Gunpowder Chronicle posted on September 21, 2008 7:45 AM | Rating:
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"Mayonaise" Shattuck, Chairman of the Circus otherwise known as Constellation Energy, has killed yet another Fortune 500 Company headquartered in Maryland. At his current pace, we will have no large companies based in this state within a decade.
The announced sale of Constellation Energy Group to MidAmerican Energy Company last week -- a week that saw Constellation's stock decline by over 60% -- recalls the heady days of the early Depression, when Sam Insull's Commonwealth Edison collapsed, destroying over $5 billion in shareholder equity in late 1929. Commonwealth Edison -- like CEG -- was a holding company that had branched out into numerous "energy related" activities beyond its core energy creation and distribution businesses.
One cannot forget what happened to Shattuck's last company. Alex Brown & Sons -- the first investment bank in the United States, founded in 1800 here in Baltimore -- was sold by Shattuck to Banker's Trust. We received the same assurances then as now -- great "synergy", great backing, great future. Well, Mayonaise failed to do his due diligence. Because Banker's Trust went down in a ball of fire, and was acquired by Deutsche Bank. Alex Brown is a shadow of its former self.
Imagine this: Mayonaise was rumored to be a potential selection as NFL Commissioner after Paul "Build a Museum" Tagliabue retired. Thank God that did not happen. Can you imagine the state of the NFL if he ran that the way he has run Constellation?
Let's do a quick stroll down memory lane with Constellation:
1) Mayo reduced the dividend on BGE stock, thus killing one of the main reasons that older folks buy utility stocks.
2) He has presided over an 89% increase in electric rates for BGE customers, as his tenue from 2001 to 2006 saw no major addition to Constellation's generating capacity in Maryland.
3) He tried to bluff BGE ratepayers into paying exorbitant decommissioning fees for Calvert Cliffs. Well, we still are paying ridiculous fees -- why should we pay to decommission a private industry's assets? -- but at least we got that $170 credit.
4) He succeeded in getting BGE ratepayers to pay for the mythical "stranded costs" of older power generation plants as they were "sold" to CEG by BGE. Amazingly, all of these plants had long ago been amoritized, so it is not clear how costs were stranded. Given that the ratepayers paid for those plants in the first place, it is even more unclear.
5) He negotiated a fabulous settlement with O'Guvnah and the Maryland PSC (fabulous for CEG, that is) that basically removed any state oversight into potential mergers or sales of CEG earlier this year, in return for giving me that $170.
6) He's dramatically cut staffing at BGE and let positions vacated due to retirement go unfilled. This means there are fewer trouble crews to work during storms.
7) He's placed our electrical generationa and distribution system at tremendous risk through the house of cards known as energy trading -- attempting to turn a fungible asset into a commodity. That's turned out real well.