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Imposing several conditions including a one-time $100 credit each for customers of Baltimore Gas & Electric Co., Maryland energy regulators Friday approved Constellation Energy Group's deal to sell half of its nuclear power business to a French utility.
In an extensive, 54-page ruling, the Public Service Commission said the proposed new reactor at Calvert Cliffs in Southern Maryland is "too contingent" to provide benefits to customers as required under state law. Besides imposing one-time credits totaling $110.5 million, the commission also placed conditions that would protect BGE against the financial troubles of its parent company.
They include Constellation investing $250 million in cash in BGE by June 30, not receiving dividends from BGE if the utility's equity level falls below 48 percent, and delaying requests for delivery rate increases.
The PSC directs the companies to inform the panel no later than Nov. 6 on whether they plan to close the transaction.
The long-awaited decision comes after a year-long saga that began with the near bankruptcy of Constellation amid the financial sector meltdown last September. In December, Constellation called off its takeover agreement with billionaire investor Warren Buffett in favor of a $4.5 billion with Electricite de France. The deal with Buffett was reached after Constellation faced a severe cash shortage which forced it to find a partner.
Since then, Constellation has been working to close the transaction with EDF but has been hit with legal battles, delays and opposition by anti-nuclear groups.
Constellation also has been under pressure by Gov. Martin O'Malley to provide one-time credits that could amount to more than $200 per household and to agree to other concessions. Behind-the-scenes settlement talks with company went nowhere, and this week, O'Malley backed regulatory approval of the deal for the first time but only if an extensive list of conditions is met, including the one-time rate credits.
In a statement Friday, O'Malley called the PSC's decision "fair and reasonable."
"By ordering certain conditions as part of the approval, the PSC clearly addressed the core issue the state has pursued in this matter from the state to protect the 1.1 million BGE ratepayers by upholding a law that requires this deal to provide 'benefits and no harm' to ratepayers," he said.
Constellation Chairman and CEO Mayo A. Shattuck said during a conference call with analysts Friday morning that the company expects to evaluate the ruling over the weekend.
Shattuck reiterated Constellation's commitment to close the deal after reports surfaced earlier this week that EDF wants to scrap the $4.5 billion deal.
"We don't have any reason to believe there is a change of heart," he said. "Both teams are working hard to get this transaction closed."
Assuming the ruling by the Maryland Public Service Commission is reasonable, Shattuck said the company is ready to close the deal in two weeks.
Shattuck noted that protections against a deal termination are strong, including the option for Constellation to sell EDF several of its U.S. coal plants for up to $2 billion assets that an EDF executive said the French company does not want during a hearing before the PSC in September.
Constellation had hoped to avoid the PSC's review and argued it was not required under state law. It lost a legal fight to challenge the PSC's authority investigate the deal when a judge ruled that it's premature for Constellation to challenge a continuing review process. The case is under appeal.
Also Friday, Constellation reported a third-quarter profit of $137.6 million, or 69 cents per diluted share. That's compared with a loss of $225.7 million, or $1.27 cents per diluted share, due to write-downs in its commodities operations in the corresponding period last year.
Constellation also raised its 2009 earnings guidance by 15 cents to between $3.25 and $3.45 per share.
"Our businesses delivered strong quarterly results and our nuclear and fossil fleets maintained top-tier reliability and operating performance," Shattuck said in a statement.
In an extensive, 54-page ruling, the Public Service Commission said the proposed new reactor at Calvert Cliffs in Southern Maryland is "too contingent" to provide benefits to customers as required under state law. Besides imposing one-time credits totaling $110.5 million, the commission also placed conditions that would protect BGE against the financial troubles of its parent company.
They include Constellation investing $250 million in cash in BGE by June 30, not receiving dividends from BGE if the utility's equity level falls below 48 percent, and delaying requests for delivery rate increases.
The PSC directs the companies to inform the panel no later than Nov. 6 on whether they plan to close the transaction.
The long-awaited decision comes after a year-long saga that began with the near bankruptcy of Constellation amid the financial sector meltdown last September. In December, Constellation called off its takeover agreement with billionaire investor Warren Buffett in favor of a $4.5 billion with Electricite de France. The deal with Buffett was reached after Constellation faced a severe cash shortage which forced it to find a partner.
Since then, Constellation has been working to close the transaction with EDF but has been hit with legal battles, delays and opposition by anti-nuclear groups.
Constellation also has been under pressure by Gov. Martin O'Malley to provide one-time credits that could amount to more than $200 per household and to agree to other concessions. Behind-the-scenes settlement talks with company went nowhere, and this week, O'Malley backed regulatory approval of the deal for the first time but only if an extensive list of conditions is met, including the one-time rate credits.
In a statement Friday, O'Malley called the PSC's decision "fair and reasonable."
"By ordering certain conditions as part of the approval, the PSC clearly addressed the core issue the state has pursued in this matter from the state to protect the 1.1 million BGE ratepayers by upholding a law that requires this deal to provide 'benefits and no harm' to ratepayers," he said.
Constellation Chairman and CEO Mayo A. Shattuck said during a conference call with analysts Friday morning that the company expects to evaluate the ruling over the weekend.
Shattuck reiterated Constellation's commitment to close the deal after reports surfaced earlier this week that EDF wants to scrap the $4.5 billion deal.
"We don't have any reason to believe there is a change of heart," he said. "Both teams are working hard to get this transaction closed."
Assuming the ruling by the Maryland Public Service Commission is reasonable, Shattuck said the company is ready to close the deal in two weeks.
Shattuck noted that protections against a deal termination are strong, including the option for Constellation to sell EDF several of its U.S. coal plants for up to $2 billion assets that an EDF executive said the French company does not want during a hearing before the PSC in September.
Constellation had hoped to avoid the PSC's review and argued it was not required under state law. It lost a legal fight to challenge the PSC's authority investigate the deal when a judge ruled that it's premature for Constellation to challenge a continuing review process. The case is under appeal.
Also Friday, Constellation reported a third-quarter profit of $137.6 million, or 69 cents per diluted share. That's compared with a loss of $225.7 million, or $1.27 cents per diluted share, due to write-downs in its commodities operations in the corresponding period last year.
Constellation also raised its 2009 earnings guidance by 15 cents to between $3.25 and $3.45 per share.
"Our businesses delivered strong quarterly results and our nuclear and fossil fleets maintained top-tier reliability and operating performance," Shattuck said in a statement.
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lol @ davidwayneosedach, now that funny.
DrDr74 (10/30/2009, 7:09 PM )