Power Company Lobbying to Keep Md. Lawmakers Out of Merger

By Matthew Mosk
Washington Post Staff Writer
Tuesday, February 21, 2006

Maryland's largest power company has launched a discreet but aggressive lobbying campaign to prevent the legislature from intervening with its plans to merge with a Florida utility to create one of the nation's largest electricity suppliers.

Constellation Energy Group has bulked up its roster of lobbyists in Annapolis, and the company's executives have been meeting with top lawmakers in recent days to try to dissuade the legislature from taking steps that would scotch the $11.5 billion deal with FPL Group, based in Juno Beach, Fla.

"This company is launching a lobbying blitz in the halls of the legislature to speed this merger through," said Sen. Leo E. Green (D-Prince George's). "We need to step on the brakes."

Green and other top lawmakers predict a fierce legislative battle over the proposed merger, which they worry could mean sizable rate increases for the 1 million Maryland customers of Constellation's subsidiary Baltimore Gas & Electric Co.

The merger comes as state caps preventing rate increases are set to be lifted in July. And Senate Finance Committee Chairman Thomas M. Middleton (D-Charles) said he worries that Maryland customers would end up paying the costs of repairing FPL Group's hurricane-battered power lines.

Green said he is introducing two bills this week to add layers of review to the process that Constellation will navigate to gain approval for the merger. A third proposal, in the House, is expected to drop early next week, said Del. Dereck E. Davis (D-Prince George's), who chairs the committee that oversees energy policy.

"The merger may be in the best interest of the company, but we need to make sure it's also in the best interest of Maryland citizens," Davis said.

Constellation spokesman Robert L. Gould released a statement last night saying that the company believes there are "sufficient" layers of regulatory oversight to reassure lawmakers.

"This merger will have a very positive effect on the state and our customers, and we think the existing review process will demonstrate that fact," Gould said.

But the company is not leaving anything to chance. The first public sign of the lobbying effort came last week, when the Senate president and House speaker reported visits from the chairman of the state's university system, who is also a Constellation executive.

Board of Regents Chairman David H. Nevins said he came into town to introduce the legislative leaders to the chief executive of FPL Group. Those present said the meetings included discussions of the merger.

"It appears they brought him in to be another insider to push their agenda," said Sen. Paul G. Pinsky (D-Prince George's). "They're concerned about the merger, and they're pulling out every trick and card they can use."

Nevins said he did not personally lobby the lawmakers about the merger. To do so would violate the university's ethics code, which explicitly forbids such meetings. It says a regent "shall not, for compensation, assist or represent any party in any matter before the General Assembly."

R. Michael Gill, the regents member who chairs the internal committee that reviews potential ethics violations, said his committee will not investigate the matter because "it hasn't been brought to us."

Nevins said he spoke with the director of the Maryland State Ethics Commission after the meetings were reported in The Washington Post and invited her "to come out and speak to our board about the policy and how it should be interpreted, going forward."

Green was one of several lawmakers who said he considered the meetings a possible ethics violation. He said he found them disturbing, although not as disconcerting as what Nevins's actions revealed about Constellation's interest in keeping the legislature from questioning the merger.

Constellation has an in-house lobbying team that includes former House speaker R. Clayton Mitchell Jr., and the company has brought in two large local firms to assist. FPL Group, meanwhile, has hired a third lobbying firm that has former speaker Casper R. Taylor Jr. as a partner.

"They've got two former speakers working this," Green said. "I am very concerned about their influence here."

Regardless, they have not persuaded House Speaker Michael E. Busch (D-Anne Arundel) to leave the merger alone. Busch said the dynamics are similar to those that led lawmakers to scrutinize the proposed sale of CareFirst BlueCross BlueShield. Busch said he remains concerned that the energy deal would bring a windfall to Constellation executives and benefit shareholders but leave Maryland ratepayers in the lurch.

Although primary responsibility for reviewing the deal rests with the Maryland Public Service Commission, Busch said he does not have confidence in the panel to give the deal thorough scrutiny.

Gov. Robert L. Ehrlich Jr. (R) appoints the members of the Public Service Commission and has helped reshape the commission's professional staff.

"We're all concerned," Busch said. "We just don't know if the Public Service Commission is going to do everything it can to protect consumer rights. And if we can't be certain, then there might be a role for the legislature here."