State in talks with Constellation over lawsuits

Third reactor at Calvert Cliffs could hang in balance

The dust-up has raised fears among local officials that Constellation may look elsewhere to build a new reactor. Company officials told Southern Maryland lawmakers several weeks ago that investors may be leery to invest $5 billion in a 1,600-megawatt reactor given Maryland’s unstable political and regulatory climate. Unistar, the nuclear development subsidiary of Constellation, is eyeing three other states to build a new reactor, but Calvert Cliffs is thought to be the favorite.

Resolving the litigation might help put the project back on track. Steven B. Larsen, chairman of the Maryland Public Service Commission, said Friday that lawyers from the state are engaged in ‘‘almost daily discussions” with Constellation’s attorneys to settle their differences.

Constellation spokesman Rob Gould also confirmed talks are ongoing ‘‘in an effort to resolve the matters related to our respective pieces of litigation.”

The 1999 deregulation law failed to increase competition in the energy market as had been hoped and ratepayers saw energy bills skyrocket last year when rate caps expired. The major issue in the quarrel is whether BGE customers are paying too much for the eventual decommissioning of the two existing reactors at Calvert Cliffs, which is projected to cost $5.2 billion.

Both sides declined to comment on the status of the discussions, but Larsen characterized them as ‘‘very active” and that they are committed to patching up their differences ‘‘so we can move forward in the future.”

Lawmakers worry that the project could be scuttled even if an accord is reached.

‘‘It’s not helpful to have that hostility that jeopardizes this investment in the state,” said House Minority Leader Anthony J. O’Donnell (R-Dist. 29C) of Lusby.

The state has much to lose if the legal battle drags on and the standoff intensifies, he told Larsen. ‘‘Sometimes it’s helpful to step away from the brinksmanship.”

But Del. Murray D. Levy said the state should not back down and should keep fighting for the credits to be repaid. ‘‘These are not just dusty accounting issues that we are arguing about,” said Levy (D-Dist. 28) of La Plata. ‘‘It is not simply political posturing. These are very real issues with very real impacts.”

Should the sides fail to settle, the General Assembly is considering legislation that would reduce the decommissioning cost by as much as $1.4 billion. Gov. Martin O’Malley (D) said Monday that he’s hopeful for a compromise, but legislative action should also be pursued.

State and local officials have endorsed the development of the third reactor – Calvert County has offered attractive tax breaks to lure the company to build there – that would provide 360 permanent jobs, generate millions of dollars for the local tax base and help address Maryland’s demand for electricity generation in the coming years.

The new reactor would power up to 1.6 million homes and help meet the state’s goal of increasing its renewable energy portfolio to 20 percent by 2022 and reducing carbon emissions, which contributes to global warming.