Constellation willing to use debt, equity to buy generating assets

By Jennifer Lanning Drey

Portland, Ore., March 29 - Constellation Energy Group, Inc. will use a mix of debt and equity consistent with its investment-grade rating to purchase generating assets if it finds opportunities to buy assets beyond what it can fund using cash, Mayo Shattuck III, chief executive officer of Constellation, said Monday.

The company has about $1 billion of cash that can be deployed to acquire generating assets in regions where the total load the company serves exceeds its generation, Shattuck said during a company analyst meeting.

Constellation is looking to acquire additional generating assets before power prices increase, he said.

"The current market environment should provide an opportunity to acquire generation plants at depressed asset values compared to a few years ago," Shattuck said.

In most regions, Constellation serves a load larger than the company's generation footprint, requiring it to enter into contracts on exchanges or over-the-counter markets to meet its load obligations.

However, as power prices rise, the amount of collateral and capital required to do so will increase, affecting the company's profitability and available liquidity, he said.

Based in Baltimore, Constellation Energy is a supplier of energy products and services to wholesale and retail electric and natural gas customers.

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