Just when the naysayers were carping that the Public Service Commission wasn't tough enough on Baltimore Gas and Electric or its parent, Constellation Energy Group, relations turned downright frosty this past week. Is it real or is it melodrama? Hard to say. Constellation's threat to postpone potentially billions of dollars in investment and to sue the state for $386 million is certainly a serious matter.
What's difficult to understand is how a draft interim report on the 1999 stranded-costs settlement could have precipitated such an aggressive response by a company that claims to prefer an even keel. The report reviews the facts from the controversial settlement, including the $528 million given BGE for its transition costs and the potential $5 billion ratepayers may have to finance for the future closure of the Calvert Cliffs nuclear facility. Little of it is new.
Mostly, the document raises questions and offers policy options. They include some observations that, admittedly, are phrased in a manner that suggests PSC Chairman Steven B. Larsen isn't satisfied with Constellation's responses. That skeptical tone may be a change from the more agreeable phrasings of PSC chairmen past, but then the former state insurance commissioner wasn't chosen by Gov. Martin O'Malley for the job because of his diplomacy. Constellation Chairman Mayo A. Shattuck III may want to compare notes with former CareFirst BlueCross BlueShield CEO William L. Jews about that.
If Mr. Shattuck is worried that the General Assembly will try to rewrite the past, including the 1999 settlement, and take the matter to court, or worse, he has misjudged the politics of the moment. Legislators have little appetite for a fight, especially one they likely can't win. Most were ready (and perhaps still are) to do what's done to most interim reports in Annapolis - file them away.
Instead, Constellation has just reminded a still-unhappy public of the 2006 rate increase and the rancorous fight that followed. It could scarcely have done a better job of painting a target on its back. Not one to miss such an opportunity, Mr. O'Malley has chimed in with a vow to fight the lawsuit "and stand up for the best interests of the people."
How will this play out? Lawmakers will now look foolish if they allow the PSC to be bullied. At minimum, Mr. Larsen ought to be given the resources and authority to fully understand such matters as how the stranded-costs payment was used and whether the money set aside for shuttering Calvert Cliffs is adequate. Then, after a thorough and fair review, let the chips fall where they may.
Meanwhile, the public can't lose sight of two hard and cold facts. First, BGE rates are a product of a global energy market and, as such, they aren't likely to go down - ever. And second, Maryland faces a potential energy shortage in the not-too-distant future. It's important that this be addressed, and Constellation's proposed expansion of certain generating facilities - most especially Calvert Cliffs - ought to be encouraged.
Maryland's "regulatory environment" hasn't become the calamity that Constellation executives are now telling analysts. But we acknowledge that a few more confrontational weeks like this past one could push it strongly in that direction. Those involved need to tone down the rhetoric, take the lawyers off speed-dial, and have a respectful dialogue about the state's energy future. Too much is at stake to do otherwise.