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Exelon-Constellation Merger Draws Maryland Objections

Maryland Governor Martin O’Malley plans to seek changes to the terms of Exelon Corp. (EXC)’s $7.9 billion takeover of Constellation Energy Group Inc. (CEG)

The state’s Energy Administration, which advises the governor, listed the conditions under which it would support the merger in testimony filed with Maryland regulators late today.

The merger is not in the public interest, and it “poses significant risk of harm” to customers, Malcolm Woolf, director of the Energy Administration, testified.

The merger will transfer ownership of Baltimore Gas & Electric Co. to an owner outside of Maryland that will be overseen by three separate regulatory jurisdictions, Woolf testified. The merged company’s “nuclear risk” will be too high, he said.

Approval of the transaction is needed from the five-member Maryland Public Service Commission, which is reviewing the acquisition. Maryland officials have twice blocked takeovers of Baltimore-based Constellation, owner of Baltimore Gas & Electric.

“Exelon and Constellation welcome input from stakeholders as we continue to work toward completing our planned merger,” Judy Rader, an Exelon spokeswoman, said in an e-mailed statement. A Constellation spokesman couldn’t be reached for comment.

O’Malley, a Democrat, rose to statewide prominence as mayor of Baltimore when he squelched a 2006 bid by NextEra Energy Inc. for Constellation amid rising power prices.

Exelon, based in Chicago, met with O’Malley before offering what it said is $250 million in economic incentives to the state including a $100 rate credit to every customer of Constellation’s Baltimore utility.

To contact the reporters on this story: Julie Johnsson in Chicago at jjohnsson@bloomberg.net. Mark Chediak in San Francisco at mchediak@bloomberg.net;

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net.

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