Constellation profit falls as energy worries hit home

Constellation Energy Group's first quarter profit fell 25 percent to $145.7 million, the power company said Wednesday.

Constellation reported earnings of 81 cents per share, down from the $1.07 per share earned in the first quarter of 2007, on revenue of $4.8 billion. The company reported a 6 percent drop in revenue from $5.21 billion for first quarter 2007.

The earnings fell short of analysts' expectations of $1.24 to $1.30 per share.

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Company officials said the largest declines were in its merchant energy business, which sells electricity in non-regulated markets. The division's profits slid to 40 cents per share from 67 cents per share in first quarter 2007. The company (NYSE: CEG) attributed the loss to defaults of two of its coal suppliers and higher interest costs. Constellation also saw the impact of an expected recession. Some commercial and industrial customers were moving away from long-term contracts for power and buying energy on a month-to-month basis, officials said.

But overall, Mayo Shattuck, CEO of Constellation, said the company's first quarter results were "in line with our expectations and reflect solid operating performance."

Earnings for Constellation's subsidiary Baltimore Gas & Electric were up one cent per share from 36 cents per share in first quarter 2007.

Company officials said they expect to record the impact of a settlement with Maryland that netted ratepayers about $187 million in rebates during the second quarter. The company and the state negotiated a settlement in March that ended a dispute regarding issues surrounding the state's 1999 deregulation of energy.

Constellation forecast 15 percent to 20 percent growth in profits for 2009.