Success in its global commodities sector helped Constellation Energy post earnings of $171.5 million (95 cents/share) for 2Q2008, compared to $116.3 million (64 cents) in 2Q2007, the company said Thursday. Constellation reaffirmed guidance for 2008 at $5.25-5.75/share and said it expects to grow earnings 15-20% over projected 2008 earnings.

During a conference call with financial analysts on Thursday, Constellation CEO Mayo A. Shattuck III said the quarterly results “significantly exceeded expectations and reflect solid execution throughout the enterprise.” Constellation’s Global Commodities Group delivered strong new business results as rising commodity prices benefited the company’s strategies in power, natural gas and coal markets, Shattuck said.

Constellation’s merchant segment earned $1.74/share during 2Q2008, up $1.18 from 2Q2007. While global commodities earned $1.20/share, primarily driven by strong new business results and an increased backlog realization compared to a relatively weak second quarter last year, differences in planned refueling outages at the company’s nuclear plants, higher costs to improve fossil peaking unit reliability in response to the reliability pricing model capacity market and unplanned outages at the company’s Baltimore coal plants forced a 19 cent/share decline in earnings from generation.

Earlier this summer the Nuclear Regulatory Commission (NRC) accepted a second portion of UniStar Nuclear Energy’s combined construction and operating license application for a U.S. Evolutionary Power Reactor at a site adjacent to Constellation’s Calvert Cliffs Nuclear Power Plant in Lusby, MD. UniStar, a joint venture of Constellation and the EDF Group, said the NRC action means the second portion of its application, which includes a final safety analysis report, is technically complete and ready for detailed NRC review. UniStar submitted the documents in March.

In June Constellation’s Gould Street Power Plant, a 102 MW limited-duty gas-fired steam generator in Baltimore, was returned to service after being idle for the last five years. Constellation is investing $26 million in the newly reopened plant, which it decided to bring back into operation based on a new capacity market created last year by PJM.

Constellation subsidiary Baltimore Gas and Electric Co. (BGE) reported adjusted earnings of 9 cents/share, up from 8 cents in 2Q2007, thanks to higher electric transmission revenue and the benefits from a settlement with regulators in Maryland, which was partially offset by higher storm expenses. In April the Maryland General Assembly approved legislation to settle a dispute between the state and Constellation over rate relief and nuclear decommissioning costs. The agreement provided about $2 billion in rate relief and relieved consumers of liability for nuclear decommissioning. Under terms of the settlement, Constellation agreed to contribute $187 million in the form of a one-time $170 rate credit for BGE residential electric customers.

Constellation reported a remarkable sales volume gain of 54% over year-ago totals in NGI‘s 1Q2008 marketer survey (see Daily GPI, June 23). Constellation, whose physical gas sales volumes to 12.62 Bcf/d from 8.2 Bcf/d, edged out Chevron Corp. to claim fourth place in the marketer listings.

Constellation completed the purchase of the 200 MW West Valley gas-fired peaking plant near Salt Lake City, UT, from a unit of Iberdrola Renewables Inc. in June. Constellation also is a part owner and operator of the Sunnyside Cogeneration plant, which is fueled by waste coal and located outside Price, UT. With the addition of West Valley, Constellation has ownership interest in 30 power plants in six states. The company also has two plants under construction: the Hillabee Energy Center, a natural gas-fueled project near Alexander City, AL, which is scheduled to go online in 2010; and the Grand Prairie Power Project in Alberta, Canada, an 85 MW gas-fired peaking plant scheduled to enter operation later this year.

In May Constellation said it was selling its Fellon-McCord & Associates energy consulting and management subsidiary to the company’s co-founder, Andrew R. “Drew” Fellon, splitting it from its Constellation NewEnergy retail natural gas sales unit (see Daily GPI, May 16). The move came five years after Constellation acquired the Kentucky-based retail marketer.

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.