- The Washington Times - Friday, June 12, 2009

Maryland regulators ruled Thursday they have the right to sign off on French nuclear power company EDF’s plan to buy half of Constellation Energy’s nuclear-power business for $4.5 billion, rejecting the companies’ argument that approval by the regulators was not necessary.

Constellation Energy immediately appealed the decision.

In the ruling, the Public Service Commission said the deal would give Electricite de France SA a substantial influence over Constellation Energy subsidiary Baltimore Gas and Electric and requires regulatory approval.

The commission said it has reached no conclusions about the deal; that decision will be made later.

“Nothing in this opinion should be construed to reflect the Commission’s view as to the merits of this transaction or the likelihood that the deal will or will not ultimately be approved,” the commission stated.

Constellation Energy said it appealed the ruling to Baltimore city Circuit Court and asked for an expedited ruling. It said it remained committed to closing the deal in the third quarter.

“We had a strong case that they didn’t have to engage in an extensive review,” said James L. Connaughton, a Constellation Energy executive vice president.

He said the deal helps Baltimore Gas and Electric customers by further stabilizing Constellation Energy’s finances and should help keep costs down.

EDF said in a statement that it, too, disagrees with the ruling and that it will continue to work toward completing the transaction.

At the time the deal was announced in December, both companies said approvals by Maryland regulators were not necessary. The deal already has received several approvals from state and federal regulators.

Constellation Energy’s nuclear business includes three nuclear power stations with five reactors in Maryland and New York. Nuclear power accounts for 61 percent of Constellation’s total electricity-generating capacity.

The agreement to sell half of its nuclear power business to EDF came after Constellation Energy had previously accepted a $4.7 billion offer from a unit of Warren Buffett’s Berkshire Hathaway for all of the company.

The deal came after Constellation’s shares plummeted amid liquidity concerns that had analysts worried the nation’s largest wholesale power generator would end up in bankruptcy.

The deal brought stability to Baltimore-based Constellation Energy, but EDF, already Constellation Energy’s largest shareholder, had complained it shortchanged the company.

Unlike the deal with Mr. Buffett, the transaction with EDF allows Constellation to remain an independent company that still will have nonnuclear assets including coal- and natural gas-fired electric plants along with half of its nuclear assets.

It also deepens the relationship it has with EDF; the two already have a joint venture to develop new nuclear operations in the U.S.

Maryland Gov. Martin O’Malley praised the commission’s ruling and said it protects Baltimore Gas and Electric customers.

He said the ruling should not be interpreted as the state opposing the deal.

“To the contrary, I believe that this partnership could help secure a more stable and cleaner energy future for our state and our nation,” he said in a statement. “But the public interest must be addressed as part of any deal in order to ensure that ratepayers and the utility are protected.”

Constellation Energy shares slipped 6 cents to close at $26.96 Thursday. The shares have traded between $13 and $87.72 in the past year.

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