Constellation Energy Group and the state have reached a settlement, which would end their ongoing feud over the 1999 deregulation of Maryland?s electricity industry and provide a one-time $170 credit to Baltimore Gas and Electric customers, Constellation announced Thursday morning.
Lawmakers must still approve the settlement before the General Assembly?s current session ends April 7.
Financial analysts greeted news of the tentative settlement with approval, saying it eliminated a significant overhang for Constellation stock. Constellation shares closed up 3.26 percent to $90.23.
Under the agreement, the state will reaffirm the 1999 deregulation settlement and end months of investigations by its Public Service Commission. In return, BGE residential customers will receive the one-time credit, totaling $187 million, and will no longer be liable for costs associated with the eventual decommissioning of the Calvert Cliffs Nuclear Power Plant.
“This agreement would provide far-reaching benefits for our customers, our shareholders and the state of Maryland,” Mayo Shattuck, Constellation president and CEO, said in a statement. “All parties gain meaningful benefits in this carefully crafted settlement, and the overarching value is a return to regulatory stability and normalcy.”
The settlement resolves lawsuits filed by the state and Constellation against each other earlier this month over $386 million the company was ordered to credit to ratepayers under 2006 legislation. It would restore all but $40 million of those credits.
The disagreement between the two sides heated up in January with a PSC report concluding that deregulation had cost ratepayers $1.15 billion but saved them just $315 million. BGE claimed that costs totaled just $155 million but savings came to $1.8 billion. The report sparked a round of contentious hearings and back-and-forth between the two sides, culminating in the lawsuits.
The agreement would also give the PSC greater oversight to examine the records of any Maryland electric utility. Constellation said it would work to develop a new nuclear power plant at Calvert Cliffs before its other sites. The company had threatened to build a new plant in another state following the PSC report.
“We think that eliminating the overhang [for Constellation stock] in Maryland is a positive event for both CEG and the state, allowing the conversation around energy policy to move from the 1999 settlement to planning for future resource needs for Maryland,” analysts for U.S. Equity Research wrote in a report released Thursday.
