The report finding that Baltimore Gas & Electric and parent Constellation Energy conducted themselves properly in the 2005-2006 BGE auctions has arrived on the PSC's Web site. Before only an executive summary was released. The PSC wanted to know whether the reverse auction that BGE used to buy electricity in 2005 and 2006 and that led to a 72 percent price increase was flawed in any way.

The report is censored. They blacked out stuff that was deemed to be confidential information for Constellation Energy, BGE's parent, and other wholesale electricity sellers. It is long (40 pages) and seems thorough. I have asked smart people to look at it over the weekend. At first glance, however, there is one disturbing item: After initial bids flunked a test to ensure prices weren't too high above wholesale costs, the PSC and its consultant raised the threshold and allowed power companies to bid again.

(Update. I should add that the PSC overseeing the 2005-2006 auctions was the "old" PSC, operating under Gov. Ehrlich and headed by Kenneth Schisler. The Kaye Scholer investigation of the auctions was commissioned by the "new" PSC, headed by Steve Larsen and dominated by people appointed by Gov. O'Malley. That PSC has been in the saddle for a year.)

The high-price protection was called the "Price Anomaly Threshold." According to Kaye Scholer, it was supposed "to protect against systemic problems that produce above-market results in the aggregate in order to prevent residential ratepayers from being charged more than a competitive market price for electricity supply." The PAT was based on various components of wholesale electricity prices. It was supposed to shield against the possibility that, for example, a scarcity of bidders could keep the auction from being competitive and could lead to companies winning BGE business at prices substantially above market.

BGE's auction for 2006, when the 72 percent increase kicked in, "saw a sharp decrease in the number of bidders," Kaye Scholer said. In the first round of bidding for the 2006 supply, every single bid exceeded the price anomaly threshold. So what did the PSC and its consultant do? They raised the threshold. The consultant "determined that it needed to modify the PAT," the report says, "to reflect more current market conditions."

Voila: In the next round of bidding, "all of the average bid prices came in below PAT," the report says. "Nothwithstanding issues with the PAT, both Boston Pacific [PSC's consultant] and the OPC's [Office of People's Counsel] consultant, Jonathan Wallach, certified the bidding process as competitive, although not as robust as in prior years."

Despite this, Kaye Scholer found that there was no reason to believe that the resulting BGE rates weren't "just and reasonable" and that regulators or BGE customers had any recourse.

Last week, I reported on another consultant who found that, based on analysis of one round in the auctions, BGE customers were paying 20 percent more than market.