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Stranded Costs

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BUSINESS
By Sean Somerville and Sean Somerville,SUN STAFF | December 14, 1997
Two years ago, Eastalco Aluminum Co.'s Frederick plant had the lowest power cost of the five major aluminum factories owned by its corporate parent, Alumax Inc.But since then, company plants in South Carolina, Washington state and Canada have negotiated lower rates. Today, the Frederick plant has the highest rates."One-third of our costs is electricity," said Earl Robbins, public and government affairs manager for Eastalco. "Over the last three years, we've paid in the neighborhood of $65 million to $70 million a year.
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NEWS
By ANDREW A. GREEN and ANDREW A. GREEN,SUN REPORTER | June 9, 2006
Gov. Robert L. Ehrlich Jr.'s top aide said yesterday that some of the key ideas being considered by legislative leaders for next week's special session are not "real solutions" to the looming electric-rate crisis, but he would not say whether the General Assembly plans would draw a veto. James C. "Chip" DiPaula Jr., Ehrlich's chief of staff, said in an interview that firing the members of the Public Service Commission, a top priority for many legislators, would be "a distraction" from securing lower rates for BGE customers facing a 72 percent increase on July 1. And he said that any attempt to require the return of hundreds of millions of dollars paid by utility customers to compensate Baltimore Gas and Electric Co.'s parent company for the anticipated but unrealized decline in value of its power plants, known as "stranded costs," would be indefensible in court.
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BUSINESS
By Kevin L. McQuaid and Kevin L. McQuaid,SUN STAFF | July 26, 1998
Suppose you own a business regulated by a government that protected you from competition in a system in which your customers and shareholders paid for your plants.Now suppose the government decides to end your monopoly and open your business to competition, making you liable for plants that haven't been fully depreciated on your books.What would you do?If you are Maryland's four investor-owned electric utilities, you would want customers to pay for more than $2 billion in plant depreciation -- "the stranded costs" of the government's decision to deregulate the power industry.
NEWS
By ANDREW A. GREEN and ANDREW A. GREEN,SUN REPORTER | June 8, 2006
As lawmakers prepare for next week's special session on BGE rates, they find themselves with two potentially conflicting goals: Get the best deal possible for consumers and don't get sued. Legislators have begun hashing out the components of a bill that would soften a pending 72 percent rate increase and bring more scrutiny to utility operations, with much of the discussion centering on the legality of the proposals. BGE's parent company, Constellation Energy Group, threatened to sue this spring over measures similar to the ones legislators are contemplating, but Assembly leaders say they're confident they can craft a plan that will hold up in court.
BUSINESS
By Shanon D. Murray and Shanon D. Murray,SUN STAFF | July 25, 1999
With public hearings on the recent BGE utility deregulation settlement set to begin in several weeks, some business owners say the agreement -- initially heralded as the best compromise possible -- might not be good enough.Baltimore Gas and Electric Co. and a dozen parties involved in closed-door talks submitted a proposal to the Maryland Public Service Commission last month that would let users pick their electric supplier by next July.Some commercial customers are balking at the $528 million competitive transition charge, or "stranded costs," that BGE won the right to claim from electricity users under the proposed settlement.
BUSINESS
By Kevin L. McQuaid and Kevin L. McQuaid,SUN STAFF | July 2, 1998
Maryland's four major power utilities asked for permission yesterday to recover more than $2 billion in "stranded costs" from consumers, as part of a transition to a competitive electric system in the state.Baltimore Gas and Electric Co.'s $1.1 billion accounts for the majority of the stranded costs, which the utilities claim they are owed for investments in power plants and fuel under the regulated electric system. BGE's 10 power plants serve 2.6 million residents in central Maryland.But BGE says the $1.1 billion is not a fixed figure; it might change, depending on the utility's cost of power.
BUSINESS
By Shanon D. Murray and Shanon D. Murray,SUN STAFF | November 13, 1999
Constellation Energy Group, the parent of Baltimore Gas and Electric Co., said yesterday that it may report a net loss in the fourth quarter because of an extra $80 million after-tax write-off related to the recent approval of its electric deregulation plan for Central Maryland.The company had expected to write off a pretax total of $150 million to account for depreciation of its generation assets over the four quarters that began with the third quarter of 1999, which ended Sept. 30, it said in a filing with the U.S. Securities and Exchange Commission yesterday.
NEWS
By Kevin L. McQuaid and Kevin L. McQuaid,SUN STAFF | July 1, 1998
Baltimore Gas and Electric Co. and Maryland's other utility companies will seek permission today to recover billions of dollars in costs from consumers as part of a plan to revamp the state's electrical power industry.The issue of so-called "stranded costs" -- money that utilities believe they are owed from investments in generating plants and fuel -- is expected to be the thorniest hurdle to transforming Maryland's regulated, monopolistic electricity suppliers into full competitors by July 2002.
BUSINESS
By Shanon D. Murray and Shanon D. Murray,SUN STAFF | December 11, 1999
A group of out-of-state power suppliers, a Baltimore Gas and Electric Co. competitor and one of the utility's large industrial customers have filed separate Circuit Court appeals challenging the terms of a settlement recently approved by the state regulatory agency that sets the rules for deregulating Central Maryland's electricity market.The Mid-Atlantic Power Supply Association also filed a motion to delay BGE's collecting $528 million in transition or "stranded costs" from its 1.1 million residential, commercial and industrial customers -- what the utility claims as partial repayment for the cost of building power plants that were being underwritten by previous rates -- until the appeal is resolved.
BUSINESS
By Kevin L. McQuaid and Kevin L. McQuaid,SUN STAFF | July 29, 1998
A Pittsburgh-based utility company abruptly called off its pending merger with Allegheny Energy Inc. yesterday, after regulators balked at a plan to give the team more than $1 billion in "stranded cost recovery."DQE Inc.'s decision to terminate the $2.6 billion merger stems from Pennsylvania's decision to eliminate a significant portion of the controversial power plant expenses that Hagerstown-based Allegheny had sought as part of a shift to a deregulated electric industry."A mutual termination would permit both companies to return to business in the ordinary course and devote their full attention to a timely implementation of retail choice in Pennsylvania," DQE President and Chief Executive Officer David D. Marshall wrote in a letter to Allegheny's top executive.
NEWS
By ANDREW A. GREEN and ANDREW A. GREEN,SUN REPORTER | April 22, 2006
Democratic legislators - joined by some Republicans - denounced yesterday an electricity rates deal struck by Gov. Robert L. Ehrlich Jr. with BGE and said they want a special session to either soften the shock of a 72 percent price increase facing consumers or take more drastic action. "I'm getting calls from my constituents telling me that's a bad deal," said Del. Patrick L. McDonough, a Baltimore County Republican, one of a cross-section of legislators interviewed yesterday. "The deal we put together in the waning moments of the General Assembly was a bad deal to start with.
NEWS
March 24, 2006
At Constellation Energy Group, business has been pretty darn good. The company racked up 16 percent growth in its adjusted earnings per share in 2005, roughly its annual average since 2002. Constellation's total return for shareholders from October 2001 to the end of last year was 193 percent - compared with just 22 percent for the Standard & Poor's 500 index. An investment of $100 in Constellation's stock at the very end of 2001 - including dividends - was worth $244.15 at the end of last year, the company boasts.
NEWS
By KELLY BREWINGTON and KELLY BREWINGTON,SUN REPORTER | March 23, 2006
A confidential draft plan from Baltimore Gas and Electric Co. that would spread a huge utility rate increase over eight years fails to protect customers in the long run, lawmakers said yesterday as they resumed threats to delay a proposed power company merger to negotiate a better deal for ratepayers. But legislators said that the concept is just a start and that they hope to see a firm proposal by the end of this week. "The next 48 hours, there will be an intense set of meetings to iron out a plan," said Sen. E.J. Pipkin, a Republican from the Eastern Shore who has taken part in negotiations.
BUSINESS
By Dan Thanh Dang and Dan Thanh Dang,SUN STAFF | August 3, 2001
For the first time in three days of grueling testimony, and as more details emerged, financial and economic experts for the state expressed confidence yesterday in a proposed plan to help Baltimore Gas and Electric Co. pay down billions of dollars in debt if it is allowed to split from its parent later this year. The turn of events was the first positive sign for Constellation Energy Group Inc. in three days of hearings held by the Maryland Public Service Commission to determine the financial health of its regulated utility, BGE, in the event of a separation.
BUSINESS
By Dan Thanh Dang and Dan Thanh Dang,SUN STAFF | October 26, 2000
The proposed split of Constellation Energy Group Inc. all but ensures that Maryland's residential customers won't have a choice when it comes to choosing their power supplier, according to two industry trade groups. Customers will continue calling Baltimore Gas and Electric Co. for service, power outages and complaints. But more importantly, customers will continue purchasing their electricity from BGE and pay millions of dollars in "stranded costs" to BGE, or money the utility spent building power plants that it had to sell when electricity restructuring started in the state.
BUSINESS
By Dan Thanh Dang and Dan Thanh Dang,SUN STAFF | August 24, 2000
The Mid-Atlantic Power Supply Association urged a Circuit Court judge yesterday to block electricity deregulation in metropolitan Baltimore because the current plan unfairly benefits the Baltimore Gas and Electric Co. In a hearing before Baltimore Circuit Judge Albert J. Matricciani that lasted almost four hours, the trade group of power producers asked the court to force the Public Service Commission to revise the deregulation plan now in effect....
BUSINESS
By Sean Somerville and Sean Somerville,SUN STAFF | December 23, 1998
The state's consumer advocate proposed cuts yesterday in Baltimore Gas and Electric Co.'s rates during deregulation of Maryland's electric utility industry, but BGE said such cuts are unjustified.In a proposal filed with the state Public Service Commission, the Office of the People's Counsel called for BGE rates to "drop by 10 percent in 2000 and remain stable for the next five years."But BGE stood by its plans to freeze electric rates at year-end 1998 levels until July 2002, when all Marylanders are expected to have a choice of electricity providers.
BUSINESS
By Shanon D. Murray and Shanon D. Murray,SUN STAFF | July 16, 2000
Baltimore Gas and Electric Co. has the unwanted distinction of becoming the first utility in the nation to have power deregulation halted by a court illustrating how the move to give consumers cheaper electricity rates through competition has become complicated and fiercely contested. BGE and the Mid-Atlantic Power Supply Association are just days away from going to battle for yet another time in a courtroom. The state Court of Appeals hearing Thursday is expected to be critical in determining the immediate future of deregulation in Baltimore and its five surrounding counties.
BUSINESS
By Dan Thanh Dang and Dan Thanh Dang,SUN STAFF | August 22, 2000
After several failed attempts, the Mid-Atlantic Power Supply Association will finally get its day in court tomorrow in its effort to force a revision of Maryland's electricity deregulation plan. Deregulation started Aug. 5 after a Baltimore Circuit Court judge lifted a last-minute stay that delayed its start in the Baltimore region. Baltimore Gas and Electric Co. immediately gave its 1.1 million customers a 6.5 percent reduction in their electricity costs, a discount that will remain in force for six years.
NEWS
July 31, 2000
BGE's rate cuts don't do Maryland consumers any favors The Sun reported only half of the issues about the appeal the Mid-Atlantic Power Supply Association (MAPSA) asked for ("Cheaper electricity held hostage," editorial, July 19). The reason that the Baltimore Gas and Electric Co. can offer a low rate for electricity for the next few years is that it stands to collect $528 million from Maryland ratepayers for stranded costs -- money BGE invested in "generation assets" that it has not been allowed to charge ratepayers.
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