Energy Firm Aims To Assure Workers
Sunday, September 21, 2008
Constellation Energy Group sought to assure its employees and Southern Maryland residents late last week that the Calvert Cliffs Nuclear Power Plant in Lusby, which employs hundreds of area residents, would continue to operate as usual under a new owner.
MidAmerican Energy Holdings, a Des Moines-based subsidiary of Warren E. Buffett's Berkshire Hathaway, reached "a definitive agreement" Friday to buy the Baltimore-based Constellation Energy Group for $4.73 billion, or $26.50 a share.
Gregory E. Abel, president and chief executive of the Des Moines-based subsidiary, said in a statement: "MidAmerican is very comfortable with, and committed to, Constellation Energy's current strategic plan. We intend, as with all of our investments, to allow Constellation Energy to operate autonomously as it pursues its long-term goals."
Abel said that his company would bring financial stability to Constellation, whose stock has plunged amid worries over liquidity. The company's stock has fallen 70 percent since July 31, closing Friday at $25.76.
Maureen Brown, a Constellation Energy Group spokeswoman, said: "Nothing has changed in regard to how we do business every day."
Brown said she did not want to speculate on how the purchase "might or might not affect employees" at the Calvert Cliffs power plant, which employs about 800 people, mostly Southern Maryland residents. She said the company continues to be focused on the safe operation of its facilities and the well-being of its employees.
"Our employees are our most valuable asset," she said. "We don't have all the answers right now."
Local officials hailed the sale, saying it could help assure that the planned third reactor for Calvert Cliffs would be built, producing additional tax revenue for the county.
But given recent volatile stock market activity and the drop in Constellation's value, some people expressed concerns.
David H. Ring, 69, of St. Leonard started working at the plant 20 years ago as an electrician. About seven years ago, he retired as an engineering analyst.
"What is going to happen to the pension?" Ring asked. "I'm hoping it is a solvent account that can't be touched, but I don't know that for sure."
Ring said he watched the plant's bottom line shrink in the years he worked there. Now, he said, his former colleagues are delaying retirement because their 401k accounts are bottoming out because of the drop in the value of Constellation Energy stock.
He said that his bottom line is getting tighter, too, and that the cost of his medical insurance through the company rose $100 last year. "That comes off the top of your pension. Those are the kinds of things as this economy goes that are making things tighter for us, too," Ring said.
Abel, MidAmerican's chief executive, said he does not expect short-term effects for customers of Constellation's Baltimore Gas & Electric, which has more than 7,000 customers in Calvert County. It also serves more than 1.8 million utility customers elsewhere in Maryland.
The agreement between MidAmerican and Constellation includes continuing with the proposed third reactor at Calvert Cliffs Nuclear Power Plant. The plans are undergoing review by state and federal regulatory agencies.
Constellation officials have said they will make the final decision next year on whether or not to build the third reactor.
Wilson H. Parran (D-Huntingtown), president of the Calvert Board of County Commissioners, said Friday that he thinks the sale is "good news."
"Regardless in the charge of players, there is still a need for energy supply," he said.
Parran said Buffett "is considered one of the most successful investors in probably the world." (Warren Buffett is a board member of The Washington Post Co. ) He said the improved financial stability of Constellation would benefit the county.
"Hopefully it will get us closer to hearing a decision that [a new reactor] will be in Calvert County," Parran said, adding that the tax agreements the county has with Constellation will not be affected.
The announcement by MidAmerican on Friday evening came shortly after wire reports that European energy giant Electricite de France SA met earlier that day to discuss a strategy for possibly bidding on Constellation.
Electricite de France recently became Constellation's largest shareholder and is a partner with Constellation in UniStar Nuclear Energy, which is the applicant for the proposed third nuclear reactor at the Calvert Cliffs plant.
The merger will be reviewed by federal and state regulators. The deal is expected to be finalized in nine months.