Tuesday, November 08, 2011

O'Malley: Constellation Merger - Rate Cuts for Job Cuts

Baltimore-based Constellation Energy has been in talks with Chicago-based Exelon Corporation to merge the companies. What this means for Constellation (and pretty much any Maryland company that is merger talks), is that Exelon will be taking the lead, moving jobs to another state, and pretty much destroying another hometown company.

I believe Constellation Energy is the largest utility in Maryland. Exelon is one of the largest energy producers in the country, based in business-friendly Chicago, Illinois. Do you ever hear people griping about how many companies keep moving to Chicago? If so, it ain't coming from people who live in Chicago.

In order for the Maryland Public Service Commission (the Maryland regulatory agency stacked with O'Malley lackies) to approve the merger, Governor Martin O'Malley is demanding a rate decrease for current BGE customers. Constellation Energy is the parent company of BGE.

A skyline of future business that will merge out of state.

So basically what Martin O'Malley is saying is that he will approve the destruction of more Maryland jobs from hard-working middle class people in order to save a few dollars for consumers. He usually demands rate cuts when he's ready to run for office. With a couple of years left on his gubernatorial office, I can only suspect that he's laying the foundation for his run for Barbara Mikulski's U.S. Senate seat. He can then say that he fought big corporate greed. Let's ignore the fact that he fought it by using extortion.

So what are the impacts to the merger of Constellation with an out-of-town company? First, I'm not sure if O'Malley realizes this or not, but allowing Constellation to be absorbed and thus be a former Baltimore-based company, he will lose some of his ability to directly punish Constellation at a whim. Maryland politicians will lose some of their ability to hold Constellation to the fire when they need a bone in their reelection war chest. No longer will elected officials have it as easy as they do now to say, "I need to be reelected. Let's punish BGE\Constellation for .....not restoring power fast enough during a snow storm that crippled the East Coast. Therefore, I want a rate cut. The consumers will love me for it and reelect me!!!" You cannot deny that this happens.

What is the impact to Baltimore? It's another company that will not be calling Baltimore home. It's a loss of jobs. It's a loss of status. It's a loss of pride. But politicians do not think long-term. They think, "What can I do right now that will make me look good RIGHT now?"

The Baltimore Business Journal reports that as many as 600 jobs will be lost, a loss of jobs that O'Malley doesn't seem to be too concerned about. To help complicate matters, Republican State Senator E.J. Pipkin of Eastern Shore and Democrat State Senator Jim Rosapepe of Prince George's County are now demanding that BGE be spun off into a separately traded company.

Generally I like E.J. Pipkin, but this response is typical of Maryland politicians. It seems like politicians across the Free State hate free market capitalism. Adam Smith be damned, that fool. Stay out of our economy, you British hob-knocking economic theorist! We prefer the heavy hand of government intervention!

What bugs me about Constellation is their perpetual attempt to get bought. They seem to be giving up quicker then the French in a war. Remember when they tried to get acquired by Florida Power and Light? Yeah, FPL gave up on that. Then there is the attempt by the French company √Člectricit√© de France S.A. to take a large stake in the company. How ironic is it that a French company is trying to acquire a company that likes to surrender so easily?

Why is there such a feckle drive by Constellation to remain independent? What are they doing wrong? Why do they want to fail? Let's not forget that Constellation is run my Mayo Shattuck III, who made a name for himself by selling Alex. Brown to Deutche Bank, who eventually moved many of those jobs to New York. Now he's getting ready to bust up another Baltimore Company. What a guy!

So ask yourself, what are the long-term benefits of packing up and leaving town? That's easy. The executives will get massive payouts. Millions of dollars! Everyone else? They'll have the pleasure of keeping their job if they're lucky. Executives will also get early retirement. Sure, the others can retire, too, as long as they don't plan on making a dime for the rest of their lives. And finally, like the Ebenezer Scrooges that run Corporate America, it's a gosh-darn fun time to stomp on the working class again!

Contrary to what politicians like Martin O'Malley say, Baltimore and Maryland continue to be unfriendly to businesses. We have a laundry list of companies that decided not to move to Maryland (Merck) have left or have failed (Digene, Duratek, Alex. Brown, Maryland National Bank, Carr-Lowrey, The Rouse Company, Piper Marbury, U.S.F.&G., Broadpoint....). The list goes on and on. And these were just companies that had headquarters in Maryland. What about out-of-state companies that had offices or factories in Maryland? Like General Motors and London Fog. What's next? Legg Mason and Under Armour?

So with this new potential move, we may end up with another abandoned building in Baltimore's skyline. The Central Business District if full of obsolete and abandoned office space. This is a total waste of land for potentially tax-generating properties (that's a topic for another discussion).

Martin O'Malley continues to prove that his business, economic, and energy policies are failures. They are resulting in fewer jobs and fewer choices for consumers, consumers who understand that choices mean lower prices. Despite this, O'Malley is clever enough to spin this as a win, and unfortunately, most Marylanders are too stupid to realize otherwise.

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