Lawyers for the state and Constellation Energy Group Inc. have been meeting to seek a resolution of their differences over electricity deregulation, talks that Gov. Martin O'Malley characterized yesterday as "fairly active."

Telephone conversations between the governor and Constellation Chief Executive Officer Mayo A. Shattuck III paved the way for the negotiations, which began about a week ago.

"We're in discussions regarding the pending litigation," acknowledged Constellation spokesman Rob Gould. WBAL-AM radio first reported the negotiations.

Constellation sued the state this month to recover $386 million in energy credits to consumers that state lawmakers ordered in 2006. The state had sued Constellation a week earlier in a pre-emptive move aimed at getting a court to find that the legislature had acted properly in ordering the credits.

O'Malley, however, indicated that he told Shattuck he's looking for more than a resolution of those lawsuits.

"I explained to him," the governor said, "the sort of energy future that the people of our state are facing is one that can only be addressed in a stable regulatory environ where we're all working together to avoid things like rolling blackouts and brownouts."

Constellation and state officials have been at odds over whether ratepayers got a bad deal when Maryland lawmakers agreed to deregulate the electricity industry in 1999. The move was meant to lower prices by increasing competition among energy suppliers in the state, but it has resulted in little competition and substantial residential price increases since brokered rate caps expired in 2006.

One issue in the dispute is whether ratepayers are being charged too much to help Constellation dismantle the Calvert Cliffs nuclear power plant in Lusby when its reactors get too old to continue.

"I believe that we got a really bad deal on deregulation," O'Malley said, "and that important aspects of that deal, including saddling our people with billions of dollars in decommissioning costs that they shouldn't have to pay, really needs to be resolved."

With the Public Service Commission investigating the 1999 deregulation deal, lawmakers are considering legislation that would lower the decommissioning amount ratepayers must pay by up to $1.4 billion.

O'Malley said he couldn't say if the talks are making any progress. He vowed to keep trying but added that "failing that, there's legislation and litigation, so we'll keep moving forward on all three fronts."

tim.wheeler@baltsun.com