"The indication from the most recent [PSC] reports, which were very prejudicial, very unfair, very unfounded in its content and, for those of you who have looked at it, it's hard not to conclude that this is prosecutor, judge and jury - all in one - in its tone," said Mayo A. Shattuck III, Constellation's chairman and chief executive.
The PSC set a hearing for Wednesday to air the dispute.
"Although we are confident in our analysis of the transaction, we initiate this proceeding now so that BGE can identify any errors it believes the commission has made so that there is no dispute about the basis for the commission's recommendations to the General Assembly," Steven B. Larsen, the PSC chairman, said in a statement.
O'Malley stood by his PSC chairman, whom he appointed shortly after taking office with a mandate from voters to act on utility rates. The Democratic governor noted that Constellation had announced its lawsuit on the same day it reported adjusted quarterly earnings that were up 37 percent from a year earlier.
The company had fourth-quarter profits of $258.1 million.
"I think it's outrageous that on the same day they announce huge profits, they then turn around and try to shift $386 million in costs back onto ratepayers," O'Malley said.
O'Malley and some lawmakers said they hope the company will continue to invest in the state.
Sen. E.J. Pipkin, an Eastern Shore Republican and frequent critic of deregulation, said some lawmakers are worried that the company's concerns about the regulatory environment will drive it to build a new nuclear plant in New York instead of Maryland. But he also said he believes that Larsen could do even more to help ratepayers.
"It's the same old story with Constellation," Pipkin said. "These kinds of threats are not constructive. Lose the threats, and let's keep talking about policy."
BGE is Maryland's largest utility with 1.1 million customers.
The PSC cheered longtime critics of the 1999 deregulation law when it issued a Jan. 17 report concluding that BGE customers took on $1.5 billion in costs in exchange for rate cuts amounting to one-fifth that amount.
Among other things, it also argued that the cost of decommissioning the state's existing nuclear plants - which it says could reach $5 billion - should not have been placed entirely on the backs of ratepayers. The report said a fund set up to pay those costs was grossly underfunded - a claim the company says is false.
