The state Public Service Commission on Friday approved the $4.5 billion sale of half of Baltimore-based Constellation Energy’s nuclear business to French company EDF, on the condition that the company gives a one-time credit of approximately $100 to every Baltimore Gas and Electric residential ratepayer by next March.
In an order released Friday afternoon, the commission said its approval also depends on Constellation pumping $250 million into BGE by June 30, and limits the dividends the utility can pay to its parent company. The order would also restrict when BGE could seek rate increases.
The order gave Constellation and EDF until next Friday, Nov. 6 to inform the PSC whether they will proceed with the deal under those conditions.
In a brief statement, Constellation acknowledged the order, but did not provide further comment, pending a review of the order. Company spokesman Rob Gould also declined to comment.
“Constellation Energy and EDF confirm that the companies are in receipt of today’s order issued by the Maryland Public Service Commission,” Constellation said in the statement. “Both companies have begun the process of reviewing the order.”
The decision ends a months-long showdown between Constellation and Gov. Martin O’Malley, who sought tangible benefits for approval of the deal ahead of next year’s statewide elections. Following the failure of back-room negotiations with Constellation, O’Malley for the first time backed the deal publicly this week, if the company would agree to a list of concessions. O’Malley had originally sought a $200 one-time credit for households.
The PSC required less than that amount with its condition of a $110.5 million pay-out due by the end of March, money that was intended for a new $20 million visitor’s center at Calvert Cliffs Nuclear Power Plant, charitable donations, and other purposes.
In its order, the commission argued that a separate, specific benefit was required for BGE ratepayers beyond those every state resident would reap from the major source of new power created by a third nuclear reactor at the Calvert Cliffs.
Both Constellation and EDF have said in the past that completion of the deal was required to move forward with the construction of the reactor.
However, in its order the PSC sought to separate its decision from those considerations.
“The decision to build Calvert Cliffs 3, and the fate of any impact to our State from that project, lies in the Companies’ hands at this point, not ours, and depends on a great many pending and uncertain decisions that are the responsibility of others,” the commission said in its order.
“It would be unfortunate, though, if public officials, unions, churches, Chambers of Commerce, business owners, the press and, most of all, the Companies’ employees have been (mis)led to believe that our decision approving this Transaction guarantees that Calvert Cliffs 3 will be built,” the PSC said.
While acknowledging the public outcry over the compensation package for Constellation President and CEO Mayo Shattuck and others, the PSC in its order opted not to address that issue.
“Even if we might, as individuals, question the wisdom of paying anyone millions of dollars a year given CEG’s recent history, it is our role as Commissioners to focus on BGE and its ratepayers,” the commission said.
In a conference call with analysts Friday morning, Shattuck said the company expects to evaluate the ruling over the weekend.
UPDATED (Mon. 11/2/09): Constellation and EDF in seperate statements this morning said that they will move forward with the deal under the conditions laid out by the PSC.
“We are pleased that the Maryland Public Service Commission concluded the Constellation Energy-EDF nuclear joint venture is in the public interest and represents an important element in Maryland’s energy future,” Constellation said in its statement. “Constellation Energy appreciates the PSC’s professional approach to the process and commitment to bringing this review to conclusion in a timely manner.”
“We have consulted with our Board and received its approval. We are now moving to close the transaction as quickly as possible so that we can begin to deliver the many benefits of this investment to all stakeholders across the state.”