Friday, October 31, 2008
Center Opposes Warren Buffet Purchase of Constellation
We oppose the pending purchase of Constellation Energy Group by MidAmerican Energy Holding Co/Berkshire Hathaway, Inc (Warren Buffet) . We oppose it because we believe the purchase could lead to the closure of Calvert Cliffs nuclear power plant. Our assessment is that Mr. Buffet will not build a new nuclear plant at the site. Warren Buffet decided against building a reactor in Idaho due to economic reasons and we believe he would make the same decision in Maryland. The plant would cost more than he is proposing to pay for the company. Although the consortium called Unistar, of which Constellation is the lead company, is proceeding with licensing and reactor certification plans at the Nuclear Regulatory Commission, it is probably more for Constellation's Nine Mile Point proposal for a new reactor than Calvert Cliffs.
Another potential problem is the cooling water intake structure (CWIS) issue. Without getting into too many of the details, the Environmental Protection Agency (EPA) could rule that plants such as Calvert Cliffs are required to build cooling towers as 'best technology available.' We are certain that Mr. Buffet would not make such an investment and if required to do it, he would probably close the facility. This would be a tragic loss to air quality in Maryland and to the global fight to mitigate global warming.
We support the Electricite de France/Kohlberg Kravis Roberts & Company (KKR) purchase of Constellation because we believe they would build the new plant and build cooling towers if required to do so. The motivation is to get a foothold into the American market with their new reactor design. Moreover, their bid for Constellation was higher than Mr. Buffet's bid and there is stockholder litigation to take the higher priced stock offer. For the reasons listed above, we encourage the Constellation board of directors and the stockholders to reject Mr. Buffet's offer and accept EdF's offer.