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Constellation Energy Group told Gov. Martin O'Malley Friday that it would give ratepayers a break and cancel a lucrative golden parachute package for its chief executive as part of a settlement that could help to ensure regulatory approval of a deal with a French utility.

But O'Malley said Constellation's counteroffer to his June proposal does not go far enough.

It is the latest development in talks that began behind the scenes but escalated into a public tussle. O'Malley has sought to wage a public campaign, laying out his case in an editorial and a Webcast to try to wring concessions from Constellation. Meanwhile, Maryland regulators are reviewing Constellation's $4.5 billion deal to sell half its nuclear power business to Electricite de France. It lost a court fight to reverse the Maryland Public Service Commission's decision to determine whether the deal is in the public interest.

Under its new proposal, Constellation would delay asking for an increase in electricity delivery rate for Baltimore Gas & Electric customers until January 2010 at the earliest and cap that rate hike to 2.5 percent, down from 5 percent. And Constellation said it will not ask for an increase in natural gas distribution rate until after filing its electricity distribution rate case.

In February, BGE said it plans to request this year an increase in distribution rates for gas and electricity. BGE charges customers rates for delivering electricity and gas. The delivery charge is a small portion of the total electricity costs.

O'Malley said Constellation's offer does not meet the state's requirements for ratepayer relief, seeks green energy investment at ratepayer expense, does not address chief executive Mayo A. Shattuck III's compensation with transparency and lacks specifics around protecting BGE.

"We also are always willing to talk with Constellation about ideas in connection with a settlement of the issues in the regulatory proceedings," he said. "Any such agreement that is reached must do significantly more to protect ratepayers than what is now on the table."

James L. Connaughton, executive vice president for corporate affairs, public and environmental policy at Constellation, disagreed with O'Malley's assessment.

"The governor can't have it both ways," he said. "What we're trying to do is make multibillion-dollar, private investments in clean energy and conservation programs that will provide significant near- and long-term benefits for BGE customers and the State of Maryland, which is why we find the governor's position so very puzzling."

Constellation said its proposal represents its "good faith attempt" to address O'Malley's goals to benefit ratepayers. O'Malley had taken a particular exception to Shattuck's potential $87 million golden parachute that would be triggered by so-called change of control, such as the sale of the company, and Shattuck's termination. Constellation's deal with EDF would not trigger the payment, and company officials have repeatedly said Shattuck would not receive any money because of the transaction.

Constellation has agreed to cancel Shattuck's change-of-control agreement. Constellation's proposal also includes provisions to insulate BGE from the any negative impacts that could result from the transaction and a commitment to evaluate BGE owning and operating power plants in Maryland. If BGE decides to build a new power plant, Constellation said it would be willing to provide BGE access to a potential site at no cost to its distribution customers.

The company's proposal continues "to articulate very aggressively how huge the public benefits are under the transaction," Connaughton said.

In contrast, O'Malley's offer included one-time credits for residential customers equal to roughly 10 percent reduction in their yearly bill and a pledge to contribute about $20 million a year to a program that helps low-income residents pay utility bills.

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