Falling electricity prices will mean lower-than-expected profits next year for Constellation Energy Group, the company said Friday as it announced first-quarter financial results.
"Because power prices are going down, the generation plants are realizing lower levels of revenue," Constellation CEO Mayo A. Shattuck III said in an interview. "Really, across the industry, you're seeing companies having to lower earnings projections from generation plants because the forward power curve has come down so much."
The Baltimore-based parent of Baltimore Gas and Electric Co. predicts earnings of $3.25 to $3.65 per share in 2011, down 20 cents from earlier "guidance," Shattuck told investors and analysts in a conference call Friday. The company reaffirmed the earnings guidance for this year of $3.05 to $3.45 per share.
Constellation's stock fell $2.21, to $35.35, on the New York Stock Exchange.
Some of the reductions caused by lower generation prices will be offset by expected earnings of the company's Constellation NewEnergy unit, which supplies energy to large commercial and industrial customers. More clients have been interested in locking in lower rates, Shattuck said.
Michael J. Wallace, Constellation's chief operating officer, also told investors that the company expects an answer within several weeks on its application for federal loan guarantees for a new reactor proposed for the Calvert Cliffs nuclear power plant. Constellation has completed negotiations with the U.S. Department of Energy on the application, which was filed more than a year ago.
Constellation announced first-quarter earnings of $191.5 million, or 95 cents a share, compared with losses of $123.5 million in the first quarter of 2009. That loss reflected the aftermath of its near-bankruptcy and the failure of its commodities trading business.