PSC probes Constellation deal

The Baltimore Sun

State energy regulators will investigate whether Constellation Energy Group's proposed nuclear-power venture with France's largest utility would have enough impact on the region's regulated utility, Baltimore Gas & Electric Co., to require their approval of the deal. The Public Service Commission concluded yesterday that the company's proposal with Electricite de France raises questions about the potential impact on BGE and its ratepayers, including whether EDF's ownership of Constellation preferred stock places "substantial influence" over the company and BGE's operations.

Constellation's now-abandoned deal to be acquired by MidAmerican Energy Holdings Co. also raises issues related to BGE, such as whether costs to terminate the transaction affect BGE's finances.

"There is, in the Commission's view, a fair question about whether this new status quo materially affects the franchise exercised by BGE," the PSC wrote in its order.

The outcome of the panel's inquiry could complicate the deal's closure, which Constellation and EDF had hoped to take place in six to nine months.

Last month, Constellation broke off the $4.7 billion deal with MidAmerican it reached in mid-September in the midst of a liquidity crisis in its commodities-trading business. Instead, Constellation agreed to sell half of its nuclear power business to EDF for $4.5 billion and remain an independent, Baltimore-based public company.

To terminate the deal with Iowa-based MidAmerican, which is controlled by billionaire Warren Buffett, Constellation paid $593 million in cash and gave him 10 percent of the company's stock. It also repaid this week a $1 billion emergency loan MidAmerican gave it to stave off bankruptcy, plus $5 million in interest.

Constellation and EDF have said the PSC has no jurisdiction over their deal because EDF is not being granted any authority over BGE.

Oral arguments are scheduled for March 6.

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