Jan 26, 2009
Constellation Energy, the parent company of Baltimore Gas and Electric, agreed to sell itself to Warren Buffett’s company in September of 2008. It had lost money speculating in energy prices, although in previous years it had made big profits by speculation. Buffet offered a one billion dollar loan it needed. In exchange, Mr. “Billionaire” Buffett got loan guarantees.
Four months later, Constellation Energy decided not to sell itself to Buffett. Instead it plans to sell its nuclear business to the French electricity giant, EDF. But Mr. Buffett not only got his billion-dollar loan back – he also got another 593 million dollars, from different fees, cash and interest payments. In other words, Buffett got close to 60% on this deal. What a deal-maker!
What happened to everybody else? Eight hundred people got laid off by Constellation. The bosses who had lost big money by speculating got to keep their jobs. And more than a million Baltimore Gas and Electric customers got a 70% electricity rate increase and natural gas price increases.
A perfect example of who benefits under capitalism.