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Baltimore, MD, Mar. 12, 2008 -- Constellation Energy announced it has signed a settlement agreement with the Federal Energy Regulatory Commission (FERC) to address capacity release violations the company discovered in an internal compliance review at its retail natural gas subsidiary and thereafter reported to FERC.
Under the FERC settlement agreement related to the violations, Constellation Energy's retail natural gas unit will pay a civil penalty of $5 million. Additionally, the retail natural gas unit will pay out, or "disgorge," approximately $1.9 million in revenue associated with the non-compliant transactions. As directed by the FERC agreement, disgorged revenues will be contributed to various state energy assistance programs. The retail natural gas unit and the company's wholesale business also agreed to submit a semi-annual compliance report to FERC's enforcement staff for a period of two years.
The violations related primarily to posting and bidding requirements for released natural gas pipeline capacity and the shipper-must-have-title requirement. The company and FERC concluded the non-compliant transactions at the company's retail natural gas subsidiary stemmed in part from the rapid growth of Constellation Energy's retail natural gas business through a series of acquisitions from 2002 through 2006.
Constellation Energy said its retail natural gas unit took self-corrective action to terminate or restructure contractual arrangements to ensure compliance with FERC's capacity release regulations. In addition, the company implemented several organizational changes, including locating all of the retail natural gas unit's wholesale natural gas functions at the company's wholesale natural gas platform in Houston; enhancing natural gas regulatory compliance controls to identify potential violations, and enhancing the legal and compliance functions for its retail gas subsidiary.
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