October 26, 2009

PSC staff wants conditions placed on Constellation, EDF deal

Print More

By Andy Rosen
Andy@MarylandReporter.com

The Public Service Commission’s staff has expressed strong reservations about Constellation Energy’s $4.5 billion deal to sell nearly half of its nuclear generating business to the French firm Electricite de France, though it says the regulatory panel can set conditions that would make it acceptable.

The PSC staff believes the company should sink as much as $400 million into utility Baltimore Gas & Electric as part of the deal. It calls for the commission to continue looking at ways that Constellation can cordon the utility off from the rest of the company, and it also suggests the PSC get commitments related to the maintenance of the power lines and facilities it owns.

“There is the potential for significant costs or harm to BGE customers from the proposed transaction, which the Commission can mitigate as part of its transaction approval process,” the report reads. It recommends between $300 million and $400 million be infused into BGE as part of the deal, because it would help the utility’s credit rating and could boost its liquidity. The recommendation is that the infusion be within two months of the transaction closing, rather than delayed or spread out.

The staff recommendation was posted on the commission’s site on the final day that the PSC was accepting briefs in its inquiry into the proposed deal. The inquiry focused specifically on how the transaction would affect BGE, which is a regulated power and gas company that Constellation owns. Lawanda Edwards, a PSC spokeswoman, said the commission is likely to rule on the deal within about a week.

Gov. Martin O’Malley’s administration also filed its comments Monday, as The Baltimore Sun reported. O’Malley is also looking at issues related to separation between BGE and Constellaiton, but he is looking for the company to give BGE customers $200 million in bill credits.

The PSC will review all of the filings before making a decision, Edwards said.

Constellation also filed a brief Monday, arguing that most parties should agree that it is best for Maryland if the deal goes through. It says it hopes the transaction is successful, but won’t fail without it.

“While [Constellation] has stabilized its financial condition and will be fine regardless of the outcome of this proceeding, [Constellation] firmly believes that this transaction is in the best interests of the state, BGE, consumers (including BGE customers), employees, investors and … a host of other constituencies,”  the company filing reads.