Judge Says Utility Commission Can Review Constellation Energy Deal
Sunday, July 5, 2009
A Baltimore Circuit Court judge has rejected Constellation Energy's contention that the state has no right to review and approve the company's proposed merger with a French energy firm.
In a ruling Thursday, Constellation lost its challenge of a decision last month by the Maryland Public Service Commission, which said that the commission needs to more closely examine the proposed $4.5 billion deal. Constellation seeks to sell nearly half of its nuclear assets to EDF, the French company.
The ruling by Judge Stuart R. Berger came days after UniStar Nuclear Energy won final approval from the commission to construct a third reactor at the Calvert Cliffs Nuclear Power Plant in Lusby. The new reactor still must receive federal regulatory approval.
UniStar Nuclear Energy is a joint venture of Constellation and EDF to build nuclear plants throughout the country.
Constellation Energy officials said in a statement Thursday that they disagree with Berger's ruling and that it goes against an agreement the company signed with the state last year. The agreement loosened the rules on when a state review process is required.
"The governor and chairman of the PSC signed an agreement specifically allowing a minority investment of this kind in our business in exchange for more than $2 billion in BGE customer benefits," the statement says. "Then, they challenged the very agreement they negotiated and signed."
The commission regulates Baltimore Gas and Electric, which is a subsidiary of Constellation Energy.
The statement says that the third reactor at Calvert Cliffs and the merger "are inseparable" and that Constellation Energy will be unable to raise the money necessary to build the project without EDF's involvement and the state's support.
The statement also says the company is reviewing its legal options: "We are committed to ensuring Maryland officials honor the agreement they signed with our company just last year, which clearly permits a transaction of this kind without PSC pre-approval. For the state of Maryland to be attractive to business now and into the future, it must honor its agreements. What could be more fundamental for representatives of state government than to honor the laws they adopt?"
Calvert County officials have backed the planned third reactor and merger, saying the county would benefit from the jobs and tax revenue coming from the plant. They said the new reactor would produce much-needed electricity for the region.
Gov. Martin O'Malley (D) issued a statement Thursday saying that he was pleased with the court ruling and that it gives the Public Service Commission more power to ensure that Maryland customers are protected.
"We look forward to continuing with the Public Service Commission review and we remain focused on the goal we have held throughout these proceedings: a thorough review of this proposed transaction by professional regulators to ensure that the transaction is consistent with the public interest and adequately protects ratepayers," O'Malley said.