Apr 7, 2008 10:28 am US/Eastern
Constellation Deal Hangs In The Balance
ANNAPOLIS, Md. (AP) ―
The clock is ticking for Maryland lawmakers to work out a crucial difference in legislation needed to complete a settlement between Constellation Energy and the state on hundreds of millions of dollars in rate relief to customers of a company subsidiary.
The Maryland General Assembly is scheduled to adjourn at midnight Monday, and lawmakers must pass legislation without a Senate-approved amendment to save the deal. The amendment would restore regulatory control to the state over new power plants, authority relinquished when the state decided to deregulate the electricity market in 1999.
The House of Delegates has passed a bill without the amendment.
Constellation Energy Group Inc. and state lawyers say if the amendment stands, it would be a deal-breaker.
Senate President Thomas V. Mike Miller told reporters over the weekend that he was optimistic the bill would pass without the amendment after "cooler heads reflect on the value of having an agreement."
If the settlement falls apart, it would be a disappointment for Gov. Martin O'Malley, who has been working to ease the pain of rising energy bills for the customers of Baltimore Gas & Electric Co., a Constellation subsidiary operating in central Maryland. The deal is valued at nearly $2 billion, including rate relief and the end of ratepayer liability for nuclear power plant decommissioning costs.
Under the settlement, customers of BGE would receive $187 million in one-time "rate rebates" on their electricity bills by the end of the year. That adds up to about $170 for each of BGE's 1.1 million customers. It also would include all but $40 million of $386 million in energy credits Constellation and the state had gone to court to protect.
The deal would also eliminate customer obligations to pay $1.5 billion in future costs for dismantling nuclear power plants in southern Maryland.
And the settlement would put plans back on track for Constellation to consider Maryland as a priority location for a new nuclear power plant. Constellation, citing a potentially unfavorable regulatory climate, threatened to build the plant in New York when the company and Maryland were fighting in the courts.
In return, Maryland 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.
The state also agreed to drop probes into stranded costs, or money paid by utility customers to cover deregulation costs, relating to Constellation. State regulators has have said they did not find any evidence of collusion between Constellation and BGE relating to an electricity auction in 2006.
(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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