Maryland lawmakers are criticizing Constellation Energy Group's plans to award up to $32 million in performance and retention payouts to top executives during the next two years, saying yesterday that the payments ignore the financial struggles of utility ratepayers and shareholders amid the recession.
Gov. Martin O'Malley and others said indignation from citizens about the payments was fueling new calls for re-regulating the energy industry in Maryland.
Others said the money should be diverted to help customers of Constellation's Baltimore Gas and Electric Co., the state's largest energy provider.
BGE customers are angry about paying higher bills this winter as Constellation plans to seek rate increases for delivering electricity and natural gas next year.
For their part, Constellation executives scrambled to contain the fallout yesterday, saying the average awards of more than $100,000 for each senior manager are necessary for employee retention. And they said the payments would not contribute to higher costs for ratepayers.
"These bonuses are yet another example that deregulation has not worked for residential ratepayers," O'Malley said in a statement. He has proposed legislation that would allow the state to regulate future power plants.
"It is hard to accept the necessity of paying $32 million in retention bonuses during record unemployment," he said.
When Constellation agreed to sell half of its nuclear power business to France's largest utility for $4.5 billion, it negotiated a deal to ensure that senior managers would receive the long-term performance and retention awards they would have received under a previous deal with Warren Buffett.
After agreeing to sell itself to Buffett's MidAmerican Energy Holdings Co. to avert a near-bankruptcy last fall, Constellation dumped that deal in favor of Electricite de France's bid in December.
Constellation has laid off more than 800 workers, slashed its shareholder dividend by half and is seeking the rate increase for BGE's 1.2 million customers.
Constellation officials say the payments are needed to retain key senior managers in critical operational roles throughout the company, including at its power plants. They continued to insist yesterday that the payouts are not bonuses because they represent long-term performance, not the past year's results.
