The years-long dispute over whether consumers were shortchanged in a 1999 deal to deregulate the power industry ended yesterday with Constellation Energy Group and Gov. Martin O'Malley concluding that neither side could afford to keep fighting.
The two sides announced a settlement yesterday that allows both to claim a measure of victory, while avoiding a prolonged legal battle that could have distracted from efforts to resolve a looming statewide energy shortfall.
O'Malley takes credit for securing rebates and bill credits totaling more than $533 million for Baltimore Gas and Electric's 1.1 million residential customers, who this year will pay 85 percent more for electricity than in 2005. BGE customers also avoid $1.5 billion they might have been liable for to shut down the two Calvert Cliffs nuclear reactors.
O'Malley said yesterday that there is no "magic wand" that utility regulators and lawmakers can wave to bring down the price of natural gas and other fuels used to make electricity.
"We have huge challenges ahead," said O'Malley, a Democrat. "But I believe that some of the contentious and divisive issues of the past are now behind us with this agreement."
For Constellation, the deal means freedom from a political quagmire that cost it a $12 billion merger with a Florida company in 2006 and has dragged the value of its shares down at a time when it needs capital for continued growth. Among other things, lawmakers pledged to stop investigations into the $975 million in so-called "stranded costs" customers paid to compensate Constellation for taking over BGE's power plants.
Lawmakers also will remove a restriction preventing other companies from acquiring more than 10 percent of Constellation's shares without regulatory approval. The cap will rise to 20 percent, making it easier for Constellation to raise capital to pay for nuclear plants and other projects.
"All parties gain meaningfully in this carefully crafted settlement, and the overarching value is a return to regulatory stability and normalcy," Mayo A. Shattuck III, Constellation's chief executive, said in a statement.
Despite the deal's sizable price tag, news of yesterday's settlement sent the company's stock up 3.3 percent to $90.23 - a sign of how much Wall Street punished the company for its battle with lawmakers. The shares touched a high of $107.97 not long before the latest dispute started.
