A 50 percent rate increase that took effect in June sent Baltimore Gas and Electric's revenue up 35 percent in the second quarter, but most of the money went toward buying more expensive electricity from wholesale energy suppliers - including the utility's corporate parent, Constellation Energy Group.
Constellation reported yesterday that its second-quarter profit climbed 25 percent on higher wholesale power sales, while BGE earnings fell 27 percent year-over-year as higher expenses more than offset revenue growth.
Constellation's net income for the quarter was $116.3 million, or 64 cents per share, compared with $93.1 million, or 52 cents per share, in the year-earlier period. BGE's contribution to quarterly earnings was 8 cents per share, down from adjusted earnings of 11 cents in the year-earlier period.
The contrast in earnings is symbolic of the complicated relationship between BGE, the state's biggest energy buyer, and Constellation, the state's largest energy producer, that evolved from deregulation of the state's electricity markets. The relationship took center stage this week after the Public Service Commission subpoenaed Constellation for records detailing its profits from power sales to BGE and other documents.
The inquiry is one of two requested by Gov. Martin O'Malley and some lawmakers as they try to deal with rising electric rates resulting from the move to deregulation.
On Thursday O'Malley asked for an inquiry into whether the wholesale energy market is delivering rates that are "just and reasonable," a request that resembles an effort in Illinois that led to a $1 billion settlement with that state's utilities.
Industry analysts praised the earnings results, but some participating in a conference call with company executives queried Mayo A. Shattuck III, Constellation's chairman and chief executive, on where the Maryland investigations could lead.
One asked Shattuck to compare the $386 million in credits that state lawmakers forced BGE to provide in legislation last year with the $1 billion Illinois settlement. That settlement came after lawmakers pressured the companies to lower rates in the face of rate increases similar to or worse than those experienced in Maryland. Some industry analysts are concerned the case could prompt lawmakers in Maryland to seek bigger concessions from BGE.
"I think maybe you could argue that the Maryland customer got a better deal than the Illinois customer, on average," Shattuck said.
