“Baltimore’s French Connection” a Baltimore Brew Special Report.
If during this broiling summer you’ve been savoring the cool air at your desk in Baltimore’s City Hall or slurping ice cream inside Harborplace, you have the French-owned Veolia Environment to thank —  and not “air-conditioning,” precisely but a different technology, a “district cooling system.”

Veolia’s in on similarly innovative “network heating” too, a growth industry in Baltimore and an arena the company is entering – as with cooling – by strategic acquisitions. They are also obliquely linked to Constellation Energy’s nuclear power production: through partnerships with EDF and a man named Henri Proglio.

Proglio is the chairman of Veolia’s Board of Directors. He is also the CEO of Electricite de France (EDF), a partner in  the nuclear power side of Maryland-based Constellation Energy. EDF, meanwhile is a 34 percent shareholder in Veolia Energy (European name: Dalkia), that owns Baltimore’s own Trigen and Comfort Link.

If the Paris-based company’s corporate strategy succeeds,  Americans in cities like Baltimore will be using Veolia-owned district heating. And if EDF’s investment in Calvert Cliffs bears fruit, it will become a platform for nuclear energy plants around the country. Americans in cities like Baltimore  who don’t know about Proglio or Veolia yet, will one day soon.

Heating, cooling — and compost

A good way to understand Veolia’s vision of the future is to study its acquisitions. Last February, Veolia Environnement – Veolia Transportation’s parent company – bought Comfort Link, a major subsidiary of Constellation Energy.

Comfort link is one of the largest suppliers of district cooling systems, which offer an energy-saving alternative to air-conditioning by using off-peak energy to freeze and store water for daytime use. In Baltimore, Comfort Link serves, among others, City Hall, the Baltimore Convention Center, Harborplace, the France-Merrick Performing Arts Center, the Clarence Mitchell Courthouse, and the U.S. Customs House.

To enter the district heating market, Veolia in 2007 purchased Trigen, a national company which operates heating networks in numerous cities across the U.S. – including Boston, Philadelphia, Atlanta, Kansas City, Trenton, St Louis, Oklahoma City and Tulsa. In Baltimore, Trigen operates an 11 mile network which serves 250 customers.

These two purchases are essential to Veolia’s corporate strategy. Instead of purchasing capital, Veolia focuses on creating synergy among existing networks. Trigen and Comfort link were fierce competitors in the hot-water industry. In 1997, Trigen sued Comfort Link (then a BGE subsidiary), claiming that Comfort Link was “improperly and illegally engaging in public service activities.” Now, they’re part of the same company.

Do you use city-produced compost? That probably comes from Veolia, as well. The Baltimore City Composting Facility is operated by Veolia Water North America, which provides operation, management and marketing distribution for ORGRO compost, which gets sold up and down the East Coast.

This and other waste management systems are operated through the Northeast Maryland Waste Disposal Authority, a quasi-public partnership between Veolia Water and Veolia North America. That partnership coordinates the composting of sludge from Baltimore’s Back River Wastewater Treatment Plant.

Again, that somewhat complex network offers a peek into Veolia’s business strategy. Veolia doesn’t gobble up Baltimore businesses and replace them with French-speaking outsiders. Using existing private organizations, it coordinates operations with the city itself through quasi-public channels. Veolia’s name may not be stamped on the compost itself – but, in its partnership with the city, it operates the production.

And Nuclear Power?
Veolia’s name isn’t stamped on Constellation Energy’s nuclear business. But let’s call them cousins once removed. Constellation Energy nuclear program is a 50.01-49.99 joint venture with the French company Electricite De France (EDF). Henri Proglio, current CEO of EDF, was the CEO of Veolia Environnement from 2003 to 2009. Now he’s chairman of the Board of Directors of Veolia, while maintaining his current position as head of EDF.

In a phone interview, Rowan Sanders, director of marketing for Veolia Energy North America is adamant that the relationship ends there. “The two companies are not merged. EDF is involved in a different line of business.” And after the interview, he sent an email:

“Veolia is involved in the production and distribution of thermal and electrical energy that is produced locally (i.e., at a large customer site, or relatively close to our customers – a central plant in the “district”). Nuclear power is not locally-produced energy.”

In that case, Mr. Proglio is juggling two separate jobs – something many have to do in today’s economy. And Proglio himself didn’t initiate the EDF deal.
The connection, however, is deeper than Proglio. Veolia Energy Service (under the name Daklia) took over the energy services cluster of EDF in 2000. So in fact the two companies are related by joint venture.
They also have size in common. EDF is the world’s largest utility company. Veolia Environnement is the global leader in water services and the leading private operator of public transportation systems in Europe and North America.

They also have a similar way of approaching Baltimore industries. While an American company – MidAmerican – bid to take over Constellation Energy for $47 billion it intended to take over the entire organization. EDF’s successful approach was narrowly targeted and less aggressive: it sought a partnership with Constellation in the operation of its nuclear energy program. In a similar way, with its purchase of Yellow Transportation, Veolia Transportation became the platform for future expansion: by offering its owner a partnership, instead of engineering a takeover.

“There are some connections,” Sanders allows, and this much is a fact: when the Calvert Cliffs Nuclear Plant is completed, Veolia and EDF will be in on the operation of Maryland’s energy and transportation infrastructure in a big way. And they will have a close economic relationship, and the CEO of one with be the Chairman of the Board of Directors of the other.

So for the moment, when you get on that spacious, comfortable, and, yes, extremely convenient Charm City Circulator, think a bit. A huge global company comes from France to the U.S., to Baltimore, and involves itself in processing sludge, cooling systems, heating systems, taxis, water cooling systems, nuclear power, the Orioles shuttle, transporting the elderly, compost manufacturing, airport shuttles and high-speed rails.

First, what exactly does Veolia hope to get out of this?

This series will explore that question, in part through an interview with Veolia Transporation North America’s CEO Mark Josephs. Josephs explains in detail what led him to sell Baltimore’s oldest Cab Company to Veolia, and why he feels that it’s a lasting partnership.

Second, what does it mean for Baltimore, and for the hundreds of communities and cities across the country where the Veolia logo is also being placed at the corner of websites?

 In conversations with people at Veolia, and elsewhere, we should get a few answers to these questions.

Meanwhile, with summer upon us, it might be a bitter pill to swallow. If there’s anything your average Baltimorean will like less than Arabs taking over horse racing, or Russians taking over steel, it’s probably cracking open a North Carolina-manufactured Natty Boh and hearing that the French have seized control of the future of air conditioning.