Maryland Business

On the surface, companies with coal-fired power plants and organizations that protect ecologically important land and water don’t seem like an obvious love connection.

So it could have caught me off guard when I saw that Constellation Energy Group is donating $1 to The Nature Conservancy every time a post on its EcoStar Grants program gets re-tweeted — up to $5,000 worth.

But over the last few years Constellation has upped its eco-friendliness, lighting up the courts at the U.S. Open with wind power,  winning awards for its solar installation at Patriot Place (retail/dining area across from Gillette Stadium, where the Patriots play) and its energy conservation program at a New England college. Not to mention its plans for solar and wind projects in Maryland and the recent upgrade to its Brandon Shores plant.

The EcoStar grants of up to $5,000 are for projects being completed near areas where Constellation does business, and according to the Nature Conservancy, it has helped to preserve more than 160,000 acres of the Chesapeake Bay watershed.

Instead of being surprised, I hit the re-tweet button. What can I say? I like spending other people’s money, especially when it’s for a good cause.

Nuclear energy supporters got a boost Monday.

Companies like Baltimore’s Constellation Energy Group Inc. have their sights set on building new nuclear power plants, but getting the funding for the multi-billion dollar projects hasn’t been easy. Wall Street investors want some serious assurances that they’ll be paid back if they loan out the money and the companies default.

Enter President Obama.

On Monday he submitted his fiscal 2011 budget and it included an increase to the Department of Energy’s loan guarantee program. The president’s budget called for tripling the program from $18.5 billion to $54 billion, a move that could give larger guarantees to the companies already on the DoE’s loan guarantee shortlist (including Constellation), or it could add more companies into the mix.

Congress approved the $18.5 program in 2005 to kick start the industry, but the Energy Department has not doled out any loan guarantees. Most say that’s because the government and the nuclear industry can’t agree on how much money industry should have to put up.

The Hill caught up with Constellation’s James Connaughton on the topic, who said there have been ongoing negotiations over what percentage a company should pay the DoE to keep risk at a minimum.

The industry wants to keep the “credit cost” at 1 percent or below the anticipated total cost to build a new plant. A company would be required to pay DoE $100 million to reduce the risks for a $10 billion project, but industry critics have sought a much higher percentage. The guarantees would mean the government would step in to repay 80 percent of a loan should a company default.

Advocates say the loan guarantees do not amount to appropriations, so they don’t require an outlay of taxpayer dollars when projects are successfully completed. But opponents say that the projects often run over on time and cost, putting taxpayer money on the line for 80 percent of the project if it’s unsuccessful.

Looks like Congress will have to decide.

(photo above is a nuclear power plant at Cattenom, in Lorraine, France)

The holiday lights that adorn Baltimore’s Washington Monument each December are getting an efficiency makeover. The lights will twinkle festively just as they did before, but they’ll use 90 percent less energy.

Baltimore Gas & Electric Co. will provide the energy efficient LEDs (light emitting diodes), which burn brighter and last longer than the incandescent lights that have heralded the holiday season for the last 37 years.

The company says using the LEDs for lighting the monument is part of its effort to meet the state’s EmPower Maryland goals — reducing power consumption 15 percent by 2015 — and to encourage Maryland residents to do the same.

The city will get its first glimpse of the new lights Thursday night during “A Monumental Occasion: The Annual Lighting of Baltimore’s Washington Monument.”

Nearly 17,000 bulbs on 84 strands of lights will decorate the Washington Monument this year. The monument’s old incandescent bulbs used approximately 40 watts per bulb, while one strand of LEDs contains 200 bulbs and uses 12 watts of energy.

The amount of electricity we use is measured by consumption over an hour through kilowatt-hours (1,000 watts = 1 kWh, so a 100 watt incandescent light bulb used for 730 hours - or all month long - would use 73 kWh).

Even if the city leaves the Washington Monument’s lights on all month long, electricity use would be about 735 kWh, well below the 1,000 kWh the average home uses each month. At 40 watts per bulb, if last year’s display also had 16,800 bulbs, lighting the monument for the month would have used 490,560 kWh.

Looks like the switch to LEDs should go a long way toward cutting electricity consumption at the monument…it remains to be seen if your neighbors will swap their North Pole lawn extravaganza lit by incandescent bulbs for LEDs.

Constellation Energy Group won approval from regulators on its $4.5 billion deal with Electricite de France Friday, with a pretty concise list of conditions.

The uncertainty of how the Public Service Commission would rule made reading through the ruling kind of exciting — if you like that sort of thing — but on my second or third time through, what made it better were the little zings and oddities here and there. Regulars at the commission will recognize the following as typical of the PSC.

Re: The conditions that make sure BGE remains stable.  The commission quotes, of all people, Warren Buffett. Constellation canceled a merger deal with his company, MidAmerican, in favor of the EDF deal.

“As with any prudent investment, the returns to ratepayers may not be flashy or immediate, but then again, ‘[s]omone’s sitting in the shade today because someone planted a tree a long time ago.’”

Re: Calvert Cliffs 3

“It is 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.” Zing.

Re: Changes to the transaction provided very late in the game (this is a footnote quoting hearing testimony).

Chairman Doug Nazarian: “I’m saying we would have liked to have a hearing about the actual bloody deal as opposed to the hypothetical one you’re in the middle of changing. When we’re sitting here hour after hour until midnight with witnesses who are testifying…and you’re sitting there knowing that it’s going to be different…”

Re: Addressing those people who want to make the case about their own interests

“Before digging into the public interest analysis itself, we feel compelled to say something about issues that are not part of this case…In this case, the public and political debate around our proceeding unfortunately has assumed a life of its own, and at times has left us scratching our heads wondering if the case being discussed is the case we are deciding. First, we are mystified by the way in which this case has been cast as a referendum on a new nuclear plant at Calvert Cliffs. This is absurd on its face, of course, because this Transaction and the documents executed to effectuate the Transaction relate only to CEG’s existing nuclear fleet…”

Also not part of the case: re-regulation and the “magnitude” of Constellation’s executive pay

Re: Benefits of the deal to Constellation

“If the Transaction closes, CEG will emerge from the Transaction with significantly less debt, a stronger balance sheet, and its existing structure intact. Although we do not subscribe blindly to the 1950s’ notion that ‘what’s good for [Constellation Energy] is good for [Maryland],’ we cannot forget that CEG careened toward bankruptcy only thirteen months ago.”

And you thought regulatory filings were boring.

Shhhhh! It’s a surprise.

Well, not anymore. The Progressive Maryland Education Fund and its friends are holding a “surprise birthday party” for Mayo Shattuck III, Constellation Energy’s chief executive on Wednesday, his 55th birthday.

I’m doubting there will be cake and party hats. This birthday party will also serve as a news conference to ask the attorney general’s office to cancel the $33 million retirement payment Shattuck is eligible to receive upon his 55th birthday once he leaves the company.

AG Doug Gansler took up review of the issue in June after Sen. Jamie Raskin, D-Mongtomgery, and Sen. James Brochin, D-Baltimore County, requested an inquiry on the basis that Constellation’s subsidiary, Baltimore Gas & Electric Co. is a “public utility.”

Constellation says only the company’s shareholders and board of directors can determine pay for its CEO. Shattuck did take a pay cut in 2008, earning $7.8 million in compensation, compared to $15.3 million in 2007.

Progressive Maryland, a nonprofit that monitors economic issues that affect working families, will try to enter Constellation’s hq to give Shattuck a “very different birthday present than the $33 million golden parachute he was hoping for.”

Who’s got a good guess on what it could be?

The Maryland Public Service Commission kicked off  a week-long round of hearings on Monday over the proposed Constellation Energy - EdF deal. The French power giant wants to buy just shy of 50 percent of the Baltimore company’s nuclear power holdings.

No stranger to the dance, as Constellation’s earlier attempts at a full merger with FPL in 2006 and MidAmerican in 2008 were scrutinized by state regulators.

With the $4.5B EDF deal, Constellation is using the web to make its case to the public. The company has set up a web site that has fact sheets covering everything from executive compensation to one called “Myths vs Facts.”

The hearings are also being followed via Twitter from Constellation’s account. Excerpts of testimony were being doled out all day, including one that said, “J. Morris of EDF said at PSC hearing just now that EDF will look for opportunities elsewhere if not a welcomed investor in Maryland.”

In addition to the tweets, fact sheets and position papers, Constellation also launched an online petition for people to sign and let the Public Service Commission know they support the deal. According to Constellation’s count, the petition had 5,113 signatures as of 4:40 on Monday.

What’s your take on Constellation’s strategy - too aggressive,  just right or not enough?

So…is it hard to clean greasy buffalo wing sauce off of Waterford crystal? It’s a question the Constellation Energy Senior Players Championship promoters may find the answer to while they’re schlepping the tournament trophy through eight of Baltimore’s finest restaurants this week.

The Sam Snead Trophy, named for the player with the most wins in PGA Tour history, is comprised of two hand-carved pieces of Waterford crystal, etched with 18 greens and numbered flags.

And if you’re thinking “Whoop-de-do, why do I need to see a trophy up close?” here’s a monetary incentive: tickets for the tournament (which range in cost from $20 to $165) will be sold to restaurant patrons for a 25 percent discount.

Here’s the schedule:

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The tournament, which is the Champions Tour’s fifth and final major of the year, will be played at the Baltimore Country Club in Timonium from Sept. 28 – Oct. 4.

It’s just a hunch, but my guess is Mayo A. Shattuck III won’t be home tonight.

That probably won’t stop the Power 4 the People Project from holding a candlelight march on the Constellation Energy Group CEO’s Baltimore home to “demand” that the guy stop power shut-offs for customers who are behind on their bills. They’d also like him to “roll back gas & electric rates.”

“We are holding a candle light march to CEO Mayo Shattuck’s home on the day before 84,000 people are slated to have their utilities shut-off to symbolize the many families and individuals who will be in the dark with only candles,” said Steven Ceci, spokesman for the group, which is a branch of the Bail Out the People Movement.

The group is urging a moratorium on shut-offs one day before local utilities meet with state regulators to discuss how they plan to handle the slew of late payments and power shut-offs that will result from particularly high bills this winter. Power 4 the People will be in attendance at the Tuesday hearing, which should add some excitement to the day.

Up next, look out for a statewide petitioning campaign from the group to keep the lights on.

Warren Buffett has been throwing his money around in the past few months – and we in Baltimore are certainly aware of that.

The billionaire recently talked to Susie Gharib, anchor of the PBS show “Nightly Business Report” and opened up about his plans to do a buyback of Berkshire Hathaway stock. The interview airs in two parts on Thursday and Friday nights, but you can read some excerpts below, care of The New York Times’ blog DealBook.

Susie Gharib: What about Berkshire Hathaway stock? Were you surprised that it took such a hit last year, given that Berkshire shareholders are such buy and hold investors?

Warren Buffet: Well most of them are. But in the end our price is figured relative to everything else so the whole stock market goes down 50 percent we ought to go down a lot because you can buy other things cheaper. I’ve had three times in my lifetime since I took over Berkshire when Berkshire stock’s gone down 50 percent. In 1974 it went from $90 to $40. Did I feel badly? No I loved it! I bought more stock. So I don’t judge how Berkshire is doing by its market price, I judge it by how our businesses are doing.

Read the rest of this entry »

Constellation Energy Group’s shareholders may have thought they were getting a raw deal with the offer of $26.50 a share from MidAmerican Energy Holdings, but things haven’t been looking up since that deal went south about two weeks ago.

Shareholders seemed hell bent on getting more out of their stock — several filed lawsuits against Constellation, and there were rumblings that they might not approve the merger deal at a planned Dec. 23 shareholder vote — but it doesn’t seem like they’ll be getting much more in the near term.

One day after Constellation announced it was rejecting the MidAmerican takeover bid in favor of a nuclear partnership with Electricite de France, the Baltimore-based firm’s share price fell to $23.97, and has since lingered in the $24 to $25 range.

In the days leading up to Constellation’s split with MidAmerican, the stock climbed above $28 in anticipation of the break up, and hit $30.15 on the day of the announcement.

Paul Justice, an analyst with Morningstar Inc. in Chicago, told me it’s hard to compare the share price between then and now.

“You’ve extended the time horizon and basically made this a stock that’s going to sit on the market; before you had a time frame for an end date,” he said. “To reflect back on the trials and tribulations of 2008, you’re probably looking two or three years out to determine how well this worked out for Constellation,” he added.

If it takes that long to see this deal bear fruit, imagine how long it could take for investors to make their money back. I wonder if they’ll wait around long enough to find out.

DANIELLE ULMAN, Business Writer