Constellation Energy Group reported Friday that its fourth-quarter profit plunged and its regulated utility, Baltimore Gas & Electric Co., would seek rate increases more frequently over the next several years as it invests billions of dollars in transmission, grid reliability and energy conservation projects.
The Baltimore company reported that for the three-month period through December, net income fell to $159.8 million, or 79 cents per share, compared with a profit of $4.4 billion, or $21.96 per share, in the corresponding period of 2009. Earnings a year ago included a sizable gain on Constellation's deal with French utility EDF Group, which bought half of the Baltimore company's nuclear power business.
Earnings adjusted to exclude that one-time gain and other charges rose to 42 cents per share, up from 30 cents per share a year ago.
BGE executives had warned last year as it was seeking its first electric delivery rate hike in 17 years that the utility would request increases on a more regular basis.
During a conference call with analysts Friday, Constellation Chairman and CEO Mayo A. Shattuck III said that requesting more regular rate increases would "promote a measured increase in distribution rates to pay for system improvements and reduce regulatory lag."
"Importantly, this is occurring during a time of decline in total energy bills in Maryland," Shattuck said.
BGE received regulatory approval in December to increase electric and gas delivery rates for customers. It was the first electric distribution rate increase since 1993, partly because of agreements the utility has made. The increase means BGE residential customers are paying on average an additional $16 on electric bills and $10 on gas bills annually.
BGE plans to spend $3 billion over the next five years to improve reliability and service quality, with the bulk of that investment in electric and gas infrastructure, as well as transmission and conservation projects and smart-grid technology.
Having more regular rate increases and capital spending also should improve BGE earnings, Constellation executives said.
For 2010, Constellation posted a loss of $982.6 million, or $4.90 a share, compared with a net income of $4.4 billion, or $22.19, a year ago.
During the year, the company took significant write-downs to reflect the reduced value of its nuclear power business and the cancellation of its nuclear development venture with EDF. In the fall, Constellation exited the partnership to develop a third nuclear reactor at Calvert Cliffs in Southern Maryland.
Shattuck said Constellation accomplished many initiatives last year, including acquiring more power plants. The company purchased five plants in the Boston area for $1.1 billion, increasing its energy-producing capacity by one third.
Shares rose 84 cents, or 2.6 percent, to close Friday at $32.67.