Baltimore Gas & Electric Co. has gone to federal court to try to overturn a Maryland Public Service Commission decision preventing the utility from forming a holding company.
BG&E officials said yesterday they have filed suit in U.S. District Court in Baltimore challenging the constitutionality of last month's PSC decision.
BG&E had sought the reorganization, in which a newly formed holding company would have acquired all of BG&E's common shares, to provide more flexibility for the corporation. The PSC blocked the holding company plan, arguing that state law prohibits a Maryland corporation that is not already a public utility from holding more than 10 percent of the stock of a utility company except as collateral for a loan.
"If the commission's interpretation of the law is correct, then the law is unconstitutional, since it inteferes with the rights of the BG&E shareholders in deciding to adopt a corporate structure in providing the flexibility to meet the challenges of the future," the company said.
The utility company's challenge to the constitutionality of the decision is based on an assertion that it constitutes inteference in interstate commerce and also pre-empts federal law, which sets certain requirements for public utility holding companies but does not prohibit them.
"We are not aware of any law in any other state which flatly prohibits adopting a holding company structure," the BG&E spokesman said.
The thwarted reorganization would have to be approved by the federal Securities and Exchange Commission and the shareholders before it could take effect.