FPL Group, Inc. (NYSE: FPL) and Constellation Energy (NYSE: CEG) today
announced they have reached a joint and amicable agreement to terminate
their plans to merge.
Constellation Energy initiated a request to end the planned merger,
citing continued uncertainty over regulatory and judicial matters in
Maryland and the potential for a protracted and open-ended merger review
process.
Mayo A. Shattuck III, chairman, president and chief executive officer
of Constellation Energy, said, “As we considered the situation in Maryland,
we determined the risks and uncertainties were too significant to overcome.
We have tremendous respect for our peers at FPL and believe each company’s
future prospects are bright. Constellation Energy has an exceptionally
strong stand-alone strategy, and we look forward to executing our business
plan and continuing to deliver robust returns to our shareholders.”
“While we at FPL Group certainly are disappointed that we will not
complete the merger with Constellation Energy, we continue to have the
utmost respect for the company and its leadership team. We remain convinced
that both FPL Group and Constellation Energy are two great companies, each
with excellent growth prospects,” said Lew Hay, chairman and chief
executive officer of FPL Group. “FPL Group remains committed to building
upon our proven track record of increasing shareholder value while at the
same time meeting the needs of our customers.”
The two companies said that they will formally withdraw merger approval
applications pending before the Maryland Public Service Commission, the
Federal Energy Regulatory Commission and other relevant agencies, as well
as legal requests filed with the state of Maryland.
Corporate Profiles
FPL Group, with annual revenues of more than $11 billion, is nationally
known as a high-quality, efficient, and customer-driven organization
focused on energy-related products and services. With a growing presence in
26 states, it is widely recognized as one of the country’s premier power
companies. Its principal subsidiary, Florida Power & Light Company, serves
more than 4.4 million customer accounts in Florida. FPL Energy, LLC, FPL
Group’s competitive energy subsidiary is a leader in producing electricity
from clean and renewable fuels. Additional information is available on the
Internet at http://www.FPLGroup.com, http://www.FPL.com and http://www.FPLEnergy.com.
Constellation Energy, http://www.constellation.com, a FORTUNE 200
company with 2005 revenues of $17.1 billion, is the nation’s largest
competitive supplier of electricity to large commercial and industrial
customers and the nation’s largest wholesale power seller. Constellation
Energy also manages fuels and energy services on behalf of energy intensive
industries and utilities. It owns a diversified fleet of more than 100
generating units located throughout the United States, totaling
approximately 12,000 megawatts of generating capacity. The company delivers
electricity and natural gas through the Baltimore Gas and Electric Company
(BGE), its regulated utility in Central Maryland.
Constellation Energy: Forward-Looking Statements
We make statements in this news release that are considered forward-
looking statements within the meaning of the Securities Exchange Act of
1934. These statements are not guarantees of our future performance and are
subject to risks, uncertainties and other important factors that could
cause our actual performance or achievements to be materially different
from those we project. For a full discussion of these risks, uncertainties
and factors, we encourage you to read our documents on file with the
Securities and Exchange Commission, including those set forth in our
periodic reports under the forward-looking statements and risk factors
sections. Except as required by law, we do not intend to update or revise
any forward-looking statements, whether as a result of new information,
future events, or otherwise.
FPL Group: Cautionary Statements and Risk Factors That May Affect
Future Results
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (Reform Act), FPL Group, Inc. (FPL Group) and
Florida Power & Light Company (FPL) are hereby providing cautionary
statements identifying important factors that could cause FPL Group’s or
FPL’s actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made
by or on behalf of FPL Group and FPL in this press release, on their
respective websites, in response to questions or otherwise. Any statements
that express, or involve discussions as to, expectations, beliefs, plans,
objectives, assumptions or future events or performance (often, but not
always, through the use of words or phrases such as will likely result, are
expected to, will continue, is anticipated, believe, could, estimated, may,
plan, potential, projection, target, outlook) are not statements of
historical facts and may be forward- looking. Forward-looking statements
involve estimates, assumptions and uncertainties. Accordingly, any such
statements are qualified in their entirety by reference to, and are
accompanied by, the following important factors (in addition to any
assumptions and other factors referred to specifically in connection with
such forward-looking statements) that could cause FPL Group’s or FPL’s
actual results to differ materially from those contained in forward-looking
statements made by or on behalf of FPL Group and FPL.
Any forward-looking statement speaks only as of the date on which such
statement is made, and FPL Group and FPL undertake no obligation to update
any forward-looking statement to reflect events or circumstances, including
unanticipated events, after the date on which such statement is made. New
factors emerge from time to time and it is not possible for management to
predict all of such factors, nor can it assess the impact of each such
factor on the business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained
in any forward-looking statement.
The following are some important factors that could have a significant
impact on FPL Group’s and FPL’s operations and financial results, and could
cause FPL Group’s and FPL’s actual results or outcomes to differ materially
from those discussed in the forward-looking statements:
FPL Group and FPL are subject to complex laws and regulations and to
changes in laws and regulations as well as changing governmental policies
and regulatory actions, including initiatives regarding deregulation and
restructuring of the energy industry. FPL holds franchise agreements with
local municipalities and counties, and must renegotiate expiring
agreements. These factors may have a negative impact on the business and
results of operations of FPL Group and FPL.
– FPL Group and FPL are subject to complex laws and regulations, and to
changes in laws or regulations, including the Public Utility Regulatory
Policies Act of 1978, as amended, the Federal Power Act, as amended,
the Atomic Energy Act of 1954, as amended, the Energy Policy Act of
2005 (2005 Energy Act) and certain sections of the Florida statutes
relating to public utilities, changing governmental policies and
regulatory actions, including those of the Federal Energy Regulatory
Commission (FERC), the Florida Public Service Commission (FPSC) and the
legislatures and utility commissions of other states in which FPL Group
has operations, and the Nuclear Regulatory Commission (NRC), with
respect to, among other things, allowed rates of return, industry and
rate structure, operation of nuclear power facilities, operation and
construction of plant facilities, operation and construction of
transmission facilities, acquisition, disposal, depreciation and
amortization of assets and facilities, recovery of fuel and purchased
power costs, decommissioning costs, return on common equity and equity
ratio limits, and present or prospective wholesale and retail
competition (including but not limited to retail wheeling and
transmission costs). The FPSC has the authority to disallow recovery
by FPL of any and all costs that it considers excessive or imprudently
incurred. The regulatory process generally restricts FPL’s ability to
grow earnings and does not provide any assurance as to achievement of
earnings levels.
– FPL Group and FPL are subject to extensive federal, state and local
environmental statutes as well as the effect of changes in or additions
to applicable statutes, rules and regulations relating to air quality,
water quality, waste management, wildlife mortality, natural resources
and health and safety that could, among other things, restrict or limit
the output of certain facilities or the use of certain fuels required
for the production of electricity and/or require additional pollution
control equipment and otherwise increase costs. There are significant
capital, operating and other costs associated with compliance with
these environmental statutes, rules and regulations, and those costs
could be even more significant in the future.
– FPL Group and FPL operate in a changing market environment influenced
by various legislative and regulatory initiatives regarding
deregulation, regulation or restructuring of the energy industry,
including deregulation or restructuring of the production and sale of
electricity. FPL Group and its subsidiaries will need to adapt to
these changes and may face increasing competitive pressure.
– FPL Group’s and FPL’s results of operations could be affected by FPL’s
ability to renegotiate franchise agreements with municipalities and
counties in Florida.
The operation of power generation facilities, including nuclear
facilities, involves significant risks that could adversely affect the
results of operations and financial condition of FPL Group and FPL.
– The operation of power generation facilities involves many risks,
including start up risks, breakdown or failure of equipment,
transmission lines or pipelines, use of new technology, the dependence
on a specific fuel source, including the supply and transportation of
fuel, or the impact of unusual or adverse weather conditions (including
natural disasters such as hurricanes), as well as the risk of
performance below expected or contracted levels of output or
efficiency. This could result in lost revenues and/or increased
expenses, including the requirement to purchase power in the market at
potentially higher prices to meet its contractual obligations.
Insurance, warranties or performance guarantees may not cover any or
all of the lost revenues or increased expenses, including the cost of
replacement power. In addition to these risks, FPL Group’s and FPL’s
nuclear units face certain risks that are unique to the nuclear
industry including the ability to store and/or dispose of spent nuclear
fuel, the potential payment of significant retrospective insurance
premiums, as well as additional regulatory actions up to and including
shutdown of the units stemming from public safety concerns, whether at
FPL Group’s and FPL’s plants, or at the plants of other nuclear
operators. Breakdown or failure of an operating facility of FPL
Energy, LLC (FPL Energy) may prevent the facility from performing under
applicable power sales agreements which, in certain situations, could
result in termination of the agreement or incurring a liability for
liquidated damages.
The construction of, and capital improvements to, power generation
facilities involve substantial risks. Should construction or capital
improvement efforts be unsuccessful, the results of operations and
financial condition of FPL Group and FPL could be adversely affected.
– FPL Group’s and FPL’s ability to successfully and timely complete their
power generation facilities currently under construction, those
projects yet to begin construction or capital improvements to existing
facilities within established budgets is contingent upon many variables
and subject to substantial risks. Should any such efforts be
unsuccessful, FPL Group and FPL could be subject to additional costs,
termination payments under committed contracts, and/or the write-off of
their investment in the project or improvement.
The use of derivative contracts by FPL Group and FPL in the normal
course of business could result in financial losses that negatively impact
the results of operations of FPL Group and FPL.
– FPL Group and FPL use derivative instruments, such as swaps, options
and forwards to manage their commodity and financial market risks, and
to a lesser extent, engage in limited trading activities. FPL Group
could recognize financial losses as a result of volatility in the
market values of these contracts, or if a counterparty fails to
perform. In the absence of actively quoted market prices and pricing
information from external sources, the valuation of these derivative
instruments involves management’s judgment or use of estimates. As a
result, changes in the underlying assumptions or use of alternative
valuation methods could affect the reported fair value of these
contracts. In addition, FPL’s use of such instruments could be subject
to prudency challenges and if found imprudent, cost recovery could be
disallowed by the FPSC.
FPL Group’s competitive energy business is subject to risks, many of
which are beyond the control of FPL Group, that may reduce the revenues and
adversely impact the results of operations and financial condition of FPL
Group.
– There are other risks associated with FPL Group’s competitive energy
business. In addition to risks discussed elsewhere, risk factors
specifically affecting FPL Energy’s success in competitive wholesale
markets include the ability to efficiently develop and operate
generating assets, the successful and timely completion of project
restructuring activities, maintenance of the qualifying facility status
of certain projects, the price and supply of fuel (including
transportation), transmission constraints, competition from new sources
of generation, excess generation capacity and demand for power. There
can be significant volatility in market prices for fuel and
electricity, and there are other financial, counterparty and market
risks that are beyond the control of FPL Energy. FPL Energy’s
inability or failure to effectively hedge its assets or positions
against changes in commodity prices, interest rates, counterparty
credit risk or other risk measures could significantly impair FPL
Group’s future financial results. In keeping with industry trends, a
portion of FPL Energy’s power generation facilities operate wholly or
partially without long-term power purchase agreements. As a result,
power from these facilities is sold on the spot market or on a short-
term contractual basis, which may affect the volatility of FPL Group’s
financial results. In addition, FPL Energy’s business depends upon
transmission facilities owned and operated by others; if transmission
is disrupted or capacity is inadequate or unavailable, FPL Energy’s
ability to sell and deliver its wholesale power may be limited.
FPL Group’s ability to successfully identify, complete and integrate
acquisitions is subject to significant risks, including the effect of
increased competition for acquisitions resulting from the consolidation of
the power industry.
– FPL Group is likely to encounter significant competition for
acquisition opportunities that may become available as a result of the
consolidation of the power industry, in general, as well as the passage
of the 2005 Energy Act. In addition, FPL Group may be unable to
identify attractive acquisition opportunities at favorable prices and
to successfully and timely complete and integrate them.
Because FPL Group and FPL rely on access to capital markets, the
inability to maintain current credit ratings and access capital markets on
favorable terms may limit the ability of FPL Group and FPL to grow their
businesses and would likely increase interest costs.
– FPL Group and FPL rely on access to capital markets as a significant
source of liquidity for capital requirements not satisfied by operating
cash flows. The inability of FPL Group, FPL Group Capital Inc and FPL
to maintain their current credit ratings could affect their ability to
raise capital on favorable terms, particularly during times of
uncertainty in the capital markets, which, in turn, could impact FPL
Group’s and FPL’s ability to grow their businesses and would likely
increase their interest costs.
Customer growth in FPL’s service area affects FPL Group’s results of
operations.
– FPL Group’s results of operations are affected by the growth in
customer accounts in FPL’s service area. Customer growth can be
affected by population growth as well as economic factors in Florida,
including job and income growth, housing starts and new home prices.
Customer growth directly influences the demand for electricity and the
need for additional power generation and power delivery facilities at
FPL.
Weather affects FPL Group’s and FPL’s results of operations.
– FPL Group’s and FPL’s results of operations are affected by changes in
the weather. Weather conditions directly influence the demand for
electricity and natural gas and affect the price of energy commodities,
and can affect the production of electricity at wind and hydro-powered
facilities. FPL Group’s and FPL’s results of operations can be
affected by the impact of severe weather which can be destructive,
causing outages and/or property damage, may affect fuel supply, and
could require additional costs to be incurred. At FPL, recovery of
these costs is subject to FPSC approval.
FPL Group and FPL are subject to costs and other effects of legal
proceedings as well as changes in or additions to applicable tax laws,
rates or policies, rates of inflation, accounting standards, securities
laws and corporate governance requirements.
– FPL Group and FPL are subject to costs and other effects of legal and
administrative proceedings, settlements, investigations and claims, as
well as the effect of new, or changes in, tax laws, rates or policies,
rates of inflation, accounting standards, securities laws and corporate
governance requirements.
Threats of terrorism and catastrophic events that could result from
terrorism may impact the operations of FPL Group and FPL in unpredictable
ways.
– FPL Group and FPL are subject to direct and indirect effects of
terrorist threats and activities. Generation and transmission
facilities, in general, have been identified as potential targets. The
effects of terrorist threats and activities include, among other
things, terrorist actions or responses to such actions or threats, the
inability to generate, purchase or transmit power, the risk of a
significant slowdown in growth or a decline in the U.S. economy, delay
in economic recovery in the U.S., and the increased cost and adequacy
of security and insurance.
The ability of FPL Group and FPL to obtain insurance and the terms of
any available insurance coverage could be affected by national, state or
local events and company-specific events.
– FPL Group’s and FPL’s ability to obtain insurance, and the cost of and
coverage provided by such insurance, could be affected by national,
state or local events as well as company-specific events.
FPL Group and FPL are subject to employee workforce factors that could
affect the businesses and financial condition of FPL Group and FPL.
– FPL Group and FPL are subject to employee workforce factors, including
loss or retirement of key executives, availability of qualified
personnel, collective bargaining agreements with union employees and
work stoppage that could affect the businesses and financial condition
of FPL Group and FPL.
The risks described herein are not the only risks facing FPL Group and
FPL. Additional risks and uncertainties not currently known to FPL Group or
FPL, or that are currently deemed to be immaterial, also may materially
adversely affect FPL Group’s or FPL’s business, financial condition and/or
future operating results.
SOURCE Constellation Energy; FPL Group, Inc.
URL to article: https://www.wind-watch.org/news/2006/10/25/fpl-group-and-constellation-energy-terminate-plans-to-merge/