The company also said the diversion of stranded costs to offset BGE's losses on power purchases did not affect customer bills and benefited the regulated utility's bottom line.
"The report's criticism of these transactions falls under the category of `No good deed goes unpunished,'" the company said in a statement.
The report revives a long-simmering argument over the value of BGE's former power plants, which were transferred to Constellation in 2000 at book value. The stranded costs were intended to compensate the company for the difference between the plants' book value and their estimated market value, which was thought to be lower.
During negotiations with the state in 1999, the company initially argued it should be allowed to collect $1.1 billion in stranded costs. By contrast, the Office of People's Counsel, which advocates for utility customers, countered that ratepayers should be compensated $1.5 billion for the power plants - a more than $2 billion difference of opinion.
As it turns out, both sides were wrong.
The value of the plants - particularly Calvert Cliffs - has soared along with the rising price of electricity. The substantial reversal has prompted calls by some lawmakers and others for Constellation to return the money it collected for the plants.
Constellation said that argument doesn't take into account the $2.7 billion it will spend on the plants between 2000 and 2010. Under traditional regulation, those costs would have been paid by ratepayers.
paul.adams@baltsun.com
Sun reporter Laura Smitherman contributed to this article.
PSC findings
A PSC report criticizes the 1999 settlement that implemented deregulation for BGE customers
Key points
Cost of settlement to BGE customers: $1.5 billion
Customer benefit from rate cuts: $315.6 million
Stranded costs, which compensate BGE parent Constellation Energy Group for taking on the plants in a deregulated environment:
- $975 million paid to Constellation for value of BGE plants
- Claims that more than half that amount diverted to offset BGE losses from buying power from Constellation
[Source: PSC report]
