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Feb 6, 2008 6:01 pm US/Eastern
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Constellation Skips Hearing With Regulators
BALTIMORE (WJZ/AP) ―
Constellation Energy frustrated Maryland regulators Wednesday by skipping a hearing to discuss costs passed on to consumers due to deregulation, highlighting a standoff between the state and the utility over rising energy costs.
Alex DeMetrick reports the hearing was scheduled by the state's Public Service Commission to address Constellation's complaints about recent PSC reports on stranded costs and decommissioning expenses for nuclear power plants at Calvert Cliffs, which were transferred to Constellation under the 1999 settlement.
An order for the hearing specifically required the attendance of Constellation subsidiary, Baltimore Gas and Electric Co., and "invited" Constellation to attend in order to better answer questions. Deborah Jennings, outside counsel representing BGE, attended, but she only answered questions on behalf of BGE, not Constellation.
The PSC didn't order Constellation to attend, because the company is not a regulated entity in Maryland, PSC Chairman Steven Larsen said.
Commissioners frequently were unable to get answers they were looking for from Jennings during the hearing.
"I think we made it clear what the purpose of the hearing was and if you all couldn't answer the questions, then someone from Constellation should be there to answer the questions," Larsen told the attorney.
Constellation spokesman Rob Gould, who attended the hearing, said Constellation simply wasn't directed to be present. Gould said BGE was a party to the settlement agreement and was directed to attend.
"And if there's any further questions that the commission would have, I'm sure they'll provide it to Constellation Energy," Gould said.
Jennings said she would be happy to forward questions to Constellation.
The PSC and Constellation have been increasingly at odds during a legislative session in Annapolis where lawmakers and Gov. Martin O'Malley have been talking about increasing regulation on utilities in wake of a 72 percent rate hike for BGE customers.
Constellation says it plans to sue the state in federal court to recoup $386 million in energy credits that customers received to soften the rate increase. The company also has indicated it's thinking of building a nuclear power plant in New York, instead of Maryland, because of what it describes as a hostile regulatory climate.
A report on stranded costs and deregulation infuriated Constellation when it was released last month. The PSC report found that customers paid $975 million for costs to BGE plants and $491 million to decommission nuclear power plants at Calvert Cliffs, while only receiving $316 million in rate relief between 1999 and 2006, for a net cost of $1.15 billion.
But the company says the report is full of errors, ignoring about $2 billion in net customer benefits. Constellation also says the PSC is creating an environment that will cast the business climate into crippling uncertainty. Jennings also criticized regulators for trying to undo a deal agreed on by lawmakers and upheld by the courts.
Larsen and other commissioners have concerns that the 1999 settlement failed to accurately reflect the liability customers have for paying to decommission nuclear power plants in 2036. The commission is worried ratepayers will end up being responsible for $5 billion when the plants are decommissioned, and they are skeptical that a fund set aside to pay is getting enough money.
"We know that under current assumptions we're not getting there, and my concern is that at some point there's going to be a big bill to pay because BGE and Constellation are going to be saying: 'It's time, and you owe us a few billion dollars,"' Larsen said.
But Jennings said she didn't agree the fund for decommissioning was going to be short.
"Well, I certainly understand why you have the concern," she told Larsen. "I would differ with the assumption that you know we're not getting there."
Larsen also said he is worried that part of the money to contribute to decommissioning is in the hands of Constellation without any oversight.
"One concern could be it's getting no where near what it needs and ratepayers are not getting the benefit of that," Larsen said.
The PSC is recommending several pieces of legislation in the General Assembly, including measures to:
--Grant oversight authority for the PSC over decommissioning funds.
--Authorize the PSC to require BGE to credit consumers if funds have been managed to their disadvantage.
--Give the PSC the authority to require BGE to increase its contribution to decommissioning reserves.
--Clarify the commission's authority to issue subpoenas to and examine the books, records and personnel of a public utility in the state.
(© 2008 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)