Électricité de France (EDF), Constellation Energy’s partner in five nuclear plants on three sites in Maryland and New York and a 7.2% owner of Constellation shares, on Tuesday withdrew its opposition to a $7.9 billion merger between Baltimore-based Constellation and Chicago-based Exelon Corp. The French company said it had reached an agreement with Exelon to protect the “operational autonomy” of the Constellation Energy Nuclear Group (CENG).
CENG is a 50.01%-49.99% joint venture between Constellation Energy and EDF. EDF had opposed the merger because it put the “integrity of its investment in CENG at risk,” said Thomas Piquemal, EDF Group chief financial officer in a statement on Tuesday.
Documents filed by the companies with the Securities and Exchange Commission on Tuesday show that the settlement between EDF and Exelon calls for Exelon to take no action that would "infringe on the operational autonomy" of CENG. Other measures provide that EDF has the right to appoint the joint venture’s chief financial officer and that Exelon does not hire EDF or CENG employees without EDF’s consent for two years after the merger. Exelon has also assured EDF it would not favor its existing nuclear fleet over the plants it would share with EDF after the merger.
“After a lengthy regulatory review process in which we actively participated, we are pleased to have reached an agreement with Exelon that protects CENG’s operational independence moving forward,” Piquemal said. “We look forward to welcoming Exelon as a partner in this important joint venture."
The Exelon-Constellation merger, which still requires approval from the Maryland Public Service Commission and the Federal Energy Regulatory Commission, would create one of the largest electricity companies in the U.S. with combined assets of $72 billion and annual revenues of $33 billion. It would also combine the assets of two large competitors in the mid-Atlantic region. Together, the companies would own between 22% and 28% of the generating capacity in the densely populated mid-Atlantic area encompassing Delaware, the District of Columbia, New Jersey, eastern Pennsylvania, and parts of Maryland and Virginia.
Sources: POWERnews, EDF, Constellation Energy, Exelon