First, the fairy tale: Constellation Energy is a company that is a victim of difficult economic times, which resulted in the demise of the company. Fortunately, through the leadership of Mayo Shattuck, the company was saved from total destruction by a white knight named Warren Buffett. That’s the fairy tale.
Now, let us examine the truth. One of only two Fortune 500 companies in the state of Maryland was brought to its knees by executive mismanagement and financial poor judgment. Warren Buffett confiscated a $25 billion company at a fire sale that should have never occurred for $5 billion. As a result, tens of thousands of shareholders have lost a huge amount of their investments and retirement funds. More than a million Maryland ratepayers are placed in jeopardy by the company that was built on their backs.
Constellation is the largest property owner in Maryland, has three nuclear power plants, numerous power generator facilities and other valuable assets. Moreover, the company possesses unlimited potential, particularly in the area of nuclear power. Constellation was selling for more than $100 a share in January and accumulating record profits. This unprecedented gift has fallen into the clever hands of Buffett for a paltry $26 a share.
Constellation Energy Group is not only a big company, it is a necessity for Maryland’s survival. It is not just another auto dealership or other replaceable free enterprise venture. The company provides a life sustaining product in a monopolistic form. It could be said, “God gives us oxygen, and Mayo Shattuck gives us electricity.” We need both in order to survive.
The magnitude of this tragedy demands the total truth, and all of the questions must be answered. Here are a few examples:
- What was the real cause of the failure?
- At what point did management realize the company was in serious trouble?
- What steps were initiated to correct the problem?
- Why were the public and shareholders kept in the dark?
- Why did Shattuck and other executives sell so much stock at $95 a share in January and February?
- Is it fair for Shattuck and other executives to receive expensive golden parachutes while shareholders are suffering grave losses?
- Whatever happened to the serious questions raised about Constellation’s accounting practices that dramatically drove down the value of the stock?
- What about the news report that Constellation had charged ratepayers an additional $1 billion with a special fee based on the premise that the company would construct needed power generator facilities that never occurred?
I have asked the governor to appoint a commission of energy experts, financial investment professionals, consumer advocates and public officials to investigate the demise of this company and answer these questions. I have requested Maryland’s attorney general to provide me with advice regarding these matters and for him to take an independent look at the situation. Finally, I will be examining the needs for new legislation and will reintroduce my proposal from last year titled, “Maryland First: The Energy Consumer Protection Act.” It is the duty of all elected and public officials to guarantee that full disclosure occurs and the end result is total truth.
Republican McDonough represents the 7th District, Baltimore and Harford counties. To reach him, call 410-238-0025, or send an e-mail to [email protected].
