Apr 1, 2008 6:34 pm US/Eastern
Bill Needed For Constellation Deal Gets Hearing
ANNAPOLIS, Md. (AP) ―
A recent settlement between Maryland and Constellation Energy Group Inc. ends regulators' probes into costs from the state's 1999 deregulation settlement, but it doesn't mean the state can't explore re-regulation options, a key state regulator said Monday.
Steven Larsen, chairman of the Maryland Public Service Commission, briefed lawmakers on legislation needed to seal the settlement, which Gov. Martin O'Malley announced last week.
The commission had been examining stranded costs, or money paid by utility customers to cover deregulation costs, but the PSC will no longer investigate them under the deal.
"We had indicated that -- all other things being equal -- we would continue to look at that, although at that point, we found issues of concern, but we hadn't found any evidence of wrongdoing, so we've closed the books and the door on the 1999 settlement," Larsen said.
Larsen also said the state did not find any evidence of collusion between Constellation and its subsidiary, Baltimore Gas and Electric Co., relating to an electricity auction in 2006.
Larsen said the PSC spent close to $200,000 in legal fees looking into the 2006 auction.
Larsen pointed out, however, that the state can still study plans for re-regulation under the settlement.
"It doesn't address the issues we talked about in terms of re-regulation options -- long-term contracting, competition ... All the other stuff is still very much on the table," Larsen said.
Last week, the state announced a deal to end legal disputes between Baltimore-based Constellation and the state. State and company officials said they hoped the deal will put an acrimonious battle behind everyone, so both the state and the company can move forward.
Under the settlement, customers of Baltimore Gas and Electric Co. will 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 will not be liable for about $5.2 billion to decommission the Calvert Cliffs Nuclear Power Plants -- which had been a key part of the stranded costs probe.
The settlement also puts plans back on track for a new nuclear power plant to be built in Maryland eventually. During the legal battle between the state and Constellation, the company had threatened to build it elsewhere.
The legislation also gives state regulators more clearly defined authority to examine books and records of the company.
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 up rules restricting ownership of Constellation stock by a non-public utility.
"It balances the interest of the BGE customer with the Constellation Energy shareholder, and there are benefits to be achieved in a comprehensive way for all of the stakeholders involved," said Constellation spokesman Rob Gould.
(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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