Apr 4, 2008 6:47 pm US/Eastern
O'Malley Hopes To Salvage Constellation Settlement
ANNAPOLIS, Md. (AP) ―
Gov. Martin O'Malley said Friday he is hopeful a legal settlement with Constellation Energy Group Inc. that would give rate relief to consumers won't be scrapped by an amended bill passed by the Maryland Senate.
The agreement, which requires legislative approval, is valued at $2 billion and would end lawsuits filed by the state and Constellation over a long-running dispute over energy costs.
The problem, however, is that the Senate changed the legislation in a way that isn't acceptable to the Baltimore-based company.
Senators amended the bill to give the state some regulatory control over new power plants -- control that the state lost when it decided in 1999 to deregulate electricity.
"We are hopeful that this will get back on track on the House side," O'Malley told reporters Friday.
The Senate went ahead and passed the bill Friday morning.
O'Malley would like the House to approve a measure acceptable to Constellation.
"We don't want to do anything to endanger an agreement that would be a $2 billion benefit to consumers," O'Malley said.
The Senate amended the bill Thursday night, after senators argued that it was the only way to return some regulatory control.
On Friday, after the bill was passed 43-0, Senate President Thomas V. Mike Miller told senators they should expect to see another version of the bill coming back to them.
An opinion released Friday by the attorney general's office confirmed that the Senate amendment would nullify the settlement "because it substantively changes the terms" of the legislation.
"In addition to voiding the settlement, certain aspects of the April 3 amendment arguably raise constitutional concerns arising from the amendment's effect on federal regulation in the areas of interstate commerce and interstate electric power," wrote John B. Howard Jr., a deputy attorney general.
Under the settlement, customers of Baltimore Gas & Electric Co. would receive $187 million in one-time "rate rebates" on their electricity bills from the company by the end of the year.
That adds up to about $170 for each of BGE's 1.1 million customers.
Among other benefits, customers also would not be liable for about $5.2 billion to decommission the Calvert Cliffs Nuclear Power Plant.
The settlement would also open the door for a new nuclear power plant to be built in Maryland.
During the legal battle between the state and Constellation, the company threatened to build the plant elsewhere.
In return, the state agreed to change investment laws to give Constellation flexibility to raise capital.
The change will allow up to 20 percent of Constellation stock to be acquired without advance approval from state regulators.
The settlement also would loosen rules restricting ownership of Constellation stock by a nonpublic utility.
(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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