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Gov. Martin O'Malley for the first time is backing regulatory approval of Constellation Energy Group's joint venture with a French utility - but only if BGE customers get one-time credits that could be worth more than $200 per household and other conditions are met.
O'Malley, a Democrat, has publicly reproached Constellation and argued that the Public Service Commission, the state's top energy regulator, should ensure that the company's proposal to sell half its nuclear business to Electricite de France for $4.5 billion is in the public's interest.
The governor's heavily qualified support for the transaction comes after he failed to wrangle concessions from Baltimore-based Constellation, which owns Baltimore Gas & Electric, during months of negotiations that took place apart from the regulatory hearings. Many of the demands O'Malley made during those talks are now the conditions he proposes to the PSC.
A copy of final briefing papers the administration plans to file in the case was obtained by The Baltimore Sun. Final briefs from all interested parties are due today.
"The Commission should attach conditions to the approval of this transaction that will give full confidence to the credit markets, to BGE customers, and to the public as a whole," the administration writes.
Constellation spokesman Robert L. Gould declined to comment on the administration's latest stance.
The PSC case is nearing an end after extensive hearings during which the commission took testimony, not only from the companies, but from the public and the Maryland Office of the People's Counsel, which represents ratepayers and opposes the deal.
While the complicated deal is under the purview of the PSC as a regulatory matter, O'Malley's involvement has lent it a political backdrop. The governor faces re-election next year and made his opposition to a proposed BGE rate increase a central point of his 2006 campaign. He has been unable to stop utility bills from rising in his first term.
As an independent regulatory body appointed by the governor with the state Senate's consent, the PSC could reject the transaction, approve the deal or allow it to move forward with certain stipulations.
The administration laid out a range of desired stipulations, from ratepayer credits to measures that would bolster the independence and finances of BGE, the state's largest utility, which serves more than 1.1 million residences. The administration argues that legally, the transaction not only must not harm ratepayers but must provide them benefits.
The credits O'Malley proposed would equal 10 percent of the total amount paid annually by a customer. Based on the average monthly power usage by BGE electric and gas consumers, that would come to more than $200 for a typical customer. The credits would be similar in scope to rebates provided under a $2 billion settlement approved by the General Assembly last year that put to rest many disputes regarding the 1999 deregulation of the state's energy industry.
O'Malley also wants Constellation to make a $50 million to $100 million contribution to Maryland's Electric Universal Service Program, which helps lower-income residents pay their utility bills. And he wants the company to agree to limits on executive compensation. The governor has been highly critical of pay arrangements for Constellation CEO Mayo Shattuck III.
Another one of the administration's primary concerns is that BGE be protected from potential financial calamity at Constellation. The company, which owns the utility as well as generating assets and other businesses, got caught in a credit crisis last year and at one point considered an offer from billionaire Warren E. Buffett to avert bankruptcy before agreeing to the EDF deal.
In the briefing papers, the O'Malley administration calls for Constellation to make a capital infusion into BGE when the deal closes and for a prohibition on dividends paid by BGE to Constellation if those payments hurt the utility's ability to meet its capital needs or affect its credit ratings.
The administration also calls for measures that would insulate BGE in case of a Constellation bankruptcy, and for corporate governance reforms to make a majority of BGE's board independent.
Constellation, during settlement talks with the governor, had proposed giving customers a break by delaying requests for minor rate increases. It also offered to increase restrictions on transactions between BGE and its parent, and to cancel a "golden parachute" for Shattuck even though the company insisted the EDF deal wouldn't trigger any payout to the CEO.
In addition, Constellation has laid out what it characterizes as extensive benefits of the deal. In particular, it warns that without transaction, the company won't be able to build a third nuclear reactor at Calvert Cliffs. The project would not only be one of the biggest capital construction projects in Maryland's history but would boost energy production in the state.
O'Malley, a Democrat, has publicly reproached Constellation and argued that the Public Service Commission, the state's top energy regulator, should ensure that the company's proposal to sell half its nuclear business to Electricite de France for $4.5 billion is in the public's interest.
The governor's heavily qualified support for the transaction comes after he failed to wrangle concessions from Baltimore-based Constellation, which owns Baltimore Gas & Electric, during months of negotiations that took place apart from the regulatory hearings. Many of the demands O'Malley made during those talks are now the conditions he proposes to the PSC.
A copy of final briefing papers the administration plans to file in the case was obtained by The Baltimore Sun. Final briefs from all interested parties are due today.
"The Commission should attach conditions to the approval of this transaction that will give full confidence to the credit markets, to BGE customers, and to the public as a whole," the administration writes.
Constellation spokesman Robert L. Gould declined to comment on the administration's latest stance.
The PSC case is nearing an end after extensive hearings during which the commission took testimony, not only from the companies, but from the public and the Maryland Office of the People's Counsel, which represents ratepayers and opposes the deal.
While the complicated deal is under the purview of the PSC as a regulatory matter, O'Malley's involvement has lent it a political backdrop. The governor faces re-election next year and made his opposition to a proposed BGE rate increase a central point of his 2006 campaign. He has been unable to stop utility bills from rising in his first term.
As an independent regulatory body appointed by the governor with the state Senate's consent, the PSC could reject the transaction, approve the deal or allow it to move forward with certain stipulations.
The administration laid out a range of desired stipulations, from ratepayer credits to measures that would bolster the independence and finances of BGE, the state's largest utility, which serves more than 1.1 million residences. The administration argues that legally, the transaction not only must not harm ratepayers but must provide them benefits.
The credits O'Malley proposed would equal 10 percent of the total amount paid annually by a customer. Based on the average monthly power usage by BGE electric and gas consumers, that would come to more than $200 for a typical customer. The credits would be similar in scope to rebates provided under a $2 billion settlement approved by the General Assembly last year that put to rest many disputes regarding the 1999 deregulation of the state's energy industry.
O'Malley also wants Constellation to make a $50 million to $100 million contribution to Maryland's Electric Universal Service Program, which helps lower-income residents pay their utility bills. And he wants the company to agree to limits on executive compensation. The governor has been highly critical of pay arrangements for Constellation CEO Mayo Shattuck III.
Another one of the administration's primary concerns is that BGE be protected from potential financial calamity at Constellation. The company, which owns the utility as well as generating assets and other businesses, got caught in a credit crisis last year and at one point considered an offer from billionaire Warren E. Buffett to avert bankruptcy before agreeing to the EDF deal.
In the briefing papers, the O'Malley administration calls for Constellation to make a capital infusion into BGE when the deal closes and for a prohibition on dividends paid by BGE to Constellation if those payments hurt the utility's ability to meet its capital needs or affect its credit ratings.
The administration also calls for measures that would insulate BGE in case of a Constellation bankruptcy, and for corporate governance reforms to make a majority of BGE's board independent.
Constellation, during settlement talks with the governor, had proposed giving customers a break by delaying requests for minor rate increases. It also offered to increase restrictions on transactions between BGE and its parent, and to cancel a "golden parachute" for Shattuck even though the company insisted the EDF deal wouldn't trigger any payout to the CEO.
In addition, Constellation has laid out what it characterizes as extensive benefits of the deal. In particular, it warns that without transaction, the company won't be able to build a third nuclear reactor at Calvert Cliffs. The project would not only be one of the biggest capital construction projects in Maryland's history but would boost energy production in the state.
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Re-regulating BGE is still an option if BGE can be separated from the parent company CEG. Unfortunately, BGE no longer owns the power plants.
Thatslife (10/27/2009, 8:07 AM )