O'Malley's deal has big pricetag for Constellation
The conditions outlined by Gov. O'Malley for regulators to approve the Constellation Energy Group -- EDF Group deal are similar to conditions he put directly to Constellation earlier this year. He wants 1) A one-time, 10 percent credit to BGE residential customers; 2) A capital infusion from parent Constellation into Baltimore Gas & Electric; 3) A contribution to a fund for lower-income utility users; 4) A moat and walls around BGE to prevent Constellation or any future owner from raiding it for resources.
Added up, all this will easily exceed $600 million at a time when both Constellation and EDF are tight on capital. The 10 percent credit for BGE gas and electric customers would exceed $200 million. Add another $50 to $100 million for the Universal Service Fund for lower-income households. Add at least another $400 million infusion for BGE to get its common-equity ratio up to levels that will make O'Malley and the Public Service Commission happy.
All this money would have to be placed on the counter when the deal closes next year, if not earlier. (However I could see everybody agreeing to have Constellation increase BGE's equity over time instead of all at once.) I wonder how Constellation's bond-rating agencies, which are already putting pressure on the company, would react if the company agrees to these conditions.