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Office of the Governor of the State of Maryland

Maryland General Assembly 2009 Legislative Session Information

SPECIAL ALERT FROM DELEGATE McDONOUGH

***SPECIAL ALERT FROM DELEGATE McDONOUGH***

(Effective 01 December 2008)

ATTORNEY GENERAL "DUCKS" CONSTELLATION

BGE SALE QUESTION

As you may know, I have been working vigorously to prevent the questionable sale of Constellation Energy to Mid-American Company. Constellation Energy is, in my opinion, a $30 billion Fortune 500 company being sold at a fire sale to Warren Buffett for a mere $5 billion dollars. This disastrous transaction will impact millions of Maryland consumers and tens of thousands of shareholders in a negative way. I believe all of the authority and resources of the state government should be brought to bear regarding this sale in order to protect the people of our state. I have asked the Governor to create a "Commission" regarding this matter, which he refused to initiate. I have forwarded informative and educational letters about this transaction to all of the members of the Maryland General Assembly.

Finally, and probably most importantly, I have asked the Attorney General to take two important actions. First, more than a month ago, I forwarded to Attorney General Gansler a group of 24 questions related to the Constellation Energy sale and asked him to respond by indicating which questions apply to his authority. I have not received a response as of this time.

Secondly, on November 14^th, I sent a letter to the Attorney General's office directing them to provide me with a formal opinion related to a specific part of the pending sale. I clearly outlined that this advice was needed in order for me to file state legislation. It is my understanding that the Attorney General is mandated by law to provide such advice, especially when connected to pending legislation. Mr. Robert N. McDonald, Chief Counsel for Opinions and Advice, has informed me in writing that he will not exercise his duty to assist with advice about my proposed legislation. He based his decision on the misguided belief that other state agencies and the courts are already addressing questions regarding the sale of Constellation Energy Group. It is my contention that the Attorney General is still required to provide an opinion in order to guarantee the accuracy and validity of proposed legislation. The legislative process should not be hindered or dismissed by pending court actions or the responsibilities of other state agencies.

I will be sending a follow-up letter to the Attorney General, expressing my strong disagreement with his position. If you wish to contact the Attorney General's office with your thoughts on this issue, you may do so by e-mailing Robert N. McDonald, Chief Counsel of Opinions and Advice, at bmcdonald@oag.state.md.us. The phone number for the Attorney General's office is 410-576-6300.

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A Special Message from Patrick L. McDonough, Maryland District 7 Republican Delegate to the State Legislature in Annapolis,

MAYO'S ELECTRIC SHOCK

First, the fairy tale. Constellation Energy is the 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 or worse. 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 2008, and accumulating record profits. This unprecedented gift has fallen into the clever hands of Uncle Warren 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:

1. What was the real cause of the failure

2. At what point did management realize the company was in serious trouble

3. What steps were initiated to correct the problem

4. Why were the public and shareholders kept in the dark

5. Why did Mr. Shattuck and other executives sell so much stock at $95 a share in January and February

6. Is it fair for Mr. Shattuck and other executives to receive expensive golden parachutes while shareholders are suffering grave losses

7. Whatever happened to the serious questions raised about Constellation's accounting practices, which dramatically drove down the value of the stock

8. What about the news report that Constellation had charged ratepayers an additional $1 billion dollars with a special fee based on the premise that the company would construct needed power generator facilities, which never occurred

I have asked the Governor to appoint a Commission consisting 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 entitled, "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, not a fairy tale.

For additional information, contact Maryland Delegate McDonough at 410-238-0025 or send e-mail to Patmcdee@comcast.net.

updated October 1st, 2009