Maryland filed a lawsuit against BGE's parent company yesterday to ensure that the Baltimore utility continues to pay out $386 million in credits to its 1.1 million residential customers.
The court filing is the latest salvo in a two-year dispute over skyrocketing BGE electricity rates. Gov. Martin O'Malley and Attorney General Douglas F. Gansler contend that Constellation Energy Group, BGE's parent company, must comply with 2006 legislation that required the consumer credits to soften an impending rate increase.
The state's lawsuit is a pre-emptive strike in anticipation of legal action by Constellation, which said this month that it would sue to regain the credits, which it contends are unconstitutional. The company plans to file that lawsuit Monday, officials said yesterday.
O'Malley has stepped up his rhetoric against Constellation recently, and General Assembly leaders say they plan to unveil next week legislation aimed at recovering any costs that might have been unjustly charged to ratepayers.
"In this time of economic uncertainty for so many of our families, it is unfortunate that Constellation would seek to further boost its profits on the backs of the working people of our state," O'Malley said in a statement. "The $386 million rightfully belongs to Maryland ratepayers."
Constellation spokesman Robert L. Gould said the company has a right to collect the money under the 1999 law that deregulated Maryland's energy industry. Terms of the deregulation settlement have been upheld twice in state court cases, he said.
The consumer credits were the only significant financial concession lawmakers extracted from Constellation two years ago in the aftermath of a 72 percent rate increase announced for BGE customers.
At the time, Constellation wanted to work out a deal because it also was seeking state approval to merge with a Florida-based energy company. That merger later fell through.
Since then, state regulators have been studying the 1999 settlement, and they concluded recently that it was lopsided in Constellation's favor. In a January report, the Public Service Commission found that BGE saddled customers with nearly $1.5 billion in costs in exchange for rate cuts worth barely one-fifth of that amount.
Constellation vigorously disputes those findings. Within a week of the report's release, the company threatened to build a $4 billion nuclear plant in New York instead of Maryland if the regulatory environment didn't improve. The plant is considered crucial in allaying an expected energy crunch that could lead to rolling blackouts.
