Governor O’Malley on Constellation Energy
June 17, 2009
Hello. This is Governor Martin O'Malley.
Over the last few weeks, there has been a lot of talk about Constellation Energy’s latest battle with the Public Service Commission, a lot of talk about rate relief for Maryland families, and a lot of talk about an outrageous $87 million compensation package for Constellation’s CEO.
I wanted to take a few minutes to explain why the State is in this watchdog role to ensure that a proposed merger between Constellation and EDF, or anyone else, is in the best interest of the people of Maryland before allowing it to go forward.
We all know that deregulation, a plan put in motion here in Maryland more than 10 years ago, has failed residential consumers. It’s resulted in unpredictable bills, unstable supply and higher and higher bills for rate payers.
Right now, we all know that times are tough for every family in every part of our State. We know that families, and particularly seniors on fixed incomes, often find themselves sorting through bills at the kitchen table, wondering how to make ends meet while the bills and the anxiety pile up. For too many of our families, it’s become a monthly exercise to figure out whether to pay the BGE bill, or to pay the grocery bill.
And that's why it is so important that we do everything we can to follow the law to make sure that this proposed deal for Constellation is in the best interest of the people of Maryland. We cannot and will not take it on faith, on a handshake, on a wink or a nod that this deal is good for ratepayers.
We know that BGE is a cash cow for Constellation Energy. We know that BGE pays more than half of all dividends paid into Constellation Energy and has a huge impact on Constellation's bottom line. We also know that Constellation Energy has had a tumultuous history over these last few years. Last year, because of their own financial mistakes, not ours, Constellation lost 80% of its stock value and was just hours away from bankruptcy. And we know that all of this had the potential to greatly impact ratepayers and our economy here in Maryland.
When Constellation told its shareholders and BGE ratepayers last December that its proposed new deal did not need to be reviewed by the Maryland Public Service Commission, we stepped in. Why? Because the law requires that an independent, professional, regulatory evaluation of the implications of this deal be done so that we can make sure that it’s in the best interest of ratepayers and their bottom line. We stepped in to look out for the public interest.
After months of hearings and scrutiny, the Public Service Commission last week agreed with our assertion that this deal did, in fact, require regulatory review. The Public Service Commission will now hold open, public hearings to determine if this new deal is in the public’s best interest. And after months of saying that they would work with us and work with the Public Service Commission, Constellation responded to this decision by instead running to court, suing the State to try to short circuit any other further public inquiry in terms of what was in the best interest for Maryland consumers and ratepayers.
Earlier this year the State also agreed, at Constellation’s repeated urgings, to enter into settlement talks. On June 2, we sent Constellation a settlement proposal at their request outlining our terms for Maryland consumers.
We told Constellation that any settlement would have to address four primary concerns:
- Short and long term rate relief for ratepayers;
- A commitment from Constellation to move forward with green technologies;
- New measures – known as ring-fencing – to protect BGE from being over-squeezed by Constellation, and;
- An unbelievable $87 million compensation package for the current CEO.
We, of course, as you might imagine, have never heard back from Constellation.
We did not go looking for this fight. We were, and we remain, open to stepping back and allowing the Public Service Commission proceeding to run its course and we also remain open to discussing a reasonable settlement that’s in the best interest of Maryland consumers.
We will use every available resource and legal expert to continue our fight to uphold the law and make sure that this deal is in the best interest of the people of Maryland.
We have fought the fights for Maryland consumers. Now, some of these battles we have won, and some we have lost. But we will not simply rubberstamp this deal until we can determine that it is in the best interest of the people of Maryland.
Thanks a lot.