Constellation, ratepayers gamble on cost of decommissioning plant

BALTIMORE (Map, News) - Constellation Energy Group could see a windfall of more than $1 billion when its Calvert Cliffs nuclear power plant is decommissioned 30 years from now, the state’s Public Service Commission said Tuesday — but the company might lose out if decommissioning costs are more than it expects.

In a daylong meeting, which delved into the minutiae of funding for the decommissioning process, PSC Chairman Steven Larsen said different estimates of current funding for the process could benefit Constellation.

“There is potentially a vast difference between ratepayers’ liability and the actual cost,” Larsen said. “It appears ratepayers could be highly overpaying.”

Under the 1999 settlement that deregulated Maryland’s electricity market, ratepayers agreed to contribute to the decommissioning of the plant, a contribution capped at $520 million in 1993 dollars, the last year an estimate of the decommissioning costs had been conducted.

If the costs exceed that amount, Constellation foots the bill. But if the costs come in lower, under the 1999 settlement, the company pockets the difference, said Mike Naeve, a Washington, D.C.-based attorney representing Constellation.

“The company accepted a risk to hedge these costs for the ratepayer and accepted that it would be a gain or a loss,” he said. “I don’t think they would have granted a hedge unless there was the possibility of a benefit.”

PSC commissioners questioned a filing by Constellation to the Nuclear Regulatory Committee that, if its estimate were carried out to the decommissioning of Calvert Cliffs in 2034 or 2036, they said would mean ratepayers will have overpaid by $1.4 billion, which Constellation would pocket.

However, Constellation contended that the NRC filing satisfied the federal regulatory agency but did not include costs specific to Calvert Cliffs. Naeve said site-specific estimates place the cost of decommissioning at $966 million at the end of last year, with ratepayers’ liability at the same time estimated at $1.01 billion, meaning Constellation would net $44 million.

The hearing was the latest face-to-face in a heated debate between the PSC, which has called into question the benefits of deregulation, and Constellation, which has rebuffed efforts to revisit the 1999 agreement.

Constellation announced plans last month to sue the state over a 2006 bill, which required it to credit ratepayers for their annual $18.7 contribution to decommissioning. Constellation spokesman Rob Gould said the $386 million suit could be filed as soon as Friday.

acahall@baltimoreexaminer.com

Advertisement