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O'Malley Seeks Rate Relief as Part of Constellation Review

Aides to Gov. Martin O'Malley (D) released details yesterday of the administration's proposal to get hundreds of millions of dollars in rate relief for electricity customers of Baltimore Gas & Electric as a condition of the sale of some nuclear plants owned by the utility's parent to a French company.

The release comes the same day the Public Service Commission, which regulates utilities in Maryland, ordered a review of the proposed transaction with Electricite de France International to determine whether it is in the "public interest."

The O'Malley administration hopes to gain some leverage over Baltimore-based Constellation, which plans to improve its finances by sell half of its nuclear assets to the French company.

The administration wants BGE to give all residential customers in Maryalnd a one-time credit of 10 percent on their annual electricity bills and to limit a potential golden parachute of $87 million for Constellation's chief executive officer, Mayo Shattuck.

In a briefing released to reporters, Constellation said BGE customers "do not pay rates that are above the norm and never have." It said the administration's focus on BGE shows a "troubling lack of fairness."

The PSC's 36-page order was long awaited by the two companies and by state lawmakers and other advocates who are pushing for return to a regulated utility market in Maryland.

The PSC said it has found that Electricite de France International, in buying half of Baltimore-based Constellation's nuclear assets, would "acquire, directly or indirectly. the power to exercise...substantial influence over the policies and actions" of Baltimore Gas & Electric, the utility owned by Constellation.

The PSC said it will seek a review of whether the transaction would ultimately benefit or harm BGE's electricity customers in the Baltimore area and parts of Howard, Anne Arundel, Prince George's and Mongomery counties.

"It does not matter for this analysis whether EDF plans to exercise or ever does exercise substantial influence," the PSC wrote. "The statute directs us to determine whether EDF will have the power to exertany substantial influence."

More simply put, regulators are looking to determine if electricity rates could rise further than they already have if Constellation has new ownership.

Constellation immediately appealed the ruling to Circuit Court in Baltimore City, saying in a statement that the $4.5 billion transaction involves a "minority investment" by EDF in the energy giant.

High bills continue to be a political problem for Gov. Martin O'Malley (D), who pledged to lower rates but has found he cannot influence wholesale energy markets.

"Although the State's position on substantial influence is clear, it should in no way be interpreted as our opposition to the EDF deal," O'Malley said in a statement. "To the contrary, I believe that this partnership could help secure a more stable and cleaner energy future for our state and our nation. But the public interest must be addressed as part of any deal in order to ensure that ratepayers and the utility are protected."

Several lawmakers led by state senators Jim Rosapepe (D-Anne Arundel) and E.J. Pipkin (R-Queen Anne's) believe the sale gives the O'Malley administration leverage to return Maryland to a regulated or partially regulated utility system. Legislation to regulate future power plants failed to pass the General Assembly this year. .

By Lisa Rein  |  June 11, 2009; 12:09 PM ET
Categories:  Lisa Rein  
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I like the Governor's approach to this well-advised, in the interest of consumers, and with a clear and fair objective. These are steps in the right direction.

Posted by: free-donny | June 12, 2009 9:21 AM | Report abuse

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