Md. aims lawsuit at utility

Maryland filed a lawsuit against BGE's parent company yesterday to ensure that the Baltimore utility continues to pay out $386 million in credits to its 1.1 million residential customers.

The court filing is the latest salvo in a two-year dispute over skyrocketing BGE electricity rates. Gov. Martin O'Malley and Attorney General Douglas F. Gansler contend that Constellation Energy Group, BGE's parent company, must comply with 2006 legislation that required the consumer credits to soften an impending rate increase.

The state's lawsuit is a pre-emptive strike in anticipation of legal action by Constellation, which said this month that it would sue to regain the credits, which it contends are unconstitutional. The company plans to file that lawsuit Monday, officials said yesterday.

O'Malley has stepped up his rhetoric against Constellation recently, and General Assembly leaders say they plan to unveil next week legislation aimed at recovering any costs that might have been unjustly charged to ratepayers.

"In this time of economic uncertainty for so many of our families, it is unfortunate that Constellation would seek to further boost its profits on the backs of the working people of our state," O'Malley said in a statement. "The $386 million rightfully belongs to Maryland ratepayers."

Constellation spokesman Robert L. Gould said the company has a right to collect the money under the 1999 law that deregulated Maryland's energy industry. Terms of the deregulation settlement have been upheld twice in state court cases, he said.

The consumer credits were the only significant financial concession lawmakers extracted from Constellation two years ago in the aftermath of a 72 percent rate increase announced for BGE customers.

At the time, Constellation wanted to work out a deal because it also was seeking state approval to merge with a Florida-based energy company. That merger later fell through.

Since then, state regulators have been studying the 1999 settlement, and they concluded recently that it was lopsided in Constellation's favor. In a January report, the Public Service Commission found that BGE saddled customers with nearly $1.5 billion in costs in exchange for rate cuts worth barely one-fifth of that amount.

Constellation vigorously disputes those findings. Within a week of the report's release, the company threatened to build a $4 billion nuclear plant in New York instead of Maryland if the regulatory environment didn't improve. The plant is considered crucial in allaying an expected energy crunch that could lead to rolling blackouts.

"Clearly, we have very divergent views of the 1999 settlement, which we have always maintained was just and fair and beneficial for BGE customers," Gould said. "We are hoping to bring these matters to final resolution, so that we can begin a more productive and positive dialogue about Maryland's energy future."

The lawsuits over the credits could drag on for months or years. The parties dispute which court would be the appropriate venue. The state filed its lawsuit in Baltimore City Circuit Court, and Constellation said it plans to file in federal court, though Gould said officials haven't determined which federal courthouse.

Some lawmakers criticized O'Malley's lawsuit as a political ploy. The Democratic governor campaigned on promises to stop the hefty rate increase, but a reconstituted PSC dominated by his appointees concluded that it could not deny a 50 percent rate increase for BGE's customers in Central Maryland last year.

"Nobody in the O'Malley administration wants to admit that they couldn't stop the rate increases," said Del. Warren E. Miller, a Howard County Republican who is a member of the House Economic Matters Committee. "This is just bad all around for the state and for ratepayers. I certainly hope this isn't a course where the governor picks a target of a company and tries to drive them out of the state."

Del. Anthony J. O'Donnell, the minority leader from Southern Maryland, said he is concerned that O'Malley's fight with Constellation could prove "shortsighted" if Constellation doesn't build its nuclear power plant here.

Other lawmakers praised the governor's efforts and pledged to push through legislation that could bring rates down.

"The governor can't roll over and play dead," said Senate President Thomas V. Mike Miller, a Democrat who represents Calvert and Prince George's counties. "There is a great deal of angst. There is a lot of money involved. Consumers believe their interests are not being preserved and protected."

PSC Chairman Steven B. Larsen said he is helping legislative leaders craft their proposals but declined to give details.

Larsen appeared before lawmakers recently asking for legislation that would give his agency clearer authority to subpoena and examine any affiliate of a public utility in the state.

He also sought legislation that would clarify the PSC's authority to order refunds to ratepayers if it found that Constellation violated the terms of the 1999 deal. Larsen has stressed that the PSC has made no such finding.

"It's in everyone's interest to try to resolve all these issues during the legislative session and then move on so that we can all look forward," he said.

laura.smitherman@baltsun.com

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