ML19242A379
| ML19242A379 | |
| Person / Time | |
|---|---|
| Site: | Calvert Cliffs  |
| Issue date: | 10/26/1978 |
| From: | Saltzman J Office of Nuclear Reactor Regulation |
| To: | Poindexter C BALTIMORE GAS & ELECTRIC CO. |
| Shared Package | |
| ML19242A373 | List: |
| References | |
| NUDOCS 7908010541 | |
| Download: ML19242A379 (1) | |
Text
,
EXHIBIT V m atc.y
'o UNITED STATES 8 i*.,. g + ' n NUCLEAR REGULATORY COMMisslON
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WASHINGTON. D. C. 20555 o, M.% f.!
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Chris H. Poindexter, Treasurer Baltimore Gas and Electric Company
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l P. C. Box 1475 i
Baltimore, Maryland 21203
Dear fir. Poindexter:
Thank you for your com.ents dated October 4,1978, which suggested modifications to fiRC's Regu-latory Guide 9.4, " Suggested Format for Cash Flow Statements Submitted as Guarantees of Payment of Retrospective Premiums." We agree with the thrust of your comments that, for some companies, it is not necessary to provide projections of retained earnings when net non-cash expenses by themselves provide cash flow sufficient to cover a company's maximum total contingent liability for retrospective premiums under the Price-Anderson system.
However, our experience has been that many companies can not generate sufficient cash flow without including projections of retained earnings.
For this reason, we proposed the format for cash flow projections contained in Regulatory Guide 9.4.
Please recognize the Regulatory Guide 9.4 is a suggested format for cash flow projections.
For companies such as Baltimore Gas and Electric Company that can demonstrate that they are able to generate sufficient cash flow without including projected retained earnings, we would accept cash flow statements in the format you propose provided that, as you suggest, the company includes a statement that it does " expect to realize retained earnings net of allowance for funds used during construction."
Thank you again for your thoughful cc=ents.
We will consider them wnon revising Regulatory Guide 9.4.
Sincerely, 7
fw
~l Jerome Saltzman, Chi,af Antitrust Ncerility Grcuo Office of Nucim Reactor Regulation 0' "\\ \\
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,f-ANNUAL REPORT 1978 i
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1977 1968 Earnings Per Share of Common Stock
$2.86
$2.32 Average Shares of Common Stock Outs' ind;ng 29.666.000 15.013.000 Dividends Declared Per Share
$2.14 S1.60 Revenues Elecinc S 558.558.000
$191.317.000 Gas 221.659.000 81.025.000 Salance '.adable for Common Stuck S 84.713.000 S 34.792.000 Dividends - Common Stock 63.743.000 24.020.C00 Earmngs Reinsested in the Busmes S 20.970.000
$ 10.772.000 FAcr:c Sa:es - thousands of kdowattnours 15.462.000 10.172.000 Gas Sa.es - cekatterms
- 80.063.000 73.665.000 Investment in Utu;ty P! ant
$2.669.927.000
$948.240.000 c e >.rer-mtm esa 31.000.000erts., terma: e 5.cr 1.cco cac <een vm f ;;> u:n a reat g. axe et 1. coo n.: :. tic n 53.5 0 53.00 52.50 52.C0 51.50 -
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'73 74
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'76
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'78 Earmngs Per Share Dre:Cends Dec:ared Per Snare Earnings and Dividends Declared Per Share of Common Stock l
DIVIDENDS PAID ON Tnh COMMON STOCK CONTINUOUSLY SINCE 1910 -
l ALWAYS EARNED - NEVER REDUCED 0/J
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We are pleased to report that the respect to Construction Work In Progress and Company's 1978 earnings improved from the Allowance for Funds Used During Construction depressed level of the previous year. The should be modified in determining the Company's quarterly dividend was raised from 54c to 57c futurr revenue requirements.
per share as of July 1.1978. increasing the Te welcome President Carter's declaration indicated annual dividend rate to S2.28 per share.
that the Nation's foremost domestic priority must Earnings per share were $3.38, an increase of he to bring inflation under control. Hopefully, his 52c over 1977 earnings. However, when com-program will reduce the current upward trend in pared to the $3.12 pet share earned in 1976, the the rate of inflation, but it is apparent that increase for the two-year period was 26c, or 8%
continuing inflation will require hixher rates for Earnings for 1977 were reduced due a the utility services.
initial operating expenses associated with start.
The 4.6% increase in electric sales for 1978 up of the Calvert Cliffs Nuclear Power Plant's was in line with the Company's long-range pro-Unit No. 2 and with the planned maintenance jected sales growth. The business vitality of and first refueling of Unit No.1. These major Central Ntaryland was a major contributing expenditures, which were not reflected in our factor, with total industrial and conunercial base rates for the first 11 months of 1977, were consumption up 4.9% Residential demand was recognized in the S72.913.000 rate increase that up, particularly in the househeating category.
took effect on December 2 of that year. The full Electric heat, primarily in the form of heat benefit of this rate relief, realized in 1978, was pumps, now is being installed in some 73% of the chief reason for the improvement in earnings.
newly-constructed homes in our service territory.
Although our 1978 financial performance was Electric consumers continued to receive sub-encouraging, the Company's earnings need fur-stantial benefits from the outstanding operating ther improvement to keep pace with the current performance of the Calvert Cliffs Nuclear Power cost of equity capital Over the past five years, Plant. which supplied 57% of our customers' total the annual growtn rate in earnings per share has electric requirements for the year. Not only did l
averaged !ess than 3% The impact of inflation on the Company's nuclear capacity help to prevent our costs along with regulatory lag, has disruption of electric service in Central N!aryland prevented the Company from earning its durma the national coal strike of early 1978, it authorized rate of return.
also enabled us to supply significant amounts of A rate relief application was filed with the electCcity to other areas of the Country that were N!aryland Public Service Commission on severely affected. The profits achieved by the September 29, and on December 27 we were Company on these intercharme sales through the uranted an increase in annual revenues approx-Pennsylvania-New Jersey-N!aryland Inter-ima ting $24.000.000. This filing was made under connection were passed along to our customers a 1977 provision of State law which is designed by means of lowered fuel-cost charges in their to expedite the processinu of rate applications monthly electric bills.
submitted under specified conditions. The higher Total gas sales increased over 1977 by 5.5%
rates became effective with service rendered on Last winter's colder weather had a role in the and af ter January 2,1979. The Commission is higher residential usage, but the principal factor currently conducting hearinas to consider was a modest improvement in availahility of gas whether the existing accounting treatment with supply. resultinu in part from the first deliveries
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H C. Trum h!rr of imported liquefied natural gas received by our In order to protect the interests of our oipeline supplier, Columbia Gas Transmission stockb lders and our customers, we as a Corporation.
Company have undertaken a more active role in in consequence. the Public Service monitoring relevant legislative and administra-Commission approved as of Augus) 28 a partial tive deliberations in Washinuton, Annapolis. and lifting of the m,' darkm on new gas uses and I c I Ntaryland jurisdictions. We will not hesitate customers that had been in effect since 1974.
to make our voices heard in governmental This action will assist in offsetting the loss of discussions that seriously affect the interests of gas sales over the past several years whicn has ur Company, its stockholders. and its customers resulted from dismantling of older buildings
- nor, when ci;cumstances warrant, will we under Baltimore City's ongoing commercial hesitate to ciert you to impending dancers and renewal and revitahzation programs. It appears suggest means by which you can, if you wish, that some further improvement in the supply of help to avert them.
gas will be experienced in 1979.
The value of such persnaal participation was The National Energy Act, enacted by the convincingly demonstrated in early 1978. when Congress on October 15,1978. constitutes a many stockholders and employees joined, at the partial step toward the development of a respon-Company's suggestion. in protesting new fuel-sible U.S. energy policy that has long been cost legislation that was under consideration by critically needed.
the Ntaryland General Assembly. These efforts played a vital part in improving the proposed The phased deregulation of natural gas field legislation to the point where we believe the new prices certainly will lead to an improvement in law permits ultimate full recovery of electric fuel
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domestic gas supplies, and the resultant increase costs. To those who responded to our appeal for
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i gas prices will be substantially less than help on this vital issue. we are deeply grateful.
would have been required by use of more expe isive alternatives, including further reliance on foreign energy sources. On the other hand. the Chairm 2n of the Board law as enacted provides the foundation for Federal intrusion in the utility regulatory func..ons of the states, a threat which remains despite the Congressional substitution of j
permissive languaue for the compulsory " rate l
reform" sections of the oriuinal proposal.
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a Rate Relief increased base rates for electricity and steam tion Work le Progress and Allowance for Funds utility service rendered by the Company took Used During Construction should be modified in effect on January 2.1979. under an Order issued determining the Company's revenue require-by the Public Service Commission of Alaryland ments. Any change in service rates that may on December 27. The new rates, which comply result from these hearings, which began on with the Federal price guidelines are de 5ned to January 22.1979. Will be applied only on a provide an additional S23.700.000 of electric prospective basis.
re les annually and to raise annual steam Rate Design revenues by $1.400.000. Considered in The Public Service Commission also issued conjunction with a $1,100.000 reduction in gas rates the net effect is to mcrease the Company's on December 27 an Onk approdng We resnuc-turing of electric rates as proposed by the overall revenues by $24.000.000 per year.
Company. The revised Residential rate schedule This rate relief resulted from a Company includes a fixed monthly Customer Charge and a application filed on September 29. in accordance separate Energy Charge per kilowatthour of with the "make.whole" provision of h!aryland electricity consumed. The Energy Charge applies law which was enacted in 1977. Under this to all lesels of usage during the summer and up statute, the Commission is required to grant to 300 k lowatthours during the remainder of the within 90 days after application whatever incr"-
year. 4 lower second ate is charged for winter mental revenues would have been needed durin4 consumption beyond 500 kilowatthours per a recent actual 12-month period to enable the month. The Company's new General Service and Company under present accounting methods to H gh Voltaue rate schedules include a fixed earn the rate of return previously authorized by Customer Charge. separate Demand Charue rates the Commission.
for the summer and winter periods, and a The Commission ordered that additional reduced number of Energy Chacge rate blocks.
hearings be held to consider whether the existing These rate design changes are consistent with the accounting treatment with respect to Construc.
cost-of-service principle.
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Change In Fuel Rate Rate, certain intervenors alleged that tf e Effective October 1.1978, the Public Service Company is now paying an excessive price for Commission ordered the Company to adopt a new coal used in Unit No. 3 at the Wagner Plant, method of calculating the Fuel Rate billed to its which is being supplied under the terms of a electric customers, implementing a change in the contract negotiated in 1974. The Commission has Public Service Commission law that was enacted retained jurisdiction to adjust the Fuel Rate from by the Ntarvland General Assembly during its April 1.1978 in further proceedings if and to the 1078 legislative session.
extent that such coal costs may ultimately be adjudged unreasonable or improper. The Previously, the Fuel Rate was based on Company has testified that the coal contract was estimates of generation and sales for the current good and prudent when signed in 1974 and that it month, a procedure that permitted fuel costs to remains so today. Further hearings covering the be recovered in the month in which they were contract price o ~ coal are being held by the incurred. Under the new system. the Fuel Rate is Commission, based on an historical period encompassing a 12-month generation mix and a three-month average Refund Order Substantially Nullified cest of fuel. Since actual totals for electric On April 22.1977, the Public Service generation and ile! costs are required and a 30 Commission ordered the Company to refund day suspension period is imposed, a delay of as
$ 31.867.000, plus interest. resulting from alleged long as 90 days may occur before changes in fuel overcollection of electric fuel rate adjustment costs are initially reflected in customer bills. In revenues from February 1975 through December.
addition, the new guidelines permit the Fuel Rate 1976. The Company appealed the Order to the to be changed only when current fuel costs vary Circuit Couct for Howard County. Nf aryland, by more than 5 % from the price les el previously which on November 22,1977 issued its decision, authorimi for billing purposes.
stating the he Commission did not have the As a result of all these factors, a lau can be power to coer the refur.o.
anticipated in the recovery of rising fuel expense.
The Commission and People's Counsel whether due to hiaher prices or changes in gener-appealed the Circuit Court decision to the Court ation mix. Therefore, the monthly differences of Special Appeals of N1aryland, which ruled on between recoverable fuel costs and Fuel Rate November 2.1978 that the Company was charges billed are to be accounted for as a required to refund only $459.430, plus interest, j
deferred fuel expense, recovery of which is to be for overcollections of fuel rate revenues during authorized by the Commission at the time of the February and N1 arch.1975. In January 1979 the next base-rate proceedina State's highest court. the Ntaryland Court of Computation of the Fuel Rate is based on all Appeals, denied petitions to review the case.
costs included in the prmr rate calculation, in the opinion of Company's Counsel. the except for the costs of transporting and storing case has now been concluded.
l spent nuclear fuel. These necessarily estimated Constructiw Program expenses are excluded because the Commission Construction expenditures in 1978 totaled l
interprets the new law as allowing only actual fuel casts to be reflected in the Fuel Rate.
$ 172.4 02.000.
j However, the Commission does not dispute the Electric projects accounted for S147.306.000
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principle that such nuclear costs should be paid of the 1978 total. with primary concentration on
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hv the same customers who derive the benefits of continuing construction of the Brandon Shores electrMity uenerated by low-cost nuclear fuel.
Power Plant and associated transmission and therefore has committed itself to consider facilities. Gas construction expenditures were l
these costs for inclusion in base rates when the
$ 11.920.000 for the year.
Company's next rate application is filed. In the In addition. S57.251000 was spent in 1978 to l
interim, the Company wdl continue to record acquire nuclear fuel supplies.
such costs m its books of account, but defer the l
l effect on earninus until recovery can be achieved e to 9 ronstruction buduet is npetted to throuuh base rates.
approximate S 190.000.000, wit h the year's expenditures for nuclear fuel estimated at an l
Durmy the course of the hearmus on the Fuel adbnal $51.000.000.
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l Security Transactiorv During the year 381.527 shares of common
he principal out-A fiaanoing required for stock were issued to cover conversions of Con-the 1978 construction,rc m and other vertible Cumulative Preference Stock and to corpv.,te purposes w-avided by a bond ir3ue provide for new shares acquired under the and, on an nterim basis, by use of commer.al Dividend Reinvestment and Stock Purchase Plan paper notes.
and the Investment Tax Credit Employee Stock A $75.000.000 issue of 9-3/8% 30-year first Ownership Plan.
mortgage bonds was sold in June, at a cost to the Bo.us and debentures retired through Company of 9.44%.
sinkins, funds in 1978 totaled $12.760,000.
$250 s2.831 52.670 l 52.499 I 5200 52.3a5 I i
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~78 Construct'on Expenditures Total Utility Plant j
v < s :< a es o ;rs :t : : :r3 ELECTRIC The average price paid for electricity by average electric rate for these cities exceeded Central alarylanders continues to compare.<r y Baltimore's by 21%
favorably with the cost of electricity in major East Coast cities and with the current price Average Ra'e Per Kilowatthour levels of other consumer goods and services. This All Customer Categories favorable cornparison results in large part from Full Year 1978 the Company's hich percentage of low-cost BALTIS10RE 4.30c nuclear electric generation.
Atlantic City N.J.
4.84 t
l System Averr ? Rates Boston..\\ tass.
3.34 The following table compares the Company's Newark N.J.
3.32 197a averaue price per kilowatthour of electncity New York. N.Y.
8.48 sold to all cateaones of consumers with corres-Norfolk. Va.
3.96 ponding charges in eight otber major East Coast Philadelphia. Pa.
4.29 cities. from Norfolk to Boston. Central.\\fr.ryland Washinuton, D.C.
4.39 customers paid less than their counter;, arts in Wilmir.uton, Del.
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six of the richt comparison areas. Ocerall. the a-CITY AVERAGE 3.9 e
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l Residential Prices The impact of inflation on the Company's further annual increases assured by the phased I
costs caused the unit price charged the typical deregulation of natural gas field prices that is l
residential consumer of electricity to turn incorporated in the newly-enacted National upward for the first time in 1971, following a Energy Program.
steady decline dating from 1939. Although Baltimore's average price per residential
- ' watthour rose 64% between 1970 and 1974.
i the cost of electricity.n 1974 remained about 2%
below the 1939 level. From mid-1974 through 1978 the average unit price of residential electricity sold by the Company increased 16% -
y one-half of the 32% rise which took place during 500 i
that time in the Consumer Price Index for the Baltimore Metropolitan Arma. In the 39 years j
extending from 1939 through 1978. the unit cost 450 l
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of electricity to the residential user increased by
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25%, and the local overall cost-of-living index by e
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approximatel; 400%.
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stability since 1974 is primarily attributable to 250; l
the fuel savings achieved by operation of the Calvert Cliffs Nuclear Power Plant and passed
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I aloa" to BG&E customers by means of lowered 200l j
e fuel-cost charges in their monthly electric bills.
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These savings - which totaled $400 million for 250' I
1977 and 1978 - have offset a substantial part of l
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- 200, the sharp rise that has occurred in recent years p
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operating costs. This Company accomplishment 150 is unique for an inflationary era in which the I '/,
i prices of other consumer goods and services have soared steadily.
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The U S. Government first asserted authority l
i to regulate the field prices of natural gas in 1954.
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- Ccst fLrr g Ca3 Eec*nc market value. As a result. the averaue unit price Residential Unit Price Compared With Cost of Living Baltimore Area paul by the C,ompany's residential cusomers in 1973 was only 12' more than it had been in 1954.
Ilowever, such control producec i wvere curtailment of uas exploration and development activities leading to a critical shortaue of domestic uas supplies. The Arah oil embarco of late 1973 compelled a reassessment of this policy.
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a censumer's uas bill. These increases caused the Company's averaue residential umt price to increase by 119 % between 1973 and 1978, with l O T.
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The most critical problem confronting the precisely measured in advance. Changes in utility Company remains the significant impact of in-prices thus ahvays tend to trail behind a flation on the cost of all aspects of its operations.
sustained general inflation. Durmg the 19 o's.
I The high rate of inflation is of vital concern to all with the high rate of inflation, public utilities Americans as individuals, and to the Nation's have been hard pressed to maintain their basic l
free enterprise system.
financial integrit y.
l Inflation has a particular'y severe effect on In the past nine years. the Company has the public utility industry. because the prices petitioned the Maryland Public Service charged for utility services are rigorously Commission for rate relief on eight occasions.
j controlled by Federal and State regulatory Each time, we have received substantially less agencies. IJnlike other business enterprises, than the full amount of additional revenues l
which generally have the flexibility to adjust requested. This regulatory restraint has demed their product prices to the current economic level, the Company an opportunity to earn a satis-l utilities have their services priced through the factory rate of return. We have been unable even l
l regulatory process; approval is required before a to attain the level of earnings which the
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utility can increase its rates to provide the Commission itself has recounized as necessary to additional revenues needed to meet rising costs.
attract at reasonable cost the capital which Moreover, utility rates usually cannot be set in investors must supply to build utility plant for anticipation of rising costs that cannot be our customers' needs.
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Electric Sales Sales of electricity increased 4.6% in 1978.
Calvert Cliffs Unit No. 2 was temporarily Residential use rose 3.9% commercial consump-shut down for its initial refueling, as scheduled, tion 3.7% and industrial usage 5.4%
in September. While the spent fuel was being The year's one-hour peak demand was 3.553 16 megawatts, reached on August 16,1978. On.:
weather-adjusted basis this represents an I4 -
increase of 4% over the 1977 peak.
Demand for electric heat remained strong in 12-------------------------
1978. Some 73% of homes constructed in the Company's service territory during the year are 10 --
electrically heated. primarily by means of heat pumps.
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Calvert Cliffs Perfortnance 6
The Calvert C.'iffs Nuclear Power Plant
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continued its record ul outstanding operating 4
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consumed during the year by the Company's 2 - - d q q 7 7 q ---i Central Maryland customers. Fuel-cost savings i
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ji resultir'g from use of nuclear fuel instead of 0 1 8 69 '70
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1978. such savings total Sa40 million since the Sales of Electn..ty ci first Calvert Cliffs unit began cperation in 1975.
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performed and a full inspection conducted of all components of the turbine-generator.
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Nuclear Fuel Supply 4
Existing purchase and lease wreements provide assurance of an adequate nuclear-fuel supply well into ti!e 1980's. To broaden its potential future sources, the Company is engaged in two small joint ventures aimed at developmg additional uranium reserves.
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Under an agreement with the Inter-T4 L continental Enern Corporation involving I W exploration of 17.000 acres in southern Texas, the Company has undertaken to pay the full cost of
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1;m)% Q %f selected exploration activities in return for the right to acquire a 50% interest in any econom-
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B g g ically-recoverable uranium reserves which mar
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4 materialize. Initiated in mid-1978 was a similar effort at four sites in southern Wyoming, where m
we have joined as an equal nartner with three
,m mi niw,3 ca,.n c% i.,m y,,.n r,.
other members of the Pennsylvania-New Jersey-M a wa - "ma w m uo m-h e m am Ntaryland intercannection.
" * ' ' " " " ' " " " " " " " " ^ " "
Present Generation The Company's present electric generatine capacity is 4.995 meuawatts which is su ficient Shores units has been clouded by an " Interim f
to meet anticipated growth in customer demand Rule" issued on November 22.19"'8 by the U.S.
through at least 1981.
Economic Regulatory Administration iERA).
G,enerally, the electric base-load require-which asserts an authority to classify units ments are prosided by nuclear and coal-fired installed in certain " transitional" electric power uenerating units. Oil-fired steam units are lants as either "new" units, which are pro-utihzed as intermediate load capacity, with hibited by law from burning oil af ter N1ay 8.
gg
..e isting" units. which may continue to combus: ion-turbine units confined to peak-load
~
demands or emergency situations.
od ed prohibited by ERA order. On
.g g 9 the Company filed in the U.S.
l Our el ctric system is fully inteurated with Court of Appeals for the Fourth Circuit a petition operatinu sysums of the 10 other members of the for review of this " Interim Rule M If the ERA rule i
Pennsyh ania-New Jersey-\\taryland Interconnec-is not amended or modified by the Court or by I
tion. Centralized dispatching of enercy for the the agency itself, both umts at Brandon Shores total interconnected system is coordinated could conceivably be classified as "new" and thus j
thronuh the computerized PJN! Control Center to prohibited from burning oil. It is estimated that achieve the highest degree of efficiency and the required conversion from oil to coal could j
economy for all member companies.
necessitate an expenditure in excess of S300 million.
Future Generation Expected to be completed at the Dickerson Construction continues on schedule at th" Plant of Potomac Electric Power Company in the l
Brandon Shores Power Plant on the Patapsco
'atter part of the 1980's is a jointly-owned coal-l Rher in Anne Arundel County, where the first of fired eeneratine unit of 800.000 kilowatts two 610.ono-kdowatt uenerating units is to uo I
capacity. The electric output of this unit. as weil l
into commercial operation in 1982 and the second as ( onstruction <
operatinu costs. will be l
two years later.
shared on an equa basa under a joint-s enture The Company's abilitt. under the Nat:onal arrangement to which the Company and PEPCO Eneruy Act of 191. to burn oil in the Brandon hat e aareed in principle.
9 a Uh u/";M*sh ( m.
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Gas Sales business concerns that are servM under inter-Unit gas sales increased 5.5% in 1978. due to ruptible-supply contracts.
an increase in the supply of gas. Residential sales were up 2.0% primarily becausc d exceptionally Easing d Gas Restrictions cold weather in early 1978. Commercial use rose The improved supply situatian le<l the 1.5% and industrial consumption 10.1%
Company to request, and the Public Service Commission of Ntaryland to approve, an easing of Increased Gas Supply restrictions on sale of gas for new uses by our Developments during 1978 produced a customers.
modest increase in availability of gas supply.
The Commission's Order, issued August 28 Liquefied natural gas from Algeria began authorizes an increase in the Company's gas load arriving in Ntarch at the Cove Point Terminal of of up to 20 million therms per year, the Columbia Cc-Transmission Corporatio. :n equivalent of 2 billion cubic feet. Existing southern Ntaryland. Two tankers per month residential and business customers now may noni/dly dock at Cove Point, each carrying 31.5 install additional gas appliances or equipment.
million gallons of liquefied natural gas, enough to provided the new service requirement does not heat 18.000 homes all wimer. Reconverted to the exceed a maximum of 500 therms per average original gaseous state. these supplies have been dav in the peak month of gas demand. Increased merged with the gas from other sources flowing ga; is available to firm industr al customers.
through Columbia's pipelines within the 500-therm limit, solely for purposes of Columbia expects to provide the Company plant protection. feedstock, and processinu. New with 4% more gas during the 1978-1979 heating commercial and industrial customers also may be season than in the preceding winter. The im.
added, but only where connection can be maan to provement in pipeline supply will enable us -
an existing gas main and the consumer's total for the first time in several years - to satisfy needs ace not above a daily averaue of 500 more than half of the winter requirements of t h e r m s.
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This action was taken to enable the Company A further easing of restrictior. may uni-to regain, without jeopardizing the primary mately prove desirable, in light of c. crent indi-interests of priority users, a portion of the gas cations that pipeline deliveries to the ?ompany revenues which were lost through the razing of will gradually increase over the next several obsolete buildings during the four-year mora-years.
torium on all new gas uses and customers.
Leslie B. Disharoon, President of Monumental Executive Vice President of Bankers Trust Corporation, was elected a Director of the Com-Company, was elected a Director of the Company pany on February 24,1978, succeeding Donald S.
effective February 1,1979, to succeed Chester Jones, who had resigned to enter retirement.
Baylis. Jr., who resigned because of his intention to reduce participation in busincss.
In July the Board cf Directors elected Sister Kathleen Feeley, S.S.N.D., President of the As of April 1,1978, the Board elected George College of Notre Dame of Maryland, a Director of V. McGowan as Vice President. Mr. McGowan the Company, effective August 1,1978.
became Vice President, Management and Staff Services, replacing Nora.an J. Bovemaker, who In January 1979. Charles S. Sanford, Jr.,
became Vice President, Electric Interconnection.
Community Leadership chambers of commerce and other crganizations Effective leadership in business, civic, directed at economic development; for the United cultural, and economic pursuits is vital to human Way appeal, the Red Cross, hospital boards, progress and to the well-being of society. This is Goodwill Industries. and other services con-especially true in well-established urban tributing to general health and welfare: for communities where the complexities of social parent-teacher associations, college boards of and economic change require that ongoing trustees. Baltimore's Symphony and Opera, and programs constantly be strengthened and new the full array of professional groups that strive projects developed. Leadership is of course to advance the area's educational and cultural expressed in many ways and to varying degrees levels.
by devoting time and effort and donating Practically every worthwhile community financial support to needed and worthwhile undertaking iri our territory benefits from the f
~
programs.
personal involvement of BG&E men and women.
Company personnel at all levels recognize this community need and have fully supported Social Stewardship l
these community efforts. Countless volunteer Time and effort alone will not suffice; all hours have been given to the management of volunteer community programs must be funded I
numerous civic endeavors, ranging from area-bv gifts, both individual and corporate. Although wide economic development concerned with there is no way of tabulating the full amount
+
improving the standard-of-living of all citizens t I
donated by Company employees to worthwhile the strengthening of neighborhood organizations causes in the course of a year, it is clear from and programs dedicated to individual local needs their annual response to the United Way appeal
~
i and desires. The sum total of such activities that our people. like the Company itself. give contributes to the building of a better tomorrow very generously to assist their less fortunate for the community at large.
neighbors. In 1978 the combined contributions of it is a firmly-established DG&E tradition that employees and Company represented about from the Company's ranks comes much of the l'20th of the S18 million which Baltimore's 1
active leadcrship for the State and local United Way received from all sources.
l y$h l
s; / J 12
The Company further recognizes the other institutions serving Central Maryland.
responsibilities of corporate citizenship by Our Thanks providing financial support to the Economic Development Program, a private /public partner.
The Management of the Company expresses ship which seeks to attract new business and its appreciation to all emplcyees for the spirit of industry to the metropolitan Baltimore area and cooperation displayed in the performance of job.
to ret :n companies already here. In addition, the related assignmec s, and gratefully acknowledges Company contributes funds for capital expansion their acceptance of citizenship responsibilities.
of hospitals. colleges, cultural enterprises, and is the name giver, to a through career guidance is the obtectne of a series of community protect under which the Company maior community programs to w hich Company people offer voluntary leadership.
prosides productne part-time employment for time, money, and effort. Included is Baltimore's " Protect CO". under whose selected students of a deugnated Baltimore lunior auspices BC&E employees return to the schools from which they graduated. to tell high school. w hale employee volunteers assist today's stuc'ents what vocational opportunities now await those who continue with with dassroom instruction and conduct guided their studies instead of dropping out "
tours of BC AE faalities This Adopt-A S<.hool"
,- y group is usitinit the Company's Arhnston Station Traimng Center in northwest Ba:timore.
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Baltimore Ga5 and Electric Company (In Thousands of Dollars)
SUMMARY
OF OPERATIONS 1978 1977 1976 Operatng Revenues:
E!ectne - Residential
$ 270.536
$ 220.904 S 2C5.188 Commercal 171363 140323 132.600 Industnal 251.966 194.811 191.920 Other 3308 2.520 2348 Total
$ 697.173
$ 558.558
$ 532.056 Cas Resadental
$ 146.675
$ 124357
$ 105.900 Commercial 20.315 17.184 14.780 Industnal 54.315 44.497 38ACS Interruptble Services - Industnal and Ou c 40.569 31.502 25.817 Other 2.712 4.119 (588 Total
$ 264386
$ 221.659
$ 184314 Steam 12.727 12305 S
9 447 Tctal Operatng Revenuas
$ 974.486 S 792.522 S 725.817 Operatng Expenses-Purc*ased Fuel and Energy
$ 321.266
$ 245A69 5 257.645 Operatons.
161.981 140.774 124.896 Mamter.ance 55.033 49.892 35.587 Deprecaton 78.063 68A49 59A48 Income Taxes:
Currer.t 43.619 19.649 (1.603 Ceferred 15.818 10.024 hvestmert Tax Cred:t Ad;ustrrents.
17.682 13.613 27.12
O*rer Taxes 83.330 72A27 62.831 Total Coeratrg Expenses
$ 777.042 S 520.297
$ 565.924 Operatrg Mcome 197.444 S 172.225 5
159.893 Accwance for Otaer Funds Used Durmg Corstructon 4.006 2.553 9.174 Net Otr.er income and Deductors.
739 2.228 621 Incer e before Interest Charges
$ 202.189 177.006 S 169631 Interest Charges 83.228 76.230 70.645 Aucwaxe 'cr Berrowed Funds Used Darrg Ccrstruct:en - Crect 3.580 2318 7.77 Fet income
$ 122.541 S
103.C94 106.81-'
Dmdends - Preferred ard Pre'erence Stock 18.177 18381 18.7'/1 Ba2ance Avadatte for Cc-man Stock 104.364 S
84.713 S
88 046 Dmdends - Common Stoca.
69.467 63.743 58 895 Earn:rgs Remested in tre Buse.ess 34.897 S
20.970 29.15l
==
Aserage Shares of Commen Stock Outsta id.ng lThousa es) 30.847 29.666 28.23:
Carnegs per A.erage Stare cf Ccmrnon Stock.
$3.38 S2.86 S31:
Dudends Dec:ared per Share cf Common Sicck
$2.25 S2.14 S2.C8 ELECTRIC OPERATING DATA Wn Scid Residental 5.434.958 5.231317 4.887.792 Commerc:ai 3.019.633 2.910.532 2.8C6.2.G Irdustral 7.715.633 7319.862 7.064 16-Tcta:
16.170.224 15 A61.711 14.758.ZCt C;eratrg Ir.ce e be'cre incc e Taxes
$ 240.661 S 198A20 S 157AX C;s*omers at end of year 810.167 796.731 781.512 Ase age use per Res. dental C stomer - Ke 7.465 7320 6.9C GAS OPERATING Dt.TA Otn Sc.d - Headental 40.576.498 39.777.652 41.197.62:
Commercal 5.417.140 5335.C81 5.514.194 nc.2tnai 18.055.404 17.4C6.677 18 692.072 Interrupt:bie Semces - Industnai and Otrer 20.439.595 17.543397 21.392.7 2 Total 84.488.637 80.063 C07 86.796.593 Cperatng inccme before Ircome Taxes 34321 S
16.382 S
28.C E Ces crers at end of jear:
"cu!
506.357 508 610 511.55 Resdent al Housereat g 311.728 311.770 311.89 Aserage use per Fes.cE,tal C stc"e - Ctn 85.9 83 8 86_
OTHER DATA Lcng7erm teot
$ 1.207.896 S 1.145 656
$ 1.C69.52 P e#e-red. Preference, a-d Ccr.ertte Pre'ere ce Stocks 245.484 247.518 2523~
Cermon Stoca. Prerrum. Ms'anme-?s. and Peured Earrr;s 906.421 e61463 790.,
Taul Cacranato:
$ 2359.801 S 2.254 637 S 2.112.3I Snares cf Comr en Stock at end cf ear (Thousarcsi 31.039 30.658 23.2 j
Sock Vale per Srare of Cc-mcr S*ocw at ead cf jea-
$29.20 S28.10 527 '
i Common Sicore cers at e-d cf, ear 89.249 88.795 87' I
Egerc Nres fcr Add:ter.s to Pa" 172.402 S
182.2C5 S :65 9 l
Teu Utzi ant S 2.831.219
$ 2.669 927 5 2.499 C2 P
Accumured P ws:on 'cr Decrauaton
$ 541.618 5 470.969 S 41 C E Erp;cyaes
(.} C4 Q ].f;fpI
[
8.459 9.36 afr O 1 U H2"Q[3$
Tcta: Paj rcJ c.'arged to ccerators a a cc s*.ruct ciJ R gJ rW 4
S 165.726 S 147f81 S
130.2 t b(o=
1 495 049 16
1975 1974 1968 s 198303 s t 75.60 t s
72388 127.840 113.740 55.735 187550 179367 61.144 2313 1.954 2.050 s 516.0C6 s 47o.862 s
191.317 The letter to Stockholders in this report provides an appraisal of the major s
87.676 s
71.940 s
51.034 12307 10230 7204 factors currently affectng the Cr*mpany s business. Year to-year vanatons in 31.7C2 25.783 13507 individual categones of the Summary cf Operatons are discussed below.
22.189 21629 8.034 References are made to the nctes to the financial statements.
1548 1344 1246 s_ 155A22 s 132.926 s
81.c25 Earnings s
8.614 S
5.023 S
2.820 The balance available for common stock decreased S3.333.000 in 1977 s 680.042 s ec8.811 s 275.t e2 and increased $19.651.000 in 1978.
Earnings per share of common stock on the increasing average number of S 2 S 29 shares outstand:ng in each period, decreased 26C in 1977 and increased 52C n
88 3C 33.586 27.7r 15 Ass in 1978.
51.628 40283 23 947 The decline of earnings in 1977 was due pnmanly to lower gas sales and to increased operatmg and ma:ntenance expenses. Operating costs were higher u281 co26a u938 largely because of the start-up of Calvert Clif's Un:t No. 2 and the synthetic 3.812 15.119 1291 natural gas plant. Cas maintenance increased due to the severe winter weather 57225 52287 32.75a expenenced in the ear!y part of the year, while eiecinc maintenance was greater s 538.644 s 501.497 s 223.537 as a result of the in:tal refue!:ng of Calvert Citf's Unit No.1.
s 141298 s 107314 s
51.625 In 1978 higher service rates combined with increases in sales brought 10A71 25S37 815 earnings back from the depressed levels expenenced in 1977.
732 1.676 438 Electric Sales (Mwh) and Operating Revenues 5 94 8f57 17.213 457 Elecinc sales increased 4.8% in 1977 and 4.6% in 1978. Crowth in the s
93263 s
92.146 s
38Me6 res: dental category was 7.0% in 1977 and 3.9% in 1978 - pnnapa!!y due to 19.148 18256 3.874 the insta!!aton of e!ectnca!!y heated dwel!:ng units. Sales to commercial cus-S 74215 S
73.890 s
34.792 tomers increased 3.7% m both 1977 and 1978. Industnal sa:es increased 3.6%
52s85 50.527 24020 in 1977 and 5.4% in 1978. The increase in 1978 was due anncipally to higher s
21230 s
232e3 s
10.7 2 producton levels by industnal customers in the last half of the year.
27.C33 25.821 15.C 13 s2.75 52 86 5222 E!ectnc operatng revenues increased each year as follows:
s t 96 s1 96 s1f0 increase From Pnor Year 1978 1977 4 663SC2 4A69.140 2333A22 (In M11] ions of Douars) 2.717.730 2fC8359 2.C50SZ9 6A75.795 6 311.586 5.187.149 Attnbutable to:
11e57A27 13se99a5 t o.1715cc Rate Adjustments
$122.8
$ 7.7 s
146.aC2 s
83.153 s
70.632 Sa:es Volumes 1S_8 18.8 769 2'a 75es39 E60.003 i
Net Increases
$138.6
$26.5
- 6.. -.
- 3 71 5.CO3 l
i 38 ea6.991 39.11:278 36.152332 Rate adjust:ren*s for 1978 :nclude increases :n ef ectnc service rates 52c2. e5 5 259013 4.740213 granted by the Public Service Commiss:on of Maryland, changes in fuel rate j
17.737.079 18365 CC8 14.770.C21 charges. and the Maryland E!ectnc Environmen+.at Surcharge reflected in 2t961199 33499222 18.Cc 1.751 revenue begmn:ng m 1978 (see Note 7), wh:ch amounted to $55.200.000.
j 61789254 MA33 521 73 664 917 S64.600.000, and $3.000.0C0. respectvely. Based on new regulatons estab-l s
11304 s
11511 s
16399 hshed by the Commiss.on, the Comcany imp!emented in Octcber 1978 a new l
5122E5 511.187 457639 Fue! Rate clause to recover the cost of fuel used in generatirg electncity. This 310.726 337 R2 235 129 system :s pred:cated upon the latest twe!ve-month generaton m:x and the I
al 6 53 0 65 6 latest three-month average cost for each fuel type. The Fuel Rate will not l
change unless the ca.cu!ated Fuel Pate is more than five percent above or below l
l the Fuel fsate then m efect. To *he extent that ac*ual accumulated fuel costs are j
3 tc15.314 s i.01c.154 3 387 370 2e0353 25t2:6 e9239 not recovered through the Fuel Rate charge, they are deferred as an operatng j
719A99 E97322 279436 l
ex;ense and recovered,if the Commission finds the costs werejustfled, m I
3 : 25.7~1 s. 9 0 3E2 5
756.0 5 i
a base rate proceed:ng. This method dfers from that accoted m Cecember 27241 27.029 15.036 I
1976. wn:ch crovicea for tne recovery of the fu!! cost of e!ec*nc fuel based 526 5 525 e2 s t3 59 cn estmates for the month in wh:ch such costs were charged to operatons.
87232 87f 5 50.143 s 143226 s
231.' E6 5
SS.C66 I
3 2345246 S 2212.502 s 34d 2,0 p
- h k h. p / " cWr * !yg p ~ !e o3.
7 g
361505
! 317190 s 29268 i
ge s
r2 7s 5 y
s m
s -
s 17 L1 L.b l j J
I t
I Gas Sales (Dth) and Operating Revenues Cas sales dec: ired 7.8% in 1977. reflectng a shortage of in add: ton. in 1978 mcreased costs were mcurred due to the I
natural gas at the nat:cnal level and the warmer weather m the in:ta! refueling and mamtenance overhaul of Caner + CWs Unit j
fail. Dunng 1978. gas sa:es increased 5.5%. due ma:nly to an No. 2.
l mcreased ava:!aoil:ty of natural gas dunng the ;:ar for sale to The increase in deprecaton cnarges results frcm addi-
{
the Company's customers.
tonal faa!ites that have been placed in service and. efectse in 1978. the Comm:ss:on granted the Company perm:s.
Cecember 1.1977 an mcrease in the annual accrua! rate for sien to aucw ex:stng residental and bus: ness custome's to e;ectnc property other than nr.: ear prcperty from 3% to l
insta:1 add: tonal gas app::ances or equ:pment prouded the 3.26%. of' set m part by a decrease in the annual accrual new seruce requirement does not exceed a maximum of 500 rate for e!ectnc nuclear prcperty from 3.6% to 3.45%.
therms per average day in the peak month cf gas demand.
Federal income Taxes - Current increased :n 1977 due to increased gas is ava:iab!e to firm industnal customers, w:th:n higher taxable income and a lower insestment tax cred;t. The the 500-therm limit.so:ely for purpcses of pl ant prctecton.
increase in 1978 was attnbutable to the higher level cf taxable feedstick. and processing. New commercal and mdustnal cus.
mcome parta"y c" set by the adopton in 1978 cf the percent-torrers a;so may be added. but only where connecton can be age repa:r a;icwance prov:s;cns and an increase m the mvest-made to an existng gas mam and the consumer's total needs ment tax crecit (see Notes 3. 4 and 7).
are not above a da:!y a.erage cf 500 therms.
Federal Income Taxes - Deferred are the resu, of the adopton in 1977 cf normahaton acccuntng for the tax i
l Cas operanng revenues increased each year as fc!!cws:
bene'!:s ansing frcm I;beralced deprecaten and for certa:n i
increase or (Decrease) From Pncr Year other tming d;"erences te* ween tax and book income. The l
1978 1977 1978 amount also ;ncludes deferrais acp:icab:e to the use of the l
(ln MWicns of OcJarsi percentage repair a!!cwance and a PennsyNan:a Grcss Rece: pts A* nbutat:e *c:
Tax on sate of e'ectnaty to out-of-state cunemer. wh:ch is I
Rate Ad;us* men's
$41.0 5394 temg co-des *ed m the court (see Notes 3 and 7).
Sa:es Vc umes 1.9 (2.1)
Investment tax cred:ts ury from year to year as construc-Net increases
$42.9 S37.3 ton expend::ures beccme e.ig:b:e for t*e crect. The large decrease :n 1977 :s pnman'y due to the cred:t tamen in late Pa*e ad;ustments mc ude mcreases m gas serace rates 1976 for Cane-:C!!Ms Unit No. 2.
e; ranted by *re Comm:ssoa. but represent pnman:y me pass-Taxes crer tnan mccrue axes increased $9.596.C00 m
- ng cn to cusicmers. tnrcugn automatc adjustments m the 1977 and $10.903.000 m 1978. The mcrease in 1977 ref'ec*s Company's gas tan"s. of higner pnces pa:d to the Company 3 cre-half year of prcperty and cap::al stock taxes on CaNert p,petne sucpaer for natural gas cms Un:t No. 2 and in 1978 a fu!i year cf sucn taxes. Gross Operating Expenses and Other items rece. pts taxes mcreased :n 1977 and 1978 due to h:gner rev-Tctal purchased fuel and energy expense decreased er~es and me PennsyNar:a Gross Pece! pts Tax m 1977. Also in
$12.176.000 m !977 as ce :cv.er e!ecnc ex;ense a: nbu-1978.: e Com;any commenced t e record:rg of tte Maryland ude to nuc: ear generancn more tnan cMset :ncreased gas tnv:rcn' rental Surcharge as a tax cn the Company mstead of a extense caused by n:gner gas pnces. The 1978 mcrease of tax passed crectly on to cusicmers (see Note 7).
$75.797.CCO resated enman:y trcm greater customer The S12.C74.000 decrease m tre A;:cwarce fcr Funds demands and mcreased fue! and ratural gas pnces.
Ustd Dunng Corstruc*:cn m 1077 :s attnbuutle to Te d:scon-Ircreases m cperanng and mamtenance expenses resu:ted rnuance cf te a!:cwance on CaNert C:i"s Una No. 2 e"ectve prTan:y 'rcm n:gner costs cf !accr ard mater:a:s. In 1977.
Cecember 20.1976. partaliy c"se: tj an ahowance accrued ncreased cos*s were mcurred due to re sta! refuecng and on eranccn Sncres m 1977. The $2.715.C00 mcrease tn the ma: :enarce overhau! of Cacert CWs Un: No.1. me com-
- a. cwance for 1978 :s attr:tu*aie to con *mued construc en encerrem cf ccmmercal coerarca cf Cahen CDf's Un:t No.
at tre Brandcn Shores P!rt (see Ncte 5).
- 2. mcreasec.vcidcad recessaated by emergency gas reca:rs Interen cnarges mcreased due to sa:es of adatcra; se-res rng frcm tre severe wtr:er. and tne comr encement c' cuntes. No add.tcrai shares cf preference stcck were sc;d c;eraton cf te Companys syrtenc natura; gas plant. In
'n 1977 cr 1978. and me number of preference srares cut-1978. such er ses a so mciude trcreases due to greater s*ancng decrened due to cor.ersions. prcducng a dec:.ne scr edled - zerance at.ar:ous fcss:; fuei generat g p! ants.
m ; reference d.adends.
P-@I lp 59fnfC:i fij d 7 Y ? l.
O )
Esk G n ?t.. 1977 Dividend Price D:wde-d
?nce m r _3_... s C c _.. _ _ <. _r. a.
--n
.a
. ~..
ced cn :ne f.ew Yor %dv.en.
Paid High _
low P_ rd H:dr
. Low _
rd Pac 5c s:cck excna ges rd nas Fm Caaner
$.54
$26-3/4 $24-7/8 S 52
$27-1'2 $24-3 4 ened trac:ng ;rm eges en re Scrd Cua~er
.54 26 24-1/2 52 28-1.8 24-34 Ecsxn. C.rc~ at. and % mn:a M Cmer
.57 27-7/8 25-1/2
.54 28-1/4 26-1/2 eerges.
Fe m Gm~er
.57 26-7/8 23-7/8
.54 28-1:2 26-1.4 i
3 yjb UDi
Baltimore Gas and Electric Cgeny Per ce':
1978 1977 rcrease un Thomsanas cf Do !am t Cec reasei CFERAT'NG ret ENUES E ec*rtc
$697.173
$553 558 24 8 Cas 264.586 221.659 194 Steam 12.727 12.3C5 34
'c:ai C; erat:rg Pe'.ea es
$974.486 S792.522 23 0 CFERA7;NG EAPENSES Parcr.ased F.et ara E egy - Note 6
$321.266
$245.469 30 9 Ocerater s - Ncte 1 161.981 140.774 151 Ya.rtenance - Ncte 2 55.083 49 892 10 4 De; rec a: on - Note 2 78.063 68 449 14 0 incc e Taxes-C trer - Notes 3. 4. a-a 7 43.619 19649 122.0 De'errec - N: es 3 and 7 15.818 10.C24 578
.a.es*~e~ Tax Cred :Acystments - Note 4 17.882 13.513 31 4 C'rcr Taxes - Nc'e 7 83.330 72.427 151
' tai CTeTng Egerses
$777.042
$620 297 25 3 CFE AT".G iNCOY E
$197.444 S172 225 14 6 t.;LCV. ANCE 09 CTHER PJ'.CS USED CL3'NG CC'.S~PUC':CN - Ncte 5 4.006 2.553 56 9 NET OTrE9 !'.CCVE AND DEC'.C":C'.S 739 2229 iE6 81
' CCYE EEFCRE.'.TEFEST CH APCES
$202.189 S177 CC6 14 2 NTE R E5' C H AFCES 83.228 76 230 92 ALLCV.a'.CE :Ca EG A RC A EO FJ'.CS LSED CLP;'.C CCNSTRUCCN - CPE:i' '. e 5 3.580 2.318 54 4 NET NCCYE
$122.541 S 103G '
' 9 C:GCENC5 PREFEP ED AND FPEFEFENCE STCCK 18.177 19331 l 1, E1.LA'.CE 2.. AU6LE FCR CCVYCN STOCF
$104.364 S e4.713 23 2 EAT. NCS FE9 SHAPE CF CCYYCN 5~CCK
- 2e S
$3.38 52 E6 162 anec c a. era;e srares e/.s'and.r.; ;
i 1978 1977
- "Gsa-es c* Cc a s;
$269.414
$24e628 i
' E7 ".CCYE TCR TWE s EAR cRCY STATEYENT OF NCCYE 122.541 103 C94 i
$391.955 S351 722
'l
. c..,- c.. a w.~. p -.e, c.cy l
n.
We'r~ed 5':u i C.~.:ar.e >
So es S 4-5 2%
$ 1.003 5 ! CC3 Za esc 4%
276 27E
- .-esc 54 %
1.620 1f 0 l
P~
<ce 5 w C ~. r.e Cr * : e 6-1. 2m 3r es 784 M3 s 75 %. 370 3e es 2.625 ZEE i
' M s. ' 9~' de es 3.940 33 -
l
~ 75 %.
372 Se es 3.100 3'~
t
-' ~ 5 %. ' 973 5e' e 5 1.556
' 556 s25% !974: ' es 3.273 32'3 i
C~~r_m
. e r. rn - S2 E :r / r9
-'- a:-
3" j
$2 M :e -
~
' '373 f: 52;d re' /1 e t'e'm 69.467 63.743 f<
l OT-E a Cr '.:CE5 -- E.:e~es c
'ec c
- mrca 50 r
_ _ _. _ ~
"c..C'-r:es S 87.694 i.3. s CE r E'
- 'SC;;E'F S304.261
' ^ ' ' -
- h eg m
j
- kay,
,..g a'.
h Ibun? diduMlOIit n~
d () f 0m.A 4 ~/ J UJC
Baltimore Ga5 and Electric Company December 31.
CecemDer 31.
1978 1977 ASSETS d"I""505 # D "''
l LnJTY PLANT 4
Pant m Serwce E ectnc - a: orgna! ccs:
$2.112.368
$2.047.852 Cas - at org ra. cost 300.379 290.345 Steam - at ces:
17.104 16.845 Common - at cr;ral cost 90.706 81.728 Total Pf art m Semce
$2.52C.557 S2.436.770 Cca.stracton Work m Progress - at cos:
306.223 229.568 Pa : Hetc fcr Fatare Use - at cos:
3.739 3589 T;*al U'.:;ty P: ant
$2.831.219
$2f69.927 Less ccea:ated Prov:s;on for Deprecatcr - Nc e 2 541.618 470.969 a
l
' e: Utmy P art
$2.289.601 S2.198.958 Lc' ear Fuet - a: a*ct:::e cos+ - Note 6 114 1 68255 i
$2.404.063 52267213 CTHE R INV EdTVENTS
$ - 7.582 S
7.574 C;.,PRENT ASSETS l
l Cas - Ncte 8 6.102 S
7.599 S:ecal Cepcs s a-c Wcreg Farcs 439 1.571 Ac::;n's Fecesaie. 'ess ;re..s. n for.rcc::ec-t es 105.143 95.935 j
Vater:a.s anc Sep es - ;e eraJy a: a. era;e ces:
103.476 1C5 630 l
Pe:a) eatsar:C:'er 35.659 34.986
$ 250.ts19 5 245.723 CE ERRED CES:TS 11.290 8.462 j
TCUL ASSETS
$2.673.754 52.528.972 1
l CAPITAL AND LIABILITIES 1
CAP'TAL S*CCK AND PETA;'.E3 EARN.NCS Pre' erred S::cx - Screse. cage 22
$ 59.185 5 59.155 Pre #e e ce 5: cn - Screne.;a;e 22 186.299 188.333 j
Co-or 5:cck - Ec ene. ; age 22 602.003 591.892 i
Pre
. on Pre'e're:S::ck 157 157 i
Peta: ed Earr ;5 304.261 ZE9 414 I
$1.151.905
$ 1.108.961 LONC-TEPY CEST l
Vc. ;a;e Sc Os - Sced. e. ;o;e 23
$1.172.496 S t.109256 I
f Cete~ eres - Icre:. e. ;a;e 23 35.400 36.403 J a cr* :ec D:sccri a O Pren-(3.053)
- 2.75 1 j
.0 ; Te m Cett est aa: to be retrec w: :r cre yea-(12.842)
,12.C93 i
)
$ 1.192.001 S t.13: 813 C'.P AENT L:A5;UT:ES 4
f Cc-Perca! Pa er '.;tes - N::e 8 5 ! 8.75 J
.cc:/!s Pa,ce 66.477 69f92 l
Taxes Acc" ed 45.186 32 597 i
'r ms* Accr_e a :C:. Je c5 Dec:ared 53.232 43074 j
.: ;ir~. Cert es: ated : te retre w :- :ne, ear 12.842 12.C93 i
C:-
- 25.895 15.Ca3
)
l
$ 203.632 5 1972SI
- -Ea CPE;iTS cre.. ate
- Ceter -: -.en~a~ Tax Cn s ; e.,
S 89.951 S 74.556 De"er ed I c:~e Taes ' :*es 3 r: 7 25.842 i1C24 rv 10.123 7.3:3
$ 126.216 5
31.689 J Y ' YENTS AND CON", CENT L: AS:LPES _ - as 1. 6 r: 3 0"A CA;"'AL ;,'.C L 13 L.T:E3 S2.673.754
$2.523.972 3e3 accO*:3 f ^Q C!?s aM sc"eca es - Ca;e5 I *- - 9 2 7 L
+
i a
.4 J u6 ij 'i.J
..i..
t/J 20 i
Baltimore Gas and Electric Company 1978 1977*
Or. Trousatcs c' DoJars; sCURCE OF FUNDS F Ms f crn 0;e ators.
Net lecome
$122.541
$ 103.094 Cecrec:atcn arc Amort:aton 87.144 75.590
%estrert Tax Crec.t Acys ~erts - Note 4 15.396 12.159 De'errec income Tves - Nctes 3 ard 7 18.015 t 1.925 Deferred Feel R3*e Cos*3 - Net of De#errec ircome Taxes 2.381 2.C59 A:lcwance fer 0:ner fLrcs Used Dur:rg Coastructon
- .ote 5 (4 006)
(2.553:
SJ ctal
$241.471 S202274 Fu cs from O ts.ce Sources Long 'em Cet 74.193 86.720 Common S:ock 10.062 49.777 P e*erence Ston (2.035) 15.c55; S crr-Te~r Cett het' (18.750) 3.500 l
Girer Aet) 414
,6.047)
'cta.
$305.355
$331.169 apt L: CAT lCN OF FUNDS C: s r.c*:cr Egenc.:As
$172.402
$1822C5 w..rce for Otrerr.rcs Use: Der:rg Cctstruc*:on - Nc:e 5 (4,006)
- 2.551 l
C;~;r. Stacw %:encs 69.467 63.743 l
Pre e~ea Loc < cw ce-:s 2.899 2.699 F~ve ce Stock Duceacs 15.278 15.482 Pe re~en: cf Lc ; 'erm Cett 12.760 11.371 Er aw cf N.c:eir Le: Var:a.s 57.253 57f05 Yre a s anc 5;;;. es P~c: rag F.e. Szce (2.154) 14.884 Cte Fr: c.ca.r '.e:Cha ge in C*rer AcrWr.g Caru t es (18.544)
(14E67 f
t
$305.355
$331.169 l
'; a;
- n crec to can' arm v..*n 1978 ese-tat.or e
I See accc paay ; no'es and scnecues - pages 22 trirougn 27.
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Coopers & Lybrand To the Stocnto'ders of Ba.::more Gas and E:ectric Ccrnpar.y l
We has e exam:r.ed t9e ta:ance snets of Ba:tmore Gas and January 23.1978. Our op:nion on the 1977 ba:ance sheet was E'ecinc Compary at December 31,1978 and 1977. and the cuanned as re'ng sucjecito the e"ects of such aq'ustments.
re!ated statements of income, reta:ned earnings and changes in if any, as m:gn: have teen recu: red as a resu:: cf the u::: mate l
Enanc:al pos; ten for tre years tren ended. Our exam:ratons resc:ut:cn of r.e matter d:scussed ato.e. Since :ne Mary:and were made m accordance w n generad'j accepted aud:tng Court of Appea.s has dec:.ned *o rev:ew the matter. cur present s*ancarcs and. accorc:rg!y. :nc!uded sucn tests of t"e acccurt-ccm:cn on :ne 1977 ba:ance stee*. as presented here:n. is nc ng recorcs and such other auc:tmg procedures as we ccrsi-
- onger queufec.
dered recessary :n the crcums*ances.
In cur oc:ran the f ranca! statements referred to acove A5 0:scussed :n Note 9. to tre 5nancal statements, the ipages 19 t romgn ee focinctes to Sr.ancai statemen's on Mry:ana Cour* Of Acceals nas decared *o rewew tre ceaszon
- age 27). present fa
- r:y tre : nanca; pos:t:on cf Barcre Gas of re Court of Speca! Accea:sof Marytand,which subs *antauy ard E:ecmc Ccmcany at Decemcer 31.1978 and 1977. and tne n;.. Eed tre Orcer cf *ne Putac Scrmce Comm:ss:ca cf Mary-resu.*s of. s cceranens and cnanges :n : s Snancal pos: ten fcr
.and w:th rescect M :ne refund of crev:cus:y couec*ec revenue
- te 3ers tnen encec. :n conform:y w :n gere:a:.y accepted
't 'ne amount of Ss 1.E67.000 p!us 'nterest. :n our report dated accoun* rg pnnec'es apcted cn a cons:s:ent cas:s.
~..'TCre. M 3rf ar dQ:9 N D. < I j.l!
h Oa.!
2 3.,. ys. t. r 'e.q gg j j
j v,
d h_I_A t aRlupq3ss A s
2' 1nC
?a 4/J UJ"
Baltimore Gas and Electric Company l
1 i
December 31.
Dece-rer 31.
l 1978 1977 dn Thosrcs cf Cdrs, Preferred Stock (Comtatcse) - $ 100 par wabe - t.000.000 seares autrcnzed Seres B 4-1/2% - 222.921 snares outranceg (Ca abie at $110 per sra e ).
$ 22.292
$ 22.292 Seres C 4% - C8.928 snares outsuncmg (Ca:labte at S 1C5 per snare) 6.893 6.893 Seres D 5 4% - 300.000 snares c
- star,d:rg 30.000 30.000 (Cate at $102.50 per stare pncr to Apn11. t 982 aad at : esser amounts trereater)
Tma: Pr e'errW 5tock
$ 59.185 5 59.185 P e'ereNe 5m (C. mea ae) - $100 par sale - 3.500.000 s* ares acenzaa:
Ccr.e te. 6-1/2% Seres - 112.989 ard 133335 srares. respeca e.y. outstand:^g
$ 11.299
$ 13333 Ca/atie n $1 CO per snare: comettre ir.to Ccmrnon Stocn cf t*e Cnry at S29 48 per snare )
B 7E %.1970 Seres - 300 000 sna es oestar.c:rg 30.000 30.000 Ca :at:e at $110 per snare prcr to Occcer !. t 980 anc at ! esser a curtsinerea"er) 7 S8 %.1971 Senes - 500.000 stares c ts ard.rg 50.000 50.0C0 f
(Cf;acie at $107 per snare pno to Oc;ter 1.1981 rd at tesser amounts trereaMer; 7.75 %.1972 feres - 400.0C0 srares outrarceg 40.000 40.000
'Ca.:at:e at SICS 50 per snare pncr to Ococer 1. t 982 and at : esser amcuris tre eaNer) 7 784. t 973 Seres - 2C0.000 snares o.ts arc:ng 20.000 20.c00 (Ca :at.e at SICS 50 per snare pncr to Decemoer 1.1983 arc at : esser amoets tre eaMer) 9 35%.1974 Seres - 350.0C0 sna es ozstrc rg 3S.000 35.CCO Not calat:e pr:cr to Acni 1.1979 erough cer a n ref nc.ng cre ators.
- rerwce calaTe at $110 pe sna e ; or to A;r.11.1984 anc n euer a"rounts rerear.er)
'ca: P e9rerce Stocr
$196.299 s 1 e8.333 C: mon Ste-k - w ineut par '.a:ue - 45.00C.Cc0 s* ares au ncnzed:
31.C39.302 ar.c 30.057.~75 sra es. reset.e y. outnareng
$602.003 s531.292
, e Te end of 1978. 383.742 s* ares were reser.ed for comers cn cf Camertte Pref erence Stock.759.064 stares 'er tne irses*mer3 'ax Cr c.t e
Em;!ciee Stock Ow e sr c P:an.ard 216 819 srares for tre Crsicera Fe r.es*Ter:rd Stoc< Purc ase Pian )
See rage 6 'cr n'crmaton rega*1rg secantes ss.ed and re*, red in 1978.
I l
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t f
l Accounting Policies:
l The account:ng records of the Ccmpany are mamtamed in to the h:gner payrolls. Based cn the latest ava!!ab!e actuanal I
acccidance w:th t"e Unifctm Systems of kccunts prescnbed report. as of January 1.1978 '
'e were no unfunded vested I
by tne Federal Energy Regulatory Commissicn and the Pubhc ilab:!.t:es.
Service Ccmmission ' f Maryland.The Company ~s pnncipal Note 2 - Depreciation and Maintenance:
o acccuntmg conces are descnbed in Notes 1 through 6.
The amourts set as:de on the Comcany's books for deprec:a-ton are generauy based on composite stra:ght-!!ne rates, de-I Note 1 - Pension Plan:
termined and revised penod:ca:ly by means of incependent l
T"e Company ma:ntains a ncn-contrbutory pensicn p!an cov.
engmeenng stud:es. acp!:ed to the average mvestment in de-j enng :ts rega!ar emp!cyees. The fundmg of t*e Corrpany's precab e u*:::ty plant m service.The composite deprec.aton l
pens:en plan is through a descsit admm:strat:cn med:um with rate fcr nuc: ear e:ectnc propemes mciudes a provts:cn for the an tr"med: ate part:cpation guarantee feature erap cymg the deccmmiss:onmg cf the piccert:es at the end of the:r useful l
aggregate ccst method. In 1978 and 1977, the Ccmpany's ccs: afe. Such prows:cn (presen*!y estmated at $36.C00.C00) s l
for pensions tota:ed $13A12.000 and $11.947.C00, respec.
sut ect to penod:c rewew for future changes m ecoremic i
3 l
- ' eb/ of ecn $10.720.000 and $9A98.000, rescectr.e:y.
cond:*:ons and advances m tecnno,cgy.
were mc!uced :n expenses, and tne remamders were charged The amcunts of e:ectnc deprecatcn for tne 5rst 11 l
to constructon. The ircrease m 1978 is pnman:y a*tnbutab:e mcnths of 1977 were ccrmted at 3.6% for nudear e:ectnc j
i r
I.
., s ah)
Kh ahU3 22 m
n 't J
i Baltimore Gas and Electnc Company December 31.
Cecemer 31.
1978 1977 (in T*caa,cs cf Dc.:ars)
F4 Rsi REFUNDWG MORTCACE BCNCS 4-7,8% 5eres. cue Jure t.1980 9.386 s
9.386 Seres W 2-3/4%. Le Jre 15. t 980 10A95 10.595 Seres U 2-7,8%. Le A;M 1. I 981 39.063 39.C63 1CN Senes.Le Jdy 1.1962 90.227 90232 10- 1/ 8 % Seres. Le Sgte-ter 15. t 983 41.932 41.932 Ser es v 2-3< 4%. Le Cece-** h. i 984.
19.123 19.123 Seres x 2 3/4 t. Le Jrmary 1L.1966 24.317 24.317 Se es 2 3%. d e J 'y 15.1989 36.754 36.754 3-t.'4 e See es. Le Dece ter 1.1990 29.682 29682 4 3 8 % Se es. Le Jr, 15,1992 25.000 25.CCC 4 % Seres. d.e Marc 91.1993 24.095 24 n95 4 E 2% Seres. Le Jay 15.1994 29.989 29 989 51 e % 5er es. Cee A;ra 15.1996 26.680 26 ESC 6-1. 8 % Seres. Le Ago: 1.1997 24.967 24.967 5 5. 8% Ps:anraer.: Seres. i.e A;;2: 15.1998 67.000 67.000 7% Seres.Le Decer ter 15.1998 28.705 28.705 8-1 4 % Seres. Le Sce-ter 15.1999 22.198 22.199 8 5. e e Seres. Le Se::e+te" 15.2000 11.433 11.433 7-1 '4 e Ee es. Le Arru 15,2001 60.000 EC.C00 7 5 B% Seres.Le Se::e-ter 1.2001 60.000 60,000 l
7! Sb 5enes. Le Jnry 1.2CC2 50.000 50.CCO l
7-t C % Sas. Le Js,1 2002 50.000 SC.CCC
[
5-1/2% Ps:3.are-Ser.es. Le J a 15. 2:02 12.500
?2.500
[
71,2 % Se cs. Le 5ette-te ? 5. 2002 50.000 SC.CCC l
l 8 1, e h Seres. Le Fe:raar 1. 2:C4 75.000 75.000 j
y 9-7 6 % 5e"es.Le L;m 1.2Cc5 18.750 40505 l
}
8-3 s% 5eres.Le Sep:e ter15.2C G 75.000 75.000 j
a U4% 5er es. Le Se;te te" 15.2007 75.000 75 000 9 3 8 % feres. Le Jvy 1. 2006 75.000 l
% F ra Fefm; Myq3;e Scr s
$1.172.496 s 1.1 C9.256
?
I
( AJ ct ze Cor pa y s c ::ec es and t~e suc c' Safe j
nrte" Arer Power Lncercn are s4ec* to t*e :er.cf j
+ e -crt;3;e vcer A*.cn **ese OcNs were med 5mr ;
i j
W carer cf s t 1.641.750 esva:ea to te ca.d m 19791 j
CEEE D E5 l
4 ' i % S.r. rg F / : Dete" ?s. Le Ju e 15.1986 13.200 s 13600 1
- 4. 6 Se r ; W Cetr :es. Le L;.s: 1.1990 22.200 22.E CO I
% Cet e res S 35.400 5 36 acC l
Za g Fra rarerts cf $40C CDC o-4 8% Cetert/es e: 5600.C0C c,4 5. 8% Cete~zes rered eer ear See me 6 'cr -f r-r ca regar; ; scr zes.s aed 3rd rc*zec m 1978 i
i i
propertes and 3% for all other e!ectnc propertes, and eiec-cf ;rcperty). are charged to aceratng expenses and/or c:eam tr.e December 1.1977, at 3.45% and 3.26%. respectve:y, as
- rg accounts, un:ess the reF2 ment of a mmor : em cf prc p l
ordered by tre Puthc Serwce Comm:ss:cn of Marf and. The erty efects a sas* ant:al. etterrner.t. :n wn ch event the ees l
amour's for gas croper*:es, steam prcpert:es and common cos* cf the reciacement over the estrnatec current cost of 23j p: ant (except for transpcnaton sen:c:es..vdcn are gen-rep:acement w *ncut tetterment :s cr.arged to tre acprepna*e erLy cepreca:ed cn a usage cas:s) were comcuted m 1978 and propeny account. Replaceme-ts of :tems des:gnated as units of G77 at annual rates of 2.6 6. 2.75% ard 3%. respectr.e!y.
prcperty are accounted for as P: ant Add; tons and Petrements.
Re in.estment in decrecab!e utri piant as of Decem er 31.
' Men deprec:ade prc;eny :s reared or ctrermse c:s;csec 1978 was nucl ear e:ectnc $775.554.000, au ctrer e ec*nc cf. *ne Acamu.ated Prow::cn for Decrecaron :s charged wm
$1.303.343.000. gas $297.C81.C00. steam $16.898.000, tre "cngmal cosr of sah pre;eny. tcgether wm tne ces cf and common $83.263 000.
removal. and :s cred:ted en tne saaage s aae or sa!e once Ex;e-d:tures for mamtenance ar.d reca:rs. :nc!ue:rg re.
and any ::rer amounts recc.ered. s;ch as ms;rarce.
rewa:s of mmcr :: ems of proceny (as c.st:ngu:sre: from un:ts "I
ge-0, sh, f. I Si lE Mdb&d__
v A } [.
- h. h l} l} j\\
\\) J U.
Note 3 - Income Taas:
The tax reductons resu:tmg from the ddeNrce be* ween accrued in 1977.The Comm:ss:cn. in its Order of December 27.
deprecaton recorded on the Company s bocks and tre de-1978 grantrg the Company :ncreases in serace rates, used a preciaton taken for Federal mcome tax purposes amounted rate of 8.13% for this aucwance. Accordmg!y.the Company to SZ9.760.000 m 1978 and $32.781.000 in 1977.
adopted the higher rate retroactvely to January 1.1978, In.
Beg:nning in 1977 the tax benefits ansmg frcm litera!ized creasing Net income for the year by $430.000. The Comm:s-carecnter. on 1976 and subsequent property add; tons haw s on is currendy conductng heanngs to consider whether the been normaaze1 This change in accountmg was autncnzed by ex:stng accountng treatment with respect to Constructon the Pubbc Serace C'mmission of Maryland. The provis;on for Work in Progress and A:!cwance for Funds Used Dunng Con-deferred Federal mccme taxes abo mc!udes the tax ef'ect of structon should be modified in determinmg the Ccmpany's d:tferences between the Cc;npanfs occk and tax deductons future revenue requirements.
for nuclear fuel ccsts. the temporary deferral of fuel expense i
under the Ccmpany's fuel rate clause. the Pennsy:vania Gross I
Note 6 - Nuclear Fuel:
I Rece: pts Tax. temg contested m the court. and the Company's adopton m 1978 of the Percentage Repair A3owance - a The Company has a ! ease agreement for a porton of the procedure under which certam expend:tures capitaazed fer nuclear fuel presently instaHed m Un:ts No. I and 2 at the occk purposes can be deducted current y fer tax purpcses Ca; vert cts P! ant. Under the : ease agreement. lease payments (see Ncte 7).
for nuc! ear fuel commenced upon consumpton of the fuel in the operaton of the Calvert Chfs Plant and are designed to i
return to the lessor the accumu'ated investment in the nuc: ear Note 4 - Invest' ient Tax Credit:
'tel pnor to commencement cf bur n-up (including ong'nal I
I In'.es* ment t3x cr d:ts cccrumg to the benefit of the Ccmpany 7urchase pnce, a!! Subs.quent processing payments made and a e
reduced Federr mcomt taxes by $18.554.000 in 197P, and iinanang charge) and a monthly carrying or f rancmg charge l
$14.7C8.00'.n 1977.
cn the unamcrtzec accumula:ed investment. Lease pa)Trents I
investr ent tax crects accrumg to the benef;t of empicy-for 1978 and 1977 tota:ed $28.020.000 and $28.743.000.
ees also reduced Federal mccme taxes in 1978 and 1977 by respectve!y. The Company is resporstie for taxes, msurance
$2.486.000 and $1.454.000. respectvely, apphcable to tNe and otter operating costs relatmg to the fuel.
add:t:onal '-1/2% cred:t in 1978 2 nd 1% cred;t in 1977 a3 owed At Decomter 31.1978. the estimated lease payrrents are i
cy the Internal Revenue Code to provide stock for employees as foilues.
j under the !niestrrent Tax Cred.t Empicyee Sto:k Ownersn:p y ncm3 c, oc n Plan (ESOP).
mc7 l
Al cred;ts. except thc.re related to ESOP. are bemy defer-m u ec armg w ten l
red and 03ccated to sacome ra*utty over the irses of the sut;e-*
^M~e" (v3 Wt j
I picper*y w;th rescect to the cred;ts prov:ded under the Rev "m
t 16.sc3 s r.sa7 s w sc 980 1g W5 lu i
enue Act of 1971 and subsequent years, and cier thr*y-year "2
Mo penods w'th respect tc tne cred:*s provided under pncr Rev-erue Ac's. !raestment Tax Crec:t Adjustments appeanng in the
-1 310_
Matement of income are ce tctal amcu't; mctuded to ceset
_53M2(
i reductens m taxes. mmus $3.158.000 an1 $2.549.000 a::o-If the Company had acccunted for the nuc:ect 'Let : ease as i
ca*ed te me in 1978 and 1977. respectne!y.
a.rpital lease. both nct asse*s and hacutes wou:d have ueen acreased by $31.791.000 and $57.370.000 at Decembcr 31.
1973 and 1977. rescective:y. Howe.er. no addmoaal egenses Note 5 - Allowance for Funds Used During Construction:
wou!d hawe teen incurred.
The A3cw3nce for Funcs Usec Conrg Concructcn.a ronca<a Pncr to May 1977, the cost cf nuc: ear feel relected an t
item. :s an 3ccountmg procedure tv ~thich there are accrue-almed va:Le for residual uraniLm :ess est mated shcpmg and aCowances for the costs of bcfrowtd unds and cther funos reprcCessing costs. However, startng w:th tre montn'y fuei used to *' nance constructon, segregated between cinerincome rate n May 1977, the nrrcany tegan CIUmg as a ccst cf ara mieren charges m confcrinance witn an order of tne nucl ear fue me cost to provide for tra^scortaton and lorg-Federal Erergy Regu:atory Ccmmisco. Such aSowances are terrn otf-s:te scent fuel stcrage, with no cred:t for e:mer trarsferred from ne Statement of !ncome to Constructcn res: dual uran:um or plutomum.
V.ork In Progress m the 5a ancc Sheet and are cap;tanzed :n tne On Nc'. ember 29,1978. th Ac Sers:cc Commiss.on cf same manner as constructcn labor and matenai costs. Such Mary!ard exc:uded the costs assocated w:tn tre transporaton 3Jowarces are rci *axao:e Icome.
and stcrage cf spent nuc: ear fuel from =c fue! rate compu*a-In 1976. apitanat.cn cf re a3cwance. wn:ch was con-ton. However. me Commiss;o, does nct di ute ce cnnap.e "ed to me CaN ert cms Un: No. 2. was d:scentnued on
- nat sucn cost srcuid te paid by tr 3 mar e customers wro Cecemter 20. However. m : s order cf Nc.emter 28.1977. me bene 5* from me nuc: ear e ergy and has ccmmitted eself to Acac Service Commscn of Yary!anc eouted sucn an ancw-ccrs: der trese costs for mcius.on m base rates when tre Com-e ce a* a 767% rate en $63.5CO.0CO apprcx: mate!y cre-na:f canis next rate acpccaton s nea. Accccr?y. mese ces*s cf me constructen excendmures fcr ce Company's Branden nase been deferred s;rce Oc+cter 1.1978. Futere tuel costs wm 2cres E:ec r,c Ceneraarg P! ant. Lcnseter"y.an a::owarce of te acjusted as actual scent fuet storage asts and reprecessmg
$4.871.CCO. c.sa:ent to 16c per snare cf comrnon s*ccx.was ccs*.s of 2ny; cecome knc An.
._ j h /
,f M / J 24
Note 7 - Tax Expense:
Total income tax expense was less than the amount utory rate to book income before tax.The reasons for computed by applying the Federal income tax stat-this difference are as follows:
1978 19 7/
( n Trousancs of Cc;:ars)
Tax computed at sta:utcr', rate on bock incor e tefors tax
$96.150
$70508 Ircreases 1Cecreases) m tax frcrn:
Exces3 of tax cver book ceprecaton - ret rort.alized (10.990)
(17.450)
Mcwance fcr Funds Used Conng Ccr:structon -
Sorrowed Funds and o~er Funcs (3.641) t 2.338)
Inses: ment Tax Cred,t at:ocated to mcorre (3.158)
(2.549)
Net c:rer :tems (589)
(4.373)
Total mccre tax cnarge.
$77.772 S43.798
- nccrne tax expense,s made up of t*e fcuowmg components.
Feceral Income Tat In:Lced m Operatng Expe ses.
$43.540
$19561 incLced m Net C*ner ! come and Cecoctors 380 418 State Ircome Tax:
McLced m C;erateg E2;enses (crec: )
79 (12) r.cLced m Net C:rer f rccme and Cec c*:Ons 73 94 Tctal mcome taxes carre-ty paja;;e
$44.072 S20.161 P cvs:cn for Deerred Feceraii ccre Ta<es*
15.818 10.C24
.rc.esve-t Tax Crec.t Ad;as:n :s.
17.882 13.613 T:*a::nccre tax cnarge.
$77.772 s43.798 Tnes c:neriran taxes en ncere.'cr:nese penccs aere as 'c :cws
- rc;em
$21.504 S21.032 Cac ta; S::ck 26.896 24.989 varyand Crcss Fece ::s 19.170 15.556 Pen.y.an;a Gr:ss Recects" 3.413 3.110 Yarj.anc E ec*r:c E.+ :rcnme~a! 5mrcnarge"*
3.442
$cc.aj S*;nty 9.882 8235 l
Y.sce.;a ects 1.281 1261 j
$85.588
$742e3 l
1.~c r. c~ cec ate.e cnar;ec cr.rc::aiy to aux :s ciner inan caxes (crecc)
(2.258)
(1.956-
~;ia; c:rer : axes
$83.330
$72.427 i
i
- R 0. s cn *cr ce*e red Fede"L cc "e !ates cons's s
- re 'cacwmg tax e"ec s c' &..rg 0."e erces j
tersee, tax and tocn ' ccre c see Nc:e 3.;
i L, tera 3::ed Ce: ecaton
$18.770
$15231 De'e red Fue; Rate Cos's crec:D (2.197) 11.9C 1 Scen* %.c' ear Ee' S:Orage C:s s (crn:
(2.850) l3.406
?e ce-age Reca r C Aa ce 3.733 l
- e~s,.an a Crcss Rece *s "a<
(1.638) i
' a.
_$ 15.818 5 ! C C_24 h
k Cne-Ier $9h **e bu^ s'y, 3^ 3 bICs3 Pece C s 3x 'd A da3 a"e* ec, e(*Ue #i*I' c :' e V *C sa aI} i 77,*) K
- o e C<r*C.rj C#:0291 '" ?e rS,:,ar.3 3^c SC.c cas ce Of *r 3: ;-Ze C0s 'se; "O' *re CT r) 'l
- ^ 0-
"'a* ' ";s.e'; S at ?.
I
" a.; 3 c mrcC s
.ra. Oc 7e
.a**c' 5 te'g COrie"*e3 Te c
- t %'3~c-*5 reel.
"er Fecera. ".C~ e ' axes l
1 i
2 6: - :97a a ; 5: - 377 :er.:- cn. a e. rasec r. re ne age / cer :+ : r-s vna ; r;
- * * ' ' 973. ; m -
g c: tre Yaq' arc c:: ej Ce era,. :re C ~;r, mcc.* et s ac:ce g.c : er re Yar:..ra E ec c I
E" ~ Ter*a. 5/ r;e 3s 3 M T *eC "Ca-)
s:ea:
- a u n c a % 1 #ed, T *O s s C'erS C:e#E"; Of.e es...:9 e. 9-M 2 eC'ec "'
s*3t t
I M O [~
(n '))s; 9/)
C Ah!
l i
Note 8 - Compensating Balances and Short-Term The Company's ability. under the National Energy Act of l
Borrowings:
1978, to burn oil in the Brandon Shores Power Plant, under l
The Company had bank lines of credit aggregatmg $138.000.000 construction smce early 1974, has been clouded by an Intenm l
at December 31.1978 and December 31,1977 which make Rule' issued on November 22,1978 ty the U.S. Economic l
avadable to the Company bank loans for intenm finanang and Regulatory Administrat:cn (ERA), which asserts an authonty l
provide backup finanong capacty for commercial paper notes.
to classify units installed in certain transitanar e!e-tric power l
At December 31.1978. there were no outstanding short-term plants as either new units, which are prohibited by law from i
borrowings (notes payabie to banks and/or to holders of burning oil after May 3.1979 or "existmg' units which may commercal paper): therefore. the total $138.000.000 bank continue to burn oil until prontited by ERA orden On January Imes of cred:t are ava:lable for short-term borrowings. In 19.1979 the Company fi ed in the U.S. Court of Appea:s for the support of such lines. the Company either ma:nta;ns compen-Fourth Circu:t a pettion for review of this "Intenm Rule'. lf the satng ba:ances (which aggregated approximately $4.125.000 ERA rule is not amended or modified by the Court or by the at December 31.1978. and which are not restncted as to agency itself, both u nits at Brandon Shores could conceivably be l
withdrawal) or pays fees generaily related to the respectve classified as "neW~ and thus prohlbited from burning all. It is l
bank's pnme rate. Borrowings under the lines are at the pnme estmated that the required conversion from oil to coal could I
interest rate of the lendmg bank in ef'ect at the time of necessitate an expenditure in excess of $500.000.000.
i borromng. Certain of the lines requ:re that compmsatmg The Pnce-Anderson Act (Act) currently limits the !! ability i
balances be increased in relat:en to usage.
of an owner of a nuclear power plant to $560.000.000 for a For the twelve months ended December 31,1978. Se sing'e nuclear incident. The Company is protected against this j
max: mum aggregate short-term borrowings outs *andmg at potental liability by a combinaton of pnvate insurance carned any one tme were $58.050.000. The average da:!y short-term by the Company (currently lim:ted to $140.000.000 through borrowmgs dunng this penod approx: mated $17246.000.
the nuc: ear insurance pools) and Federal governmental indem-l and the average interest cost was 7.46%.
nity agreements. In the event of a nuclear madent as de'ined i
The weighted-average interest rate of the aggregate by the Act, causmg damage to the pub lic in excess of the iim:ts
(
short-term borromngs at December 31.1977 was 6.69%. For of primary financial protection. the Company could be assessed j
the twelve months ended December 31.1977 the figures were up to the limit of $5.000.000 per reactor at the Company's t
as foi!ows: max::m m aggregate short-term borromngs of Calvert C;iffs Nuclear Power P! ant. For one nuclear incident.
$81.500.000, average da:ly short-term borromngs of therefore, the Company's max: mum contmgent iab:lity S31.500.000, and average interest cost of 5.33%. Average (retrospect:ve assessment) would be $10.000.000. Under reg-I da:ly short-term borrowings represent the sum of the dot:ar u:atons issued pursuant to the Act. the Company's maximum l
days of outstandmg borrowmgs dmded by the actual days in contmgent I:abi;ity in any one calendar year for payment ans:ng the pencd. The average interest rate is determ:ned by dmdmg from more than one nucl ear inadent is lim:ted to twice the the actual accrued mteres* dunng the penod by the average retrospect:ve assessment per reactor, or $20.000.000.
I da:!y borrowmgs.
Ren*al expense under leases currently in e"ect, exc!udmg j
the nuc! ear 'uel l ease (see Note 6). is not matenal.
j Note 9 - Commitments and Cortingent Liabilities:
The Company has mace substantai comrn:tments in l
On Apnl 22,1977. the Publ:c Serv ce Comm:ssion of Maryland connecton with its constructon prograrns for 1979 and ordered the Company to refund $31.867.000, plus interest-subsequent years.
l resu;tng from aueged overcol:ectons of electnc fuel rate ad-l Justment revenues frcm February 1975 through December Note 10 - Segment Information:
{
1976. The Company appea:ed the Order to the Circuit Court for See Schedu:es cf Segment Informaton for 1977 and 1978 Howard County Maryland which on November 22.1977is-en pace P_7.
l sued its decs:en statng that the Commission d:d not have tne
~
l l
pov.er to order the refund. The Commiss:on and Pecp!e's Note 11 - Jointly-Owned Electric Utility Plant:
Counsel apcea!ed the Circu:t Court deaston to the Court of The Comcany's ownership as a tenant m comrnon of undlv:de Speaal Apceals cf Maryland, wh:ch ru:ed November 2.1978 mterests :n the Keystcne and Conemaugn Mme-You*h Eectnc l
that the Company was required to refund only $459.430. plus Generatng P! ants !acated in western Pennsy! van:a.ent:t:es me j
mterest. for overcoilectons of fue! rate revenues dunng Feb-Company to 536 megawatts of rated capacty. The fet;ow'ng l
ruanj and March.1975. In Januarj 1979. the State's highest da*a as cf Cecember 31.1978 represent the Ccmpany's pro-ccurt.the Maryland Court of Appea:s. den:ed pettons to portionate snare:
reuew the case. In the cpm:on of Company's Counsel. *he case
- w :s.:< De n has now been Conc:Uded.
%7 The Ccmpany is present!y burnmg coal :n one un:t at the W'
C"3 C Herbert A. Wagner Ceneratmg P: ant. The pnce the Company C vm " ~ r 7*
O EE
- Fh
_[
- 7. $((7 m2 man sea pays for this coal wh:ch is suppued under the *erms of a centract neget:ated n 1974. has teen reged to be excessr.e by c 3ag 5.;;5 m
mtervenors n a 1978 fue! ra*e heanng. In 1s Novemoer 29.
j
. -r e n 1978 Order.the P;oac Service Comm:ss:on of Varj:and re-
' - m:
3:5
!h ta:recjunsd:c*:en to ad;un tre fuel rate from Apnl 1.1978 Panang and account:ng #cr the accue preser+y is tre sar e f
- n Nrmer raceedmgs to the extent that such cea! cost may as dat for any otrer fuay-owned prcper*y. The Cor panfs smcsecuent y te cetermired unreasa ab:e or :mprccer. The snare of the c: rec
- expenses of reprt crece *y !s mc!uded :-
Cer pany r anta:ns mat tre coa! ccntract was good and
- Ne ccrrespondmg ooeratmg excenses m tre Sta*ement of i
prucent wren egned n 1974 and that it rema:ns so today.
!ncor e.
pq/f; QJ a s il'
I i
l Note 12 - Quarterly Financial Data (Unaudited):
The fo!!awmg data are unauc:ted but. in the The busmess of the Company is seasonal opinion of the Company. include all adjustments in nature. and it is management's opininn that (compnsing only normal recurnng accruals) comparisons between quarters of a year do not necessary to a fair statement of the results for give a true indication of overa!! trends and the penocs presented.
changes in operations.
(in T*ousands of Douarsi Net Incare Earmngs Tctal Operat:rg A;;Lcate Per Share Operaarg income Net to Common of Comen Q arter Enced Resecues plcs AFUCC*
Inccme Stock Stock Vartn 31.1978 s268.836 S 59.832 S 40.C20
$ 35.467 S I.15 June 30,1978 219241 47.879 27.890 23.341 0.76 Septemter 30.1978.
249.776 55.651 34587 30.044 0.97 Ce(erter 31.1978 236.633 41.668 2C.044 15.512 050 Totai vear 1978
$974.486
$2C5.030 5122.541
$104264 S328 Varch 31.1977 S228.199 5 49697 s 31.692 S 27.C64
$0.94 Ane 30.1977 170.045 38.C35 20.773 16.162 C.56 Secte-ter 30.1977.
197.SCZ 50.437 31.483 26.9C6 0 89 Cecerter 31.1977 196.476 38.927 19.146 14.581 0 48 Tcta: iear 1977
$792.522 S1'7.36 S103.C94 S 84.713 S2.86 Wowance for Frcs Used Cormg Cces r;c9en :for Sorrowec F rcs arc Ctrer Frcs) is acced to Operatng Ircome m determm.ng operateg mccre for ra:e raNrg pur;cses m tne S'a*e c' Varfa-d (see a.so Note 5).
Note 13 - Asset Replacement Costs (Unaudited):
Due to inf' acon. the cost of replacmg the Com-requ:rements. estimated replacement ccs:in-pany's ciant in service today wou:d substantiaily formation is d:sclcsed in the Company's annual exceed the amounts actua!!y scent for such report to the Secunties and Exchange Comm:s-fac:!:t:es and reported in the Companys finan-s:en on Form 10-K (a ccpy of which wul te clal s*atements. In comphance with report:ng furnisned upon wntten request).
}
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1978 1977 1976 l
(M T"ousands cf CoJa s) i l
t Electric Ocera ng Fe.e N es
$ 697.173 S 558.558
$ 5.32.C56 j
C;eratng Pcome te' re Mccre 'aies 240.661 198.420 157.401 C; erat.rg f rccre 173.639 157.544 138.2E4 Cecrec.at.cn 69.415 59.710 51569 I
Cn
..c*:n Excerc:.res (u 155.781 168.563 141.880 l
L:e-nac e Ast rs at : ace ~:er 31 ta: tct 2.229.415 2.1 C2.CC8 1.936.150 l
Cas Operatng Pe'. eses S 254.586 S 221.659 S 184214 C;eratrg trccre tefore inccie Taus 34.321 16282 28 CSS l
Ccerac7 ircc~e 23.570 13 930 2125C Cecrecat on 8.156 8269 7.425 j
ccr:: rec :en Exce-cues.ai 14.875 12.904 23.564 l
i te"'iac.e Assets at Cece-ter 31 <ai &
261.500 255.476 246245 i
Steam Ccerrr.g Fe'.er~es S
12.727 S !22C5 9.447 I
C; era rg MccTe te' re rcc-e Taxes (219) 7C9 CO I
C;e.r. ; cccre 235 721 245 Cecrecatan 492 470 454 Cc s *.c: c-Er;ecc !;es. t 1.746 733 492 j
- e-re Asse s a: Cecer ter 31 <a: t 14.042
!2f89 11 965 Total Cce-rq Fr.e es S 974.486 S 792.522 s 725 317 Q
Cte : g Pcc e re :re bec e ' axes 274.763 215.511 135.410 gi Cc-0 g.mcre 197.444 172225 159293 es '
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78.c63 63443 59448 172.402 122.2C5 1E5 936 Cc m. e Ei:en:
a c ate be:S /. Cecec 21,R 2.504.957 2271173 2.:94270 r axe:s 168.797 59 79 120.254 V)
%.C 2.673.754
528 972 2224 t24 Cs r
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D Ce; ci '.., ?a' 2 ;Yrer35YlLLC.-5en I~-
f e ". e ~ C 32182 CCC s2 671CIO (; $2.C2.CCC Cet e c.'r 3 !. : 9.'3. ' D > > 976. : - ::ecm ec, e - -
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6 I.JUfJO bddhEdb 27
Directors J. OWEN COLE JOHN A. LUETKEMEYER WALTER SONDHEIM. JR.
Cha:rman of tN Scard. First Marpard Sarcerp.
- >recor (#cr~er Cra.r-an cf the Board Cha,rman. Crames Ce.ter Incer Har*xr B.rtm. ore (Sara Hoerg Company)
E:wtacie sancorporatr.
Yaaage-e t. Mc. Sa.t.nore (Dewatan ALONZO G. DECKER JR.
Bame Hoeg Cows aewsw Cra4r a,cf ta C ecut.s.Cornm. tee.
MARTIN D. MUNGER BERNARD C.TRUESCHLER
?e Sacn aro Decker Mary'actr rq Bait ~iore. Marian'.
Wes.:e-t of t*e Cemry. Battrore Ccmca y. ramu uer rac s' e
JULIAN S. NEAL C. EDWARD UTERMOHLE JR.
LESLIE B. DISHAROON Cra;r a, c, tne scare. r,cen.y a-o oe:cs.1 C a.rr 3n of tre soara 3f we Comca y. sa.emore Deside*L Mca$ea'a. CCToraton 3ait*cre.
CG.mpar) of Mary'a,d. Sa:t*cre g 8ar.c : g) vs ra ce ce m.es met va ageme GEORGE W. VELENOVSKY CHARLES S.SANFORD JR.
C a.rma, e w soa e. ne 2nraus wg SISTER KATHLEEN FEELEY S.S.N.D.
e,ee me greset. san,.e,s a-ast Cma,. Anraccus (sams:
Ndert.COlege of NOtTe Came
'h.s! CO*0ary. f.e VJr4 ( Bartrg)
- varyand eaarnore cecucaecr3 HARRY K. WELLS JOHN R SIPPEL C a:r a, e ee ecy acresze-t.
RALPH G. HOFFMAN ue Cr2.7 a, e tre scar 3. ne C=e3 vcCcr,c4 a Co-ra j. :nc. saamore awey at i.aw. Aestemste-sazorai sa 3. Laure: s a mg; s
eccc -oces.a,g. sexes. etc )
a HENRY E SNYDER, JR.
Ge era: vau;er. Satmore Acr,s Aes'er~
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.I C. EDWARD UTERMOHLE. JR.
Cra.rma, cf tre Board ard Cr.ef Exec.t:.e o*cer BERNARD C.TRUESCHLER ARTHUR E. LUNDVALL. JR.
Fresicent ar4 Chef ocer' :nq Cfcer Vice P es:Je-t Suppy i
NORMAN J. BOWMAKER GEORGE V. MCCOWAN 9 <e Pres: cert. E.ecr.c inte ccreecton
% <e Pres; cert. Manager-ent arc Sta? Sevces i
RAYMOND C. BRYANT HENRY H. MILLER I
Vee Prescert. Cors.mer Ser.;ces Oce Pres.dert. D'3tnouton EDWARD A.CROOKE CHRIS H. POINDEXTER I
V<e Pres;cer't. Fmste ard Accountrg. and Secretary Deasurer a.c Ass.s ant Mretan, VERNON R. EVANS ALFRED H. INNERS l
V'ce Preside"t. Carrerai Sev'ces AE5*Jr.t Secr?'ar' aSd iss.S*Et Tret%rer
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s JOHN W. GORE. JR.
HENRY E. LENTZ i
Vice Preside"t. En7reerm; anc Cons *rac*:an Ass. star.t Secretary ar.d Assstart Treas rer l
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preferred and Preference Stock P0. Box 1475. Baltrnore, Marytand 21203 Re C*.ase Marnat*an Sank. N A. New York Umon Trust Campany of Vary!and. Sa.tmcre Common and Ccn'.ertt.e Preference stock Annual Meeting vargan cuaranty Trust Ccmpany of New York l
T*e annual meermg of stockhcaers wu: be teid Urien Trust Company of Marytand. Sa:tmcre at 2.00 P M or 4r:127.1979. at te Compary's Emtie C"ces. Ba tmore. Mao <ard-Transfer Agents Preferred. Preference Cervert0!e Conversion Agents Preference and Ccmmen Stock Conser+2e Preference Stock Cre acal Barn. New York CPemica! Bank. New Ycrk Var,:and Natonai Sans. Ba.tmore Mary:and Nationa:Bar.n. Ba.trcre Upon wntten request to l
Chns H. Poindexter. Treasurer RO. Box 1475. Baltmore. Md. 21203, j
the Company w!!I furnish without charge a copy of its Form 10-K annual report after it is fUed with the Secuntes and Exchange Commission in March.1979.
7'E 5;.04 CCN ER ;cera',s ee ~;% ? Brcre:3 mcnerr e-createn cf re 'a ed 52 tmre C1:rer scn crers A hcn Safed Ce fig" se.15 frOm tTe EeVO LUC'3P I'3r d"t' fe 73 73 ce"J.Jry **3"0cra**e] a Cr; tre aa er s ec, n y
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