Illinois lawmakers are about to extract hundreds of millions of dollars in rebates from holding companies that took over utilities' electric-generation plants when the industry was deregulated. This is what Maryland was unable to accomplish last year. In 2000 Constellation Energy took over Calvert Cliffs and other low-cost plants owned by Baltimore Gas & Electric without ever compensating BGE customers. Then, after price caps expired a year ago, the plants were able to auction off the juice to the highest bidder as prices escalated. Because the plants are powered by low-cost coal and nuclear energy in a market where the clearing price is often determined by expensive natural-gas generators, Constellation has been pocketing huge profits.

But after BGE announced a 72 percent price increase for residential customers last year, Maryland's General Assembly never came close to getting serious money out of Constellation for rate relief. The legislators delayed the rate increase for a few years, but customers will eventually have to pay it anyway -- with interest. Annapolis did get BGE to cut its profit margin slightly, and it got Constellation to agree to stop collecting money to decommission Calvert Cliffs decades from now. But Constellation never should have been getting the decommissioning money in the first place. They own the plant, and liabilities for shutting it down should be their problem now, not BGE customers'.

The Illinois settlement sets a model for what might happen in Maryland. The attorney general sued holding companies Exelon and Ameren, alleging irregularities in wholesale electricity auctions. Now the companies have reportedly agreed to give back more than $1 billion. Illinois is also scrapping its auction system and appointing state bureaucrats to oversee electricity purchases. Nobody has alleged that Maryland's auctions were flawed. But PSC Chairman Steve Larsen says he is still examining whether they were conducted properly. And he is hiring experts to examine the profits Constellaton is making on the former BGE plants, which I wrote about yesterday.

From a story in the Chicago Tribune:

"Utilities and Illinois officials reached a proposed agreement that would return about $1 billion to customers stung by this year's brutal increase in electric rates, sources said Friday, and also replace the controversial auction that led to the high rates with a new state agency that would procure electricity on behalf of consumers.

"About $800 million of the consumer rebate will come from Exelon and its corporate offspring, ComEd. Ameren is contributing about $150 million and other, smaller electrical generators will provide the remaining $50 million, the sources said. The rebate is expected to be paid over a period of several years.More complete details of the agreement are expected to be announced Monday."

UPDATE: A Reuters story on today's deal announcement:

"NEW YORK, July 23 (Reuters) - Illinois electric customers of Exelon Corp.'s (EXC.N: Quote, Profile , Research) Commonwealth Edison and Ameren Corp. (AEE.N: Quote, Profile , Research) will receive $1 billion in refunds and other relief as part of a reform package, state officials said Monday.

Half of the $1 billion would go to Ameren's 1.2 million customers in the southern part of the state and half would go to Commonwealth Edison's 3.8 million customers in the northern part of the state."