Hearings on CEG deal extended
PSC action enables attorney general, people's counsel to further review partial sale of nuclear business to French firm
Additional hearings are scheduled for Oct. 14, and Oct. 15 if necessary. That means it's unlikely that the Public Service Commission will make a decision by its Oct. 16 deadline, even though the commission has tried to accommodate the companies' concerns over the timeliness of the deal's closing.
"We see this as a process delay and, as always, are respectful of the process. Clearly, the commission appreciates the need to conduct its work in a timely fashion and to that end we will continue to cooperate fully as it completes its review. That said, we're hopeful the commission will issue a final order as soon as possible," Constellation spokesman Rob Gould said.
For more than six months, the PSC has been considering whether the $4.5 billion sale of nearly half of Constellation's nuclear power business to Electricite de France would benefit Baltimore Gas and Electric Co. and its customers.
The PSC's action on Friday allows the state and other parties, including the Maryland Office of People's Counsel, to seek more information and file additional expert testimony on whether the transaction's final terms would substantially change the deal.
Representatives of the state attorney general said the companies did not release the deal's final terms until evidentiary hearings concluded last week.
The state said it needs more time to investigate changes to the deal's terms that it argues would pose more risks to BGE, Constellation's regulated utility, and what new conditions would be warranted. EDF and Constellation disagree with that assessment.
Some PSC members took the companies to task for not updating the commission with new details of the transaction's agreement, though Constellation lawyers said they had provided drafts of changes to the parties involved in the case.
At one point, Chairman Douglas Nazarian raised his voice in frustration, asking why the companies took so long to reveal a change to the deal's tax structure that is estimated to save $1.4 billion in mostly federal taxes for both companies, including $200 million for Constellation.
"But the bottom line is it's the PSC who has to make the decision," member Susanne Brogan said. "It's up to us to determine what is material or not. We need to know what the deal is, all the parameters."
In September, the commission also pushed back the review schedule, forcing the companies to miss its Sept. 17 deadline to complete the transaction.
Constellation and EDF have extended the deadline to Oct. 30 and either party can extend the agreement's termination date to Dec. 17, according to regulatory filings.
Paula M. Carmody, the people's counsel, said her office was pleased with the commission's decision to extend the case, which allows the parties to examine new issues that have been raised in the past week. The office is seeking from Constellation an analysis of the companies' tax savings, in particular, the impact on Maryland.
Gould said "nothing substantive" has changed with the transaction due to the deal's new terms. He noted that the estimated $130 million in state income tax that Constellation would pay remains the same.
Lawyers for the state, the people's counsel and the PSC staff have until noon Oct. 13 to submit additional expert testimony related to the deal's final terms.