Friday, March 7, 2008
Battle between Constellation, state could jeopardize reactor
Sides square off over $386 million from deregulation
by Alan Brody | Staff Writer
The legal dispute between Constellation Energy and the state has some lawmakers worried about the fate of a potential third reactor at Calvert Cliffs Nuclear Power Plant.
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ANNAPOLIS — Dueling lawsuits have intensified the conflict between Constellation Energy Group and the state, stoking new fears that the development of a third reactor at Calvert Cliffs Nuclear Power Plant could be in jeopardy.
The latest salvo came Monday as two Constellation subsidiaries filed suit against Maryland in U.S. District Court in Baltimore, seeking to recoup $386 million it was mandated to credit ratepayers resulting from a 2006 law that altered the 1999 deregulation agreement.
The Baltimore energy giant’s suit followed the state’s filing last week of a pre-emptive lawsuit in Baltimore City Circuit Court against Constellation and subsidiaries Baltimore Gas & Electric Co. and Calvert Cliffs to uphold the law that requires reimbursements to ratepayers over 10 years.
The legal dispute has lawmakers worried about the fate of the third Lusby reactor, which is projected to generate millions of dollars of tax revenue for the state and Calvert County.
‘‘The best hope for reducing greenhouse gas emissions, given that we have tremendous generation needs, is, in my opinion, nuclear,” said House Minority Leader Anthony J. O’Donnell (R-Dist. 29C) of Lusby. ‘‘This administration seems intent not only on imposing onerous restrictions on generation development, but also on precluding the nuclear option in Maryland. That’s bad for the economy and bad for the environment.”
Constellation’s lawsuit alleges that the General Assembly violated the deregulation agreement in its bid to mitigate rate increases for more than 1 million BGE customers. Deregulation aimed to reduce energy bills, boost production and increase competition, but soaring utility costs led to price inflation when rate caps expired.
‘‘The sanctity of an agreement is a basic tenet of business and cannot be selectively and unilaterally changed many years later, particularly after the other party has fully performed its obligations under the agreement,” Mayo A. Shattuck III, Constellation CEO, said in a statement.
‘‘This means a contract is a contract, and the state must abide by the rule of law,” Shattuck said.
The state asked the court to affirm its actions as legal and necessary to relieve the cost burden on ratepayers, who were saddled with 72 percent increases in their energy bills.
‘‘Despite receiving healthy and growing profits over the last several years, Constellation wants to boost its bottom line at the expense of hardworking Marylanders,” Attorney General Douglas F. Gansler (D) said in a statement.
‘‘The $386 million rightfully belongs to Maryland ratepayers, and we will do everything in our power to make sure that this cost is not passed on to consumers,” Gov. Martin O’Malley (D) said in the statement.
About half of the contested money stems from average monthly surcharges of about $3 levied on BGE ratepayers to pay for the decommissioning of the two existing nuclear reactors at Calvert Cliffs decades from now.
It remains unclear if the legal battle will affect plans for the third reactor, but O’Donnell is leery. ‘‘Time will tell, but it doesn’t weigh on the positive side of the ledger,” he said.
Others think the plant’s expansion is above the political and legal fray.
‘‘My opinion is that the reactor is so valuable to a company’s future, especially at a time when we are weaning ourselves off of fossil fuels, that I don’t think anything short of legislation saying we don’t want you at all [will halt the reactor],” said Sen. Roy P. Dyson (D-Dist. 29) of Great Mills, whose district includes Calvert Cliffs.
