006 attempt to sell out to Florida's FPL Group died after then-gubernatorial candidate O'Malley repeatedly attacked BGE and blamed incumbent Gov. Robert L. Ehrlich Jr. for soaring electric bills.

O'Malley continued the onslaught in his first term, appointing a Public Service Commission that attempted to undo deregulation that was partly responsible for high BGE prices and high Constellation profits. Deregulation lives, but that sally produced an immediate $187 million settlement for consumers and $1 billion-plus over a couple of decades.

Next, the commission claimed jurisdiction over EDF Group's $4.5 billion investment in Constellation's nuclear fleet. O'Malley intervened directly, trying to get Shattuck to cut his gajillion-dollar golden parachute as a condition for approval of the transaction. Shattuck's pay didn't change at the time, but BGE customers got another $110 million in rebates. (EDF's and Constellation's plan to build a third reactor at Calvert Cliffs eventually fizzled.)

This time, Shattuck and Exelon boss John Rowe met O'Malley in Annapolis to alert him to the deal before it was announced. They offered over $100 million for electric cars, charity and renewable energy, which O'Malley favors. Their opening bid for compensating consumers was $110 million, which suggests they'll go higher. Shattuck no longer has a golden parachute.

And the companies hired the governor's brother-in-law to sell the deal to the governor's PSC.

J. Joseph "Max" Curran III, 45, is the son of former Maryland Attorney General J. Joseph Curran Jr. and the brother of Maryland first lady Katie Curran O'Malley. A seasoned energy and utilities lawyer, he served on the Public Service Commission from 1999 to 2005, overseeing the deregulation (passed by the General Assembly) that generated so much political heat.

As head of Saul Ewing's energy practice, he advocated for Allegheny Energy and FirstEnergy before the PSC, a merger that resulted in a $29 rebate for each of the utility's customers.

"It's a landmark for a successful merger" before the PSC, says Michael C. Powell, an energy lawyer with Baltimore-based Gordon Feinblatt, which also does work for Constellation. "Allegheny was what showed you how it can be done." For Constellation, he added, Curran's "understanding of what the PSC wanted in the Allegheny issue was valuable knowledge."

"If you're going to go out and hire a lawyer, you want one who's done it successfully already," said Allen Freifeld, who served with Curran on the PSC and is now senior vice president with Viridity Energy. "No. 1, it's a good indicator. No. 2, it can save some money. You don't want somebody learning on the job."

Through a spokeswoman, Curran declined to comment, saying he didn't want to speak publicly about a pending case. Constellation declined to answer my question about whether Curran's ties to O'Malley were a factor in the decision to hire him.

Robert A. Hahn, executive director of the State Ethics Commission, would not address Curran's Constellation gig specifically. However, he said, Maryland law bars public officials from participating in matters involving somebody who employs a spouse, child, parent or sibling. Nothing about siblings-in-law.

O'Malley spokesman Rick Abbruzzese said Curran's involvement would have no bearing on the governor's approach to the Constellation-Exelon combo.

"Max Curran's reputation speaks for itself, and the governor has complete confidence in the independence of the Public Service Commission that will ultimately have to determine whether this deal is good for ratepayers," Abbruzzese said.

By all accounts, Constellation has retained a fine lawyer in Curran and what Freifeld called "a good regulator, a good public servant" when he was on the PSC. But the hire also fits right into Shattuck's charm campaign.


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