posted on Monday, November 13, 2006 7:05 PM by Andrea Kells

Constellation, FPL Abandon Merger

Giving way to what they characterize as a "perfect storm" of uncertainty and risk, Constellation Energy Group and FPL Group Inc. have decided to abandon their plan to merge.   

Constellation and FPL's merger proposal had been facing an increasingly hostile climate for months.  Contributing to the storm was the impending end of a retail rate cap in Maryland, rising commodity prices, and a hard-fought gubernatorial race also in Maryland.  Citing a mutual conclusion that the path to regulatory approval remained very unclear and was likely to result in a protracted review, FPL acceded to Constellation's request to call it quits. 

Constellation and FPL will withdraw their merger approval applications pending before the Maryland Public Service Commission and FERC, and FPL will drop its suit against Maryland and the PSC for a timely decision on the proposal.  With the merger put to rest, Constellation plans to turn its attention more fully to the rate stabilization plan developed in a special session of Maryland's General Assembly earlier this year and other Maryland regulatory issues.   

This marks the second time in recent weeks that regulatory opposition and uncertainty has stymied a utility merger proposal. New Jersey's opposition killed the planned merger of Exelon and PSEG.  The failure of these two mergers calls into question the myriad predictions of a massively consolidated electric utility sector following last year's repeal of the Public Utility Holding Company Act of 1935.