BGE settles rate case Firm, state reach deal on expenses from plant's shutdown

PSC has 30 days to review

Utility won't charge customers for rest of Calvert Cliffs' costs

December 31, 1996|By Greg Schneider | Greg Schneider,SUN STAFF

Baltimore Gas and Electric Co. has agreed to settle a 6-year-old rate case with the Maryland Public Service Commission by not charging customers for $118 million in energy costs related to the Calvert Cliffs nuclear plant shutdown.

Yesterday's preliminary settlement with the Office the of People's Counsel and the PSC staff closes the state's longest and most expensive rate case ever. The commission now has 30 days to review the deal.

BGE agreed to absorb part of the cost with a noncash charge of $58 million during the fourth quarter of 1996 that equates to 39 cents per share. The utility had been expected to post a gain of 29 cents per share for the fourth quarter, according to Bloomberg Business News.

The case involved the shutdown of BGE's Calvert Cliffs nuclear power plant between 1989 and 1991. The utility says it spent $458 million to replace the energy lost during the shutdown. At issue in the rate case was whether BGE could recover that cost from its customers.

Maryland ratepayers have already paid about $340 million of the total bill.

Yesterday's settlement won't mean any reduction in bills, but People's Counsel Michael J. Travieso said the deal kept BGE from hitting customers with a surcharge to cover the remaining expense.

"We think it's a very significant case, and we think it's a reasonable and just result that the ratepayers don't have to pay for this," Travieso said.

The Public Service Commission could have decided that ratepayers shouldn't have covered any of the bill, and could have ordered BGE to reimburse the $340 million it already has collected.

"I would say it's a compromise," Travieso said.

A BGE spokesman agreed that the settlement was "fair" and stressed that BGE was not admitting any liability for the problems at Calvert Cliffs that led to the shutdown.

"There's no fault and no liability here on our part," BGE spokesman Art Slusark said. "A settlement means, you know, people give a little bit in each direction."

Other parties involved in the case -- the Department of Defense, Bethlehem Steel Corp. and the Maryland Industrial Group -- have agreed not to oppose the settlement, according to a news

release issued by the people's counsel.

The case could have dragged on another five years, by some estimates.

The various interests have been talking about a settlement for about a year, and reached an agreement early this month, Slusark said.

It then took time to complete the paperwork, he said.

BGE also will forfeit $8 million it had declared as interest income from the anticipated $118 million reimbursement, Travieso said.

Ratepayers have been reimbursing the replacement energy costs for seven years through a monthly fuel rate charge, which is designed to cover fluctuations in the price BGE pays for power.

BGE tried several years ago to set the fuel rate charge high enough to cover the entire $458 million cost of the two-year Calvert Cliffs shutdown, but the Public Service Commission allowed only a partial increase. That resulted in the residual $118 million expense that BGE was trying to recover.

Yesterday's settlement will not cause any decrease in the fuel rate charge; it just prevents a further increase, Travieso said.

The origins of the case date to May 1989, when leaks were discovered in the pressurizer heater sleeves in one of Calvert Cliffs' two reactors. The second unit was shut down so BGE could look for similar problems.

During the shutdown, the people's counsel and the PSC staff argued to the commission that BGE had a record of poor decisions at Calvert Cliffs, and that ratepayers should not be liable for any excess costs.

Calvert Cliffs spent time on the Nuclear Regulatory Commission's "Watch List" of plants with potential problems, but it has since cleaned up its act, officials agree. Earlier this month, the NRC gave the plant its highest rating on three of four review criteria.

Yesterday's settlement was announced late in the day, and BGE stock closed unchanged at $27.125.

Pub Date: 12/31/96

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.