The Maryland attorney general's office announced on Friday that it will seek the dismissal of a lawsuit from Constellation Energy Group that accuses state regulators of overstepping their authority by intervening in its deal to sell half its nuclear power assets to a French utility.
At the same time, Gov. Martin O'Malley and Constellation officials reaffirmed a willingness to continue settlement negotiations while both sides also stepped up the sniping that has marred their relations for several years.
The court fight stems from a decision by the Public Service Commission, the state's top energy regulator, that Constellation's $4.5 billion deal with Electricite de France must be in the public's interest to go forward - meaning the deal is subject to a detailed regulatory review.
Constellation, which owns Baltimore Gas and Electric Co., has sued in Baltimore Circuit Court to overturn that ruling.
John B. Howard Jr., deputy attorney general, said that Constellation's lawsuit is off base and premature, arguing that the Baltimore company would have to wait until the conclusion of all PSC proceedings before it could appeal the decision in court.
"There is no merit to what they are arguing," Howard said.
In a lawsuit filed this week, Constellation accused the PSC of an "unlawful attempt to expand its regulatory reach" and company officials have said the EDF deal is permitted by a law approved by the General Assembly just last year. Constellation's nuclear operations are considered an unregulated merchant business, while BGE is regulated by the PSC.
Constellation spokesman Robert L. Gould said it is "extremely unfortunate" that the EDF transaction is "meeting with such strong political resistance."
At a news conference Friday, O'Malley called Constellation's argument that the new law allows the deal to go forward without further review "ludicrous." He also said that Constellation treats BGE like a "cash cow" and that the EDF deal could have an indirect impact on its ratepayers.
The governor, a Democrat, has laid out a wide-ranging settlement proposal as part of talks that have been going on parallel to the PSC case, which could include one-time credits for residential customers roughly equal to 10 percent of their annual bills.
He defended the PSC's decision to initiate a public-interest review of the EDF deal, saying ratepayers have been gouged in the past.
"We will not take it on faith or handshake that this is in the public's interest when the public has been so poorly treated by Constellation Energy," O'Malley said.
Constellation officials say the O'Malley administration has unfairly targeted their company even though BGE's electricity rates are not out of line with other large utilities in the state.
They warn that derailing the EDF deal could hurt BGE's credit rating and therefore increase energy bills, and they contend the EDF transaction is critical to moving forward with construction of another nuclear reactor at Calvert Cliffs.
Baltimore Sun reporter Gus G. Sentementes contributed to this article.
