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April 28, 2011

Liveblogging the Constellation-Exelon conference call

11:00: Analyst: Are there change in control agreements furnishing merger bonsues to Constellation execs? Shattuck: There are no change in control agreements and no employment contracts.

10:50: Analyst: Who will be in charge of the combined company? Shattuck will be "executive chairman" and Chris Crane will be CEO. Who's the boss?
Shattuck: "I can answer that. Chris is in charge. He's the CEO, and I'm going to help him any way I can."

10:47: Several questions about Constellation's joint nuclear venture with the French EDF Group. Execs said several times there are no plans to change that.

10:43: Rowe: "We think long-run value lies in being greener and cleaner."
Shattuck: "More diversification among the regulated territories is nice... I think that's a plus for us." -- referring to the combined company having regulated utilities in Illinois and Pennsylvania, not just BGE in Maryland.
Shattuck: "Each of us coveted what the other had" -- Constellation was trying to add generation, Exelon was interested in Constellation's energy marketing.

10:35: Analysts are concerned about whether the Maryland PSC will approve the deal, given how it dragged its feet on Shattuck's attempt to merge with FPL in 2006. Analyst says to Shattuck: "The history there, particularly for your company, has been a challenged one."
Shattuck responds by saying it's a different environment, with a stable commission and falling BGE prices, in contrast to the spike in BGE prices in 2006.

Shattuck: "We have had now a sitting commission for five years. Across the board we felt like they have dealt with these cases to the letter of the law. Six years ago the status of that commission was less stable. We're also dealing with an environment that is substanatially different," not least because BGE prices are going down.
Shattuck says he thinks the package of benefits, including the $100 BGE rebate, will be attractive to Maryland officials.
In Maryland, he said, "they care about renewables. They care about efficiency projects. They care about electric vehicle infrastructure" and programs for low-income customers. "The combination of these things is meant to respond to five years worth of observations here, and I think what we've done is hopefully doing to be well received."

10:23: Chris Crane, Exelon president: Corporate consolidation will lead to an annual reduction in costs of $260 million per year.

10:18: Shattuck: To satisfy the antitrust cops, the companies expect to have to sell off 2,600 megawatts worth of generation plants within the PJM, midatlantic grid.

10:15: Constellation Chairman & CEO Shattuck:
Refers to "the benefits of this transaction to Constellation shareholders and to Maryland."
Shattuck: "We are maintining a significant employee and headquarters presence here in Baltimore."
For BGE employees: "No involuntary merger related job reductions" within two years after deal closes.

10:10: Rowe: "We believe the transaction can be executed. We expect to close in early 2012."

10:08: John Rowe, Exelon CEO and Chairman, belabors the benefits for Exelon shareholders. "The combination gives us the scope and scale we want.... It's not just about bigger. It's about a sustainable platform for smarter growth." Reduces collateral requirements for both companies moreso than either company could do on its own.

Rowe is quick to bat down speculation that the Constellation acquisition will revive the Calvert Cliffs 3 nuclear reactor project that Constellation abandoned last year.

"That is simply not the case," he says. "At today's gas prices you can't build a new nuclear plant in a competitive marketplace." (Cheap natural gas, he's saying, makes new nuclear uncomptitive.)

9:55: They're not letting reporters ask questions: "Media representatives are invited to participate on a listen-only basis."

Posted by Jay Hancock at 9:54 AM | | Comments (9)
Categories: BGE/electricity


why is the plan to give EVERYONE a $100 rebate ? some folks pay $40/mo for BGE service --- I have bills over $1,000 in the winter at my home ..... why is the rebate NOT prorated based on your monthly / yearly BGE bills ???? Seems like this is just a way to BUY votes and BUY the PSC approval !!!!!!
ALSO --- how much will Shattuck walk away with ?? $100+ million ?? -- good work if you can get it AFTER running the share holder's value DOWN more than 65% over the last FOUR years !!!!

$1000 a month? You must live in a HUGE house.

Terrible for Baltimore. $100 rebates that families can use to take there family to DC for the day. Who cares about this electric vehicle infrastructure? We have the light rail and most people would be to afraid to ride it because they may get mugged.

Shattuck does it (to Baltimore) again ...

Shattuck became CEO of CEG 10/2001.

Since then, CEG total return = approx. 2.75% (price only), and 6% if one includes reinvestment of dividends.

S&P 500 comparable time period returns are just shy of those levels i.e. Shattuck's tenure generated roughly the same retrun to shareholders as buying an index fund, even with the dividends included ... excluding the photos of his wife in a cheerleading outfit and the various bankruptcy threats, and ignroign the major share price fall since mid-2008 (even the S&P has recovered much of its drop sicne then).

In 2008, Buffett offered $9.5 billion cash to CEG shareholders.
Today, CEG shareholders are getting $7.9 billion in Exelon shares.
The cash paid by EDF for various CEG assets over the intervening years was used by CEG for operations i.e. not passed to shareholders.

As important -- regardless of the rhetoric, charitable support by CEG in Baltimore will fall over time vs. the level it would have been had it remained a locally-based company.

Good job Mayo ... is Legg Mason your next target of destruction (since Legg shares remains down over 80% from their 2006 high share price, and the T Rowe guys are too smart to let you near their offices) ?! Memo to Kevin Plank and other Balto.-based major entrepeneurs who are critical to the region's future - beware of men toting old Alex. Brown bags and wives selling absurd workout videos ...

Yeah, Bob Ehrlich was in the pockets of big business and corporations.

Meanwhile CEG/BGE execs were funneling campaign money to Martin O'Malley and The Baltimore Sun just looked the other way and reported it as a back page story.

Now, the other shoe drops, Baltimore loses its last Fortune 500 company and O'Malley's PSC is going to rubber stamp it?

Jobs in Maryland guaranteed for 2 years? Hell, it will take 2 years to fully merge the 2 companies. You don't think they won't start laying off workers in Maryland after that and sending the jobs to Chicago? Are you people at The Sun dumb as a rock or what????

This is political and corporate corruption at its finest. Both O'Malley and Shattuck got their golden parachutes to success and the general public is getting f'd again. $100? Are you kidding me?

If this were Bob Ehrlich approving this, there would be public outrage and The Baltimore Sun would be pouncing. O'Malley was on TV repeatedly slamming CEG/BGE while taking money from them and every media outlet in Maryland just looked the other way and refused to confront him on this hypocrisy.

Instead, The Baltimore Sun just rubber stamps this too. Sad and pathetic.

let me see here ..

I am CEO and sell the co and make millions and we'll layoff a few hundreds if not more employees in 2012 cause I am ..well CEO..

what value did YOU as CEO add???

It took Shattuck a little longer than usual but he is finally getting done what he is good at and that is selling companies he runs to bigger companies while reaping a large payout for himself. Over the years very little was accomplished in creating additional value for shareholders, the dividend was drastically cut but don't forget, Shattuck will come out smelling like a rose. What a bum.

For 200 years the Baltimore economy was built on a three legged stool of innovations for the nation: B&O RR, BG&E, and Alex Brown Brokers which issued the bonds to finance both. B&O = C&O = CSX (Seaboard RR) went to Jacksonville long ago.

Shattuck personally killed the other 2, selling Alex Brown to First Boston which sold itself to Deuche Bank, now he first bankrupted BGE (Constellation), driving the dividends and share price into the ground that its traditionally conservative stock owners depended on, now he has sold it out of state.

Next maybe he can take his windfall and buy the Preakness and move it to West Virginia. Baltimore is running out of institutions for him to destroy.

I echo the comments about Shattucks history here in Baltimore. He led the sale of Alex Brown with promises of more jobs and economic windfall for stockholders. He lied all the way to the bank helping to reduce Baltimore's business leadership ranks, tax base and pride. Anyone who believes that history repeats itself is prepared for major job losses in Baltimore spurred on by Shattuck's personal financial gain. If the PSC approves the sale it should prohibit all bonuses to Constellation execs and require them to set up a trust fund to pay unemployment to all Constellation employees laid off during the next ten years. Bigger is almost never better for the middle and working classes.

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.

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