Del. Dereck E. Davis, who voted in favor of deregulation in 1999 and is chairman of the House Economic Matters Committee, acknowledged that lawmakers made mistakes in approving deregulation. But he said the General Assembly is focused on fixing those errors.
"This was uncharted territory for the legislature," he said. "We took the information presented before us and made the best decision we could, as did the Public Service Commission at that particular time."
The report focuses in part on $975 million in stranded costs BGE customers paid to compensate Constellation for taking on power plants in the deal.
The consultants say that between 2000 and 2003, the company diverted some of those payments to offset losses the utility incurred by buying power from a Constellation affiliate that may have charged inflated prices. The company denied that it acted improperly.
BGE has said it lost money buying power because of a six-year, 6.5 percent rate cut for customers as part of the settlement. PSC consultants dispute that assertion, arguing that utility customers essentially funded their own rate cut as a result of the company's diversion of the stranded-cost payments.
The report questions whether the action was a violation of the utility's settlement with the state and if those disputed payments can be returned to ratepayers.
In addition, the report criticizes the deal for giving Constellation ownership of the Calvert Cliffs nuclear plant, while saddling BGE customers with the potentially $5 billion or more costs to decommission the plant after its operating license expires. The report says a fund set up to pay for decommissioning was underfunded by $491 million at the time of the deal and faces an even bigger shortfall in the years ahead.
Constellation said that assertion is false. It said it is in compliance with federal regulations, which require the fund to be maintained at an adequate level.
The commission plans to study whether Constellation should be forced to pick up all or a portion of future decommissioning costs.
"Constellation got the assets, they got the power plants, and ratepayers held on to probably the most significant liability associated with the plants," Larsen said.
Constellation disputed most of the report's findings, saying stranded costs had no impact on customer bills under the settlement's terms. That position seems to be supported by past testimony from the PSC's staff in an unrelated case. The company also pegged the benefit to customers from the 6.5 percent rate cut at more than $1 billion, rather than the $315.6 million stated in the report.
