$170 For Your Troubles

If you found $170 on the ground, would you pick it up? Does it make up for the rapid rise in your electricity bill?

From WaPo:

Gov. Martin O'Malley (D) and Constellation Energy Corp. hailed their agreement yesterday to give 1.1 million Maryland electricity customers a one-time $170 credit as a victory that will cool the disputes and turmoil of recent months.

"I believe some of the contentious issues of the past are behind us," the governor said at a news conference while flanked by state utility regulators and Democratic legislative leaders. They contrasted O'Malley's effort to wrest concessions from the region's biggest power company with what they contend was the industry-friendly administration of his predecessor, Robert L. Ehrlich Jr. (R).

"We all win in various ways," said Public Service Commission Chairman Steven B. Larsen, who scoured Maryland's 1999 electric deregulation deal for more than a year to find potential givebacks for Baltimore Gas and Electric customers. One included in the proposed Constellation settlement: A $1.5 billion cost that customers were scheduled to pay to dismantle the Calvert Cliffs nuclear plant will now be all but wiped out.

Constellation chief executive Mayo A. Shattuck III said in a statement last night, "All parties gain meaningfully in this carefully crafted settlement, and the overarching value is a return to regulatory stability and normalcy."

If the General Assembly approves the settlement, customers of BGE, a Constellation subsidiary, should expect to find the credit on their bills by the end of the year, officials said yesterday. In the Washington region, BGE serves parts of Montgomery, Prince George's, Howard and Anne Arundel counties and Southern Maryland.

Whatever the benefits for electric customers in the short term, the deal doesn't change the skyrocketing rates that resulted when Maryland opened its electricity markets to competition. Electric bills rose when rate caps came off for Pepco customers in 2004 and BGE in 2006. The expected competition never arrived. Fuel prices are climbing, and unregulated power companies, including Constellation and Mirant, are free to charge what the market will bear to supply Maryland's growing electricity needs.

"What customers are losing every year dwarfs the credits," said Sen. E.J. Pipkin (R-Queen Anne's), the General Assembly's chief critic of deregulation. "On the surface, it's cents on the dollar. If we're trading in regulatory reform for this, we're giving in."

BGE customer Liz Barrett of Annapolis, a choir director and activist, called the $170 credit "ridiculous."

"It's less than the increase on my bill for this month," she said, noting that it has doubled since 2006 and totals $425 to heat her four-bedroom house. "The thing that kills me is we're facing these horrendous bills and we're not having much of a winter."

The deal was struck by attorneys for Constellation and the O'Malley administration after two weeks of negotiations to resolve a lawsuit the company filed in federal court this month. Constellation sued to recover $2.83 in monthly credits it is giving electricity customers over 10 years. The state filed a countersuit to continue the credits.

A public relations war over rising rates, simmering since O'Malley's 2006 campaign, boiled over. The governor took aim at Constellation's wealthy stockholders; the company was furious at a report Larsen made to lawmakers in January that assailed the deregulation deal as bad for consumers.

For Constellation, the settlement restores political peace in a dispute that industry analysts at J.P. Morgan described yesterday as a "high stakes political issue." The company gains more leeway to sell stock to investors without approval from regulators. And it has withdrawn its threat to pursue financing for a new nuclear plant in New York instead of building a proposed third reactor at Calvert Cliffs.

"Maryland was getting a lot of negative national attention as a result of these disagreements," said Glen Thomas of the P3 Group, a consortium of power companies in the mid-Atlantic.

Under the agreement, the company will assume the costs to decommission the two existing Calvert Cliffs reactors starting in 2034, perhaps the biggest long-term gain for electricity customers. BGE transferred the nuclear facility and its other power plants to Constellation in 2000, but customers, not shareholders, were on the hook to dismantle it. Customers have paid $920 million to a decommissioning fund through their bills. But the PSC disputed the future cost in recent months, contending that customers would pay in excess of $1.5 billion if they kept contributing through 2034, a windfall for Constellation.

O'Malley and lawmakers said yesterday that the agreement does not preclude any attempts by the legislature to adopt reregulation of the power industry.

"Issues regarding reregulation are still very much on the plate," Larsen said.

Senate President Thomas V. Mike Miller Jr. (D-Calvert) said O'Malley "made out very well politically" by announcing a deal for customers. But he said the "financial benefits aren't going to be enough to stop high utility costs."

Sean Dobson of Progressive Maryland, an advocacy group, said O'Malley is "playing a bad hand as best as he can."

"Given the fact that the 1999 law was a total and absolute giveaway to the power companies, it's the best he could negotiate."