Exelon, Constellation Resolve EDF Dispute Over Pending Merger

Exelon Corp. (EXC) and Constellation Energy Group Inc. (CEG) said Tuesday that an agreement they reached with Electricite de France S.A. (EDF.FR) will help the U.S. companies advance toward their pending merger.

Under the agreement, Exelon and Constellation reaffirmed the terms of Constellation's joint venture with EDF, which bought nearly half of Constellation's nuclear power fleet in 2008 for about $4.5 billion.

In return, the French utility agreed to withdraw its opposition to the U.S. power companies' proposed merger, the companies said. They added that the agreement did not include any payments.

Exelon, of Chicago, plans to purchase Baltimore-based Constellation in an all-stock deal that has been valued at nearly $8 billion. The deal would allow Exelon, the largest operator of nuclear plants in the U.S., to absorb Constellation's nuclear fleet and large retail power business.

"This agreement reflects additional positive momentum toward the timely consummation of our merger with Constellation," Exelon President and Chief Operating Officer Christopher Crane said in a statement.

The agreement with EDF is the latest move by the U.S. companies to allay concerns of opponents as they work to secure approvals for their merger.

The companies need the approval of the Federal Energy Regulatory Commission, the Nuclear Regulatory Commission and the Maryland Public Service Commission before they can proceed. The companies have spent considerable effort trying to win approval from the Maryland commission, after state officials and consumer advocates initially opposed their merger.

In December, Exelon and Constellation reached an agreement with Maryland's governor and other officials, in which the officials pledged support for the deal and the companies agreed to invest $1 billion in Maryland, create 6,000 jobs and provide other benefits.

In October, Paris-based EDF asked the Maryland commission to reject the merger over worries that the French company would lose control over its joint venture with Constellation and that Exelon might block it from developing new nuclear plants in the U.S.

A year earlier, EDF and Constellation ended a separate joint venture, called UniStar, to develop new U.S. nuclear power plants, after Constellation dropped out of an application for a federal loan guarantee for Calvert Cliffs 3, the partnership's first project. EDF retained the right to build that project and two additional U.S. projects in exchange for $250 million in cash and stock.

In November, Exelon Chief Executive John Rowe said he didn't think building a new nuclear power plant, such as Calvert Cliffs 3, made economic sense, owing to very low U.S. natural gas prices and power prices, compared to the expense of building a nuclear reactor.

On Tuesday, however, EDF Chief Executive Henri Proglio said his company still plans to develop new nuclear units in the U.S.

EDF's application for a license to build the Calvert Cliffs 3 reactor is still pending at the NRC, according to the agency's website.

-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; [e-mail]

-Inti Landauro in Paris contributed to this article