Appeal Filed with the Circuit Court for Baltimore City, Citing PSC Pre-Approval Not Required Under Law to Close the Proposed Transaction
– By Stephen Heiser –
Constellation Energy has said that the company is appealing the Maryland Public Service Commission's (PSC) decision requiring a pre-approval process for its pending nuclear joint venture with EDF Group. The company said it had clearly demonstrated in proceedings before the PSC that EDF's minority investment in the company's nuclear business would be unrelated to Constellation Energy's regulated utility, Baltimore Gas and Electric Company (BGE). Constellation Energy said it will ask the Circuit Court for Baltimore City to expedite the proceedings, as the company remains committed to closing the EDF transaction in the third quarter.
"We strongly disagree with the commission's conclusion that EDF's less than 50 percent investment in our nuclear subsidiary would result in EDF acquiring the power to exercise substantial influence over our utility, BGE," said Mayo A. Shattuck III, Constellation Energy chairman, president and chief executive officer. "Although we cooperated fully with the commission in its proceeding to enable it to better understand the transaction, we do not agree that pre-approval is required under the law to close our proposed nuclear joint venture with EDF. We believe that prompt resolution and clarity on this issue is essential, not only for this transaction, but for all future transactions in the state of Maryland.
"The intent of the PSC review process was to determine whether commission pre-approval was required to close the EDF transaction, and we clearly demonstrated that it is not. Still, we remain committed to working with all stakeholders so Maryland can realize the substantial benefits this transaction provides. In this regard, the company anticipates that EDF will file an application with the PSC for pre-approval of the transaction in order to pursue all possible paths to bring this matter to closure. While we disagree with the PSC's decision that a pre-approval process is required by law, we appreciate that the PSC has set an expedited hearing process. We support a parallel approach, with proceedings before the court and the PSC, and any alternatives that would allow Maryland to lock in the benefits of the EDF transaction quickly.
"Those benefits include the increased prospect of a new nuclear unit at our Calvert Cliffs site in southern Maryland, creating an estimated 4,000 construction jobs and 400 high-paying permanent positions. The proposed 1,600-megawatt unit would be among the largest industrial development projects in Maryland history and would greatly reduce Maryland's need to import electricity from out-of-state suppliers. This large infusion of emissions-free power would, over time, result in lower future energy prices for residential and business consumers and would benefit Maryland consumers for generations."
Shattuck noted that the $4.5 billion transaction involves a minority investment in Constellation Energy Nuclear Group. He added that the commission's decision contradicts a March 2008 settlement between Constellation Energy, Maryland Governor Martin O'Malley, the PSC and lawmakers, which amended state law specifically to allow investments similar to the one proposed by EDF to take place without prior PSC approval.
Shattuck added that Governor O'Malley is on the record as strongly endorsing new nuclear, labeling it as a "moral imperative."
"That's encouraging to us because the administration knows our joint venture with EDF is vital to our plans to develop new nuclear in Maryland," Shattuck said.