ML20064G904
| ML20064G904 | |
| Person / Time | |
|---|---|
| Site: | Calvert Cliffs  |
| Issue date: | 03/04/1994 |
| From: | Poindexter C BALTIMORE GAS & ELECTRIC CO. |
| To: | |
| References | |
| NUDOCS 9403170066 | |
| Download: ML20064G904 (15) | |
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1 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT l
Italtimore Gas and Electric Company Annual Afecting ofShareholders April 20, IW4 i9:00 a.m.
Sheraton Inner liarbor llotel 300 South Charles Street Italtimore, 51aryland 3-1
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1 t403170066 940304 r
a Cus<ssisrm ti. YothnExTw flaltimore Gas wid filectric Comparo Chairman of the livard I' U IS"' '*l75 cmd Chief ther utn e Officer llaltimore, Alagiand 21203.t.175 March 4,1994
1 You are invited to attend our Annual Sharehr + , Meeting on Wednesday, April 20,1994, at 10 a.m. Please note that the meeting '
held at a new location this year, the Sheraton inner liarbor flotel located at 300 Souto Charles Street in llaltimore.
At the meeting, I will review 1993 company operations, answer your questions, and attend to other business matters. The following pages provide additional details about the meeting as well as other useful information.
A proxy card is enclosed that lists all matters that need your vote. Please sign and return this card promptly in the envelope provided, if you plan to attend the meeting, please check the box on the proxy card. If you cannot attend the meeting, please sign and return the card to ensure that your shares will be voted in your absence.
Ilecause your opinion is important to us, we have enclosed a card for you to give us your comments about the company. Please return this card in the same envelope as the proxy card.
'Ihank you for your continued support of the llaltimore Gas and Electric Company.
Sincerely, n
N Chairman of the lloard
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS i
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! The Annual Meeting of the Shareholders of Daltimore Gas and Electric Company will be held at the Sheraton Inner liarbor llotel,300 South Charles Street, Baltimore, Maryland, at 10:00 a.m. on April 20,1994
! for the following purposes:
- 1. The election of fourteen directors to serve for the ensuing year and until their successors are elected l and qualified.
- 2. The election of Coopecs & Lybrand as independent auditors for 1994.
- 3. The transaction of such other business as may properly come before the Annual Meeting.
Each of the above items is described in the Proxy Statement which accompanies this Notice.
The stock transfer books will not be closed before the Annual Meeting. Cornmon shareholders of record at the close of business on February 18,1994 will be entitled to notice of and to vote at the Annual Meeting.
C. W. Shivery Secretary March 4,1994
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PROXY STATEMENT Annual Meeting of Shareholders- April 20,1994 - 10:00 A.M, Sheraton Inner liarbor flotel 300 South Charles Street Baltimore, Maryland This proxy watement is provided in connection with the 1994 Annual Meeting of Shareholders of Baltimore Gas and Ele, oc Company (the Company or BGE). Proxies are solicited so that all common shares may be voted. Shares conor he soted unless the owner of record is present or represented by proxy at the Annual Meeting. By complenng and returning the accompanying proxy card, the shareholder authorizes Messrs. Jerome W. Geckle, George V. McGowan, or Christian 11. Poindexter, as designated on the face of the proxy, ta vote all shares for the shareholder. All returned proxies which are properly executed will be voted as the shareholder directs. If no direction is given, the executed proxies will be voted FOR each of the directors and FOR the election of Coopers & Lybrand as independent auditors. A proxy may be revoked by a shareholder at any time before it is voted at the Annual Meeting by giving notice of revocation to the Company in writing, by execution of a later dated prosy, or by attending and voting at the Annual Meeting. l The accompanying proxy is solicited on behalf of the Board of Directors by the Company, through its directors, oflicers, and other employees. In addition, the Company has retained Georgeson & Co. Inc., a proxy l solicitation firm, to assist in the solicitation, and it is anticipated that the fee for these services will not exceed l
$13,500 plus out of pocket expenses. Solicitations will be made primarily through the use of the mail, but they may also be made in person, by telephone, or by telecopy. The Company bears the cost of soliciting proxies.
This proxy statement and the accompanying proxy card are being sent or given to shareholders beginning on or about March 4,1994, together with the 1993 Annual Report to Shareholders.
l Common shareholders of record at the close of business on February 18, 1994, will be entitled to vote on all matters at the Annual Meeting. Each share will be entitled to one vote. On February 18,1994, the Company had 146,446,343 outstanding shares of common stock, without par value. The presence in person or by proxy of the holders entitled to cast 73,223,l"f2 votes (a majority of all the votes entitled to be cast at the meeting) will l
constitute a quorum. Broker non-votes, abstentions and withhold-authority votes all count for the purpose of l determining a quorum. Each item on the agenda must receive the affirmative sote of a majority of the shares l voted at the meeting in order to pass. Shares voted include votes for or against an item, but do not include l
broker non-votes, abstentions or withhold-authority votes.
l The Board of Directors is aware of two items of business to be considered at the Annual Meeting: Item 1, the election of fourteen directors and item 2, the election ofindependent auditors for 1994.
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Item 1. Eloetion of 14 Directors The entire floard of Directors is elected at the Annual Meeting. Each director is elected for a term of one year and until a successor is elected and qualified. Each of the nominees was elected a director at the 1993 Annual Meeting of Shareholders except Mr. Curtiss, Dr. lirabowski, and Ms. Lampton who were elected to the Board effective January 1,1994.
Information concerning the nominees for election as directors is presented below. Each of the nominees has consented to serve as a director if elected. Should any nominee become unable to accept nomination or election, it is intended that the enclosed proxy will be voted for the election of a nominee designated by the Board of Directors, unless the Board of Directors reduces the number of directors.
II. Furlong llaldwin, age 62, currently serves as Chairman of the Board and Chief Executive Officer of Mercantile flankshares Corporation (a bank holding company), positions he has held since 1984 and 1976, respectively, and as Chairman of the floard and Chief Executive Officer of Mercantile-Safe Deposit and Trust Company, positions he attained in 1976. Mr. Baldwin also senes as a director of GRC International, Inc.,
USF&G Corporation, Conrail, Inc., Fairchild Space and Defense Corporation, Offitbank, Wills Group, and Constellation Holdings, Inc. lie is also the Chairman of the Board and a trustee of Johns liopkins 11ospital and Johns llopkins llealth System, and a trustee of Johns flopkins University and the Maryland llistorical Society. Mr. Baldwin has been a director of the Company since 1988 and is a member of the Executive Committee and the Long Range Strategy Committe:
Ileserly H. Ilyron, age 61, ser ed for seven successive terms as a Congresswoman to the United States llouse of Representatives from 1978 to 1992. She is a director of Farmers & Mechanics Bank, McDonnell Douglas Corp., UNC Incorporated. Mount Saint Mary's College and flood College. Mrs. Byron has been a director of the Company since 1993 and is a member of the Audit Comnmtee and the Committee on Nuclear Power.
J. Owen Cole, age 64, currently serves as Chairman of the Executive Committee of the Board of Directors of both First Maryland Bancorp (a bank holding company) and The First National Bank of Maryland, positions he has held since 1988. In addition, he serves as a director of Blue Cross and Blue Shield of Maryland and the Farm Credit !!ank of Baltimore. Mr. Cole has been a director of the Company since 1977 and is the Chairman of the Audit Committee and a member of the Committee on Management.
Dan A, Coluny, age 62, currently serves as Chairman of the floard, President and Chief Executive Orlicer of UNC Incorporated (aviation ser ices). lie was elected Chairman of the lloard in 1989 and has served as President and Chief Executive Officer since 1984. Mr. Colussy also . serves as a director of Blue Cross and Blue Shield of Maryland, the Maryland Business Council, and the Ilistoric Annapolis Foundation. Mr.
Colussy has been a director of the Company since 1992 and is a member of the Committee on Management and the Chairman of the Committee on Nuclear Power.
Edward A. Crooke, age 55, currently serves as President and Chief Operating Officer of the Company. Mr.
Cicoke has been President of the Company since 1988. Mr. Crooke serves as a director of Constellation iloidmgs, Inc., First Maryland Bancorp The First National Bank of Maryland, Associated Electric & Gas insurance Services, Limited, and Baltimore Equitab:e Insurance, in addition, he serves as a trustee of Goucher College and the llaltimore Museum of Art. Mr. Crooke has been a director of the Company since 1988 and is a member of the Executisc Committee.
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James R. Curtiss, age 40, currently is a partner in the law firm of Winston & Strawn, a position he attained in 1993. From 1988 to 1993, he served as a Commissioner of the United States Nuclear Regulatory Commission.
Mr. Curtiss has been a director of the Company since January 1,1994 and is a member of the Committee on Nuclear Power.
t Jerome W. Geckle, age 64, was Chairman of the Board of PHil Corporation (vehicle, relocation, and management services) from 1979 to 1989. He served as Chief Executive Orlicer of PHH Corporation from l 1979 to 1988. Now retired, Mr. Geckle serses as a director of First Maryland Bancorp, The First National Bank of Maryland, and Constellation IIoldings, Inc. Mr. Geekle has been a director of the Company since
- 1980 and is the Chairman of the Committee on Management and a member of the Long Range Strategy Committee.
l Dr, Freeman A. lirabowski, III, age 43, currently serves as the President of the University of Maryland Baltimore County, a position he attained in 1993. Previously, he served as Interim President from 1992 to 1993, Executive Vice President from 1990 to 1992, and Vice Provost from 1987 to 1990. Dr. firabowski is also a director of the Citizens Bancorp, Citizens Llank of Maryland, Baltimore Equitable Society, and the University of Maryland Medical System. He has served as a director of the Company since January 1,1994 and is a member of the Audit and Executive Committees.
Nancy Lampton, age $1, currently serves as Chairman and Chief Executive Otlicer of American Life and Accident Insurance Company of Kentucky, a position she attained in 1971. Ms. Lampton is also a director of L.iberty Bancorp and Liberty Nation.d Bank and is a trustee of the University of Louisville. She has served as a director of the Company since Jr.nuary 1,1994 and is a member of the Long Range Strategy Committee.
George V, McGowan, age 66, served as Chairman of the Board and Chief Executive Officer of the Company and Chairman of the Board of Constellation Holdings, Inc., from 1988 to 1992. Mr. McGowan is a director of flartland & Co., Maryland National Bank, American Security Bank, The Baltimore Life Insurance Company, Life of Maryland, Inc., McCormick & Company, Inc., UNC Incorporated, and Organization Resources Counselors, Inc. Additionally, he serves as Chairman of the University of Maryland System Board of Regents and as a director of the Unisersity of Maryland Medical System. Mr. McGowan has been a director of the Company since 1980 and is the Chairman of the Executive Committee and a member of the Committee on Nuclear Power.
Paul G. Miller, age 71, currently serves as Chairman of the Board of Supercomputer Systems, Inc., a position he attained in 1987. He is also Chairman of the Board and Treasurer of LSC, Inc. (computer data storage systems), positions he assumed in 1986. Mr. Miller is also a director of Bon Secours Health Systems, Inc.,
Merrill Corporation, and Constellation Holdings, Inc. Mr. Miller has been a director of the Company since 1981 and is the Chairman of the Long Range Strategy Committee and a member of the Committee on Nuclear Power.
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9 Christian 11 Poindexter, age 55, currently serves as Chairman of the floard and Chief Executive Officer of the Company and Chairman of the lloard of Constellation floldings, Inc., positions he attained in 1993, after serving as Vice Chairman of the lloard, a position he held since 1989. From 1985 to 1989 he was President and Chief Executive Officer of Constellation iloidings, Inc. Mr. Poindexter serves as a director of Johns llopkins llealth Systems, Mercantile llanksi. ares Corporation, Mercantile Mortgage Corporation, and Mercantile Safe Deposit and Trust Company, lie is a trustee of Johns llopkins llospital and Johns llopkins University. Mr. Poindexter has been a director of the Company since 1988 and is a member of the Executive Committee.
George L Russell, Jr., age 64, currently is a partner in the law firm of Piper & Marbury, a position he attained in 1986. Mr. Russellis a director ofIllue Cross and illue Shield of Maryland and the University of Maryland Medical System. Mr. Russell has been a director of the Company since 1988 and is a member of the Audit and the Executive Committees.
4 Michael D. Sullivan, age 54, currently serves as President of Merry-Go-Round Enterprises, Inc. (specialty retailing), a position he has held since 1982. lie also served as Chief Executive Officer of Merry Go Round Enterprises, Inc. from 1982 to 1994. That company filed a petition under Chapter XI of the Federal llankruptcy law in January,1994. In addition, Mr. Sulbs serves as a trustee of1 oyola College in Maryland and the llaltimore Symphony Orchestra. Mr. Sullivan h, - o a director of the Company since 1992 and is a member of the Committee on Management and the Long Range Strategy Committee.
Committees, Meetirigs, and Fees 'i The Executive Committee of the lloard of Directors may exercise most of the powers of the lloard of Directors in the management of the business and affairs of the Company in the intervals between meetings of the full lloard. The Committee, however, may not declare dividends, authorize the issuance of stock, recommend to shareholders any action requiring shareholders' approval, amend the by-laws, or approve mergers.
The Audit Committee of the floard of Directors, comprised of outside directors, recommends an auditing firm to be engaged, discusses the scope of the examination with that firm, and reviews the annual financial statements with the auditing firm and with Management of the Company. Additionally, the Committee meets with the Manager of the Auditing Department of the Company to ensure that an adequate program ofinternal auditing is being carried out, and invites comments and recommendations from the auditing firm concerning the system of internal controls and accounting procedures. The Audit Committee. reports on its activities periodically to the lloard of Directors.
The Committee on Nuclear Power monitors the performance and safety of the Company's Calvert Cliffs Nuclear Power Plant. The Committee meets periodically, usually on-site at the Calvert Clitrs plant, to confer with Management, senior plant management, and other nuclear oversight personnel. Following each meeting, the Committee reports the results ofits observations and findings to the floard of Directers and makes such recommendations as it deems appropriate.
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t The Committee on Management's duties include recommending to the Board of Directors nominees for election as directors and otheers and making recommendations concerning remuneration arrangements for directors and ofIicers of the Company. This Committee, which is comprised of outside directors, considers nominees recommended by shareholders; such recommendations should be submitted in writing to the attention of the Corporate Secretary, Baltimore Gas and Electric Company, P.O. Box 1642, Baltimore, Maryland 21203 1642.
The Long Range Strategy Committee provides an osersight role in the development of the Company's long range strategic goals. The Committee meets periodically to review the continued appropriateness of these goals and to approse for presentation to the Board the implementation of significant strategic initiatives. This Committee also reviews major regulatory, ensironmental and public policy issues as well as technology advances which may impact Company operations.
The Board of Directors met ten times during 1993 for regularly scheduled meetings. The Committee on Management also met ten times. The Executise Committee met seven times, the Audit Committee met four times, the Committee on Nuclear Power met three timrs, and the Long Range Strategy Committee met two times. All members of the Board of Directors, except Mr. Sullivan, attended more than 75% of the total number of meetings of the Board and any committees on which they served in 1993.
Each director, who is not an officer or employee of the Company or its subsidiaries, receives a fee of $900 for each regular, committee, or special meeting of the Board attended and a retainer fee of $18,000 per year, payable quarterly. Each committee chairman receives an additional annual retainer fee of $3,000 per year, payable quarterly. Each director may be reimbursed for reasonable travel expenses incidental to attendance at meetings. Each director who is not an officer or employee may elect to defer receipt of any portion of the fees earned. The Company provides an automobile to Mr. McGowan, a director who retired on December 31,1992 as Chairman of the Board and Chief Executive Officer of the Company and who continues to participate in civic and community actisities on behalf of the Company. The approximate yearly cost to the Company is
$ 10,000 i
During 1993, the Company established a director retirement plan. Under this plan, non-employee directors
! with at least five years of service receive an annual retirement benefit for life equal to the annual Board retainer in etrect at the time of the director's retirement from the Board.
Certain Relationships and Transactions The Company and certain of its subsidiaries paid legal fees to the law firm of Piper & Marbury of which Mr. George L. Russell, Jr., a Company director, is a partner. It is expected that the Company and subsidiaries will continue to do business with this firm in 1994.
The Company and certain ofits subsidiaries maintain a banking relationship with Mercantile Safe Deposit and Trust Company, of which Mr. II. Furlong Baldwin, a Company director, is Chairman of the Board and Chief Executive Otlicer. As of December 31, 1993, loans to certain of the Company's subsidiaries were outstanding in the amount of $19,684,000. The loans were obtained on competitise terms and in the ordinary course of business.
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Security Ownership of Directors and Executive Officers The following table sets forth the beneficial ownership of equity securities of the Company of each nominee for director, five executive officers, and all directors and executive officers as a group as of January 21,1994.
13eneficial Ownership Name (Shares of Common StockX1)
Bruce M. Ambler 23,092 (2)
II. Furlong 13aldwin 750 Beverly 11. Byron 300 J. Owen Cole 3,546 Dan A. Colussy 1,500 George C. Creel 18,258 (3)
Edward A. Crooke 50,160 (4)
James R. Curtiss 300 Jon M. Files 15,702 (5)
Jerome W. Geckle 4,806 Freeman A. lirabowski, Ill 300 Nancy Lampton 300 George V. McGowan 98,995 (6)
Paul G. Miller 9,000 Christian IL Poindexter 73,459 (7)
George L. Russell, Jr. 1,057 Michael D. Sullivan 1,500 All Directors and Executive Ollicers as a Group (26 Individuals) 414,345 (1) Each of the mdividuah listed, as well as all directors and executive odicers as a group, benencially owned less than 1%
l of the Company's outstanding common stock. If the individual participates in the Company's Dividend Reinvestment and Stock Purchase Plan or the Cornpany's Employee Savings Plan those shares are included (2) includes shares awarded under the Company's Long. Term Incentive Plan.
(3) Includes shares awarded under the Company's Long-Term Incentive Plan. Of the total shares,7,593 shares are held in the name of Mr. Creel's wife and 390 shares are held in the name of Mr. Creel's son, Andrew P Creel, of which Mr.
Creel disclaims benencial ownership (4) includes shares awarded under the Company's long Teini Incentive Plan. Of the total shares,879 shares are beneficially owned by Mr. Crooke with his wife, and 2,850 shares are held in trust which Mr. Crmke votes.
(5) Includes shares awarded under the Company's Long Term Incentive Plan. Of the total shares,2,000 shares are held in the name of Mr. Files' wife.
(6) Of the total shares 1,228 *, hares are bene 0cially owned by Mr. McGowan with his wife.
(7) Includes shares awarded under the Company's Long-Term Incentive Plan. Of the total shares,18,298 shares are held in the name of Mr. Poindeuer's wife, and 12,0nD shares are held as trustee.
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s Compensation of Executive Officers by the Company The summary compensation table below provides information about salary and other compensation.
Following the summary compensation table are tables about long term performance program awards and pension benefits, a performance graph that compares BGE common stockholder return to both the S&P 500 Index and the Dow Jones Electric Utilities Index, and a report by the Committee on Management about j executive compensation.
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SUMMARY
COMPENSATION TABLE Long Term Annual C0mpensation Compensation Name and Principal Position Fiscal Restricted All Other 4412/31/93 Year Salary Bonus Stock Award (1) Cornpensation (1)
Christian 11. Poindexter 1993 $ 465,533 $ 124.000 $ 81,813 $ 36,844 Chairman of the Iloard and 1992 $ 355,300 $ 267,150 $ 29,805 Chief Executive Officer 1991 $ 338,433 $ 25,691 Edward A. Crooke 1993 $ 361,267 $ 83,000 $ 30,335 President and Chief Operating 1992 5 328,533 $ 232,900 $ 29,347 Officer 1991 $ 314,000 $ 25,240 Bruce M Ambler 1993 $ 264,000 $ 139,267 0) $ 15,902 President and Chief Executive 1992 $ 249,633 $ 66,733 $ 198,650 $ 13,159 Officer of Constellation iloidings, 1991 $ 237,767 $ 11,389 inc.
George C. Creel 1993 $ 220,233 $ 47,000 $ 19,079 Senior Vice President-Gen +ratier 1992 $ 205,767 $ 154,563 $ 16.278 1991 $ 184,467 .5 13,653 Jon M, Files '1993 $ 188,600 $ 36,500 $ 19,740 Vice President-Management 1992 $ 181,167 $ 61,650 $ 17,297 Ser ices 1991 $ 175,633 $ 14,944 (1) At December 31,199), Mr. Pomdenter held l$,200 shares of Restncted Stock with a salue of 5385,7M Mr. Crooke held 10,200 shares of Resencted Stock with a value of $2$8,82$, Mr. Ambler held li,700 shares of Restneted Stock with a value of 5220,76), Mr. Creel held 6,7$0 shares of Restneted Stak with a value of 5171,281. and Mr. Files held 2,700 shares of Resincted Stock with a value of
$68,$13. Dmdends on Restncted Stock Awards are paid directly to the named esecutive otTicers from the record date following the date of grant.
(2) These amounts represent the Company m. itch under the Cornpany's saungs plans and the interest on the cumulathe corporate funds used to pay annual premiums on poheies providing spht. dollar hfe insurance b(nefits (calculated at the Internal Revenue Service's ,
blended rate)
(3) 5An,000 er Mr. Ambler's 1993 tenus relates to 1993 perfarmance, and $$9,267 relates to performance initiated in 1992 and completed in 1991 7
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O Long-Term Performance Program in 1993, the long-tern. performance program was established. The initial awards under the program will be based on corporate performance for the years 1994 through 1996 and will be paid out in 1997, if earned. For all executive officers except Mr. Ambler, performance will be measured by comparing DOE's total shareholder return to the Dow Jones Electric Utilities Index. Both are shown in the Performance Graph on page 9. For Mr.
Ambler, performance will be measured in terms of improvement in Constellation Holdings, Inc. net income.
Estimated Future Payouts (award opportunities) under Non-Stock Price Based Plans Performance Period Until Name Payout Threshold Target Maximum Christian H. Poindexter 3 years $82,500 $165,000 $330,000 Edward A. Crooke 3 years $54,000 $108,000 $216,000 Bruce M. Ambler 3 years $45,000 $ 90,000 $180,000 George C. Creel 3 years $22,500 $ 45,000 $ 90,000 Jon M. Files 3 years $15,000 $ 30,000 $ 60,000 Pension Benefits The following table shows annual pension benefits payable upon normal retirement at age 65 to executives, including the five individuals named in the Summary Compensation Table, Pension benefits are computed at 60% of total final average salary phis bomu tor Messrs. Poindexter, Crooke, and Ambler, without regard to years of service. Pension benefits are computed at 55% of total final average salary plus bonus for Messrs. Creel and Files, who have attained the maximum credited years of service.
Total Final Percentage of Final Average Salary and Ilonus Salary and Honus 55 % 60 %
$200,000 $110,000 $120,000 -
225,000 123,750 135,000 250,000 137,500 150,000 275,000 151,250 165,000 300,000 165,000 180,000 350,000 192,500 210,000 400,000 220.000 240,000 450,000 247,500 27C,000 500,000 275,000 300,000 550,000 302,500 330,000 600,000 330,000 360,000 Salary and bonus are calculated in the same manner shown in the Summary Compensation Table. Th'ere is no offset of pension benefits for social security or other amounts.
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During 1994, the Company will implement a program to secure the supplemental rension benefits for each of the executive ollicers listed in the Summary Compensation Table. The program, which was approved by the Board of Directors in 1993, does not int rease the amonnt of supplemental pension benefits. In the past, the supplemental pension benefits were unfunded-that means no money was set aside on behalf of the executive as he earned the benefit, and the benefits were paid from the Company's general funds when the executive retired.
To provide security, accrued supplemental pension benefits will now be funded through a trust at the time they are earned. An executive otlicer's accrued benefits in the trust become sested when any of these events occur:
retirement eligibility; termination, demotion or loss of benefit eligibility without cause; a change of control of the Company followed within two years by the executive's demotion, t ermination or loss of benefit eligibility; or reduction of previously accrued benefits. As a result of becoming vestad, the executive would be entitled to a payout of the vested amount from the trust upon the later of age 55 cr employment termination. To date, no payments have been made to the trust. Future payments will be included in the Summary Compensation Table.
i Performance Graph The following graph assumes $100 was invested on December 31,1988 in Baltimore Gas and Electric Company common stock, S&P 500 Index and Dow Jones Electric Utilities Inder. Total return is computed assuming reinvestment of dividends.
Additional, more detailed information about earnings is included in the Company's Annual Report to shareholders, particularly in the Management's Discussion and :tnalysis of nnancial Condition and Results of Operations, which accompanied this proxy statement.
1 Performance Graph 250< < < -
1 i
225 ,
l A 200l &
.A-L- -A-8 175!
g i
- g. _-,
f I
o ;
o 150 l
.e' i ',_._ i ..
125 -
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l 1005' .
I f i ,
I 75 - - '
1988 1989 1990 1991 1992 1993
~#~BGE - M - S&P 500 - A -- DJ Elec. Util. Index 9
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Report of Committee on Management Regarding Executive Compensation The Committee on Management, made up completely of outside Dirc<: tors, is responsible for executive !
compensation policies. In addition to establishing policies, the Committee approves all compensation plans and recommends to the floard of Directors for approval specific salary amounts and other compensation awards for individual executives.
The Committee designs compensation policies to encourage executives to manage the Company in the best .
long-term interests of shareholders and to allow DGE to attract and retain executives best suited to lead ilGE in j a changing industry.
In 1993 all aspects of the compensation policies were reviewed. In the past, policies were crafted to provide compensation that fell midway between the utility industry and the general manufacturing industry. Recently, the Committee determined that the relevant later market for executives is the utility industry. Utilities used for j
. comparison are electric utilities and combination electric / gas utilities that have annual revenues in the $2-3 billion range. These utilities are thought to best represent the portion of the executive labor maiket in which BGE competes.
i In addition, the Committee also recently determined that base salary should approximate the middle of that labor market for average performance, and that short. and long term incentive awards for above-average performance should bring total compensation for superior performance to approximately the 75th percentile of the labor market. A similar philosophy is used in designing compensation for all employees. Total compensation is made up of three components: base salary, short term incentive awards, and long-term incentive awards. As -
described below, corporate performance is one of the criteria used by the Committee in determining base salary,-
and it is a key component in determining both short-term and long term incentive awards.
During inh. the Committee retained an outside executive compensation consultant, who provides informatior '
'Ivice on a regular basis. In addition, internal compensation analysts (certilled by the American Compensat- ociation) use survey data, outside consultants, and other resources to make recommendations to the Comnuun llase salary range increases for Mr. Poindexter and other named executives in 1993 were based upon survey data and the new policies mentioned above. Mr. Poindexter's 1993 base salary increase placed him at the bottom of the range for his new position as Chairman and Chief Executive Officer. Mr. Cmoke's base salary increase reflected his promotion to Chief Operating Officer and his expanded duties, including responsibility for nuclear operations. The Committee also considered Messrs. Poindexter and Crooke's individual performance in their former positions when determining their 1993 salary increases.
Bonus payments to Mr. Poindexter and other executives represent the short term incentive component of executise compensation. Mr. Poindexter's bonus was based upon corporate performance measured by' the following factors: higher consolidated earnings per share (an increase of 13.5%, or $.22 per share, in 1993 compared to 1992), competitive retail cost of service, improved customer satisfaction, and continuing improsement in nuclear perforrnance. The other utility executives' bonuses were determined based uptm higher utility earnings per share (an increase of 16.4%, or 5.25 per share, in 1993 compared to 1992), competitive retail cost of service, plus, as appropriate for their duties, nuclear performance, improved customer satisfaction, 10
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individualized performance goals, or a combination of these three factors. Cost of service factors are measured against neighboring utilities. Customer satisfaction is measured by an independent consultant. Nuclear ;
performance is based upon nuclear satety and quality measures as well as plant performance factors. Mr.
Ambler's bonus was based upon eatnings contributions from Constellation IIoldings, higher consolidated earnings per share, and individualized performance goals.
The last component of executive compensation is long term incentive pay. In the past, restricted UGE common stock awarded under the Long Term incentive Plan was the only form oflong-term incentive pay for executives. Restricted stock awards were deWgned to increase the amount of common stock owned by executives and as an incentive for executives to remain at BGE during the restriction period. No restricted stock awards were made to the named executives in 1993, except for an award on January 1,1993 of 3,500 shares with a 5 year restriction period to Mr. Poindexter upon his promotion to Chairman and Chief Executive Officer. During 1993, the Committee determined a second form oflong-term incentive pay for executives was appropriate, and approved the cash long-term performance program for executive officers, including Mr. Poindexter beginning in
( 1994. The first awards to be made under the new program will be payable in 1997, if earned. These awards are described in the table on page 8 under "I.ong-Term Performance Program". The program is designed to tie the awards directly to total shareholder return. Progmm objectives are based upon BGE total shareholder return compared to total shareholder return for the other companies included in the Dow Jones Electric Utilities Index, one of the indices used in the Performance Graph, except for Mr. Ambler. Mr. Ambler's objectives measure improvement in Constellation iloidings net income.
As described on pages 8 and 9 in the " Pension Benefits" section, during 1993 the Committee and the Board of Directors approsed a program to ecure supplemental pension benefits. The program, which will be implemented during 1994, does not inciene benefit levels. The Committee concluded the program was appropriate in light of the common practice in the u'ility industry, the increasing portion of all benefits provided under unfunded programs, and the total dollar amaunts to be provided under the presiously unfunded supplemental pension.
Jerome W. Geckle, Chairman Dan A. Colussy J. Owen Cole Michael D. Sullivan item 2. Election of Auditors Coopers & Lybrand, Certified l'ublic Acceuntants, have been the Company's independent aaditors since.
1941. Unless the shareholder otherwise specifies in the proxy, the votes represented by the proxies will be cast FOR the election of Coopers & Lybrind as independent auditors for the Company for the year 1994. A member of Coopers & Lybrand will be present at the Annual Meeting and will be given an opportunity to make a statement and answer appropriate questions.
l 11 i
l l
o The consolidated financial statements for the previous fiscal year were examined by Coopers & Lybrand. In connection with the auditor function, Coopers & Lybrand also reviewed the Company's annual report, its filings '8, with the Securities and Exchange Commission and Federal Energy Regulatory Commission, and examined the inancial statements of urious Company benefit plans.
The Audit Committee of the lloard of Directors has approved each professumal service provided 19 Coopers & Lybrand during the previous fiscal year, each of which was furnished at customary rates and terms, and has determined that the performance of each service does not impair the independence of Coopers &
Lybrand as auditors for the Company.
Other Matters The Board of Directors knows of no matters to be presented for action at the Annual Meeting other than those mentioned above. Ilowever, if any other matters come before the Annual Meeting, if any of the persons named to serve as directors or as auditors should be unable to serve or for good cause will not serve, if any propostd omitted from the proxy statement and proxy are presented for action at the Annual Meeting, and any matters incident to the conduct of the Annual Meeting are presented for action at the Annual Meeting, it is intended that the persons named in the proxy will vote on such matters in accordance with their best judgment.
Shareholder Proposals for 1995 Proposals by shareholders intended to be presented at the 1995 Annual Meeting must be received no later than Nosember 4,1994 for inclusion in the proxy materials. Proposals should be mailed to the attention of the Corporate Secretary, ILittimore Gas and Electric Company, P. O.13ax 1642, !!altimore, Maryland 21203-1642.
Please sign and date the enclosed proxy card (or voting instructions card) and return it promptly in the postage-paid envelope provided for that purpose, 12
_ _ _ _ _ - - _ - _ _ - _ _ _ _ - _ _ _ _ _ - _-_______ ______-_____-___-__-_-________-_____- m-
MM.MMMM!,MEMiM MM.MM.M:M~M MM MMMnMMMM MnMMALMM 4
Success is neverfinal.
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The coming of competition to our industry calls to mind the wonis of Winston Churchill <m our cover: " Success is neverfinal."
in the utility business, the definition of success is dramatically changing. As a monopoly, our success was the natural consequence of providing safe. reliable sers ice. In 1993 we left behind that enduring standard .
for success. Today safe, reliable service is considered a minimum expectation.
We also left behind our familiar blue-and-orange logo; its design OM,,.
a M commemorated the double-diamond anniversary celebrated nearly 28 years
- k ago. The green llGli on our front cover takes its place.
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Our new logo sy mholi/es a culture that welcomes competition-a culture pursuing success. I.ike contenders in a decathlon. we emplov our '
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natural strengths to reach rigorous goals-goals that flex with change and, when achieved, ensure our success.
C U N I E H T !:
1 ilightiyhts For years we'vc pnnted our annual reports on recycled 2 Corporate Ysotile Parer. This year, lum ever, we've put a neu spin on 3alvant--vhe ucycled paper n e u3nt was our ou n.
3 To Our Shareholders With slus annual report, we begin fidt-circle recycling, an 7 lhe T, car in Res .iew to Success is Nes er Final we generate. over 35)xx) pounds ofitGCs u hite waste paper 17 Financial Contents went into pi'oducing the paper our annual report is printed on.
sp. Coriorate and Utility Ofikers j,, j g ,,,,, ,
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- 53. Board of I)irectors the 54) / vin of wage paper we iccp le each year.
54 Constellation Subsidiaries INSIDE BACK COVER Shareholder information
e.
H t G H L1a H T s natnwrc aas and trectric cvngsm, amt sunsatarscs j in nuitwr$ey err w Asu owemt<
I993 1992 % Change COMMON STOCK O A's A Earnings per share Utility operations $ 1,77 $ l.52 16.4 %
Diversified actisities 0.08 0.11 (27.3) %
Total $ 1.85 $ 1.63 l3.5 %
Dividends declarni per share $ 1,47 $ 1.43 2.8 %
Average shares outstanding 145.1 136.2 6.5 %
Return on a' erage common equity 10.39 % 9.40% 10.5 9 g Book value per share-year end $17.94 $ 17.63 1.8 %
N1arket price per share-year-end close $25.38 $23.38 8.6 %
FIN ANCI AL DATA Revenues Electric $2,115 $1,968 7.5 %
Gas 436 403 8.2 %
Dis ersified activities 118 120 (l.7) %
Total $2,669 $2.491 7.1 % +
Net income $ 310 $ 264 17.4 %
Earnings applicable to common stock $ 268 $ 222 20.7 %
Assets Utility $6,891 $6.351 8.5 %
Diversified 1,096 1.023 7.1 %
Total $7,987 $7,374 8.3 (re Utility construction expenditures $ 455 $ 367 24.0 9 ,
BGE investment in Constellation Companies $ 307 $ 295 4.1 %
U TI LITY SYSTEM OAYA Electric sales-megau althours 26.8 25.3 5.9 %
Gas sales-41ekatherms 108.0 108.6 (0.6) %
EARNINGS AND DIVIDENDS DE CLARED RETURN ON COMMON STOCK MARKET PRICE PER SHAHE OF COMMON STOCK AVERAGE COMMON EQUITY AND BOOK VALUE Prrt eso 52 50 ! . i s'~ ~ ' ~~ ~ 'l [ 4 j $30 , ,
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1 L
CORPORATE PROFILE
- l r
Hakimore Gas and Electric Conipany, with assets of nearly SS billion and approximately 8,000 l 1
employees, combines a core utility business with diversified. nonutility operations. As the l 1
nation's ohlest gas utility and one ofits earliest electric utilities, we have a tradition of superun', '
O low-cou service and reliability. That tradition is the Isey to our corporate strategic vision: To pelfbrm as a world-class energy company.
IKiE senes an cennomically than one million customers.
thverse iciritory with a broad Augmenting these plants are y0',____
' ?-) httstiless base: 2. IOU Mltl.UC thlee in Petins)hailla where h\ ,ex
\ Iniles 11) Central Marylafld, we are p.llt owner %. We aie i L with our 10 local power also memhers of the plants. inclothny the Cahert Pennsy h ania-New .lersey-Clit h Nuclear Poact Plant. Maryland Interconnection, s we supply elettricity to more power pool alfording us additional operating relia-erv.sn w.m -
hitity at fasorable terms.
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contract with interstate
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\' nd!UIa [dslIlII'ebasC U)II) n u w rnN oc u, fI Mkt Y ONY 55 R,EO M T>4 5 L FC 75tK lT1 y M tim eron r st n'.n o w.rn s te:C f mr't T Y ANO G A 3 al'e suffhillCnIed hJ ()ur
( (RW i Y (IWn lk.f uC e [ds Eul propane facihties.
IKiE's dh ersificci HGt 's un u e awa urcludn Hainmvr c ( 7tv and all or p,v t of nine ( cntral Alanland cmmtin. businemes. yrouped under ti?c arca u i wd nith cicancar appn > umain .'Jnu upune nnin n ah 2n millwn reudenn. Constellation Ilohlings.
n luft the as va scn cJ n uh gas vu hidn hl: s.poare vuln n ich a populanon of nearly 2 millu m. melude power generation.
teal estate des elopment, and tinanei.d ins estments.
s
To ouR SHAREHOLDERS
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Because our beginning dates back 178 years, BGE can conpare the l 1
i-d present against a generous past. Thefisct that we consider 1993 one af I <
a harulfid of natershed years in our company's history speaksJi>r the l year's signljicance. Q ;
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! - In our traditional under-K+1 [ : sq$M 3%I ' aan
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i standing of the phrase. Ef,: .' 7
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1993 was a ytxxl year.
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- Consolidated eantings were t g.- ...
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$268 million. or $1.85 per 16'-'
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C share, an inaease of 13.5 l
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- percent over IW2. And the .
Iloard of t)acetots inucased S' 3 .p .p .
the disidend to $1.48 per f'(
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share, a 2.8 percent gain com- !&,. . '..
1 partd to the previous ycar. f.
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In April the Marsland W-' f c Public Service Comn ission . - - .
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(PSC) granted us a base-rate increase of $S6.5 million to cover the cost of system unchanged irom I992 Chairman and Chief Executis e oflicer Christian H. Poindeater impnnements and increased because of decreases in the and President and Chicf Operating Officer Edward L Croole '
operating espenses. '1bose fuel rate. at the company's Electric Operations Budding. The advent of impnn ements contributed to The deeline in fuel rutes transnission open access is greativ changing the traditional the escellem performance of sas brought about primarily focn s and structure of the electric utility indentry. The need to our disnibution and genera- by esecilent plant perfor- aa ommodate such changes and define ourfiaure spurre d an tion sy stems during last mance, both at the Cakcrt unpra cdented companywide impt ovement e)) ort in 1W3.
sununer's prolonged period Clif fs Nuclear Power Plant l 1
of record high temperatures, and at our lossil plants. Since Despite the increase in base retuming to operadon in rates. our customers' cost per 1991 Calvert Cliffs has Lilow atthour w as essentially operated exceptionally well,
. __ . . _ - _ - . . . - _ _ _ __m ._ . -. .__ m _ . _ 4 _
e a
a logging its second-highest annual elecuicity output in We a3Ard mir become a critical issue for 1993. This gyrformance, staAcholders to help every group, ranking near the coupled with creative bulk- In actuakty, however, ut define "worhl clan." top of almmt esery llGE
'Q [wm er arrangements, enabled last year was anything but in 1993 we identified our stakehokler survey. Now -
the company to save about traditional. As a consequence major stakeholders' especta- more than ever before, envi-
$25 million through sales of the linergy Policy Act of tions of a world class energy ronmental responsibility goes and purchases in the 1992. regulatory agencies company. We define our right to the core of ont com.
k o@r our customers superior vahie. we must more beyond providingjust To]Ind creative, sometimes HoHlraditiOHal SuiHilons to our CHStomers' energy L
wholesale ; ow er market, throughout the country began stakeholders as any group pany 's idemity, in 1993 w e an increased savings of to make precedent setting that significantly affects our strengthened our programs 35 percent mer 1992. decisions that u ill reshape future: customers, i'nvestors, for preserving the environ-Our aggressis e mar- the energy indnstry in the employees, regulators, legis- ment through a policy that keting of natural gas con- years ahead. Clearly, the old lators, comraunity leaders. encompasses all aspects of tinued to produce escellent industry standard of the and suppliers Through environmental responsibility.
results last year. We added elettiic intility supplying extensive surveys and inter. We learned, too, that 6,5(X) new gas customers. customers without competi- views, our stakeholden some of our stakeholders We received approval to tion cannot be sustained in its defined world class perfor- misunderstood the use of ;
establish a new natural gas place is a new market-driven mance from their perspective "world class" to define our fr y hhe, our first since standard that relies on mnova- and compared 13GE's perfor- vision. Some thought a f, , u, the tow rf Mount five pricing, pnwhicts. and mance with that ideal. Our world< tass vision meant we Airy, w hich lies in both services to satisfy the needs purpose was to identify the w anted to expand into the Carroll and I'rederick coun- of present and future cus, gaps between the two. This international energy marketJ tiet And in partnership with . tomers. The need to accom- information will guide our - Others believed a world-Crou n Central Petroleum, malate such changes and continuous improvement ' chiss vision meant we we opened Maryland's first - define out future spurred an efforts in the years ahead.- intended to pursue large-public natural-gas fueling unprecedented compan) wide We learned that concern seale growth strategies.
I
. station in Annapohs. improvement effort in 1993. for the environment had Neither is the case Still '
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others sani they loimd _ liGhl lloar d of /hici tot s t
l "woild class" osemwd and tota ed liethlchem $!cc/S va:ne (ii.mted, we miyht Sparimn Poiret 1%mt. the base been inoie cles cr. hm to evmpan3N largest < totomei, I us the me.unnp of "w or kt e At eccr3 Iccci of the orxani- Q
- s. lad was tle,u. At IMiE it &ef lalwn, liGl:is stris me to
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to icalize our f ull intential, i r '
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huilalunp ('il tiur esjYithe Hi tiur cthtolilers' enef g) needt ('nited States a potettlial our applialke Wl'Vice and 1hmm ,m.em w _ h ourEme,m s.oehen, cu.mer. n m a m h,eep ~ hon.
for euellence m esci)ihing Poyiam est.ibinhes long We also aie olTermg An organi/ed gioup of we ilo. We .mn to oller out tenn telationships with our tustomers added salue by heating and cooling senice 1'
customers supcoor s alue lor laicest tustomers by oilering expanding our business m contras ton has oppowd the d
their eneng dollars them innot atis e pnnlucts the apphance and home elec. espansion ot our exisung Amiutiotn ' 'r es, but w e sen ices. and priemp. Our tromes sales and service service businew. We con, behes e a vision should be P.utnen for Pm,penty pdot area.12 te last year we began sider this opposition luth th.a and moie. pmgr.un is it sting new teth. ottenng senic sonnrison anti <orbumer and anti-1 lh dopiCs Ior !arye illdlnin.lk e!ectIii heatkn and t(it dlnf com(Niktls e. WC e \lhllIded l llecoming world clan customers to enable them to equipment. llus program is a our sen ice contiact program l rea arcs itinoratiic tontrol their energy use and lopcal expansion of the at our cusiomers' request. In thin Aing. t osh through a ta o.way maintenance progrann July 199.1 alone, we turned
, 'Io elfet our customes s teleconununicanons aheady in plate for home away more than 1Julcuv superior s alue, u e inu 4t netuoil And through our apphantet w atei heaters, tomers requesting air-condi-mose tv3 ond pna tding .nnt ConstcIlanon Energy and g.h turns es. l'o empha- tioning senice. We in'end to ras and elecincity in oider subsidiary, an independent si/e thn huuness, we are sigorously protett our tiebi to find creatis c. sometunes powei pantuter, we can planning to estabhsh a wpa- in expand into this and other nontradaional so!unon, to tonuJer escry niihty in the rate subsidiary to manace all energy-related biomewes.
We tool decisire action to in the end. how ever, improre nur cornpetitive sen e us well in the long run, our ability to succeed rests We also rededicate our-position and get ohrad of We are passmg each strategy squarely on the shoulders of sches to pieserving our industry change 3. through a seicen of future the inen and women who investors' confidence in in adilitron to seeking ways uncertamties, such as compe- work foi llGIL We regret ilGl.i as a stable, rewarding to mt rease our resenues, we tition for electric and gas that preparing for competi- im estment. That is the goal s: des national and regional tion ineans saying goodbye of our short- and long term Q also took detisis e action to impmve our conyttithe etonomic conditions and to some of our long time initiatives-to heighten position by streamhnmg our tet knological ads ances. This employees. In corning financial perfonnance. We costt We evaluated every ongoing pmcess wdl drive years, we dedicate ourseb es are detennined that ilGli will function in the company to our pLms and allow us to to staying ahead of the remain among industry see if it contributed to ont prepare for a range of changes in our industry so leaders in the future. We miwion-to achies e com- posdhihties. that we can con >ue to thank each of you for your plete cu3tomer satisfatnon prmide fulfilling careers support and h>ok forward to by prmidmg superior energy UP/P havfandamentally and opp <ntunities for sharing our succew with you pmducts and servicet As a changed the way we operate, our employ ret in the years ahead.
result, we reduced the UN We are well on our way to divisional operations and beconung a company adept maintenance hudget well at making thanges. We below 140 lesett '1hese began this process tluce savings are, in part, being yean ago when we created realized by eliminating about OPIP, our Organizational -
1iWK) pmilions. To help Perlonnance improvement 67/
reduce our work force, we h ocess. Our logo change ollered a soluntary retire- serves as an outward symbol Chrbhan 11, Poindester ment program, an enhanced of the progreu we hase Chair man of the Itoard and Chief Etec.stire Officer severance package, and a m.ide toward deselopmg a placement pmgr;un that resihent corporate culture helps thsplaced employees that encourages escellence find jobs mside and outside and rewards results b the company. Although we still hase ,
A(
To respond to the uncer- ground to cover, OPIP has tam energy market, we base fundamentally changed the Edward A. Cmoke strengthened our strategic way we operate and pmi. Pre 3ident and Chief Operatine Of/ircr pl nunng and identilied alter- tioned us to benefit from the nath e strategies that could changes ahead Prbruary /-l. /9W
.'I
1 s l i
i THE YEAR IN REVIEW . AND A PREVIEW OF THE FUTURE l Oltr UCClric ulici Gas flitsitiesses . Cah ert Chft, Nuclear
~
Review: We took the third hottest July on record in stride Youes Plant recorded its l
second highest yearly ~'-
- x and increased our annual utility rerennes more lhan 5180 .
- E ..
l million, or 7.6 percent, m er l991, energy output: it receis ed ..-@g , , * ' 'jq high marks for continued b ' 'L Y SALES OF Eu:cimCirY weather and ;ui increase it) the improvement ([om the .tsswds. hifaimmier us,m p %. %,.o i
number of gas customets Nuclear Regulitory . To promote the the of g
- Connnission in its Systematie attematise-luel s chicles, industnal and conunertial gas
, , .- # sales fell by 2.3 percent, pri. Assessment of 1.icensee Maryland's first public j is manly became of lower gas Pertonnance reput The PSC natural-gas fueling station
opened hearinp on purchased opened in Annapolis, a joint m y. uv by our lar eest customer, neihichem Steel. fuel and energy costs inem red ef fort between IKiE and s during the 1989-1991 outages Crow n Central Petroleum.
. IKiE was eranted a base- with a decision expected in And the Chesapeake
" " '" o2 " rate int rease totaling 'sSh.5 late 1995 or early 1996. Consortium delivered to its
- P wul unthon. or 3.8 percent, by inembers 10 electrie minivans
. w ,m ui ,f 4 m, .. a the Mai) land Pubhc Service . ILGE broke ground to build Consisting of IIGE. Chrysler,
. Electne system sales rose by Comnussion tPSC) etlectise a 140 megawatt naimal-gas Westinghouse, and the state of 5 S percent. Ilecause of late April inh. s. unit at its Perrynun site in Mary land, the Consortium extremely high summer heat II:n foni County. coordinates researth and and humiday compared w nh . nUE added inore than expected to be in ser- resources to des elop electrie-h:
mild summer temperatures in 6.500 new eas customer 3 % ' : sice June 1995 vehitle technology .
c 1992. residert ial customer through aggrewive nutketing . ........... ,,, .. ... ,, ,,,..................... . .. ..
sales increir,ed 4 percent. of natutul yas Preview: Our primary goalis to grow our revenues by sales to our offering customers the best of both gas and electric SALES OF GAS gj "i """iD' " '" technologies at competitive prices.
N j. !< industrial and l p y Q*5 kQ J ,, y _ tonunercul m' ,
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%hd er omers grew M
Nky A -+ . IlGE will select from l
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- ' g i by I $ pertent. among 28 prophals to L
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P .R T A I R Y' Q i a supply die next phase or p %
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. ovemn gas sates deaeased ,
c apatity- lao megaw ans ol p less than i pertent compared . .
electricity for a term of 25 [i_ ff y
to the pres ions year. n, 3 ears hepinning June 1997 h y l
- Residential gn sales how - -- g , g g g i 'h es er. inmeae permm . n o E win expana n s m;d '. &
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twanse of couer woier . ~ > . . w o.~ - se sersice m Mount Airy in . . - . .
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. IlGF.'s newly cicated flulk Power Arr.incemenh Umt . The remote meter-ieadmg ensionien' huildings.
Canoll and Frederick toun- w ill h>cus on buy mg and pilot uill be estended in lhentually 110l! hopes to nes, the hrst rm muiacipal selbng elettne capacity and in9 L linergy use is recorded .en ice 5003N X) customers ya, han(Im.e llGF. has energy in the emergmy using a radto-equipped meter, through remote meter-requested since 1%5 w holesale bulk-luwer market. climinating the need to enter readmg sy stems.
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Tlic Coitstellalitus Ctmiparties bi ;c , '. W4?
n' }!@T, TsM f kniw: Hur CointcIlation sulnidiarin, particularly W'W
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Corntellatmn I:nctgy. prmide ditcnification from '
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l gemeing compctition in the utility induury,
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- 15Non1Us llinm Colhtellation al)d was recopul/cd for .
- J lloldulps w ere 15.8 percent energ) Innos alloll h) lhe ahose UHJ hetore the WN Department of I nergy in in nnlhon (h.nge to f elles t the nation.d aw ardt higher corporase mcome tas llroce AI. Ambicr, PinMent and ChiefEtecutive npiccr of l rate enacted by Congress Lnt . In the nutial public offering ( 'onuc/lation flo/dm o, fococo ncedent urva th opportunitin I ycar. Reportcd earnings u cie of Capital (iuarant) loc.. m the indcrendent pou er marlct. "To meet ruuomen' necdv in N (enh pen share. Connellation lmestments sold the ; cars ahead and remain c ompetitn e. cncro companin nunt ahout 50 pe\ cent of in hold- taAc the 'bnild vnne, htn wme. . sat c wme' a;;> roach to genera-
. Constellation i nergy now ings in the A A Alaaa rated tron planning." va.n Amb/cr. "That m., An crrry unhty a poten-has ou nership intecest in hnancial yuar.miy company. tial Conuclhalon rn womer.
l l l
l .'.1 pow er projects. ~l he . .. . . . o ... .. . . .. .
25 meyawatt Puna Comtellanon Real Ihtatch I'rnine: Constelhaian's minion is la cinphasize energy and
[
geothennal plant heean da cloped properties ate contribute significantly to HGE's prt fin and shareholder value. '
operatmg in Hawaii. the O! percent occupied, sur-83 megau au Panther Creek pas smg the ILibimore arcai . Constellation llohhngs plans contn ue to deselop and plant in Penns)hama is .n erage of 85 pertent for to redute ik im esonent in real operate w holesale power-operating uell:dter it tail and conuneraal occu. estate mer the nest few years genera lion projects. The conecting fuel and turbine pancy. And Constellation u hen it can tecognve reawn- ConstcIlanon deseloped j piohkms dhemered donng llealth Sen nes sold at a able s alue for ih im estments. 102-mt pawatt Coher Power !
I start up Ihe Affi plant in proht its ou nership m fke Plant in Penm> hania is sched-Cahtonna had a rc<ord ycar nunmp homet . Constell.uion Energy will uled to i ome on line in 1995.
l I
4 J
lIl Ollier News.
Review: Refinancings sure more than $lli inillion.
- BGE's p.utnership with ntinority businen grew by 150 percent, and ont connnunity Baltimore Cany in operating and conservation eforts drew praire, the Mayor's Crkis Centers . /
earned the company the N #
- - . IlGE issued about $1.062 Conunerte and the f.dison Electnc Institute's. , , , , , , , ,
! million of long-tenu debt and U.S. Small Business Conunon Goals Award for .S G&l(([M M WAlX Q
' Administration, w hich rewp community respondbility, as preference st(xk, $693 mdlion of which was used to refi- ni/es outstanding programs well as awards from the nance existing issues and take and perfoimance in support of American Gas Association community's economic i
advantage of lower mterest minority business. and the Greater llaltimore health and the company's rates. The rennsmcings will Committee, an association of success. BGE employees save about Si l 1 million in a 'the Cambridge Gmup, a Baltimore businesses. The continued to be nulels for
]
interest and preference skick national consulting firm. Mayor's Crish Centers assist the business community.
dhidends over the remaining reported that ilGEN customer low-income customers with For example, our volunteeis life of the redeemed securities, favorability rating is 57 energy-related problems. collected almost $145,000 percent. sersus the national homelessness, and food and for the 1993 March of Dimes
, , , y,,
aserage for utihties of clothing shortaget TeamWalk-a 70 percent
.' 76 percent. increase over 1992. That
. BGE continued to be the raised the company's team
. The Maryland Chapter of largest corporate benefactor ranking within the utility j % the Nature Conservancy in Central Maryland, recog- industry from sixth an arded its first Corporate nizing the link between the to second.
- BGE increased by 150 per- Conservation Award to DGE cent its business with minority for outstanding achiesement Preriewt Two Acygoals willbe to continue cost control contractors. such as investment in conservation. let spring, and secure nur right to expand into nonutility businessev.
banker Nathan Chapman. Jr., BGE and the Conservancy President The Chapman signed an .
. The PSC will hold hearings . In 1994 BGE will continue Company. In recognition of agreement [ relating to ilGE's participation to kiok for ways to improve this accomphshment, the com- to manage in appliance sales and service efficiency and cost-effective-pany camed six awards from the habitat g businesses. In these proceed- ness. Our efforts will include industry gmups. Nhwt notable oftwo ings initiated by our potential refining the design of a new is the joint Corporate Award species of competitors. BGE will compensation system that j from the Minority Business globally rare -
vigorously defend its right offers excellent eaming Development Agency of tiger beetles at to increase revenues by opportunities to employees the U.S. Department of Cahert Clitfs. expanding into new businesses. who achieve desired results.
1
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o Succcss is NEVER FINAL I
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"You amnot walk the middle of the n>ad holding hands with tradition on one side imd n::>d-l i ernism on the other Yun have to make a cholce," This saying by politicalpundit Alvin Rolland ;
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- describes the most important decision we made last vcar. In 1993 HGE chose to turn Jidly l
}g towani change, a choice that has proved both painfid and liberating. j Painfid because we lep behind a 17M-vear tradition of unwavering . job security fi>r our 1
i l employees. Liberating because with the probable loosening of regulations comes greater li Jivedom to define ourfitna e success.
- l We choose to define success much like a contender in a decathlon. li> come out ahead, we i
l muyt perform well in all essential areas: expanding customer awareness, positioning to compete i
on price, balancing environntental Concerns, and heigittening ourjinancialpel}i>rnlance.
t OU R C U sT oM E R AW A R E N E S S w
y
'l o tenuin otir ethtomeri tions We then ;bket! our u e einpow eletl employ ees g %q
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energy pros hier of(hoice, cthtomers to tieline the wlih front-lille cthlonier ~\U -
we unht first become acutely tluras tcrhtks of a worfil- cont.ht to solve cusioiners' .,.
aw;Ue of their neetls alkl clihs energy conipan) alMI lo problenh quhkl), ollelt on expcotations. In 1991 w e measure llGE's perfornunte the first contact.
l.nHhlict! an IntelhIs e elIof t apailht that hie.II, Ne st, til "Ille t'cCalhaCk we i
- to gCl to know our Chitomers implos e customel cononunk- retchetkbomlbCseVaMous beltet. (ioing beyond ton eattoni, we paitet! key cus- cthtoni..'r contacts gas e Ih a
! s entiorul customer mput, we tomers w tth comp.my greater untlerstanthng of our first des clopeil ongomg .ur- representathes- tiuni customeis' needs and espec. g sey s to .ert ahead of t hanges m.u kenng specialnu to the tations. I or e taniple, our m our customeis' expecu Ch.nnuan of the Boani. And customers need the right mh I
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Public Senice Comunssion.
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As a combination utility, .
se can offer nes ga, and longevity is a characteristic IKilhhares with ame ofits key customers. AlcDonogh Schmd, a s ener-electne tcchnolayies that uh!e 120 > car.vidprivate schoolfor kindcrgarten through senior-high students. IIGh"s account play un increasingly impov repicsentain e, Cherire Scals, ahos e right, has warled closely with John White, AlcDonogh's ,
1 t.mt Iole in masimiting value Dio ctor ofl'acihtics. tofind encrev solutions that o))ir the right bicnd ofcast and wahrefor the '
and profitability for our cus- sc hool, a hic h coven N10 ac res and im ludes 14 hmbhngs Sahitions such as e))icient liglaing and tomers. i.ust ycar the ainconditioning energy saver su itches entitled AlcDonogh to conservation rchates and monthly University of Maryland sasinns on its ennst hilh. l Medical System received Seah sta>cd partu ularly < lose to the customer during the rcplacement of an anti,luated oil-fired U%Dn for instalhny an hviler last scar. Ihe new < lean burning naturabeas boiler wdl have Ah Danagh roughly $20/kl0 eneryy efticient woluny annually in enero cant, and will odd ahvut 30910 cubicject of lossd to luit 8 xas sy sicm.
.. _ _ _ _ _ - - - _ _ - - _ _ _ _ _ _ _ - - _ _ _ _ _ _ _ _ _ _ _ _ - - _ _ _ _ _ _ _ _ _ _ _ _ _ _ - _ . - _ _ _ _ _ . - - - - - - - - _ _ __ _ _ _ _ _ _ ._____J
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system-our largest conser-vation rebate to date, management technologies tion, perhaps the best indica-1 l
lluilding on our pdor ef forts, to seseral of our large technologies to pnxluce tion of our conunitment to i
! we will espand our Partnen customen And our encru) for s,de to the customer service is our cor-1 for Prosperity Program. Constellanon Energy independent power market. porate mission: to achiese w hich uses a sophisucated subsidiary continues to Although we set mea- complete customer satisfac- '
g teleconununications network des elop projects using surable yeady go,ds to tion by providing superior )
to bnng an array of energy- the latest generation enhance customer satisfac- energy pmducts and services j( T o CO M P E T E O N PR I C E i
llecause price will be maintenance budget signiti- important continuous increasingly important in a candy below 1993 lesels,in improvement tool we use to compeutive marketplace,in ,
part because we eliminated control msts. Through PITS, 1993 we esamined pricing in about iJNU position 3. employees break dow n each area of our electric r u , in the yeais aheaJ. we organi/ational barriers to busmess - generahon, trans- p will continue to control costs. identify work-process inet ti-1 miwion, and dntnbution, '" We bas e increased elforts to ciencies, recommend and Our studies showed that our keep our compensation les els implement improvements, transmiuion and dntribunon compentne ihmugh a mm. and measure results.
costs are generally m line prehensise study of our pay Two years into the PIT with those of neightwing rates and job-evaluation procew, we are beginning to ulihties, but that there were sy stem. And we hase imple- see significant savings and l'
areas w here w e couhl reduce mented pay for-performanec improved efficiency. Our i .1 expenditures. compenution that offers Nuclear Procurement PIT l
Te, imprm e our m etall cuellent earning opportuni- streamlined the procedure for l compentn e pnce position, we ;n oes to employees who receiving materials and sup-took decisis e action to reduce achiese desired results. par- plies by reducing the number costs We studied esery tune- ticularly results that add of hand-offs f rom worker to tion w ithin our company , value for our customers and worker. As a result, the pm-l eliminating those that did not in; prose company earnings curement area increased pro- l
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- a resnh, we reanced our ivw Pnicess improvement reducing msis by um.a0
- divisional operatioih and teams, or PITS, are an the first year with additional i
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ticer. -as ing WIU n C the resulb of o.minuom /W i to o im mhu,vmn raaentenance < ons an / veri n e tunch.
annuaik . ()ur hub stan"n unpu.s ement. \nJ Pil m o , ! n jun s. I'/ / s at e tearns of emp!.n ces ti.ar < rm or cam-
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ntuna nance <o b a tule ,aedenIs19ond tou and 10 0 41 nan, c l'// < ri < "unen /n/ a < i,n @ aozin tu opam that nuinuunn ' rehab:hn and ethcico s unpon emenh an a i , i min t,no 'n n or io s d t //s to do vii 1al tmb /hiv amt impon ine the inuch': s of ms ius. d en se of s elt m orth v.i e r nato m rnu nt s wo n/ 3 //2.Ih W /au scar n itli n/aal subsutn n ncp m s N.n u e s and responsibdity ou the hat u ve c ipa t. J r.t / v> /
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IST,Ja.sawbamaff7 7D7QWYMENVIRONMENTAL CO N C E R N S l Ma '
To llGIi, being a w ell- 'Ihtoughout the past 24 spawned naturally. recoscry systems would regarded (orporate neighbor ycan, our sense of ensiron- Ahogether, llGli reared eventually become federally includes balancing our role mental responsibihty has 75.000 pounds of rockfish mandated, BGEi built six of energy prmider with grow n. We play ed an inte- before the facility was underground fuel storage g preserving the ensironment. gral part in replenishing the donated to Maryland's tanks with piping for vapor Ahhough environmental Chesapeake llay N dwindhng Department of Agriculture. recovery already in place, regunsibility is now an ntkfish population for sesen We anticipated changing saung significant money in l essential utihty attribute,it is years by operating an environmental expectations the long run.
not new to liGF. In 1970 v e aquaculture facihty that by addressing the issue of We took strong pollution established an emironmental ma le marine biology history. vapor retosery when pres ention measures w hen group to monitor and help For the first time eser, rock. building fuel storage tanks, we became one of the first in prove our performance, fish raised in captisity Predicting that vapor utilities in the country to r ,% ,- - 4 - 4 4
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building. and operating * \\'ork with sciennfic. 1 m: 1 our facilines. bu siness, government,
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R$ llama our cu stomers. ncigh- tives to help ensure Q
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sercen for hatardous chemi- Since the need for envi- bors, employers. regula- sound public environ-cals. Requiring resiew and ronmental responsibility is lors, and others when mentalpolicy.
f apprm al of any chemical increasing dramatically, we they have wncerny . Support community j prior to its use in the com- recast our existmg corporale about the cmironmental c// bits that promote pany, this policy minnni/es phihnophy as a conumarcnt c/& cts ofour business. environmental aware- i hazardous u asic and reduces in IW3 and created an eight.
- Support a/I employces nc3 v and improve the the amount of toue chemi- point policy that includes all in handling the emiron environment.
cals we u<e. And with the aspects of environmental mental respon citJ!itics Our goal is to instill in !
prinhng of this annual repmt, excellence. We pledge to: of their work and every employee an instinc- l
- we hegin full-circle recy-
- Continuoudy improve encouraec environ- tise sense of environmental l thng, an mnovative concept our em tronmental man- mentala careness both responsibility, since suc- l l
whereby we produce our agement systemt on and off thejob, ce3sful environmental man- j j printed materials directly . Alaic pollution pre- 3/ca mre, audit, and agement rests heavily on Irom the 500 tons of u aste s ention. environmental tale correr tive action to know ledgeable, empmvered w hite paper we recycle protecticn, and remurt c hnprm e our environ- employees making respon-
, each year. comervation important mental performance. sible decisiom.
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! e ]OU R Fi N A N C I A L PE R FO R M A N C E l
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To remain successful, we llGE's performance.
. must maintain imestors' Our individual investors confidence despite industry listed the top live quahties of .
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change. As with customers, a world-class utility as we began by asking our insti- healthy dividends. good disi- ~ 0/ I l
} tutional and individual dend growth, quality manage- l 1
j im estors to define a w Orld- ment, inarket6 alue grow th, ,
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, class utihty, then to compare and concern for the em iron-i m
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. _ . _ _ . . _ _ _ _ _ _ _ _ _ _ _ _ _ . _ _ . _ _ _ _ _ _ . _ _ _ _ _ _ _ _ _ _ _ _ _ . . _ _ _ . - . _ _ _ - _ _ _ _ _ . _ _ _ _ _ - __ J
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ment. In all th e categories, future; others are uncomf ort- I our indn idual shaichohlers able w hen llGli s entures out- many components w ill be said IIGli exceeds or tomes in the "necds improve- side its core business area. used to measure our financial close to meeting their defini- ment" category , institutional We are using this infor- . success, our ptimary goal is tion of a woild class utihty. im estors placed communica- mation to unprose the quality to pnxtuce an carnings stream Our institutional tiom at the top of the list of our imestor conununica- that will allow us to increase tions and guale our goals for our dividends.
Q imestors cited seseral They siewed us as reluctant strengths. They view fas or- to admit past mistakes and financial pertonnance in the ably both our current yield lacking a clearly articulated years ahead. We beliese we in closing.1993 was the year and potential foi carnings and s ision, and they feh a major are already in an enviable we let go of seseral closely i l
I ditatend growth.They credi: business strategy shouhl be position. Our cash dh idends hebt traditions to fully embrace sound im.utcial management co,t containment. Our busi- hase been uninterrupted for 83 change. In the year ahead we with keeping us competithely ness-diversification strategy y ears. Our stock price, earn- will continue our progress l l priced. And they beliese we diew mised reviews from ings per share equity ratio, tow ard becoming a lean arxl operate in a good sen ice both im estor groups. Many and dis idend grow th have agile competitor. A: d we will terntory with a reasonable consider Constellation improved steathly over the alw ays remember that success regulatoiy emironment. linergy the wave of the pa.st three years. Although is never final.
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=; g t e d in 1993 we survered our l .
S.I L investors to discover their
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perceptions of a warIJ, class
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- ^h, utdity. We learned that
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. healthy dividends top our s.
a l e individual investors' list of capectations, and that flGICs average invntor depends on dividends to augment a retirement income. We are e committed to prodm ing
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is Selected Financial Data uriury constsucTION EXPENDITURES '
stiu,,mi opott""
to M ment's Discussion and Analysis
. . . .-. ~- - . . .
.$500 ... L .- [ --
- ... l . . I 0 :l 26 Report of Independent Auditors N _ _
, 27 Consolidated Statements or income ,
28 Consolidated Ba!:mce Sheets O
$2 g so Consolidated Statements of Cash Flows 3g
~ - - ---
31 Comolidated Statements of Common Shareholders' Equity
. . . .89 90 91 92 93 . . . .94 (EsT.) 32 Comolidated S.tatements of Capital;/ation t
me connu, w.n a mum e or i uu, rus nur.nx conuracmm 34 Consolidated Statements of Income Taxes 35 Notes to Consolidated Financial Statements 52 Corporate and Utility Officers 53 Iloard of Directors 54 Constellation Subsidiaries 1993 OPEHATING E' PENSES 56 I'ive-Year Statistical Summary ffQs INSIDE
/b f 1 A. BACK COVER Shareholder Information
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. $:gM 4,: "*
&EgyCW 4000
% Pvt hawd FulumfIwgy 50 29 3
. n operawnu M5 El Maintemmce . $n 07 2.000 R IWpur wtum 5U 04 1,000 .l N laws - $0 ll .i i
14 Intant and Pwfernd e, ,n ,, ' ,, a3 l and Prefemm e Dn uJend, $a M n t'emma n 'itm t Un Jords 5) M e Summer Peak .
9 Retainalh Bu,mm 9) U.: - e nirtter Peak l I
14GE a hicud an all-time puk kud of
'l 6.0.18 nwganattum Janu.ny 19. lW4. !
I Battintore Gn and Hearic Onnmy an<lSiobiidsunes
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SELECTED FINANCIAL DATA .
1993 1992 1991 1990 1989 einnar amown, in thanans, e u ept va shar e ammmin S tJ M M A H Y OF OPEH ATIONS Total Res enues $2,668,714 $2.491,343 $2,448,853 $2.178,112 $2,032M09 Expemes Other ~lhan interes and Income Taxes 2 447,714 1,955,998 1,959.665 1,854,183 1,555,424 income I rom Operations 621,000 535345 489,188 323,429 476,585 Other income 15,702 22.006 26A28 36,674 30,928 Income Before Interest and Income Tases 636,702 557,441 515,8I6 360h03 507,513 Interest ihrense 188,764 189,747 196.588 165.205 149,593 income itefore income lexes 447,938 367,694 319,228 195,398 357,920 138,072 103,347 85,547 19,952 81,629 Q income Tases income Before Cumulathe Effect of Changes in Accounting Niethuis 309,866 2M,347 233A81- 175,446 276.291 Cumulathe Ef fect of Change in the Methml of Accounting for Inwme lates - - 19,745 - -
Cumulative Fffect of Change in the Methml of Accounting for l'nbdled Resenues, Net of Tases - - - 37,754 -
Net income 309,866 2M,347 253,426 213,200 276,291 Prefened and Preference Stm k Dhidends 41,839 42,247 42,746 40.261 32,381 Earnings Applicable to Connnon Stock $ 268,027 $ 222.100 $ 210.6x0 $ 172.939 $ 243.910 Larnings Per Share of Common Stock Hefore Cumulatne Elfect of Changes in Acco: dng Methah $1.85 $163 $ 1.51 $ 109 $7.03 Cumufative Effect of Change in the Method of Accounting for income lases -
.16 - -
Cumulathe Effect of Change in the Method of Accounting for Unhilled Revenues __
.31 -
Total Eanungs Per Share of Conunun Stock $1.85 $163 $ 1.67 $1A0 $2.03 Dividends Declared Per Share of Common Stock $1.47 $ 1.43 $140 $ 1.40 $ 1,38 Ratio of Eanungs to Fned Charges 3,00 2.65 2.27 1.78 3.02 Ratio of Earnings to Ened Charges and Preferred and Preference Stott Dividends Combined 2.34 2.08 1.82 1.47 2.44 FIN ANCI AL STATISTICS AT Y E AR END Total Assets $7,987,039 $7374,357 $7.137.989 $6,710.375 $5,985,679 Capiuhration I,ong term debt $2,823,I44 $ 2,376,950 $2,390,I I 5 $2 I93,844 $2,076,620 Prefer'ed stm k 59,I85 59,!85 59,I85 59,185 59, t 85 Redeemable preference stock 342,500- 395.500 398,500 365,(XX) ~ 322,800
, Preference stock not subject to mandatory redemphon 150,000 l 10,fM K) [ 10,(XX) I 10,(KM) .
I l0,(XX)
Common shareholders' equity 2,620,511 2.534.639 2,153,306 . 2,073.158 2,001,188 l otal capitalization $5,995,340 $5.476,274 $5,11 I,106 $4,801.187 $4.569,793 thri Value Per Share of Conunon Stak $17,94 $l7M $ 17.00 $16.58 $1640 NuAr of Common Shareholders 82,287 80371 71,131 73Dl9. 75,762 i
Itainmare Gu dnd iIm un Compan ,m,I %hu.hann
1 I
l MANAGEMENT *S DISCUSSION AND ANALYSIS 'O F FINANClAL CONDITION AND RESULTS OF OPERATIONS This annual reput presents the financial condition and re3ula of Consolalated I mancial Statements (Notes). Utility Operating )
operatiom of 11akimore Gas and Elecoic Company (IIGlh and as Staintics and Selected I;inancial D.na. The following dheussion I sulmidianes tcollecthely, the Comp,uiy) Among other mtonna- explains tactors that significantly aHect the CompanyN resulh of tion. it pioudes Comolidated I inancial Shtements. Notes to operanons, hquidity, and capital resources RESULTS OF OPER ATIONS (PSCh the effect of weather and ewnomic conditiorts on sales, and wmpetition in the generanon and sale of elecuicity, he base rate Earnings per Share of Common Ntm L Consolidated cannngs per share were SI.8i for 1993 and 51.63 mcreases authorized by the PSC m April IW3 will af fect 1994 unhty earnings fasoiably. Several electric fuel rate cases now g
for 1991, an inere.ne of %22 and a decrene of SN hom poor" pemhng bdore the PSC dncussed m Notes I and 13 could also year amountt he changes in earnings per *. hare reflet t a higher af fect f uture years' earnings. During IW3 and 1992, unfawrable level of camings applicable to common stock, ofhet partially in ewimmic corxhtiom diminhhed electrie and gas sales grow th in 1993 and completely in 1992 by the larger number of outstandmg l$cp',, sersice terntory Electrie utilines presently face wmpetition common sharet Ihe sununary tvlow presenh the earningeper- in the conuruction of generating unin to meet future load grow th share amounh. :uid in the sale of electricity in the bulk power maikeh. Electric utili-1993 1992 Uni nes aho f ace the future prospect of competition for electric sales to Uulity buynew $ 1.77 Ni 52 51.60 rdd cuwooien h h not insible to predict currently the uhimate Dnersified busineses eMed wnpuhon w iH hae on llGifs caniings in tuture years.
Currem 3 ear operanons .n3 .I t um Mmnp In >m do ersified businewes. w hich primarily represent Cumulaine etfeu of tiunee ** "lwahons of Constellation lloldmps Inc. and its subsidiaries in the mc0%I of accounbn, koHed % onsteHanon CompanicMaased during N lor income taxes nee Note Ii .16 and increased during 1992. The reasom for these changes are dn-cuwed in the "DherWied liusinewes Eamings" section on pages Total dnersdied hu'anesses .08 ,11 07 ,3 and 24.
lual $1.85 %I.63 51 h7 EJ]ect of Wcather on Utility Sales Earnings Applieub/c to Common Stock Weather condihons af fect ilGE'.s utikty sales, ilGE measures Eanungs apphcable to conunon stot k int reascd M5.9 miHion in wcather condinom using degree days. A degree day is the differ-190 and $1I A million m 1992. Ihe 1993 mcrease tellech higher ence between the average daily temperature and the baseline unlity camings slighdy of het by lower earnings of dneruhed temperature of 65 degrees. lioner weather during the summer.
businewet ne 1992 mtrease reflech increases in both utihty and measured by more cooling degree days, results in greater demand dnershed bmmesses camings for clettricity to operate coohng systems. Conversely, cooler Unhty c.uninp increased in 140 because flGE sold more weather during the summer measured by fewer cooling degree electricity than in die pres inus year and because of increased base day w results in less demand for electricity to operate cooling rates. Iinee principal f auors pnxtuced the inc rease in sales of elec- systemt Colder weather during the winter, as measured by greater incity; the summer of 19H was botter than 1992; commercial heating degree days, resulh in greater demand for electricity and customers med mme e!cctricay; and the numtvr of residential gas to operate heating systems, Conversely, wanner weather customen inueased De eftert of weather on unlity sales is dunng the winter, measured by fewer heating degree days. results discuwd below. De 1993 carninp increases were parually ofhet in lew demand for electricity and gas to operate heating systems.
by higher operatiom and nuintenance expense % deprecianon t he degree-day wh.ut below presenh infonnation regarding expense, and property taxes, and the etlect of the Ommbus fludget cooling and heating degree days.
Reconciliation Act of IW311993 fat Acth which increased the 30-Year federal corporate income tax rate to 359 from 3ri . Utdity earn- ;99y g 3993 ings increased in iW2 mer 1991 hecause the colder winter in 1992 led to higher elet nic and gas sales. Operations eyrnses ark! NNEF #
mterest charges w ere aho lower in lW2, w hde other unome w as P" " "'"f" d
- E" higher. Ilowes er, the summer of 1992 w as cooler than 1991, and as
""*P""'d to prim year M WW i lleating degree days 4,959 4,975 4.901 a result lower cledrie sales of fset a substantial portion of the increase in 1992 utdits earninct #""E # ""E#
ue following facth inthrence liGE's unlity operahom ** I '" I'"* > # # U carmop tegulanon by the Pubbe Senice Conunission of Maryland l l
1 Itainwre Gas amlIM Gmm alSukiiams
IlGE Ctility Revenues andSales .
of operating espenses and a return on llGIN higher level of Electric revenues changed during 1993 and 1992 because of the electrie rate base. The order also reduced the authorized rate of following factors: retum to 9.40% from the previous rate of 9.94E Base rates g993 3993 increased in 1992 for similar reasons: the PSC's December 1990 un m,m,m3) rate order and, to a lesser estent, the recos ery of eligible electric System sales solumes $112.4 $ (32.01 conservation program costs through the energy conservation sur-liase rates 58.5 N 4.9 charge, w hich began in July 1992, The December 1990 rate onter Fuel raies (55.0) (l13 M authorized a $124 million base rate increase to provide rate -
recognition for BGE's investment and operating expenses at Revenues f rom system sales 115.9 (m91 Bedon Shores Unit 2, elfective with that Unit's initial .
Interchange sales 27.2 40 $
commercial operation in May 1991. The order further authorized
.@ Other resennes 4.1 (6.2) a $53 million surcharge to base rates in October 1991 to recover .
Total elestric revenues $147.2 $ (26.6) certain purchased capacity charges. Ahhough these base rate increases improved llGE's electric revenues during 1992, they had Electric syvem sales represent solumes sohl to customers little effect on net income because they were essentially offset by within ItGfi's sersice territory at rates detennined by the PSC. two things: a decrease in the allowance for funds used during con-These amounts esclude interchange sales. discuwed separately struction (Af'C) and higher depreciation expense and other taxes later. In 1993. IlGE changed its classification of commercial and because of the completion and commercial operation of lirandon induurial customers to present this information on a basis which Shores Unit 2; and increased purchased capacity charges.
is more consistent with predominant industry practices. Prior year The Apsil 1993 rate order and a continued higher level of mnounts have been reclassified to confonn to the current year's recosery of electric conservation pmgram costs under the energy presentation. Below is a comparison of the changes in electric conservation surcharge will favorably affect base rate revenues in system sales volumes. 1994. Ilowever, if the PSC detennines that IIGE is earning in g993 ;99y excess of its authorized rate of return, llGE will have to refand a portion of energy conservation surcharge revenues to its cus-Re.sidential 9.09 (3.6W mmen TM portion subject to refund is compensation for fore-Commercial 4,1 1.7 gone sales from conservation programs and incentives for Industnal 2.7 (l.2) achiesing conservation goals. IlGE has been earning in escess of .
!. Total 5.8 (Om ts authorized rate of retum on electric operations since September 30,1993. As a result, BGE has deferred the portion of liotter summer weather was the main reason for the increase electrie energy conservation revenues subject to refund beginning in total sales for 1993. The sales increases to residential and in December 1991The deferral of these billings is expected to commercial customers refleet significantly hotter summer average approtimately $1.7 million each month these deferrals weather, and to a lesser extent, increased usage and customer continue in 1994; The deferral w ill continue as long as BGli growth. Sales to induurial cestomers reflect increased sales of exceeds its authorized rate of retum on electric operations, as electricity to llethlehem Steel to support its increased steel pro- detennined by the PSC.
duction duting 1993. Sales to the residential customers decreased Changes in fuel rate resenues result from the operation of the j' in 1992 hecause of cooler weather in the summer of 1992 This electric fuel rate fonnula. The fuel rate fonnula is designed to decrease was partially offset by higher sales because of colder recuser the actual cost of fuel, net of revenues from interchange winter weather in 1992 and grow th in the total number of cus- sales bee Notes I and 13). Changes in fuel rate revenues and i tomers. Impmved economic conditions among commercial cus- interchange sales normally do not affect earnings. Ilowever, if the somers in 1992 increased sales compared to 1991. Sales to PSC were to disallow recovery of any part of these costs, camings -
industrial customers in 1992 rellect the negathe effect of eco- would be reduced as discussed in Note 11 nomic conditions on this segment despite higher sales of elec- Fuel rate tevenues decreased during both 1993 and 1992 due tricity to liethlehem Steel after the start-up of its newly to a lower fuel rate. The rate was lower in both years because of a modernized hot strip mill. less costly twenty-four month generation mix from greater gener-Base rates increased in 1993 for two principal reasons: the ation at the Cahert Cliffs Nuclear Power Plant compared to the PSC's April PN3 rate order and an increased recosery of eligible year before. The .1993 decrease was partially offset by increased electric consersation program costs through the energy conserva- electrie system sales volumes. %e 1992 decrease also reflects tion smtharge. The April 1993 rate order for an annualized elec- $$x million of annual fuel cost savings resuhing from the trie base rate increase of $49 million provided for a higher level i
t
- Itainmarc Gas and I intric Company ad %hsisarits I _,I a
_ _ .__ _ .m _ _____ _ _ _ _ ___ _ . _ _ _ _ . _ . _ . _ . _ _ _ _ . _ _ . .
6 commeraal operanon of Ilrandon Shores Unit 2 and the Ouoher of customert Gu sales to mdustrial customen for 1992 reflect 199l expuation of a sorthar e to the eleurit luel rate, llGF. pomarsly mereased sales solumes to liethkhem Steel because of expects electric luel rate resenues to decreme again m 1991 lugher use of gas in ib production and procewing.
because of a contmued lewcostly generation mit liase rates increased in l993 tor two principal reasom: the Interchange sales are sales of IHilN energy to the PSC's April IW1 rate order and an increased recmery of eligible
- Pennsyh anta.New Jene) Maryland Interconnettion t PJNih a as conservation program emb through the energy comen ation i j regional p>wer lud of eight memirr companies mcluding IKili. sercharge ~lhe April 1993 rate order for an annuahied gas base l Interchange sales occur alter ilGE ha satistied the demand h>r - increase of St.h nullion pnnided im a higher lesel of oper.
system sales of clntricity,if liUE's asailable generatien is the aung expenses and a return on llGE's higher lesel of gas rate
{' least cmtly mailable to PJM utihties interchange sales increaed base. 'Ihe increased txne rates during 1992 iepresent the effech during IW3 and PN2 because llGE had a less costly generation mit than other Pl\1 utihties ~lhe less costl> mn during IW3 of the PSCN October 1991 rate mder. 'that order authori/ed a
$4 million annuah/cd increase in gn base iate resenues The g
relletts the higher generation lesch at the Calven Chth Nu(kar April IW3 gn base rate order and continued recmcry of gu ,
! Power Plant. The less cmtly mit during 1992 aho reflects the comervation program costs under the energy consen ation operanon of the Cahert Clills Nuclear Power plant and a tull surcharge will faorably affect base late revenues in 1994.
year of operanon ut lirandon Shores Umt 2. Changes in gn cmt ad%tment rewnues resuk from the oper-Ga resenues mcreased dunng 199I and 1992 because of the ahon of the purchased gas adlustment f PGA) clause, which is following factors: designed to recowr actual gas cosh incurred (See Note 1L pa9j 1992 Changes in gas cost adjustment resenues nonnally do not af fect t/n nal6no camme Gas cost adjustment revenues increased during both Sales s olumes ) 0,6 % 86 yeah pmnanly because of increased prices to resmer higher llam rates 2.r, 13 cosh of pun.h:ned gas and higher sales volumes subject to the Gas (mt ad iostment resenues 28,8 32.9 PG A clame. Delhery service sales solumes are not subjett to the Other resenues 0.9 to 11 PG A clause beuuse these customers purchase their en directly Rom durd pah Total gas resenues $32.9 un7 i IIGC Utility FuelamiEnergy C.spones in 1993, llGE t hanged ih clesilitation of conunercial and Lieune fuel and purchased energy espenses were as follows:
indmtrial customers to present this ndonnanon on a beh which p393 p;92 1998 n more comhtent with predominant industry pratoces Pnor. year 39 ygyn amounh hac been retlawihed to confonn to the entreni year \ Aaual ets 1483.9 $415.2 M92.6 presentation. The thanges in gas sales solumes compared to the Net recmery of(mh l year before were: under electrit fuel rate
. tw3 IW2 (lause (see Note 1) 50.7 I I l .0 105 6 -
O Residennal 2.5 S (W i Total esivnse $5.4h $556 2 $598.2 Commercial 2.2 l' 8 Indmuial ( 5.H i 23 Actual electrk luel and purthased energy costs during 1993
'l otal d o.td to increased f or two pnncipal reasom: a highcr net output of elec-tricity generated to meet the demand of 11GE's system and the Total gas sales detreased during 100 because of lower sales PJM sy stem, and higher purchased capacity costs under the to industnal customers partially of het by increased sales to the Pennsybania Power & l.ight Company Energy and Capacity remainder of the ge sprem t mtomers. Sales to industrial cus. Purchase Agreement. Actual electrie fuel and purchased energy tomen decreeed primarily because of lower me of deln ery ser- costs decreased during 1992 became of a less costly generation sice pas by Bethlehem Steel and intenuptible senice customen. mit The cost of the generation mix decreased because of the who increased their use of ahernathe f uelt Go sales to Cahett Chtfs Nuclear Power Plant's return to operation fol-liethlehem Steel aho detreased because of a maintenance outage low mg the completion of extended maintenance and repair out-at its 1 -Blut lumace. ~lhe increases m sales to residential and ages and the May IWI commertial operation of lirandon Shores commetcial t uuomers reflect the colder winter w eather during Umi 2. Thk decrease w as partially othet by purthased capacity the tint quarter of 19H and an increase m the munber of cus. charees beginning in October 1991 under the Pennsylvania Power tomers, Sales to reudential and commercial customen during & Light Company Energy and Capacity Purchoe Agreement.
p 1992 reflect the colder winter of IW2 and growth in the number f
sYhN f 4334j3h $ (IIM ,4 hsly Clha . M h \ hfe glf I
, , , - , - . - , .- - - - - , . _--.-~ . - - , ~ . . .
4 '&
a Purchased yas egenses were as follow t programs charged to expense; and the expected reduction in 1994 j993 gw2 j99; operations expense resulting from the sale of a significant portion an munmu of the Con >tellation Companies' investment in senior living Actuat costs $246.4 $2116 $1811 facilities (see page 23 for a discussion of the sale of senior Net ideferrah recmcry of costs living facilities). These decreases will be partially offset by the under purchased gas adjustment 8'*'fli ation of the deferred VSERP costs and other increases in f
i' clauw (see Note 1) Lt7) 0.5 aN operahons expenses.
Maintenance expense increased in 1993 because of higher labor Total expense $242.7 5214.1 $ 181.5 costs and higber costs at the Calvert Clif fs Nuclear Power Plant.
Maintenance expense was essentially unchanged in 1992 because '
Actual purchased gas costs went or po}p in turn 1991 and 1992in f.hil-fuel electric generating plants were s -
O. three prinopal reasons: higher gas ces causeil by maiket offset by higher costs at Calvert Clifft conditions; higher reservation charges; and higher output to meet
- Depreciation expense increased during Ph3 and 1992 com-greater demand for BGE gas. Purchased gas costs exclude gas pared to the year before because of higher depreciable plant in -
purchased by dehvery seruce customers. meluding Bethlehem sersice. De increase during 1993 resulted from the addition of Steel, who obtain gas directly from third parties. Future purchased 4
electric transmission and distribution plant and certain capital gas costs are eypected to increqse due to transition cost < incurred additions at the Cahert Cliffs Nuclear Power Plant. Tne 1992 i by BOE gas pipeline supphers m implementing Fede- t- ;gy increase resuhed from the addition of Brandon Shres l'ait 2.
1 Regulatory Commission (FERC) Order No. 636. Thest .. nsinon g g .g g g 999 cost.s if approved by FERC, will be passed on to BGE customers Taxes other than income taxes increased during both years
- through the purchased gas adjustment clause.
because of higher propeny taxes from the addition of Brandon Shores Unit 2 to the taxable base effective July 1,1992. The (Jther Operating b.yenses increase during 1993 also reflects higher franchise taxes because -
Operations expense increased during 1993 by $50.6 milh.on~ '
of k increase in total electric and uas ' revenues and increased Die combmed eBect of higher labor costs, employee reduction gg expenses (dhcussed below), amoni/ation of energy conservation intlation affects the Company through increased opetating program costs. swtretirement benefit expenses resulting from the expenses and higher replacement costs for utility plant assets.
Implementauon of Statement of hnancial Accounting Standards ggggg ; g ggj No.106 (see Note n and nuclear operating costs was in total k ory l $rocess imposes a time lag which can delay BGE's
$70.2 mdlion higher compared to J 992. These increases were par' of increased costs. There is a regulatory lag primarily :
tully offset by the 1993 reversal of a $9.8 mdlion charge origi-because rate increases are based on historical costs rather than nally recoided in 1992 for tennination benefits associated with the d wh'Dw PSC has historically allowed recovery of the~
Company's 1992 Voluntary Special Early Retirement Program
~,
cost of replacing plant assets, together w. a h the opportunity to (1992 VSERP) to reflect the ratemaking treatment adopted by the .
earn a fair return on BGE sinvestment, beg.mmng at the time of PSC in its April 1993 rate order. In accordance w.ah that order, the replacement.
Company has def. erred this charge and is amorti/ing it over a Cve-year penod. beginning in May 1993. Operations expense OtherIncome and Expenses -
decreased m 1992 because of lower nuclear contractor costs and AFC w as essentially unchanged in (993 because the accrual of ' I lower payroll costs annbutable to lator savings from the I AFC on a higherlesel of construction work in progress compared ;
Company s 1992 VSERP and other cost-control measutes. These to 1992 was offset by the lower AFL, rate npprovedm, the April decreased cosis were putrally offset by the original charge to oper-1993 PSC rate order; AFC decreased during 1992 because of the ations for the 59.S nullion cost of termination benehts associated ldion and commercial operation of Brandon Shores Unit 2, with the 1992 VSERP and by higher fringe-benefit costs. .
partially off. set by the effects of the expansion of the AFC policy -
The C.ompany announced several emplovec reduction pro.
grams during the third quarter of 1993 m conjunchon wnh its m dNM M h** L Interest charges .mereased sh. gn. tly m. 1993 as a higher level of -
ongoing cost control etforts. %.e cost of these programs totaled .
. . outstanding debt was partially offset by a dech.ne m .he level of
$105.5 milhon (see Note 7E C,onsistem w ith previous rate actioris of the PSC, BGE has deferred and will amortite the $88.3 million interest rates and the redemption of higher coupon debt of BGE.
. Interest charges decreased during 1992 pnmarily incause of lower of 1993 Voluntary S.pecial Eudy Retirement Program (1993 .
levels of debt out. standing and a deci.me m the level of interest
\,SE. RP) costs related to regulated activities over a five-year period hepinning in February 1944. lhe remainine $17.2 rmlaon
.N h d M M b W m sh@ dk
. additional shares of common stock .mued and the recosery of pre--
of these pn> gram costs was charged to expense m 1993, viously, deferred electric fuel costs.
Operations exp'nse is expected to be reduced in 1994 by three -
3.
Capa. h.a ied interest increased dun.ng 1993 because B0 2.-
factors: cost savings from the 1993 employee reduction programs began accruing carrying charges on electric deferred fuel costs are expected to be reah.ted beginning in 1994; 1993 operations 7 expense reBects the pntic , of the cost of employee reduction i
Bahimar ti.a and t'larde Gmtwo wul5dsidarn.t r -. + ,
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o ,
l .
excluded innri rate base nee Note 5L 1992 carnalt .d mterest sents a utihty's next lowest cost generation to service the decreased 'amse the Conuellation Companied wontinued demands on its sy stem. Dese pow er generation projects are interest capitalin ;on at tenain real estate proje6s. scheduled to com crt to supply mg electricity at avoided cost rates l Inwme rat es ense increased during both ars because of in various years beginning in late 1996 through the end of 2000 J b a resuk of dethnes in purcnasing utilities' as oided costs sub- I higher pre-in cam ngs. The 1993 increase : r o renects the effect of the IW3 Tat Aes which incre:, sed the f Jeral corporate meome sequent to the inception of these agreements revenues at these tax rate to MM from ,19, retroactise to ' tauary 1.19% As a projects based on cmrent avoided cost lesels would be substan- !
tesult, mcome tax expens.
- lated ic 4 opera' ions increased by tiaUy lower than revenues pn sently being reahied under the lhed l M6 nullion. and the Compan>A deferre.1 unome tax habdity price tenns of the agreements Il current asvided cost lesels were increecd by %20 t imthon. lhe Company defened 512 8 milhon to i.ontinue into in96 and beyond, the Constellahon Companies of the merease m the deferred msome tas liabihty applicable to unNy operations for recovery throuch future rates and charged the could experience reduced earnings or incur losses associated w nh these projects w hich could be significant. The Comtcllation g 1 remaming 57.3 million to income tas expense. Of this $7.3 mdlion Companies ate investigating alternatnes for certain of these charged to expense, $5 8 milhon pertams to the Comtellation power generahon pnGetts including, bui not hmited to, repow-Compames as discussed on pape 24. e ing the projects to reduce operating costs, renegotiating the power purchase agreemenh. and selling its ow nership interesh m Dirmi#rd Rn3inmn Earning the projects The Company cannot predict the impact these mat-Earnings per share trom dncrsihed businewes were: ters may hase on the Constellation Compames or the Company, '
19U "W 1991 but the impact could be matenal.
Eaming from the Constellation Companici portfoho of Power eeneranon systems $ A7 $m $ .03 hnand inwomenh indi& capital gains and losses, dmdends, I inancial investments ,10 m of mcome fmm Onmial Innhed pannmhips and income fmm Real estate development and senior Onandd guanuity insurance companies.1993 financial investment hsing fxihnes (,0h to5; gi1, carmnp increased slightly oser 1992. % i miUion in income from Effect of 1993 Tax Att (.00 _
an inetnwnt in a financial guaranty insurante company w as sub-Ohcr LOI) Lot) 0026 stantially of fset by lower imestment income compared to !W2.
(sorrem year operanons AS II (m resuhing i.mm the decline in the si/c of the investment portfolio
(,umulative etlett of s hance in due to the sale of selected assets to provide h.quidity for oncoing the method of actounung businesses of the Constellation Companies. Hnancial invesiment im mcome taxes (see Note I) - -
16 earnings increased in P)92 primarily because of write-downs taken
,I,otal diversdied busmesses $ .0S %.!l 5 .07 on certain investments in 1991 and because of an improsement in the performance of certain financial limited partnerships.
T he Constellation Companies' real estate development busi-The Constellation Companies' pow er generation sutems ness includes land under development; office buil dings; retail busmess includes the deseloament, ow nership, managem nt. and pipjects; commercial projects; an entenainment, dining and retail operation of wholesale pow cr generating projects in which the complex in O bndo, Morida, a mhed -use planned-unit deselop.
Constellation Companies i ald ow nership interests as well as Inent. and senior lising facilnies The majority of these projech the provision of sen wcs a power generation projech utkler oper.
are in the Bahimore-Washington corridor.They base been ation and maintenan :e ontr.c . Pow er generation systems earn, affected adversely by the depressed real estate market anil eco-ings during 1993 were siat comp;ued to 1992. The recognition of M million of energy tax credih on the commercial operation of nonne c ndnions muhing in ieduced demand for the purchase or lease of asailable land othce, and retail space.
the Puna geothennal plaat was offset by costs mcurred at the Earnings from real estate development and senior Using facih-Panther Creck waste-coal project m order to raolve f uel qualns~
ties wcre eswntially unchanged in 1993 compared to 1992 and other start-up problems. Additionally,1992 eamings reflect because a $2 l rmilion gain on the sale of the nursing home the gMn on the partial sale of an ow nership interest in a power generation pmject. representing most of the increase in pow er P""i"n of the ConsteHation Companiev insestment in senior l
generation spiems camings compared to 1991.
hWng facdab w as okt by gater operating losses at other real
't he Constehahon Companies' ms estment ir w holaale power ewne pndects The senior hsing facilit.ies which were sold con-tributed real estate res enues and operating expenses of approxi-generating projects includes $163 milhon representing ownciship interests in 16 projects w his h sell electricity in Califomia imder rn tely $17 million and $16 million. respectively,ia 1993, The Interim Standard Offer No. 4 power purchase aercements. Under increase in camings in 1992 reflecb the 1991 w rite dow ns these agreements, the projects supply electricity to purchasing m&d by the ConsteHabon Companies aggregating S 10 mdh.on on certain real estate projects and a $3h million utilitics at a fixed rate for the first ten scars of the acreements and l at vanabic rar er based on the utihties avoided cost for the reserve for loans w here the value of the collateral was less than remaining term of the agreements. Avoided cost generally repre- the oubtanding loan balances. Additionally, the Constehation una un am in nimmvammuhaaria
1 e !
I i
Companies' real estate portfolio has emerienced continuing car. jects m the current depressed market, losses would occur in l
rying costs and depreciation and, during 1991, the Constellanon amounts dilheult to detertnine. Depending upon market condi- ;
Companies began egensing rather than uipitalinng interest on tions, future sales could also result in losses. In addition, were the cettain undeveloped land w here development actisities were at Constellation Compataes to change their intent about any project minimal levels. These factors have affected earnings negatnely fnim an intent to hold until market conditions improse to an --
I during 1993 nnd 1992 and are expected to cononue to do so until intent to sell, applicable accounting rules wouki require a write-current narket conditions improve. Cash llow from re.d estate down of the project to market vahie at the time of such change in i operauon3 has been insulticient to cover the debt service require- intent if market salue is below book value. l ments of certain of these projecrt Resulting eash shortlalls hase The liffect of the 1993 Tax Act represents a 55.8 million charge i been sausfied through i, ash inf ustons from Constellahon to meome tax e pense to tellect the increase in the Constellation g floldings, Inc., w hich obt.nned the funds through a combination of cash flow generated by other Constellation Companies and its Companies' deferred income tax liability becaue of the increase in the federal corpora! ' f at rate.
corporate horrowings Until the real estate market .shows sus-tained improvement, earnings from real estate acinities are En rironmenta/ Matm eyected to remain depressed. The Company is subject to increasingly stringent feder A state, and The Constellation Companies continued msestment in real kical laws and regulations relatmg to imp os ing o* maintaining the estate projects is a function of market demand, interest rates, quality of the em ironment. These law s and rg!athw reOuire the ,
credit availabihty, and the strength of the ceonomy in general. Company to remose or remedy the effect on the environment of the
'Ihe Cotniellation Compames' N!anagement beheves that dispo al or release of specilkd substantes at ongoing and former although the real estate market is beginmng to show signs of operating sitet including linvironmental hotection Agency improvement, unni the economy reflects sustained growth and the Superfund sites. Iktails regardmg these matters, including financial ewess im entory in the market in the llaltimore. Washington cor- information. are presented in Note 13 and in the Company 's rtdor gn:s down real estate salues wdl not imprme sigmficantly. Annual Report on Form 10 K under item 1. IlusinessJ If the Constellation Companies wcre to sell their re.d estate pro- F.nvironmental hlalters.
i LIQUlOITY AND C APIT AL RESOURCES T. Capital Requirements j The Company 's capnal seguirements reflect the capital-intensive years 1991 through 1993, along w ith estimated amounts for the nature of the u0lity business Actual capnal requirements lor the years 1994 through 1996.are reflected below.
1-1991 P192 1993 1994 1995 1996
- tmilkwu p 7
Unhty Busmess:
Construction expendnutes fesclu.hng Al C) j lilectne % 128 $ 292 $ 3N) ,, M 5 (314 $300 j Gas 43 % 51 s N) 56 i
Common
_48 39 48 5 '. 46 44 Total construcnon cipemhtures 419 367 455 450 425 4t W)
, Al-C 37 22 23 34 35 25 l Deferred nuelear espenduures 23 16 14 12 - -
j Deferred energy son 3cnation espen4tures 3 20 31 48 45 40 i Nudcar fuel turamum punhases and pntessing charges) 2 40 47 46 42 51-Renrement of long term debt and redemption of preference siotk T19 4M6 907 36 281 98 Total utdity bunnew x23 951 1 A74 622 X12 614 IMersified flusinesses:
- 4. Retirement of king 4erm debi 167 IIX 222 9 81 77 investment requirements 109 XO. 78 63 60 20 4
Total disersified businewes _276 198 3no 72 141 07 Total $13N9 $ 1.f 49 ' % l .779 %A44 $973 $711 I
i NIEYm / On Wh.$ (Its it h ('nNfijUrn alts$ Nit.sth$hpM s 1
. , - - - . - - . . - - - ... - - - - ~ ~ ~ -. , .
B BGE Utility Capital Requirements Divenified Businesses Capital Requirements BGEN construction program is subject to continuous review and Debt and Liquidhy
, modification, and actual espenduures may vary fmm the esti- During 1993, Constellation Holdings, Inc. (CHI) closed two pri-mates on page 24. Electrie construction eyenditures include the vare placements totaling $225 million of unsecured serial notes installation of two 5.(H) kilow att diesel generators at the Cahert with several institutional insestors. CHI used pmceeds of the Cliffs Nuclear Power Plant, scheduled to be placed in service in private placements to pay off its bank debt facility. w hich Clu i 1995; the construction of a 140-megaw att combustion turbine at elected to tenninate, as well as for other general corporate uses.
!. Perryman, scheduled to be placed in ss ervice in 1995, w hich the in addition. CHI entered into a $20 million unsecured revolving
, PSC authorized in an order dated March 25,1993; and improse- credit facility wuh a bank on September 30,1993. This facility i ments in BGE's existing generating plants and its transmission matures September 29,1994 and will be used to provide liquidity l- and dntribution facilities. Future electne construction expendi-tures do nm meluJe additional generating units in light of the for general corporate purposes As of December 31,1993. Clll had no borrowings under this facility.
g competitne bidding process estabhshed by the PSC. The The Constellation Companies intend to meet capital require-t Company eshmates currently that expenditures for compliance ments by refinancing debt as it comes due and through intemally l with the sulf ur dioxide provisions of the Clean Air Act of 1990 generated cash. These sources include cash that may be generated 2
will total approximately $55 milhon through 1995. from operations, the sale of assets, and cash generated by tax r Durine 199L 1992. and 1991. the internal pencration of cash benefits earned by the Consteihiion Companics. In the event the from unlity operations provided 71% 81% and 74% respec, Constellation Companies can obtain reasonable value for real tively, of the funds reytared for BGE% capital requirements estate propenies, additional cash may become available through culusive of retirements and redemptions of debt and preference the sale of projects (for additional information see the discussion stock. During the three-year period 1994 through 1996, BGE of the real estate business and market on page 23 under the expects to provide through utility < perat ons approximately 70% heading " Diversified Businesses Earningch The ability of the of the funds reymred for BGE's capital requirements, exclusive Constellation Companies to sell or liquidate asscts described of retirements and redemptions, alm e w ill depend on market condnions, and no assurances can Utility capital requirements not met through the intemal gener- be given that such sales or liquidations can be made. Also, to ation of cash are met thmugh the issuance of debt and equity provide additional liquidity to meet interim tinancial needs CHI
- securities During the three-year period ended December 31, may enter into additional credit facilities.
199 L BGE's issuances of long-term debt, preference stock, and common stock were $1J33 million, $165 milhon, and $446 md- Im cument Requiremenn lion, respeeth cly. Dunng the same period, retirements and The investment requirements of the Constellation Companies redemptions of BGE's long-term debt and preference stock totaled include its portion of equity funding to committed projects under ,
$1,546 million and $167 million, respectively.esclusive of any des elopment, as well as net loans made to pmject partnerships, .I redemption premiums The ir crease in issuances and retirements investment requirements for the years 1994 through 1996 reflect of long-tent - ; aunng P 43 refleets the refinancing of a signifi- the Constellation Companief estimate of funding for ongoing cant portion of bM 4 ot in order to take advantage of the and anticipated pmjects and are subject to continuous review and favorable imerest rate market. The amount and timing of future modification. Actualinvestment requirements may vary signifi-issuances and redemptions w ill depend upon market conditions cantly from the estimates on page 24 because of the type and )
and BGE's actual capital requirements. number of projects selected for development, the impact of The Constellation Companies' capital requiremems are dis- market conditions on those projects, the ability to obtain -
cussed below in the section titled " Diversified Businesses Capital financing, and the availability of internally generated cash. The Requirements-Debt and Liquiday."1he Constellation Constellation Companies have met their investment requirements
.l Companies plan to meet their capital requirements uith a in the past through the internal generation of cash and through .!
combination of debt and internal generation of cash from their borrowings from banks and institutional lenders. l operations. Additionally, from time to time, BGE may make .I loans to Constellation Holdings, Inc., or contribute equity to Constellation iloidmgs, Inc.
Baiww G.u and Dmrk cmpun amt subudiaries
. _ - - -~ - _ - . -.- -
1
' REPORT OF MANAGEMENT
- 1 The management of the Company is responsible for the mfunua- conducts perimlic resiews to maintain the ettectiveness of
- tion and representations in *he Company's finant tal statementt intemal control procedores.
'ihe Company piepares the Gnancial statements m accordance Coopers & L)hrand. independent auditors, audit the financial with generally acecptnf aci onnting principles haml nl win aunl. statements and espress their opinion ahina them Tory audit in able latts and circumstantes and management's tvst estimates accordance with generally accepted auditing standards.
and judgments of know n condaions The Audit Committee of the lloard of Directors, which 4 The Company maintains an accounting system and related conshts of four outside Directors, meets periodically with sy stem of internal controh designed to prmide reasonable Management, internal auditors, and Coopers & L) brand to review g awmance that the Gnancial records are accurate and that the tire actidnes uicach in diwhaiging their responsibilities. The Company N assets are protected. The Company N staff of internal internal audit staff and Coopers & Ly brand have free access to auditors, which repons directly to the Chainnan of the Board, the Audit Committee.
6 REPORT OF lNDEPENDENT AUDITORS
- - 10 the 5harchuhlcn of Bahimore Gm and Liectric C >mpam We base audned the accompanying consolidated balance sheets in our opmion, the Gnancial statements referred to above pre-l and statements of capitalization of Dahimore Gas and Electric sent fairly, in all material respects, the consolidated 6nancial
} Company and Subsidiaries at December 31,19(O and 1992, and ' position of Baltimore Gas and Electrie Company and Subsidiaries i the related consolidated statements of incomuash tiows, at December 11, l993 and 1992, and the consolidated results of (ommon shareholders' equity, and meome tases for each of the their operations and their cash now s for each of the three years in three years in the period ended December 31.1993. These 6 nan- the period ended Decemter 31,1993 in confonnity with generaHy eial statements are the responsibdity ef the Company's accepted accounting principles.
l Management. Our responsibility is to espress an opinion on these As discussed in Note 13 to the consolidated Gnancial state.
financial statements based on our audits. ments. the Public Sersice Conunission of Maryland is currently We conducted our andds in accordance with generally resicwing the replacement energy emts resuhing from the 1%9-accepted audding standards Those standanh require that we plan lWI outage.s at the Company's nuclear ptmer plant, and the and perfonn the audit to obtain reasonable awurance about Company estaNished sn 1990 a reserve of $35 million for the whether the finantial statements are tree of matenal nusstate- possible disallowance of replacement en gy costs. The ultunate ment. An auda includes esanuning, on a test basis, evidence sup- outcome of the fuel rate pmecedings, howeser, cannot be detere pontinp the amounts and dislosures in the finansial statements. rnined but may resuh in a dnallowance in excess of the reserve An audit aho instudes assewme the a;countmg principles used provided.
and signiheant estimates made by Management, as well as es alu- As dncuued in Note I to the consohdated finarcial state-ating the merall financial statement presentation We behese that ments, the Company changed its methml of accounting for j our auihts prmide a reasonaNe basis for our opimon. income lases in 1991.
4 l
Coopers & l.ybmnd Haltimore, Maryland January 21,1994 i
l l
l l
l namn Gammairh cmmm an.mmarm i
a 6
CONSOLIDATED STATEMENTS OF INCOME Year i nde,I De< ember 3I. 1993 l992 1991 tin th..a ramh. e u ept per share arwann) 1(evenues Electrie $2,115,!55 $1.967,923 $ 1.994.525 Gas 435,849 402,937 358,195 Diverulied businesses 117,710 120,483 96,133 Total res enues 2,668,714 2,491,343 2,448.853 Expenses Other Than Interest und income Iaxes Electric fuel and purchased energy 534,628 556,184 598,208 Gas purchased for resale 2429,A 214,103 181,455 Operations &,7,110 606.498 634,309 h Maintenance 181,685 172,726 173,M8 Deprecianon 236,774 223,483 201,264 1 ases other than mcome taxes 194,832 183JGt 170,781 Total expenses other than mterest and income tases 2,047.714 1,955,998 1,959,665 Income from Operations 535,345 4h9. l88
_ 6213)00 Other income Allowance for equit,s funo used during construction 14,492 13,892 23,596 Equity in earninp of Sate ll.ubor Water Power Corporation 4,243 4,267 4.388 Net other income and dedt ctions (3,033) 3,937 (1,356)
Total other income 15,702 22.096 26,628 Income liefore Interest and Income Tuses 636,702 557,441 515,816 Interestth pense Interest charps 212,971 211,712 231,411 Capitah/ed interest (16,167) (13,800) (20,953)
Allowance for borrowed tunds used during construction (8,040) (8,165) (13,870)
Net interest espense 188,764 189,747 196,588 Income llefore income Tases J 47,938 367,694 319.228 Income Tases 138,072 103,347 85,547 locome llefore Cnmulathe Effect of Change in Accounting Slethod 309,866 264,347 233,681 Cumulative Effect of Change in the \lethod of Accounting for income Tuses ISee Note 1) - - 19,745 Net Income 309,866 264,347 253,426 Preferred and l' reference Stock Disidends 41,839 42,247 42,746 Earnings Applicable to Common Stock $ 268,027 5 222.100 5 210.680 Average Shares of Common Stock Outstanding 145,072 136,248 126.093 Icarnings l'er Share of Common Stock 11efore cumulatis e ef fect of change in accounting meti $ 1,85 $1.63 51,5)
Cumulatise cf teti of change in the method of accountmp o o meome taxes - -
.16 Total eanungs per share of common siosk $1.85 $1.63 $ 1.67 see %,:r u w n>n whJ.nnti snam ia! hra:rmenn Cerraat prior 9 car um.>unn has e bei n reserJ to < vnl arm is she curren: y ear *> presentarb w flaltawre Gas and Lieune Gmyuny and Subiharws
i CONSOLIDATED BALANCE SHEETS
- Ar lbet ember 31. l993 1992 tin th<nt<sutils>
-ASSETS Current Assets Cash and cash equis alents $ 84,236 $ 27,122:
Accounts receis able (net of allowance for uncollectibles) 401,853 369,144 Fuel stons 70,233 85,063 Materiah and supplies 145,130 141,611-Prepaid taxes other than income taxes 54,237 54.510 ,
Other 38,971 29/04 Total current asse:: 7944,f,0 707,054 .
Ingestments and Other Assets Real estate projects 487,397 462n42 Power generation systems 298,514 259,996 Financial invesunents 213,315 207,011 Ni.cicar deu mini ,is.,iing inist fuiid 56.207 43,118 Safe liarbor Water Power Corporation 34,138 34,176 Senior lis ing facilities 2,005 24,538 Other 65,355 M,986 Total investments and other assets 1,156,931 1fl95,867 Utility Plant Plant in service filectrie 5,713,259 - 5,474,590 Gas 557,942 526,058 Cmnmon 487,740 468,264 Total plant in service 6,758,941 6,468,912 Accumulated depreclation (2,161,984) (1,980,361)'
Net plant in sersice 4,596,957 4,488,551:
Construction work in progress 436,440 308,908 Nuclear fuel (net of amortization) 139,424 147,374 Plant held for future use 24,066 21,486 Net utility plant 5,196,887 4.966,319.
Deferred Charges Regulatory as4ets 768,125 . 568.563 Other 70,436 36,554 Total deferred th.npes 838,561 605.117 Total Assets $7,987,039 $ 7,374,357 he Mrs to Conwl,Jared financial Statemenn.
Certam prior-wear ams mnts has e twrr revateJ to conform to the current yrar's presentathm.
l Baltimore Gas and Cla trie Compimy and Sah6fiarits
g;
.C O N S O L I D A T E D BALANCE SHEETS At D<ccinher 31, 1993 1992 (in timaands)
LI ABILITIES AND C APIT ALIZ ATION Current Liabilities Short-tenn hurtmings $ - $ 11,900 Cunent pirtions of long-tenu debt and preference stock 44,516 291.270 Auuunts pqaNe 195,534 175,495 Customer depo its 22,345 20.027-Accrued taxes 20,623 20,925 Accrued interest 58,541 55,537 Dividends declared 63,966 62,282 Accrued vacation costs 35,546 28,908 @-
Other 38,716 2,567 Total t urrent liabilities 479,787 668,911 Dercrred Credits anel Of her I inhilities
, Defenrd income taxes 1,067,611' 983,534 Ikferred investment tax credits 157,426 165,697 Pension and postemployment benefits 183,043 ' 5,352 Ikcommissioning of federal uranium enrichment facilities 46,858 55.000 Other 56,974 19,589 Total deferred credits and other liaNiities 1,511,912 1.229,172 Capitalitation . .
Long-tenn debt 2,823,144 2.376,95P Prefened stock 59,185 59 '85 -
ludeernable preference stock 342,500 395,500 l Preference stock not subject to mandatory redemption 150,000 110,000 ,
' Common shareholders' equity 2,620,511 2,534,639
')
Total capitalitation 5,995,340 5,476,274 1
I Commitments, Guarantees, and Contingencies - See Note 13 i
I Total 1. labilities and Capitalitation $7,987,039 $7,374.357
$ec Notes to Cornodisfated Fmancial Statementt Certam prier 9 ear amormn have Iven restated to wnjbrm to the current year's prewnrarian.
liattimore Gu and Urrrrh Cwpmy and Subsidaaries a
r CONSOLIDATED STATEMENTS OF C A'S H FLOWS -
. l' ear findcJ /kum/vr 3/. 1993 1992 I99I fin thmoandu Cash Flows From Operating Actisities Net income $ 309,866 $ 264,347 5 253,426 Adjusunents to rewncde to net cash provided by operating acth ties Cumulative effect of change m the method of accounting for income taxes - -
(19,745)
Depreciation and amortization 314,027 273,549 244,017 Deterred income taxes 53,057 2rx914 30,725 Insestment tax creda adjustments (8,444) (8,854) (6,225)
Defened fuel costs 51,445 105.430 102,754 g Write-dow n of financial msesonents and real estate projects -
(14,492)
(13,892) 23,563 (23,5%)
Allow anee for equity lands used during construction fiquay in carnings of affiliares and joint sentures ine0 (4,655) (11,525) 8,707 Changes in current assets (37,252) (26,206) (6,563)
Changes in current habilities, other than short-term borrowings 71.153 (9,614) (6,027) .
Other (31,9191 (31,005) t5,373)
Net cash provided by operating actis ities 702,786 569,144 595,663 Cash Flows From Financing Acthilies Pniceeds from iwuance 01 Short-term borrowings (net) (11,900) (139,600) (15.530)
Long-term debt 1,206,350 (4)3,400 1,015,950 l Preference stock 128,776 - 34,801 Conunon stock 57,379 355,759 32,263 Reatquisition of long-tenn debt (I,012.514) (687,052) (959,379)
Redemption of preference stock (144,310) (2,924) (22,800)
Common stock dividends paid t 211,137) (189,180) (176,007)'
Preferred and preference stock dividends paid (42,425) (42,300) (42,743)
Other (7,094) (3991 (442)
Net cash uscd in linanemy activities (36.875) (102,296) (133,887)
Cash Flows From Imesting Acthities Utility construchon expenditures (477,878) (389,416) (456,244)
Allow ance for equity funds used during construction 14,492 13,892 23,596 Nuclear fuel expenditures (47,329) (39,486) (1,854)
Deferred nuclear expenditures (13,791) (15,809) (22,681)
Deferred energy consen ation expenditures (32,909) -(19,918) (3,489)
Nuclear decommissmning trust fund (9,699) (8,900) (8,900)
Financial im estments 6,523 52,616 67,282- ;
' Real estate pmjects (30,330) (23,385) (45,322)
Pow er generation spiems (26,841)- (31,483) (33,204)
Other 8,965 4,746 _ (3,422)
Net ca.sh nsed in investing acthities (608,797) ( b7,143) (484,238)
Net increase (Decrease)in Cash and Cash 1:quhalents 57,1I4 9,705- (22,462)
- j. Cash and Cash Equhalents nt Ileginning of Year 27,122 17,417 39.879 j Cash and Cash Equhalents at ICnd of Year $ 84,236 5 27,l22 $ 17,417 i
Other Cash I low information Cash paid during the year for:
Interest (net of amounts capualized) $ 183,266 - .$ 183,209 $ 189,271 income taxes $ 126,034 ' S 87.693 $ 16.078 ser Aaro in conwhdated Finam ial kan menn.
Certam pri.ar par um mnu h u e hecn recated to o vnf >nn to the s nn ent y car 3 picscntarum.
l'ainmm e Gn am!I:lectric Company and kduidur ses
s
! . CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY Net linrealized Pennon Low on Common Stak Retained Liability Marketable Total Fran Ended /)n cmher 1/, /W1. /W2. aml /WI Shares Amount Earnings Adjustment Scenrities Amount (In th,wunda llalance at December 31,1990 125.039 $ 947,147 $ 1,139,999 S -
$( 13,988 ) $2.073,158 Deferred tases on net unrealized low 4,756 4,756 Net income 253,426 253,426 Dividends declared -O Preferred and preference stock (42.746) (42,746)
Common shw k ($1.40 per share) (176,584) t 176,584)
Common shwk issued 1,651 32.263 32,263 Other i199) (199)
Change in net unrealized loss on maiketable securities 13,988 13,988 Change in deterred tnes on net unrealized loss (4,756) (4,756)
Italance at December 31,1991 126.690 979.211 1,174JN5 - -
2 I53,306 Net income 2M,347 264,347 Dividends declared Preferred and preference skick (42,247) (42,247)
Common stock t%I.43 per share) (196f411) (196 601)
Common stock issued 17,098 356,230 356,230 Other (4) (439) 43 (396) llalance at December 31,1992 143,784 1,335.002 1,199.637 - - 2,534,639 Net income 309,866 309,866 Dividends declared Preferred and preference stock (41.839) (41,839)
Common stock (51.47 per share > (213,407) (213,407)
Common stock issued 2,250 57.379 57,379 Other (917) (3,117) (4,034)
Pension liability adjustment (33,990) (33,990)
Deferred tases on pension hability adjustment i1,897 11,897 Italance at December 31,1993 146.034 51,391.464 $ 1,251,140 5 (22J93) $ -
$2.620.5 l 1 ye Lwa , a,nsai,1.ae,I nmmoat st,n<n cru s Certavi pnarneur anwas has e beca re a,ned in e amlbrm re, the a rirre nt yar's pr runtanon, Ita%cre flat and Flutriz Company and Subsidiarses
. ~ . . - - . ---- . - , - - - - .. ., ~, -
- < .e-C O N S O L I D'A T E D STATEMENTS . O F C A P I T A l l 2 A T I'O N - .-
At purmher n, 1993 1992' _j tin !!wusands) .
I,ong Term I)<bt i
'First Refunding Mortgage Bonds of BGE c 4% Series, due March I,1993 $ - 5 24,061 4M Series, due July 15,1994 - 29,921 9X% Series, due October 15,1995 200,000 2(X),(XX) .
$X4 Seriesdue April 15,1996 26,585 26.585 - 1 6#1 Series,due August l,1997 24,957 24,957 j
$X% installment Series,due August 15,1998 - 50,00()
j; p-79 Series due December 15, l998 8.40'1 Series, due October 15,1999 28,638 100,fH)0 28,638 100,00() >
5/:% Series, due July 15,210) 125,000 -
7/,4 Series, due April 15,2(X)] 59,911 59,914-8M4 Senes.due August 15,2001 124,980 125,000 7X9 Senes, due September 1,2001 - 59,975 -
7X% Series, due January 1,2002 49,999 49,999-7M9 Series, due July 1,2fK)2 125,000 125,(XX) 7XQ Series, due July 1,2002 - 49,985' SMG InstaHment Series, due July 15,20W)2 12,080 12,500 -
7M Series, due September 15,2002 - - 49,990 6M9 Seriesdue February 15,2003 125,000 -
6X% Series,due July 1,2(KO 125,000 -
HW4 Series, due February 1,2(xM - 74,983 5A% Series,due April 15,2(WM 125,000 -
6.80's Series, due September 15. 2(KM 20,000 20,(XXJ 8X% Series,duc September 15,2006 '- . 74,960
' 125,000 . 125,(XX) 7#6 Series, due January 15,2007 8X% Series, due September 15,2007 - 75,(XN) 6%G Series,due March 15,2008 125,000 :-
9X% Series, due July 1,2(X)8 - 12,718 6M)% installment Series,due September 15,2t4)9 55,000 55,000 - ,
9X% Series, due March I,2016 -
98J)00 7M Series, due Marth I,2023 124,998- ;-
. 7WI Series,due April 15,2023 100,000 -
TotalIirst Refunding Mortgage Bonds 1,802.148 1,552,186 Other long-tenn debt of ilGli Medium-term notes Series A 23,500 '69.500 MediunHenn notes. Series B 100,000 - 100JK)0 Medium-term notes, Series C 173,050 138,050 9M Notes duc May l,1993 - ' 1(K),000
. Pollution control loan. due July 1,2011 36,000 36,000 Port facihties loan, due June I,20l3 48,000 48,000 Adjustable rate pollution contml loan, due July' l 2014 ' 20,000 20,0f K1 5.559 Pollution control resenue refunding loan, due July 15,2014 47,000 --
Economic development loan, due Decendier I,2018 35,000 35JXX)
Total other long-term debt 482,550 '546,550 Long tenn debt of Comtellation Companies Mortgage and construction loans and other collateralized notes 7.75% due December 16,1995 - 5,575 Variable rates, due through 2009 151,251 160,572 8.5% due May 1,2001 -- 3,300 7,73%, due March 15,2009 6,465 -
loans un Ier revolving credit agreements - 152,00()
wmunt ,m raxe n -
.[
>.1 . - 4 4 y Bahimore Gis and thctric Gmpany and kbsidiarin
6 CONSOLIDATED STATEMENTSOF CAPITALIZATION Ar Darmher 3I. I993 1492 tin alwusansb Unsecured notes $ 440,000 S 255JXX)
Total long4erm debt of Constellation Companies 597,716 576A47 Unamorti/ed discount and premium t 17,754) (8,463)
Current portion of long-tenn debt (41,516) (289,770)
Total long-term debt 2,823,144 '2.376.950 Preferred Stock Cumulative, $100 par value,1JO)JH) shares authorized Series ll,4M% 222.92I shares outstanding, callable at $1 !O per share 22,292 22,292 h Series C,49,68,928 shares outstanding, callable at $105 pei share 6,893 6,893 Series D,5 A09,,300jul shares outstanding, callable at $101 ner share 30,000 30fMK)
Total preferred stwk 59,185 59,185 Preference Stock Cumulative,5100 par s alue,6.5(MUp) shares authorized Redeemable preference stock 7.50%,1986 Senes,470fu) and 485,0(X) shares outstanding. respectb ely. Callable at 5105 per share prior to October I,1996 and at lener amounts thereaher 47,000 48,500 6.754,1987 A rtin,485J A0 shares outstanding. Callable at $104.50 per share prior to April I,1997 and at lesser amounts thereaf ter 48,500 48,5(W) 6.95% 1987 Series,500Jul shares outstanding 50,000 50JKO 7Al% 1988 Series,500/XK) shares outstanding, called at $103.82 per share on July 1,1993 -
50ful 7.80% 1989 Series.500Jni shares outstanding 50,000 50JKK) 8.25% 1989 Senes,5(K)Jn) shares outstanding 50,000 50)u) 8.625% 1990 Series,650JN O shares outstanding 65,000 65,fH) 7.854,1991 Series,350jM X) shares outstandmg 35,000 35JX10 Current portion of redeemable preferente stod (3,000) (I,500)
Total redeemable preference stock - 342,500 395,500 Preference stock not subject to mandatory redemption 7.88% 197I Series,500fW) shares outstanding, called at $101 per share on September 1,1993 50,(W) 7.75% 1972 Series,400JX0 shares outstanding, called at $101 per share on November 8,1993 - 40/p>
7,78% 1973 Senes,2(XUXO sliares outstanding, callable at $101 per share 20,000 20JO) 7.1259,1993 Series,400jn) shares outstanding, not callable prior to July 1,2003 40,000 -
6.97% 1993 Series 500jWO shares outstanding, not callable prior to October 1,2fKO -50,000 -
6.709 ,1993 Series 400JXO shares outstanding, not callable prior to January I,2(K4 40,000 -
'lotal preference stock not subject to mandatory redempnon 150,000 110J4)
' Common Shareholders' Equity ;
Common stock without par ialue,175JUMNO shares authorized; 146,034,014 and 143,783,581
) shares issued and out standing at December 31,1993 and 1992, respectively. ( At December 3!,
l 1993,166,893 shares were reser ed for the Employee Savings Plan and 4,770.773 shares j were reserved for the Dhidend Reinvestment and Stock Purchase Plan.) I,391,464 1,335jX)2 i
Retained earnings 1,251,140 1,199,637 l
Pension liabihty adlustment (22,093) - 1 l
Total conunon shareholders' eqmty 2,620,511 2.534,639 ;
! Total Capitalisation $5,995,340' ' $5 A76,274 l
- 4 Sec &Ics to Gms,Jhud Iinamut Suaremenn. 4 Certam prior acar amounu Iw c twn restateJ rn omfarm to the < urrent year s prrunranon hinmore Gas and i In trn- Company and Subd, liar it s
t CONSOLIOATED STATEMENTS OF lNCOME TAXES I993 1992 199I Tear FndeJ Da emIvr 31.
(Dollar amounn ut IIh m sanJH
, Income Taxes
$ 93,459 $ 85,287 $ 61,(47 l Current l
Ikferred Change in tax effect of temporary dif ferences 63,972 44,975 28361 l
Change in income taxes recoserable through future rates (30,086) (18,061) (12,625; Deferred taxes credited (charged) to snarcholders' equity 11,897 - (4,756) -
45,783 26.914 10,980 Ikferred taxes chargid to expenv Ef fect on deferred taxes of enacted ( unge in federal corporate income tax rate lucrease in deferred ax liability 20,105 - -
Income tavs recose able through i nure rates (12,831) - -
, Deferred taxes chargad to expense 7,274 - -
(8,444) (8,854) (6.225)
Imestment f ax credit ad iuseuents 138,072 103,347 65,802 >
Total income taxes Cumulative effect of change in the method of accounting for income taxe3 increase in deferred tax liabihty - - 286,787 income taxes recoserable through future rates - -
(267JM2) 19,745 Amount recogni/ed in income - -
Income taxes per Consohdated Statements of Income $138,072 5103347 $ 85.547 Reconciliation of Income Taxes Computed at Statutory Fedcral Rate to Total locome Taxes income before income taxes (includmg cumulatise effect of accounting change) $447,938 $367,694 $319,228 Statutory federalincome tax rate 35 % 34 % 34 9 income taxes computed at statutory federal rate 156,778 125,016 108,538 increases (decreases) in income taxes oue to 9,253 8,955 7,008 Depreciation differences not nonnahzed on regulated activities Allowance for equity funds used during construction (5,072) (4,723) . (8,023)
(8,444) (8,854) (9,344)
Amortization of deferred investment tax credits Tax credits flowed through to income (9.736) (8(M) (I,335)
Change in federal corporate income tax rate charged to expense 7,274 - -
Reversal of deferred taxes on nonregulated activities - - (19,745)
Amonization of deferred tax rate differential on regulated activities (5,789) (7,365) (5,024)
(6,192) t 8.878) (6,273)
Other
$138,072 $103.347 $ 65,802 Total income taxes Effectis e federal mcome tax rate 30.8 % 28.1% 20.6 9 m Dn emher 31. 1993 1992 t uollar amounn in tiwusanJa Deferred Income Taus Deferred tax liabihties Accelerated depieciation $ 789.165 $714,019 Allow anee for funds used during construction 202,490 199,577 income taxes recoveraNe through future rates 90,950 73,759
[kferred termination and postemploy ment costs 55,890. -
Deferred fuel costs 45,518 61,709 Les craped h:ases 32,613 33,867 Percentage repair allow ance 35cl31 33,367 129,130 95,995 Other Total deferred tax liabilities 1,381,187 l.212,293 Deferred tax awets Ahemative minimum tas 72,187 72,189 67,016 1,595 Accrued peinion and postemploy ment benefit costs Deferred investment tax credits 55,099 56337 Other 119,274 98.638 Total deferred tax assets 313,576 228,759 Deferred income taxes per Comolidated Balance Sheets $1,067,611 $983,534 tw wn w c,-+wa r umat swmms (t'Havl j'f b m(- WJf st!+3,Wffli hhn e hYeR l a' \leJWs} !v n eJfb rm w ikf L 6tU rrl! yGli [H t' WMdtvM l?alumore Gas ured E!n t!sc Company and SubstJaarics
l N'o T E s To CONSOLlDATED FINANCIAL STATEMENTS NOTC 1. SIGNIFIC ANT ACCOUNTING POLICIES Nature of the llminess The purchased gas adjustment is based on recent annual vol-llahimore Gas and Electric Company (liGE)and Subsidiaries umes of gas and the related current prices chaiged by 13GE's pas (collectively, the Company) is primarily an electric and gas utihty suppliers. Any deferred underrecoveries or overrecoveries of serving a territory w hich encompasses 13altimore City and all or purchased pas costs for the twehe months ended November 30 part of nine Central Maryland countiet The Company is also each year are charged or credued to customers mer the ensuing engaged in diversified businesses as describ'd further in Note 3. calendar year.
' Principles of Conwlidation Income Taxes The wnsolidated linancial statements include the accounts of The Company adopted Statement of Financial Accounting IlGE and all subsiduries in w hah IlGE ow ns directly or indi- Standards No.109, " Accounting for income Taxes," effective rectly a majority of the voting stock Intercompany balances and January 1,1991. Statement No.109 requires the use of the lia-transactions base been chminated in consohdation. Under this bility methat of accounting for income taxes. Under the liability pokey, the accounts of Constellation iloidings. Inc. and its sub- method, the deferred tax liabdity represents the tm ef fect of tempo-sidiaries teollectis ely, the Constellation Companieu and ilNG. rary differences between the financial statement and tn bases of Inc. are consohdated in the financial st.nements. Safe liarbor assets and liabilities. It is measured using presently enacted tax Water Power Corporation is reported under the eqmty method. rates. The portion of IIGE's deferred in hability applicable to Corporate jomt ventures, partnerships, and af fikated companies in utihty operations which has not been renected in current service which a 20% to 5tN mting mterest is held are accounted for rates represents income tnes recoverable through future rates. It under the equity method, unless control is evident, in which case has been reconfed as a regulatory asset on the balance sheet.
the ennty is consolidated. Investments in power generation sys- lieferred income in expense represents the net change in the tems und certam knancial imestments in which lew than a 20% deferred tax liability and rep 9 asset duiing the year, exclusive wtmg interest is hehl are accounted for under the cost method, of amounts charged or crei common shareholders' equity.
unless significant influence is exercised over the entity,in w hich The 1993 and 1992 curreni in expense consists solely of reg-case the imestment is accounted for under the equny metini. ubr tax. The 1991 current tn opense consists of a regular tax of
$46.8 million and an ahernative minimum tax (%lT) of $14.2 Regulation of Utility Operationy miHion. The AMT liabilities generated in 1991 and prior years llGEN utihty operations are subject to regulation by the Public can be carried forward indennitely as tax credits to future years in Service Commiwion of Maryland (PSC). The accounting policies uhich the regular tax liability exceeds the AMT liability. As of and practices used in the detennination of service rates are aho December 31,1993, this carryforward tot &d $73.2 milhon.
generally used for fmancial reporting purposes in accordance with As a resuh ofits ef fect on nomegulated activities the cumula-generaHy accepted accounting principles for regulated mdmtries. tive effect of the change in the method of accounting for income See Note 5. Ines rerutted in an increase in 1991 net income of $19.7 million,
- g. p or 16e per common share, because of the reversal of deferred income taxes on nonregulated activities accrued in prior years at IlGE recognizes utihty revenues as senice is rendered In mtes n men o e in nue in ect at mat hme.
to cmtomers.
The investment tax credit (lTC) associated with BGE's regu-Faul amf l'urchaird lincrgy Cmts lated utihty operations has been deferred and is amortired to Subject to the approval of the PSC. the cmt of fuel used m gener, inwnu ratably over the lives of the subject property, ITC and ating electricity, net of resenues from interthange sales, and the other tax credits associated with nonregulated dnersified business cost of gas sold may be recovered through zerabased electne fuel adinb other than leveraged leases are flowed through to rate (see Note I h and purchased gas adjustment clauses. The dif, income. As of December 31,1993, the Company had energy and ference betueen actual fuel costs and fuel revenues is deferred on other tn credit carryforwards of $43 million which expire in the
' the balance sheet to be recovered from or refunded to customers yean 2W thmugh 2M.
in future periodt IlGE's utility revenue from system sales is subject to the lhe electric fuel rate funnula is based upon the latest twenty- Manland public service company franchise in in lieu of a state
. four-month generation rnis, subject to a minimum lesel of nucIcar income tax. The franchise in is included in taes other than generation. and the latest three-month as erage fuel cost for each income taes in the Consolidated Statements of Income.
generatmg unit. Thc fuel rate does not change unless the calcu-lated rate is more than 5% abmc or below the rate then in etfect. I" "#"'"J E"I""'I""
Fuel stocb and materials and supplies are generally stated at average cost, ba!rtwre Gu and1Intric Comparty amiSuhiharics
i l
1 Reaf fntate l'rojects the plants' output to the joint ownere senice terntories, ilGE's Real estate projects consist of the Constellation Companies' ownership interest in these plants is 20.999 and 10.56%, respec-investment in rental and operating properties and properties under tively, and represents a net investment of $128 million as of j development. Rental and operating properties are held for invest. December 31,1993. Financing and accounting fm these proper- j ment. Properties under deselopment are held for f uture develop- ties are the same as for w holly owned utility plant. 1 I
ment and sale. Costs incurred in the acquisuion and acthe Nuclear fuel expenditures are amortized as a component of development of such properties are capitalized. Rental and oper- actual fuel costs based on the energy produced over the life of the l ating propenies and properties under development are stated at fuel. Fees for the future disposal of spent fuel are paid quarterly to j cost unless the amount insested exceeds the amounts expected to the Department of Energy and are accrued based on the kilowan- l be recovered through operations and sales. In these cases, the pne hours of electricity generated. Nuclear fuel expense s are subject g jects are w ntten dow n to the amount estimated to tv reemerable. to recosery through the electric fuel rate.
Nuclear decommissioning costs are accrued by a nd recosered
< In mtments through a sinking fund methodology. In its April 1993 rate order, Marketable equity securities are stated at the lower of cost or the PSC granted BGE revenue to accumulate a decommissioning market salue. and other seemities are stated at cost. Where appro- resene of $336 million in l992 dollars by the end o'Calvert priate, cost reflects amorntation of premium and discount com. Cliffs'ser ice life in 2016, adjusted to reilect espected inflation, poted on a straight-line basis. Gains and losses on the sale of the m decommission the radmactive portion of the plant The total Cuthtellation Companies' investment securities are included in decomminionine reserve of 593A million and $77.8 inillion at resenues from doersihed activities on the income statement and December 31,1993 and 1992, respectively, is includ:d in accu.
are recognized upon reah/ation on a specific identification basis. mulated depreciation in the Consolidated Balance Sheets. In Gains and lowes on the sale of BGE's nuclear decommissioning accordance with Nuclear Regulatory Commission (NRC) regula.
- trust f und securities are included in net other income and deduc- tions, BGE has established an extemal decommissioning trust to j tions on the income statement and are recognited upon realitation w hich a portion of accrued decommiwioning costs have been on a specific identification basn. contributed.
Statement of Financial Accounting Standards No.115, whitb The NRC requires utihties to provide financial assurance that must be adopted in 1994, r. quires that investments in equity secu-they will accumulate sufficient funds to pay for the cost of nuclear rities having readily determinable fair values and debt secunlics decommissioning beed upon either a generic NRC fomiuta or a other than those w hich the Company has the posake intent and facihty-specinc dewmmiwioning cost estimate, prm ided that the abihty to hold to maturity be recorded at fair value rather than at ragj[ity_specitie estimate is equal to or greater than that of the amortired (ost. Changes in the fair salue of these securities will NRC fonnula. Subsequent to the PSC's April 1993 rate order, the be recorded in shareholders' equity except for trading securities, NRC updated its generie fonnula to reflect substantially higher for w hich snch thanges will be recorded in income Adoption of w aste burial charges. The revised NRC formula generares a thn statement is not expected to have a material impact on the decommiwioning cost estimate of $703 million in 1992 dollart Company 's financial statement *- Additionally, the Company initiated a facility-specific s:udy
, w hich, when completed. is expected to generate an estir late of the Utility l'lant, Deperriation und Amortication' cost to decommission the radioactive portion of the plant w hich is and Decommmmmng lew than the NRC formula estimate.The Company is ccrrently
~
Utdity plant is stated at origmal cost, w hich includes material' completing the facility-specific study and plans to request the labor, and, w here applicable, construction os erhead costs and an NRC to permit the use of the facility-specific decommis4ioning
- allowance for funds used during construction. Additions to unhty ost estimate as a basis of funding these costs and providine ' the plant and replacements of units of property are capitah/ed to ui n R m a l m m u unhty plant accounts, Maintenance and repairs of property and i replacernents of itenn of property determined to be lew than a unit of property are (harged to inaintenance expense.
M r Funds Used During Construction and
. IUpreciation is generally computed using composite straight' Capitalized Interest line rates applied to the aserage insestment m classes of depre-The allowance for funds used during construction ( AFC, is an ciable property. I he composite depreciation rates b) dass of o i dm M apitalizes the cost of funds used to depreciable property are 2.809 for the Calvert Chlfs Nucicar f nance utilitv construction projects as part of utdity plant on the Power Plant,2.75% for the Brandon Shores Power Plant,3.26%
halance sheei, crediting the cost as a noncash item on the income for other electnc plant 3.124 for gas plant, and Atl2% for .. '
statement. The cost of borrowed and equity funds is segregated conunon plant other than schicles. Vehicles are depreciated
, between interest expense and other income, respectiv' c~h. BGE based on their estimated useful lhes.
M i/ed AFC and a return thereon after the related itGE owns an undmded interest in the Keptone and utihty plant is placed in seruce and incieted in depreciable assets Conemaugh electric generating plants kn;ated in western and rate bee.
Penns)h ania, as well as in the transmissmn line w hich transports nahowe das aNI na vie cmmy amt whak ,
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d
i 6
I During the penod January 1,1991 through Apnl 23,1993, the Long-Term ikht Company accrued AFC at a pre-tax rate of 9.9Fi, compounded The discount or prenuum and expense of issuance associated with annually, Effectis e April 24,1993, a rate unter of ihe PSC long-term debt are deferred and amortifed mer the original lives reduced the pre tas Al C rate to 9.404. compounded annually. of the respective debt issues. Gains and lowes on the reacquisition Elfectise January 1,1992, the PSC authorized the accrual of of debt are amortized mer the remaining originallives of the Al C on all electric, gas, and common utihty construction projects iwuances.
with a comtruction period of more than one month. Prior to 1992, Al:C was accrued on major elet.tric projech only. Cmh Flows the Comtellation Companies capitalize interest on quahfyine For the purpose of returting cash flows, highly lignid investments real estate and pmer generation deselopment projech. liGF, capi- purchased with a mat trity of three months or lew are considered talizes interest on certain deterred f uel cosh as diwuwed in Note 5. to be cash equivalents. g NOTE 2. GEGMENT INFORM ATION har Fndedl)n mha f / 1993 1992 1991 rIn alwaruds>
Electric Resenues $2,115,155 $ 1.967,923 $ 1,994,525 income in un operations 53MJ40 441,784 444,530 Income fmm o[wrabons net of mcome rases 402,893 350A29 352,385 Depreciation 203,476 191,970 173 349 Constna tion cyndnmes (includmg Al O 419,519 346,728 406JX)8 ldentifiah!e awch at ikcember 31 6,025,798 5,508JX18 5,374,940 Gas Revenues % 435,849 $ 402,937 $ 358,195 Intome from operations 39,426 45,552 35,w7 locome hom opemhons net of intome taxes 33,188 37,514 30,945 Ikprect.alion 22,995 21,364- 1N,896 Construction eqwnddures tincludme Al'C) SHJ59 42,688 50.236 hientifiable assets at ikcember il 694,977 579,386 555/m Dis enified Ihainewn Resenues $ 117,710 s 120,483 $ 96.133 Income f rom operaoons 43,234 4X,009 9.051 income Imm operations net of mcome tase3 46,847 44,055 20313 Depreciadon 10J03 10,149 9,019 Cumulatine ef fett of (hange in the mcihmt of accountn g for income tases - -
19,745 (dentifiable auch at December 31 1,096,220 1,023,315 1,001313 Total Resenues $2,668,714 $2,49 f J43 $2,448,853 intome from operations 621,000 535.345 489,188 Ir.come fnim operations net of mcome taxes 482,928 431,998 403/41 lkpreciation 236,774 223,483 201,264 Cumulatne effeu of(hange m the melbod ut accounting for income tases - - 19,745 Construction etpenditures unslwhng Ali ?) 477,878 3M9,416 456,244 ldentiliable assets at Ikcember 31 7,816,995 7,110,709 6,931.862 Other aweb at ikcemter 31 - 170,044 263 M8 206.127 Total awch at Ikcemkr 31 ?,'o0,039 7374.357 7,137,989 l
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NOTE 3. SUBSIDI ARY INFORM ATION Disersified businesses consist of the operations of Constellation BGE's ins estment in Safe liarbor Water Power Corporation, a Holdings, Inc, and its subsidiaries and BNG, Inc. pioducer of hydroelectrie power, represents two-thirds of Safe Constellation iloidmgs, Inc , a w holly ow ned subsidiary, hold s liarbor's total capital stock, including one-half of the voting all of the stoc k of three other subsidiaries. Comtellation Real stock. and a tw o-thirds interest in ih retained earnings.
Estate Groig ine., Comtellation linergy, Inc., and Constellation The following is condensed financial infoimation for Investments. Irr, These aimpanies are engaged in real estate Comtellation iloidings, Inc. and its subsidiaries. Similar informa-doeloprnem and ou nership of senior lis ing f acihties; des elop- tion is not presented for Safe liarbor Water Power Corporation ment, ow nership, and operation of power generation sprems; and and HNG, Inc, as the financial po ition and results of operations O fi""""'i*"*'""'P"'"'> """'e entilics ate immaterial The condemed financia1 infonna-HNG, Inc. is a w holly ow ned subsidiary w htch invest 3 in nat- tion for the Constellation Companies does not refleet the elimina.
ural gas reserses. tion of intercompany balances or transactions which are eliminated in the Company's consolidated financial statements.
1993 1992 1993_
,In rhoumh. e n rpr en shan amonn >
Income Shilemenb Resenues Real estate projais $ 77,59M $ 76,532- $ 75,205 -
l'ower generanon systems 24,971 28JN4 17,732 Finanmi investments 21.195 21,485 8,059 Total res enoes 12A764 126.151 100,996 Egenses other than mierest .uid mcome tases ,
MO,427 77,M72 91,848 Income hum operations 43,337 48,279 9,148 Mmority interest (230) 718 3,550 Interest cxFnw' t33,143) t 30,103 } (32,938) fneome tat beneht (expeme) 1,944 (3,637) 9J105 ;
Cumulatise ef fect orchange in the methat of accounting for mcome lates - -
19,745 Net income $ 11,898 $ 15.237 $ 8.510 Connibunm to the Oc.mpany's earnings per share of common stock $ .08 $ ,II $ .07 Italance Sheets Current assets $ $4,039 $ 29.899 $ 20,463 Nont urrent asseh 1,036,507 990.273 976,l79 Total asseh 51,090 546 $1.020.172 $996 M 2 Currem liabiliues $ 24.201 $ I13,404 5285,130
.. Noncurrent liaNhties 759,04'l 611,370 431.370 Shareholder's equity 307.297 245,398 280,142
'l utal habilities and sharehokler's eqmty $1,090.546 $ 1.020.172 $996M2 I
l IGlumac Gas med i h*ctor Cmpmy and %bmhane s A
3 NOTE 4. RE AL EST ATE PROJECTS AND FIN ANCI AL INVESTMENTS Real estate projects consist of the following investmenh held by in 1991, a subsidiary of Constellation Holdings. Inc. recog-the Constellation Companies: nized a loss of $ 10.5 million to w rite-dow n the carrying value of Ai Deumher 31, 1993 1992 linancial investments to reflect previously unrealized losses on un thma,mdo certain marketable equity securities, The securities w ritten down Propenies under development $249,473 $231,856 were subsequently sold. A subsidiary of Constellation iloidings.
Wnt;d and operanng pmperties Inc. also recognized a loss of $3.1 milhon on two financial lim-(net of accumulated ited partnerships that were adjusted to reflect matket s alue when depreciation) 237,194 227.412 the partnerships were reclassified as short-term investmentt Other real estate ventures _ 730 2.774 As of December 31,1993, gross unrealized gains and losses g Total $48U97 $462.n12 applicable to marketable equity securities totaled $1.8 and $0.5 In 1991, a subsidiary of Constellation lloidings,Inc recog. million, respectively Net realized gains (losses) from financial nited a loss of $10 mdlion to write down the carrying salue of investmenh included in net income totaled $6.5 million in 1993, certain operating propenies and properties under deselopment to $9.8 million in 1992, and $(11.6) million in 1991.
relle t the depassed real estate and economic markets.
I:it :mcial investments consist of the follow ing insestments held by the Constellation Companies:
a Dn ruhr //. 1993 1992 dn thouuindo insurance comp.mies $ 83,275 $ 93.048 i inancial limited partnerships 44,903 41,076 to craged leases 33.669 39,44I Alarketable equity secanties 42,681 25,344 Other secunues 3,787 S.142 Total $213.315 $207.011
)
l NO T E 5. REG UL ATOR Y A SSETS I
'I' Certain utility expenses and credia nonnally renected in income income taxes recuserable through future rates represent princi-are deferred on the balance sheet as regulanary assets and liabili- pally the tax effect of depteciation differences not normalized and 'I lies and are recognized in income as the related amounts are the allowante for equity funds used dt. ring construction, of fset by included in senice rates and recosered from or refunded to cus- unamortited deferred tas rate dif ferentials and deferred taxes on tomets in utility resenues.%e following table sets forth 13GE's deferred ITC. These amounts are amortieed as the related tempo-regulatory assets. rary differences reserse. See Note I for a funher discussion of income taxet di Dn m/<r 31. 1993 1992 Deferred fuel costs represent the difference between actual un thounmdo fuel costs and the fuel rate revenues unde 13GE's fuel clauses Income tases recoserable bee Note 1), Deferred fuel costs are amorQed as they are col-through future rates $259,M56 $216939 lected frorn customers.
ikfened fuel wsts - 130,032 - ig 1,497 undenecovered cosh deferred under the fuel clauses were Deferred tennmahon
"*I""""*
benefit costs 96,793 -
Ikfened nudear egendnures M6,726 76,549 A' Do mha A 1993 1992 Ikferred postemploy ment un thousanM lenefit wsh 62,89' Electric Costs deferred $155,90I $210,483 Ikferred cost of
' decommissioning federal Resene for possible uranium ennchment facihties 49,562 55Jn) disallowance of replaecment energy costs bec Note Ih (35,000) (35Jul)
Defened energy conwrvanon expenthturn 3X.655 20.519 Net elettric 12n,901 173,433 ikferred em ininmenta! cosh 32,966 - GM 9,151 MM Other _ 10,613 18.059 Tot A . $130.052 s; i S 1.497,,
Teial . $768.125 $568.561 Mun..re Ganmd Ik Inc Com;wn and Submharin
k 4.
2 Delerred termination benclir costs represent the net unainorti/ed such contributions w hich are generally payable over a lifteen-year balance of the cost of certain tennination benelib (see period with cualation for inflation and are tused upon the amount Note 7) upphcable to HGE's regulated operations.1hese cosh are of uranium enriched by DOli for each utihty. These costs are being ,unortlied over a (he-year period in accordame with rate being amortized over the contnbution period as a cost of fuel.'
actiom of the PhC. Deferred energy conservation expenditures represent the nel
, Defened nuclear expenditmes represent the net unamortited unamoni/ed balance of certain operations wsts which are being balante of certam operatiom and maintenance cmh which are amorti/ed over fise years in accordance with orders of the PSC, being anmitired mer the remaimng hfe of the Cahert Chth These expenditures comist of latmr materials, and indirect cost 3 Nudear Power Plant in accordance with orders of the PSC.These assosiated with the comervation programs apprmed by the PSC, expenduures wnsist of cosh incurred f rom 19'/9 through 1982 for Lkferred environmental costs represent the estimated costs of g inspecting and repairing seismic pipe supports, esperkhtures investigating contamination and perfonning certain rernediation incurred f rom 1989 through 1993 associated with nonrecurring aethities at contaminated Company-owned sites (see Note 13).
'- phases of certain nuclear operatiom projects, and egendnures These costs are generally amortized over the estimated term of
- incurred durmg 1990 for investigating leaks in the pressuri/er the remediation pn(ess.
heater sleevet Electric deferred fuel ems in excess of $72.8 milhon are -
l Deferred pmtemployment benefit cosh represent the excew of escluded f rom rate base by the 1%C for ratemaking purposes.
suth t osh recogm/ed in accordante with Statements of I inancial Etfecthe April 24,1993, ilGE has been authorized by the PSC Accountmg Standank No.106 and No. I 12 mer the amounts to accrue carrying charges on electrie deferred fue! cmh excluded reflected in utiht) rates 'Ihese costs uill be amorti/ed over a from rate base. These cairying charges are accrued prospectively 15 year period begmning no later than 1998 bee Note N. at the 9Au% authorized rate of return. The income ef fect of the Dcierred cost of dewmanwioning federal urimium ennchment equity funds portion of the carrying charges k being deferred facihties represents the unamoni/ed portion of HGE's required until such amounk are recovered in utihty service rates subse- l l contributions to a fund for demmnuwinning and decontaminating quent to the completion of the tuel rate proceeding examining l the Department of Encry)'s t DOE) uranium enrichment facilities. the 19M9-1991 outages at Calvert Chtfs Nuclear Power Plant as lhe hnergy Pol.cy Act of 1992 requires domestic uuhries to make discussed in Note 13.
f .
NOTE 6. PENSION AND POSTEMPLOYMEt4T DENEFITS l>rmion Benejin credit cmt method. Pension Plan assets at December 31,1993
, The Company spomon several nonconinhutory dehned benefit consisted primarily of marketable thed income and equity l pemion plans the largest of w his b (the Pemion Plani coven sceurities, group annuity contracts, and short-term investments..
s'u bstannally all HGE employees and certain employees of the The following tables set forth the combined funded status of .
Comtellanon Companics The other plans, whith are not the plans and the composition of total net pemion cost. Due to matenal in amount. pn 6 ide supplemental benefits to certain declining interest rates, the Company reduced the discount rate -
. non<mployee ductiors and key employees. lienefits under used to measuie ih liabihty for pen.sion, postretiremem, and -
the plam are generally based on age. y ears of senice, and postemployment benerib to 7 M as of December 31,1993..This compemanon levek. decrease in the dhcount rate, coupled with the increased pension
- Poor senice cost awotiated with retroasthe plan amendmenh liability resuhing from the 1993 Voluntary Special Early
- l. B amonized on a straighthne hash mer the average remaining Retirement Program pnkluced an accumulated pemion obliga-senice period of atthe employees, tion gre,uer than the fair value of the Pemion Plani assets. As a The Company % funthny policy h to contribute annually the result, the Company rewrded a pension liabihty adjustment, a cmt of the Pemion Plan as determined under the pmjetted unit portion of which was charged to shareholders' equity.
i
" k!n**1Jrr Go ami fin (W Umpuy wed S&thirin i'
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1 As Ikr cmfur 3/, 1993 1992 1 the thmoamid Vested henclit obhgation $677,069 $485,098 Nonvested benefit obhgation _ Ii)59 _ 9,814 l Accutnulated benefit obhgation 6MM,42M 494,9l2 Pniccted benefits relaicd to int reuse in fuusre cornpensation in ch 109,161 86M2 Projected benefit obhganon 797,589 581,794 l'lan awen at fair value (60$,629) 1542,19t h Pnbled benefd ohhpatnin less plan anets 191.960 39fM Unrecognved prior serwe wst OI,252) (17,67I)
Ihuemgnized net loss t 148,450) 0 8.017)
Pension habitu> adjustment 58,553 -
Unamortved net mset Inim adophon of I-Asli Statement > o. 87 1,N 12 2,039 Accrued pen , ion liabihty (awett $ N2,623 5 (4Ng ff.dW %!IM d L!L. _ .. _ _._ _ _.
1993 1992 IWi-tln thwamio Components of net pen, ion cost Servite sost benefits camed durir the penal % l 1,(>45 S l 1,771 $ 11,729 Interest cost on prointed herx fii obhyation 51,1N3 47.3 M 43,143 Actual retam on plan auch (56,225) (33 M 5) (56,737)
Net amorti/ation and deferral _ 6f 91 (12,257) 12,8 lo Total net pension cost 13,194 13,184 l() 945 Arnount cap tah/ed as construchon cost . (1,800) ( 1.8 %) (1,$0tn Amount charged to c qvnse $ 11,394 si1 m 5 9.445 Net pension cost shown above does not intlude the cost of Ef fectise January 1,1993, the Company adopted Statement of tennination benchh destnbed in Note 7. Financial Accounting Standards No.106, w hith requires a change lhe Company also sponsors a defined contribution savings in the methat of accounting for ;mtretirement benefits other than plan cosering all eligible IlGE employees and certain emplo)ecs pensions from the pay-as-you-go methat used prior to 1993 to the of the Constellation Companies. Under this plan. the Company accrual > ,ethod The transition obligation existing at the begin-makes contributions on behalf of participanh. Company contnbu- ning ,1993 is being amorti/ed over a twenty year perimi.
tions to this plan totaled $9 mdlion, $14.8 milhon, and $10.6 .a April 1993, the PSC issued a rate order authorizing IIGE to milhon in 1993,1992,;md 1991, respedively, recogni/c in operating expense one half of the annual increase in PRil costs applicable to regulated operations as a result of the I'mtretirement lienefits adoption of Statement No,106 and to defer the remainder of the Ihe Company sponsors defined benefit pmtretirement heahh annual increase in these costs for inclusion in llGE's next base (me and hfe insurance plans whith cover substantially all rate proceeding, in accordance with the PSC's Order, the 15GE employees and certain employees of the Constellation increaw in annual PRil costs applicable to regulated operations Companies Ilenclih under the plans are generally based on age, for the period January through April 1993, net of amounh years of service, and pemion benefit levels. The pustretirement capitaheed as comtruction cost has been deferred. This amount, twnefit (PRII) plans are unfunded. Substantially all of the health w hith totaled $5.7 million, as well as all a mounts to be deterred care plans are coninhutor>, and participant contributions for prior to completion of I!GE's next base rate pmceeding, wdi be employees who rehre a!!cr June 30, PJ92 are beed on age and amorti/cd over a 15 year period beginning no later than 199S in years of sersisr. Retiree contribunons increase commemorate accordance with the USC's Order. This phase-in approach meets with the expected increase in metheal costs. The postretirement the guidelines established by the Emerging issues Task Force of life insurante plan is noncontnhutory. the Financial Accounting Stand nds lloard for deferring post-Batwwr e Gn wid I tatMom;wn at subasaon i
.m . - _ _ - _
a _,- q
. retirement benefit costs as a regulatory asset. Accrual basis The following table sets forth the components of the accumu- h
- PRll costs applicable to nonregulated operations are charged lated pwtretirement benefit obligation and a reconciliation of to evense. these amounts to the accrued postretirement benelit liability, Ai/kcem/<r31, 1993 1992 1,ife 1.ife . l Ilealth Care insurance llealth Care Insurance. ;
IIn thomanJO \
Accumulated pntretirement benefit obligation: l Retirees $1M2,638 $45,461 $116,935 - -$34/iOO l l ully elipble attise employees 19,177 839 18,082 143 0 odmranive m eioyce Sun 260,M7 i5,m 61,677 SuoM iuSM 51,201 Total accumulated swtretirement benefit obligation 189.225 Unrecognized tranution ohhgation (179,764) (48/>4O (189,225) (51.201)
Unrecognized net loss (36.675) (9,072) - .-
Accrued prntretirement benefit habihty $ 44.208 $ 3,964 % - 5 '-
The following table sets forth the compwition of net which requires a <.h.uige in the method of accounting for these pwtretirement benefit cost. benefits from the pay.av>ou-go method to an a crual method, ~
as of Decembri 31,1993. The liability for these benefits totaled rcar enant tu, emho 3I. 1993 $52.1 million as of December 31,1993, and the portmn of this stu thmua<rd liability attributable to regulated actisities was deferred. The .
Compinents of net pwtrot.irement benefit cost: amounts deferred will tv amortized over a 15-year period begin.
Senite cost- benefih earned dunng the period $ 4,373 ning nolater than 1998. The adoption _of Statement No.112 did '
interest cost on accumulated pntretirement not hase a material impact on net income. The increase in the
. trnetit obhgation 20,451 annual cost of these benefits subsequent to the adoption of accrual -
Amortization of tranution obligation 12,021 accounting is not expected to have a material impact on the 36,H45 Company's financial statements.
'l otal net swtreurement benefit wst Amount capitahted as construction cost (5,M98)
Amount deferred (l1,965) .lssumpthms Amount tharged to exp nse $18,982 The pension and postemployment benefit liabilities were deter.
mined using the following assumptions.
Net pwtretirement benefit costs shown above do not include At Durmbedt, 1993 1992 i the cost of tennination benefits described in Note 7. Assumptions -
' Postretirement benefit costs recognited under the pay-as you- Discount rate 7.5% 8.75 %
go method were as follows Average increase m rear cr*J pmmher //. 1992 1991 future compensation levels 4.3 % . 4.5%
(In shomamto bpected long-term rate of Total swtretirement benefit cost si !/>7ti $9,741 rerum on awets 9.5'fr 9.5%
Amount capitah/ed as construction cost ( l .91 l } t1.573)
Amount charged to espense i 9,765 $8. l f,g The health care inflation rates for 1993 are assumed to be l
9.5% for Medicare-eligible retirees and 12% for retirees not covered by Medicare. Both rates are assumed to decreme by OS4
~
Other l'osternployment Ifenefits annually to an ultimate rate of 5 5% in the years 2001 and 2006,-
The Company provides certain pay continuatmn pay ments and ropectively, A one percentage point increase in the health care l
heahh and hre insurance benefits to employ ces of BGli and cer- inflation rate from the assumed rates would increase the accumu.
tain of the Constellation Companies who are determined to be lated p(wiretirement benefit obligation by approximately $37.8 -
disabled under ilGE's I onpTerm Disabdity Plan. The Company rnillmn as of Decenibi r 31,1993 and would increase the aggre-adopted Statement of Financial Accouming Standards No. I12, gate of the service cost and interest cost compments of pot.
retirement benefit cost by approximately $3.M million annually.
twww.re Ga, a sJ IJec tric Com;wy and udniduann I
_ ___ _ _ _ .____ _ _ . _ . . _ . _.- _ _ _ _ . ~. _ _ _- _ . _ _ . _ . . _ _ _ _ - .__
i l
4 5 a
i d
NOTF 7. TERMIN ATION BENEFITS i
i The Company of fered a Voluntary Special Early Retirement the Company of fered a second Voluntary Special E.uly
! Program Ithe 1992 VSERP) to eligible etnployees w ho retued Retirement Program Ohe 1993 VSERP) to eligible employees during the penod I chroary 1,1992 ihtough April 1.1992. In w ho retned as of February 1.1994. The one. time cost of the 1993 acconlance with Statement ut Financial Accounting Standards VSERP condsted of enhanced penston and postretirement bene-No. SS," Employers' Actoording ior Settlements and lits. In aikhtion to the 1993 VSERP, further employee reductions Curtiulments of Dehned Benetit Pension Plam and for have been accomphshed through the elimination of ci ruin posi-l
'lennination Henchts," the cost of tennination benefits associated tions. and various programs base been otfered to employ ees j with the 1992 VSERP. which corhisted prmeipally of an impacted by the eliminations. In accordance with Statement No.
enhant ed pendon benclit. w as recogm/ed in 1992 and reduced net income by $h 6 million, or 5e per common share. In Apnl SS, the cost of tennination benefits associated w tth the 1993 VSER P and s arious programs, w hich totaled $105.5 million, was g
! 1993, the PSC authorized HGB to amortite this charge oser a recognized in 1993. The %8.3 million portion of 1993 VSERP l hse.) ear peimd for ratemaking purpo es. Acconhngly. H(iE attnbutable to regulated activities w as deferred and will be amor-l est iblished a regulator) awet and rewrded a correspondmg credd n/ed oser a fise-year period for ratemaking purposes, beginmng
{ to operaung eyvnse for llus amount. The resersal of the 1992 in February IW4. consistent with presious rate actions of the VSERP in Apnl 1993 mtre;hed net income by $6 6 nulhon, or PSC. The 517.2 mdhon remaining portion of 'he cost of 5e per common share. tennination benelits uas charged to expense in 1991 4
3 4
N OT" 6. SHO R T T E R M DO R ROWING S Infonnation concerning conunertial paper notes and hne3 of compensalmg balan<.es which hase no withdrawal restrictium.
- crcdit is set lonh below. In support of the lines of credit, the Horrow mys under the hnes are at the banks' prime rates, base Company pay s committnent fees and. In some cases. maintains interest rates, or at s arious mone) market rates
, I993 1992 199l l clh.ilar antounn m timoando
] IIGE's Commer(ial Paper Nutes d
llorrow mp out aandmg at December li $ -
$ ll/MO $159,500
- Weighted aserare interest rate of notes outstandmg at December 31 - 9 3.62's 1 75 %
, Unused hnes of credit suppoinng commercial papei notes at Decemhtr 31 (a) $208,000 $203 04 N) $103.000 Maumum borrowine dunng the year 96,900 393.h50 316,2(N')
Aserage d,uly lorrow mp donng the year Du 10,322 9859' 'l0383 Wetghted nerage inutest iate for the year (c) 3.28 4 4794 6.08%
l Constellation Companies'I ines of Credit
) Horrow ings outstanding al Decernber 31 $ -
$ $ 52,670
] Weighted asenge mterest late of bornm mp outstanding at December 31 - % - 9 5.91%
l nused hnes of credd at Ibember il 5 20,000 5 $ 8000 Madmum borrow mgs during the y ear -
tW.MO 75 A10 Aserage dad) th 6llow(ngs dunny the ) car (h) - 31,773 6l}hO
, Weighted aserage mieiest raic for the year (c) - % tt01% 7.19'4 i
(M HUE decreased as imes ol' creiht supportmg commen.ial paper noRs to $143 nulhon effecme January 1,19%
tb> The sum of dollar dap of oubtandme horrowmp dnidcd by the number of days in the period.
J tc) Total tmerest accmed dunny the period daided by average dady terrowings.
I i
a IGhnve G. 3 amt i k trv Cmmy ont umhm hn i
d i
l N O T E 9. L O N G T E R M D E' O T l'irst Refunding 3fortgage Hands of HGI-l 1.ong Term iDebt of Connellation Companies Substannally all of the princqui propernes and franchises owned The mo0 gage and construction kians and other collateralized notes by BGE as well as the capital stock of Constellanon iloidmps, bas e varymg tenus. Of the %I51.2 million of sariable rate notes.
Inc., Safe liarbor Water Power Corporation. and BNG, Inc., are 551.1 milhon requires periodie interest only pay ments with var-subjett to the lien of ilx inortgage imder w hich BGE's out- ious maturities from Septernber 199 5 through March lW6. and standing Eirst Refunang Mortgage Honds hase been mued. 400.1 million requires ivriodic pay ment of principal and interest 00 August I of each year. liGE h required to pay to the mort- with various maturities from January 1995 through January 310%
page trustee an annual smkmg innd payment equal to 14 of the The 56.5 nullion. 7.73% mortgage note requires quarterly principal and interest pay ments through March 15,2tX19 g largest principal amount of Mortgage Bonds outstandmg under the mortgage during the precedmg toche months. Such lunds are The umecured notes outstanding as of December 31.1993 to be ced, as prouded m the mortgage. for the purchase and mature in accordance with the following schedule:
retirement by the trustee of Mortgage Ilonds of any series other m, g,,e than the in3talknent Senes of 2002 and 2009 the 9M Series of Xl57,due August 2S,1995 5 20MO 1995, the 8.409 Seiies of 1999, the 5%G Senes of 3X0. ihe S.711due August 2x,1996 23,tX U M Senes of 2001. the 7M Series of 2002, the 6W Senes of 6.199.due September 9.1996 10JX0 2(WH the 6M Series of 2003, the SW Seiies of 20n4. the 8.9 Pi. due August 2N 1997 5231to 6 A09 Series of 204. the 7M Senes of 2007, and the 6hl 6 65'i due September 9. PN7 15MO SCrles ol MW N 8 23'i, due Riober li llP)7 30.t N )()
1054.due April 22.1998 25M O Other Long Term Ilebt of flGl: yyy;,aueseppemperq gnos 20plo BGE maimams res oh mg credit agreements that espue at s anou' MM9.duc Notwr M.1995 75MO times during 1995 and 1996. (Jnder the terms of the agreements, 7.3;iq , due Apn122, (999 90M10 ilGE may, at its option, obtain loan, at s arious interest rates. A 8331 due October 15,1999 15JN10 conumtment fee is paid on the daily aserage of the unborrowed 7.559. due Arnt 22. 2tX0 35JXO poruon of the wnunitment. At December 11.1993. HGE had no 7 A34 Nue September 9,200n 30MU hotrowings under these resohing credit a ercements and had g, as ailable $165 imthon of unused capacity under these agree-mems Effectne January 1, Prkt, BUE decreased its resohing H esg
. htedherage Interest Ratnf.or 1,ariable Rate Debt credit agreements to $I23 nulhon. .
.t.he weighted average interest rates f.or vanable rate debt during
..t.he Meihum-term N.otes Series A mature at various dates from l993 and 1992 were as follows:
I chiuaiy 1994 through 1:ebruary 1996.1he wewhted averaae 3993 1992 mierest rate for notes outstanding at December 31,1993 is i.934.
lhe Medium tenn Notes Series Il mature at s anous datCs "GH Low under nwolving credit agreements -% 4.23 %
from July 1998 through September 20% 1he weighted aserage 1 loating rate notes Series 11 -
7.90 interest rate for notes outstandmg at December 31.1993 is 8.439.
Pollution control loan 2.39 2.90 1he Methum term Notes Series C mature at s arious dates Port facihties loan 2.53 3M4 from June 1996 throuch June 2003. The weichied aserage imerest tate for notes outstantimp at December 31, N93 is 7.164. Adjustable rate imilution control loan 3.00 4.13 Emnomic doelopment Imn 2.49 '3.11 The principal amounts of installment Senes Moripage Bonds pay able each year are as follows: Constellation Companics Bond, Due Honds Due Modpge and comtruction loans y, ygp wp and other collaterah/ed notes 6.26 6.74
~~ , /,m. m #lo
~
I oans under crecht agreements 5.94 6.15 199$ $ 430 1993 through 199 7 605 1993 and l999 69tI 2tOO and 2001 565 2102 6.725 2tO5 through 2tOS $ 3.250 2009 42M10 tww.n Go ,ntIimm c, man, and wtiaon I
i
, , , ..-. . .. . - . . ~
-i:
l Aggregate Sluturities Constellation The combined aggregate maturities and sinkmg fund require- Year ilGli Companies ments for all of the CompanyN long-term borrowings for each ol (In thorodmin the next five y ears are as follow s. 1991 5 32,728 5 8,788 1995 218,429 81,260 1996 72J30 77,213 1997 80,754 l12J59 1998 84,i12 128J55 G-NOTE 10. REDEEM ABLE PREFERENCE STOCK 1he 6.95'i,1987 Seiies and the 7A09.1989 Series are subject to The combined aggregate redemption requirements for all mandatory redemption in their entirety at par on October I,1995 series of redeemable preference stock for each ot the next fhe and July 1,1997, respectisely, years are as follows:
The followmg senes are subject to an annual mandatory y,.a, redemption of the number of shares shown below at par begin- , f,, ,3y,,,a,,sg ning in the year show n bdow. At IIGE's option. an additional 3
number of shares. not to exceed the same number as are manda-
,993 tory, may be tedeemed at par in any year, commencing in the
,yy same year in u hich the mandatory sedempnon begins Ihe yg g ~.
8.25%,1959 Series, the 8.6259,1990 Series, and the 7.85%
1998 13,000 1991 Series listed below are not redeemable except through oper-ation of a sinking f und.
With regard to payment of d. m.dends or assets available .in the lleginning .
i, car event of h.quidation, ' pref. erred stak tanks prior to preference and Sen.es Shares common stock; all issues of prel.erence stock, whether subject to 7.509,19S6 Senes 153 0 ) 1992 mandatory redemption or not, rank equally; and all preference 6.75% 1987 Series 15 JKK) 1993 MM ranh prior to conunon Mock H.25% 19X9 Series 100JXK) 1995 8<6254,1990 Series 13034(I. 1996 7 85% 1991 Senes 70JM) 1997 9
1 1
,l J
l 1
1 i
1 1
Od!?fMWe'f (5d5 d!U$ Uf0Tht' l'UM:l' Oft 1 Ulk.l bJCh$lt$idfit 5 .
NOTE 11, LEASES The Comp,.'v, as lessee, contracts for certam facihties and equip- Certain of the Constellation Companies, as lessor, base ment under leae apeements with 5 anous espiration dates and entered into operating leases for oflice and retail space. These j renew al options Consistent with the regulatory treatmem IKiE leases espire user periods ranging from 1 to 23 years, with lease paymenh .ue (harged to expense. I case espense, w hich is options to renew. The net book value of property under operating -
compnsed primanly of operating leases. totaled il 3.8 million. leases was $187 million at ikcember 31,1993. The future mini-514 million, and 512A million for the 3 ears ended 1993,1992, mum rentals to be received under operating leases in effect at and 1991, respatnely. Ikcember 31.1993 are as follow s:
'Ibe future rmnimum lece payments at Daember 31,1993 for yn,,
g lon;:-teim non(ancelable operatmg leases are as follows: ,j,, ,gy,g
) car 1994 5 16,685 dn ihnmmdo 1995 15.222 p>94 % 4.4 N 19 % 13,826 1995 4. l S5 lu97 12,398 1996 3A27 1998 10,744 1997 2.755 Thereafter 62,888 199S t ,751 Tobd annmm renul, $ 131,763 Thereafter 2.77f)
Total inunmum lece pay menn 519.527 NOTE 12. T AXE 5 OTHER TH AN INCOME T AXES Tases other than income tases were as follows:
Year EnJedIincmber 3I. I993 1992 194I iI)al:ar ammma in thmuamh1 Real and personal property $107,958 Sim.419 5 89,379 Pubhc service mmp,uiy frant hke 48,693 45.654 46,N I Lei.d security 33,724 34 91i 33,121' Other 9,836 9,M5 9,026 Total tases other than inume toes 202,211 190,339 177,567 Amounh mcluded atme charged to accotinh other than tnes (7,379) (7.335) (6.786)
Tases other than income tnes per Con ohdated Statements of Income $ 194.832 $18UN %I70.781 1 l
4 i
NOTE 13 COMMITMENTS, GU AR ANTEES, AND CONTINGENCIES i Commitmenh Year
^
UGE has made substantial commitment, in connection with its du thousands) 0 coihtruction propam for 1994 and subsequent years in addition. P)91 5 63.675 llGE has entered into two long-terta contracts for the purchase of 1995 71.884 elect:ie generating capacity and energy. The contracts espire in 1996 ' n51 2001 and 2013. Total pay ments under these contracts were 1997 N6
$68.7 milhon, $N).6 million. and $30 nullion during 1993,1992, 1998 67.556 and 1991, respectisely. At Decemtwr 31,1993, the estimated Thereafter _415,736 future pay ments n'or capacity and energ) that flGE is obligated to Total paymenh $757.398 buy under these contracts are as follow <
l I
Bahame Gas wtd Currh Cmpmv andhh,hhann
4 Crrt;nn of the Constellanon Companies har t'onunitted to considered a potentially respmsible party wnh respect to the contribute additional capaal and to make adihtional huns to cer- c!canup of certam environmentally contaminated sites tmned and tain atfdiates joint sentmes, and partnerships m which they hase operated by third parties. Although the cleanup cmts for ceitain an interest As of I)etember 31,19% lhc total amount of imest. environmen! dly contaminated sites couhl be significant, llGli ment requirements commined to by the Comiellation Companies beheses tha the resolution of these maners will not have a h M4 milhon matenal ef feu va h financial position or results of operations.
Aho. IlGE n umrdmating investigation of several fortner Guarantres gas manutaccuring plant sites, including expioranon of corrective 11G1; has agreed to purantee tw o-thirds of certain indchiedness action options to remove coal tar. llowever, no formal legal pro-iucurred by ide liarbor Lier hmer Corp >ranon The amount t cedmys have been imtituted. In 1993, llGE accrued a hability of of suth mdehtedness totah 540 nullion.of winch M6 7 mdhon appnnimately USA million for estimated luture enviromnental- g represenh m jus share of the guarantee l!Gi: beheses that the costs at these sites. Ilased on previous actiom of the PSC,llGE risk 01 matenal loss on the foam guaranteed h nunimal, has deferre l thee e stimated future costs, as well as actual costs As of December 31.190. the total ochtandmg loam arul w hKh has e been mcurred to date, as a regulatory awet t see Note levers of cretht of certain p<mer generanon and real estate pro 5L 'lhe tec hnology f or cleaning up sut h sites is still desetoping, p h guarameed by the Constellanon Compames wete YO rmt. and potential remedies f or these sites have not been identified.
lion Aho. the Comtellanon Companies hae agreed to guarantee Cleanup cosh in escess of the amounts recogni/ed. which couki tertam other bornm mgs of satious pmer generanon and real be significant m total, cannot presently be estinuted.
estate projects. ~lhe Company beheses that the risk of m.uerial loss on the loans guaranteed arul perfonnance Nur/ cur Insurance guarantees o mminul An amdent or an extended outage at either umt of the Cah ert Clitfs Nutlear Power Plant could have a substantial a<hcrse eticct Eni/ronmental ifatten on IKiE. ~lhe primary contingencies resuhmg Inun an incident at
'Ihe Clean Air Att of 19% ithe M ti contains provisiom designed the Cahert Chtis plant would invohe the physical damage to the to reduce wlfur donide and mtrogen oxide emhsiom from elec- plant, the recoverabdity of replacement power cosa and ilGE's tric generatmp statiom in two separate phases. Under Ph.he I of liability to third parties for property damage and Nxtily injury.
the Act. whnh must be implemented by 1995. ItGE espech to Although !!GE maintaim the variom insurance policies currently incur expenditures of appnnimately $55 million. most of whwh nallable to provide coverage for portions of these contingencies, is annbutable to ih portion of the tmt of instalhng a flue gas I!GE does not comider the available imurance to be adequate to desulfmitanon system at the Conemaugh generating station, m cover the cmts that conid result from a major accident or an which I!GE owm a 10.5m mterest IlGE k currently esamining estended outage at either of the Calveit Chffs unis, what actiom will be required in order to comply with Phase 11 of in a&htion,in the event of an incident at any commercial the Act, which must be implemented by 20th llowever. !!GE nuclear power plant in the country, IRiE could be assessed for a anneipates that comphance will be attained by some combinanon petion of any third party claims awociated wah the inchlent.
of fuel sw at hmg, flue pas desuhurization. umt reuremenk, or Under the prosisions of the hice Anderson Act, the limit for third allowance tradmg. party claims f rom a nuclear incident is $9A bilhon. If third party At this time. plans for complying with innogen oxide (Noy daims relating to such an incident exceed $2(U milhon (the control requiremenh under the Act are less certam betause all amount of primary insurance),llGIIs share of the total hability implementation reculations hme not yet been linah/cd by the for thiid party claims could be up to $159 milhon per incident, gmetnment. It n espetled that by the year Nm these regulaimm that wouhl be payable at a rate of $20 inilhon per year.
uill require additional NOs (onnoh for o/one attainment at !!GE and other operators of commercial nuclear power planh IKilCs generanny plans and at other llGE tacihtia The wntroh in the United States are required to purchase imurance to cover a di resuk in ad(htional expendnures that are difficult 10 predtet daims of certain nuclear workers Other non-governmental come poor to lhe iv.uant e of wt h regulahom. Itased on esisting and mercial nudear facilities inay aho purhase such imurance.
propmed otone nonattanuncnt regulations, llGE currently estis Umcrape of up to 540 tnilhon is provided for claims against mates that the NO x contiok at ilGlis generating plants will cost !!GE or others insured by these policin for radiation injuries. If approumaely VIO nulhon. IlGE h turtently unable to predict certain claims w cre made under these policies, !!GE and all poli-
- the cmt of comphanse with the additional requirements at other cyholders could be awessed, with !!GE's share being up to $6.2 IlGE lacihnes. mdhon in any one year.
IIGE has been nonfied by the Environmental Protecnon For physical damage in Caherl Clif(s, ilGE has 523 bilhon Agency WPA) and sescral state agenties that it is being of property insurance,inchnhng $1 A bdlion from an industry na%m no aiiImoc cm;uny e.1%%An m
mutual insurance company. If accidents at any insured plants in October 1988. BUE filed its first fuel rate application for a cause a shortfall of funds at the industry mutual, BGE and all change m its electric f uel rate under the GUPP program. The l poligholders could be assessed, with BGE's share twing up to resultant case before the PSC covers BGE's operating perfor- l
$ 14.6 million. mance in calendar year 1987, and BGin filing demonstrated that if an ontage at Calvert Cliffs is caused by an insured phy sical it met the system-wide and individual nuclear plant performance 1 damage loss and la3ts omre than 21 weeks, BGE has up to $426 targets for 1987. In November 1989, testimony was filed on ,
million per unit of insurance, provided by a different industry behalf of Maryland People's Counsel alleging that seven outages )
mutual insurante company for replacement power costs This at the Cah ert Cliffs plant in 1987 were due to management i amount can be reduced by up to $85 million per unit if an outage imprudence and that the replacement energy costs associated with
, to toth units at Calvert Chih is caused by a singular insured those outages should lx disallowed by the Commission. Total g phydeal damage lost if an outage at any insured plant causes a replacement energy costs associated with the 1987 outages were shott-fall of funds at the industry mutual, BUE and all policy- approximately $33 nullion.
i holders couhl be assessed, wiih BGE A share being up to in May 1989. BGE filed its fuel rate case in which 1988 perfor-59.4 million. mance was to be examined. IIGE met the sy stem-wide and nuclear plant perfonnante targets in 1988. PeopleN Counsel alleges that Rrca rrat ility of lllectric fuel Costs iklE imprudently inanaged seseral outages at Calvert Clif fs, and By stamte, actual elettric f uel costs are retoserabic so long as the BGE estimates that the total replacement energy costs associated PSC finds that ilGE demonstrates that. among other thmgs. it has with these 1988 outages were approdmately $2 million.
maintamed the pnnlucth e capacity of its penerating plants at a rea- On Novemtwr 14,1991, a lleanng Examiner at the PSC issued sonable lesel. Ihe PSC and Niaryland's highest appellate court a proposed Order, w hich became final on December 17,1991 ano have interpreted this as pennitting a subjectise evaluation of each concluded that no disallowance was warranted. The llearing unpl.umed outage at IlGEN generating plants to detennine whether Examiner found that BGE maintained the pmductive capacity of or not ilGE had implemented all reasonable and cost effecthe the Plant at a reasonable level, noting that it produced a near maintenance and operanng control procedures appropnate f or pre- record amount of power and exceeded the GUPP standard. Based senting the outage. Etfective January 1.1987, the PSC authorized on this record, the Order concluded there was sufficient cause to the establishment of the Generating Unit Perfonnance Program escuse any avoidable failures to maintain pnxluctive capacity at (GUPPt to incasme, annually, utdity compliance with mainta'm ing higher levels.
the poxluttive capatity of generating plants at reasonable lesels by During 1989.1990, and 1991, BGE experienced extended out-establishing a system wide generating perfonnance target and it di- ages at Calvert Chffs. In the Spring of 1989, a leak was dhcov-5 idual performance tarFets for eac h base load generating unit. 'm ered around the Unit 2 pres 3urizer heater sleeses during a future tuel rate hearings, actual generating perfonnance after refuehng outage. BGE shut down Unit I as a precautionary mea-adjustment for planned outages will be compared to the system- sure on Niay 6.1989 to in pect for simdar leaks and none were wide target and if met, should signify that BGE has complied found. flowever. Unit I was out of service for the remainder of widi the requirements of Ntaryland law. Failure to meet the 1989 and 285 dan of 1990 to undergo maintenance and modifi-system-wide target will result in resiew of each unit's adjusted cation work to enhance the reliability of various safety systems to attual generating performance versus its performance target m repair equipment and to perfonn required periothe surveillance detennining compliante with the law and the bads for powibly tests. Unit 2, w hich retumed to service on Niay 4,1991, remained imposing a penalty on BGE. Parties to fuel rate heanngs may still out of sersice for the remainder of 1989,199(L and the first part question the prudence of IlGEN actions or inactions w ith reyrct of 1991 to repair the pressurizer, perform maintenance and modi-to any ghen generating plant outage, w hit h could result in the fication work, and complete the refueling. The replacement disalhmance of replacement energy costs by the PSC. energy costs awociated with these extended outages for both units
, Smce the - o units at BGE's Calvert Cliffs Nuclear Power at Calvert Clif fs, concludmg with the retum to sets ice of Umt 2, Plant utihze v d h.a at cost fuel, replacement energy costs are estimated to be $458 milhon.
~
associated w nh umages at these units can be significant. BGE in a December 1940 order issued by the PSC in a BGE base 1 cannot estimate the amount of replacement er,ergy costs that rate proseeding. the PSC found that certain operations and main-could be ch.dlenged or dnallow ed in future fuel rate pmecedings tenance expenses incurred at Cahert Chfh during the test year but such amounts couhl be material. should not be recovered from ratepayers. The PSC found that this i
l
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l work, whith w,n perfonned durine the 19X9- 19% Unit I outage 1991 ourages. ~Ihe work duracteri/ed as asoidable signineantly and fell within the test year. was moidable and caused by HGli increased the duration of the I:mt I outage. Despite the l'SC's actions which were delicient statement regarding no bmdmg ef fect, llGli recognizes that the
'lhe Conunisuon noted m the onlet that ik icsiew and lind. siews esprewed by the PSC nuke the full recusery of all of the ings on these issues pertain to the reasonablenew of IIGliN test- replacement energy costs awociated with the Unit i ouuge ycar operations and in.untenanse espenses for purpmes of settmg doubitut. Therefore. in l>ecember 19W. IlGli recorded a prou-b.be lates and not to the responubthty for replacement nower sion of $35 million agamst the possible disallowance of such costs awatated with the outages at Caheit Chth ~1he PSC stated i.osts. ItGli cannot determine whether replacement energy cosh that ih dechion in the hate rate t m.e w ill h.n e no rm pedi' o/o may IV dhallowed in the present fuel rate proceedmps in escew (bindmg)ellect m the fud rate proteedmg esannuing the 1984- of the pros bion, but such amounh could be nuterial.
NOTE 14. F AIR V ALUE OF FIN ANCI AL INSTRUMENTS
'the following table presenh the carrying amount and I,nr salue of finantial instnnnents indaded in the Consolidated llalance Sheets.
Af Dom!w f /. 1993 1992 Carrying l' air Carry ing Fair Amount 4 alue Amount Value an % wdo rfurrent mei, $ 496.919 $ 496,919 $ KKi,790 $ 40N790 hnesimenh and other awch (25,046 129,732 93318 97,135 Current liaNhno 441968 44A968 M9h30 MuA50 Captah/ anon A163.M4 A311A613 1772,45n 2.871.291 lhe Gurying amount of cuttent ,hsets and current habihtie- Finanetal instrumenn included in capitalization are long-term apponunates fair value because of the short maturity of these debt and redeemable preference stock The fair salue of fixed-rate instrumenh long-term den and redeemable preference stock is estimated Ihe fair ulue of mse'.tmenh and other asseh is b,ned on using quoted market prices v<here as ailable, or by discounting quoted market prices where asailable. Certam insestmenh with a remaining cash flow s at the current market rate.The carrying carrying amount of $70 mdlion at December 31. lo43 and amount of variable-rate long term debt approdmates fair value.
571 nulhon at December 31.1992 are exduded from the amounn 1101, and the Constellation Companies have loan guarantees show n in im estmenu and other .nsch because it w as not practi- totalhng 526.7 million and %% million, respectisely, at taNe to detennme their fint ulues. Ibese imesonenh indude Decemler 31.1993 and 530 and 538 milhon, respectisely, at partnership tmcsonens in puhhe and prhare eqmty and debt December 31,1992 f or w hich it i3 not practicable to determine q seemines, partnership insestmenh in solar powered energy pro- fair salue. h h not anticipated that these loan guarantees will need dutnon facihties, and no,estmenh in stock trush. to be funded l
l Hal'mc thu ami Un tor Comen ed Sulutwna l 1
r: ,
4 n
NOTE 15.. QU ARTERLY FIN ANCI A L D ATA (UN AUDIT ED) 1 The foilsming data are unaudi'ed but,in the opmion of Manage- perials generally occurring during the sum tur and winter {
i ment,ini.lude all adjushne its necessary for a fair presentation. months. Accordingly, comparkons among quarters of a year may !
IlGE's unhty business is sasonal in nature with the peak sales not be indicatise of overall trends and thanges in operations 1
/
Quarter Ended Year Ended i March 31 June 30 Setember 30 Ikcember 31 Ikcember 31 l l993 lla thousands. e.tt ept per share amountsl Resenues $6K3,N25 $5A721 $774,064 $646,104 $2,66d,714 0 in- nei",m onerunens i36,094 65,796 io7as7 55,876 287.46i 90.05x 62i,000 i Net intome 157,058 31,136 309,866 Eanunp apphoble to wmmon stock 55,276 45,300 146,511 20,940 268,027 12.armnp per share ut common stock 0.3M 0.31 ,
1.01 0.14 f.M5 1992 Resenue3 5669.253 5540,x95 $677,059 $644,136 $2,491,343 Income inun operations 127,12I 91309 222.627 94.288 535,345 Net income 59.254 38.tk19 124.620 42,424 2M.347 Larnings apphcaNe to common u & 4S.6ko 27.475 l14 047 31.898 222,100 Earninp per share of unnuon st. ( 0.37 0 20 0.84 0.22 1.63 Reut!!s for the m on,Iquarter of 1943 r efin t the rcs crsal of the cost of the termination bcncfits aswt iated with the 1992 Voluntary Special Early Retirement Program t See Note h Resnits for the ihn,Iqu,n ter of 19% rella t the < gen s of the Ommb: s nudect Reconaliation ,1ct of1993.
Rewks lor theforath , pan ter ,; 1993 ref!crt the wtt rtf t ertain tcrmination benefits e % e Note 7).
Rew!rs Jhr the ju st and tinrd <;uarin s of 1992 icllet t the c mt oj^ternunation bentlits a, sos iated with the 1992 Voluntary Special Early Retirement l'roer am t.\ce Note ">
[lw shm ,*f t lte quar terly carnutgs pcr shar e amomits may not cqual the total f,rr the ycar Jue to changes in the awrage nuthber of shares out-stamhne thronyhunt the scar.
W liabiwrr Ga2 amt ttwnh Gwpmy andSohstaana d
i 4
UTILITY OPERATING STATISTICS 1993 1992 1991 1990 1989 ELECTHic OPER ATING S t ATISTICS Revenues (In Thousands)
Residential $ 931,643 $ 839,954 $ 882,591 $ '718.032 $ 648,883 Commercial N69,M29 842,694 850,018 758,573 668.819 Industrial 199,042 201,950 212, % 4 194,951 191,795_
System Sales 2 000,514 1,8x4,598 1,945,l"3 1,671,556 1,509,498 Interthange Sales 91,543 M,323 23M 5 26.629 17J02 Other 23,09M 19 002 25,187 14,268 19,867 70tal $2,115,155 $1.967,923 $1.994,525 $1.712.453 $ 1,547,167 Sales (in Thousanda Mw n Residential 10,614 9,735 10,097 9,283 9,451 Commercial 12,395 I I,m 11,707 11,352 11.079 @
industrial 3,763 3.663 3.70S 3,743 4.261 Sy stem Sales 26,772 25.307 25,512 24,378 24,791 Interchange Sales 4,149 3,180 1,166 1.038 595 lotal 30,921 28.487 26,673 25,466 25,386 Cu stomers Residentral 96M,212 956,570 939,734 930,880 913,910 Commercial 100,820 99,673 98,254 96,567 95,102 Industrial 3,800 3,761 3,584 3,526 3,l32
~
Total 1,072,832 I .060JX4 1 J k41,572 1,030,973 I.012,144 Aselage Use per Residential Customer-kw H 10,963 10,177 10,744 9,973 10,341 Ascrape Rate ivr Awn IS) stem Sales Residential 8.7M 8.63 S.74 7,73 6.87 Commercial 7,02 7.08 7.26 6.68 6D4 Industrial 5.29 5.51 5.74 5.21 4.50 Peak load ione-hourp uw 5,876 5,558 5,910 5,477 5,304 Capainhty at Summer Peak-uw 6,701 6,6s? 6JM8 6,159 6,l M Sy stein 1.oad I actor 55,2 9 54 M 52.4 % 54.1 % 57.4 %
G AS OPER ATING ST ATiS TICS Resenues (in lhousand o Re ddential $ 265,601 $ 242,737 $ 220,653 $ 218,967 $ 242,389 Commercial Includmg ikliseiy Senice 121,M32 112,147 96,189 M9,573 112,630 Iklisery Service 3,287 3,591 3,031 3.304 4,409 Industrial thcluding Deinery Senice 22,250 21,l23 14,855 32A39 18,163 Ikinery Semee 12,920 14,290 14,288 17,851 22,661 Other 9.959 9.049 9,179 11,285 11.349 Total $ 435,x49 5 402,937 $ 358,195 $ 373,419 $ 411,801 Sales (In Thousandsht>r n Residential 40,029 39J42 36.519 35.026 39,806 Commewial thcluding Ikinery Senice 23,830 23A78 20.687 18,lM 21,964 Dehvery Senice 7,428 7,102 6,433 5,872 5,773 Industrial beluding iklisery Sernce 5,298 5,314 3,605 7,305 3,697 Iklivery Service 31,390 33,638 34.240 34,720 39A52 lotal 107,975 108,574 101,484 101.087 110,697 Customers Resukutul 491,165 486.S63 482,085 482,680 482,538 Commercial 37,51N 37,000 36,561 35,953 35,790 Industrial 1,333 1,412 1.385 lA01 1,398 Total 530,036 525,275 520.031 520,0 " $ 19,726 Average Use per Reudential Custenwr-Thenns N15 802 758 ,
'3 825 Aserage Rate per Thernr$
( Residential .66 .62 #1 ,
.61 Commercial Wuluding iklisery Scrvlet .51 .48 .46 W .51 Industrial Wuludmg Ikihery Sen t.e> .42 .40 .41 44 .50 Peak Day Sendout ota 657,700 609,200 610,200 653,900 663,200 Peak Day Capabihty-nin 847,000 847JiOO 817JXO 853.10) 761,000 Cerutn po wr. war ,;was hat e im re,wd ro umfurm to !!ae norror yearb p rwaawm.
Elahawir Gas and ilecnic Cempmy and Sahvidsnin
D : CORPORATE AND UTILITY OFFICERS Christian 11. Poindoter Ronald W. Low man Chairman of the floard and Chief Etecutis e 0))iccr Vice President. Fossil Energy Aqc: 55 Years of servic e: 2b Age: 49 Years ofsenice: 25 Edward A.Crooke G. Dowell Schwarts.Jr.
President and Chw] Operating Oficer Vice President. GeneralServices Age: 55 Years nf s< rvic c: 25 A ye:57 Years of servit c: 35 George C, Creel Charles W.Shinery .
0 Senior Vic e President. Gt neration Vice President. Finance & Accounting Aye: 59 )e ars of serricc: 33 Chief Financial Officer and Secretarv Age: JS Years qf servic e: 21 Thomas F. llrady Vice President, Cusn,mer Sertwe & Diuribution Joseph A. Tiernan .
A ge: 44 Yearsof wrvice:24 Vice President. Cor;) orate A]l airs Age'55 Years ofsenice: 25 lierhert D, Cow, Jr.
Vice President. Alarletinx & Gas Operations Richard M. Itange Jr.
Age 39 Ycars of service: 37 Controller and A ssistant Secretary A ye: 49 Years ofservit e: 22 Roberi E. Denton Vice President, Nm lear Energy Ly nne ll. Church Axe: 30 Years qf sen ire: .?3 ireawrer and Assistant Secretary Age: 50 Year s ofservice: 9 j- Carserlo Doyle Ywe President, Electric Interconneuion & Transmission Thomas E. Russin, Jr.
Axe: 44 Year s vi scrrice: 22 Assistant Tucasurer A ge: 39 ' Years ofservice:- l7 Jon M. Files Vu e President. Management Services Age:!M Years of verfi:e: Jb l
I CHANGES IN OFFICERS AND DIRECTORS l
-Elfecove Jannary 1,1994, the Hoard of Directors elected Carserio Effective January 1,'!994, the following members of the Board -)
Doyle, former Manager of Telecommunications, to the position of were electedtJames R. Curtiss Dr. Freeman A. lirabowski 111, I Vice President, Electric interconnection & Transmission. lie and Nancy Lampton.
replaced iterbert D. Coss, Jr., w ho was named Vice President, The following membeis retired from the Hoard of Directors Marketing & Gas Operations. Mr. Coss replaced effective December 31,1993: Leslie B. Disharoon, George G.-
l i
'i Michael J. Chesser, w ho left the company in January 1994. Radehffe, and Harry K. Wells.
Also during 1993, Charles W. Shhery became Vice President of Finance & Accounting and Chief Financial Officer Lynne II Church w as elected Treasurer and Awistant Secretary, and -
i j Richard M. Bange, Jrm was elected Controller and
)
- Assistant Secretary.
Effecthe July 1,1993, George D. England retired from the j
company uith more than 38 years of sernee.
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CONSTELLATION SUBSIDIARIES . >
I 1
Officers Christian II. Poindester Slesen D. Kesler Chair man of the BoarJ. Constellation lloiding s, Inc. President, Constellation in vestments, Inc.
Age:53 Axe'42 liruce M, Ambler Randall M. GrifTin President and Chief E u cuttre Ol}iver. nesident, Con stellation Real Estate Go oup, Inc.
Constellation Holdutgs. Inc. Age: 49 0 Acting President. Constellation Energy, luc.
James W. 3eifcoat 1
Axe: 34 President, Constellation Health Services inc.
Douglas S Perry Arc 40 L' ice President and General Coumel, 1 Comtellanon Holdmxs, Inc. Robert V. Windham Age: 44 President Church Street Station,Inc. i Age:$1 CON S T ELL A TION HOLDINGS CO N STELL ATIO N REAL EsT ATE GROUP Constellation Iloidings provides direction to all of its operatmg Thi4 is the parent company of sese-al businewes, including subsidianes and furnishes them with legal, financial, tas, Church Street Station in Orlando,1 lorida, that operate projects .
I accounting, and personnel services. In addinon, deenions on in ses eral real estate categories. Constellation Real Estate ;
I new im estments are controlled from Constellation iloidings. perfonns des elopment, construction, and operational activities.
Comtellation IIealth Services, through joint ventures, owns CONSTELL ATION ENERGY senior-lising and retirement cornmunities, as well as awisted-Thn is the senior member of our Energy Group. Under the lising facihties for the elderly.
auspices of Constellation Eiietgy, the company participates in a number of ahemat:ve energy and co-generation pmjects producing CONST ELL ATION lNVESTMENTS clectricHy for sale n i other utilities. The energy group deselops, Constellation Investments serves as a significant prm ider of arranges (mancing fu . builds, and operates a number of w holesale current income from its investments in securities, investment j l
power projects throught ut th.: country, partnerships, and financial-service companies.
CHANGES IN O F F I C 8E R S Bruce M. Ambler becan.e Acting President of Constellation .l Energy when Terry L Ogletree resigned from the company effective March 31,1993.
Randall M. Grif fin became President of Constellation Real 4 I' Estate Group on May 24,1993. J. Richard O'Connell, w ho I- was President of Constellation Real ihtate, Inc., resigned l from the company on July 1,1993.
l.
- theHinhwe G.n arid Fia rns Camtruty an,I Auhnliano i
e
- . ' C O N S T E L L A T l O N SUBSIDIARIES i
i BO ARD OF DIRECTORS N
I
. Christian 11. Poindester T
Ypc . . f Chairman of the Board. ConsteBation iloidings; Chairman of
' the Board anJ Chief Erecutis e 0))ic er. Baltimore Gas and Electric Compemy; member since 1935.
i Ilruce M. Ambler Afr. Poinde tter President and Chief Etecutive Officer, Constellation floidings; 4
member since 1989. &
- ?
^
- 11. l'urlong Italdwin
- Chairman of the Board and Chief Etecutive of]icer, i ~
f l Atercantile Bankshares Coq oration (hank holding company),
. Baltimor c; mernher stnce 1937; serves on audit committee, 4 4 Edward A. Crooke Alt, Ambler Alr. Baldwin Air.Crooke President and Chief Operatiny (1))ic cr, Baltimore Gas and Electric Company; member since 1993.
~
l.
[. { . .
Jerome W. Geckte i.; ;
Retired Chairman of the BoarJ. PJHI Corporation Ivehici, ,
I E
- % relocation, and manageme.n services), Baltimore; member
~' g since 1985; chairman of comminee on management.
I Edward W. Ka3 Retired Co-Chairman and Chief Operating Officer, Ernst & '
Air. Ga kle Alr. Kay Air. AlcGowan Yowg katijk Jj>d>Hc awoumams %'ashington,0.C.;
member since 1988; c hairman of audit cor imittee,
_ y t
- f. '-
George V. McGowan
- . /' -
Former Chairman of the Board and Chief Eren. tit e Officer, J%
~
Bahimore Gas anJ Electric Company: member since 1983.
4 l'aul G. Miller
'4 Chairman of the Board, Supercomputer Systems, Inc. (design. l Alt. Afiller Alr. Shattua L Alr. Trueschler manufacture, and sale of supercomputers), and Chairman of
(
the Board and Trearurer. lhC. Inc. (computer data storage '
systems). Baltimore; member since 1984; serves on auJit committee.
CH ANGES IN DIRECTORS Mayo A.Shattuck til Ef fecine June 18,1993. Edward A Cnuke was elected to the President and Chief Ope : ting Of/iccr, Alex Brown inc, lloard of Constellation ilohhny (investment Ir.nking and securities brokerage) Bahimore; member sam e 1994.
On December 31, lW. Leslie B. Dkhanon retired from the Hoani of Constellation iloidion liernard C Trueschler Former Chairman of the Board and Chief Etecutive Officer.
Elfective February 1.1994, Mayo A. Shattuck 111 w as elected to Baltimore Gas and Electric Company; mcmber since 1983.
the lloard of Constellation lloklino Bahmwe Gas an.1Ucctra commen an,i s'ia>suwres -
_ _ _.___ _ _ . _ . . _ _ _ _ _ . _ ~ . _ _ _ _ _ _ _ __
, e l FIVE-YEAR STdTISTICAL
SUMMARY
1 i
i 1993 1992 1991 1990 1989 f COMMON STOCK DATA
!_ Quarterly Earnings l'er Share l First Quarter $ .33 5 .37 $.40 $.54 $ .53 Second Quarter .31 .20 .38 .23 .30 1hird Quirier 1.01 .8-l .84 .72 9) l j 1:ourth Qumrter .14 .22 .05 1.09) .29 Total $1.85 $ 1.63 $1.67 $ 1.40 $2.03 4
l .s .
Dividends Disidends declared per share $1.47 $ 1.43 $ 1.40 $ 1.40 $1.38 Dnidends paid per share 1.46 1.42 1.40 1.40 1.37 Dnidend payout ratio 79.5% 8739 83.8% 100.09 6S.0%
- 31arket l* rices j- liigh $27'. i $24% 522% $23% $23%
- j. Low 22h 19Z 17 % 16 % 19 j Close 25 % 23 % 22% 18 % 23 I
l l
C APIT AL STRUC TURC l
Conwlidated Long-term debt 47,4 4 46,14 47.89 47.99 44.9 9 i Short term debt -
0.2 3.8 4.1 2.6 i
Preferred and preference stiwk 9.2 9.8 10.1 10.2 10.5 l
3 Common shareholders' equity 43.4 43.9 38.3 37.8 42.0 i
Utility Only I.ong-term debt 44.5 9 42.94 45.60 45.0% 42.4 9 Short term debt --
0.3 3.4 3.6 2.9 j Preferred and preference stock 10.9 11.6 12.1 12.3 12.4 t Common hareholders' equity 44.6 45 2 38.9 39.1 42.3 L $505'l o $ (ifil IfWh _N ("YY5Eb5Ik\ fYY \ SYYL' YlNi405N UIAl9" O?f ff ('Ll$$Y $ 0( h SN$ )tI$ $hW f(O$ dUV $0 I hY?$f(b iU he LN(VY$'Y mentbes of sharr\ ontstarh}tnq du onghout the y ear.
~
HAREHOLDER I N-F O R M A T I O N COMMON stock Divf DENDS AND PRICE RANGE'S 1993 1992 Disidend Price Dividend Price Declared liigh I.uw Declared liigh Low First Quarter $ J6 $ 26% $ 22% $ .35 5 23% $ 19%
Second Quarter .37 26% 23 % 36 22 % 19 %
lhird Quaner .37 27 % 25 % .36 24 % 21%
L Fourth Quarter J7 26% 23 % .36 24 % 21 %
Total $1,47 $l.43
~ Ol V f D r.N D POL IC Y ANNUAL MEETING The common stock is entitled to disidends when and as declared by The annual meeting of shareholders will be held at 10:00 a.m. on
. the lloard of Directors. There are no limitations in any indenture or Wednesday, April 20,1994, at the Sheraton inner liarbor llotel,
'other agreements on pay ment of dividends. Iloiders of preferred 300 South Charles Street, Bahimore, Maryland.
=
. stock (firsu and hokters of preference stock (nest). however, are
+ entitled to neceise, w hen and as declared from the surplus or net FORM 10 K pmfits, cumulative yearly dividends at the fixed preferential rate Upon u ritten request, the company will furnish, without specified for each series and no more, payable quarterly, and to charge, a copy ofits Form 10-K annual report, including receise when due the applicable preference stock redemption pay- financial statements, after it is filed uith the Securities and ments. before any disidend on the common stock shall be paid or inchange Commission in Alarch 1994. Requests should be set apart. Dnidend, hase been paid on the conunon stock continu. addressed to Curles W. Shisery, Chief Financial Officer ously since 1910. Future dividends depend upon future camings, und Secretary, Vice President-Finance & Accounting, the financial condition of the company, and other factors. Quarterly P.O. Ilns 1475,llattimore,31ar3fand 212031475.
dividends were declared on the conunon stock during 1993 and 1992 in the amounts set forth above. AUDITORS Coopers & L3brand C OM wtON ST OCK DIVIDEND D ATES
- Record dates are nomially on the 10th of March, June, September. EXECUTIVE OFF1CES and December. Quarterly dividends are customarily mailed to each Gas and Electric Building b shan'hokler on or about the 1st of April, July, October, and January. Charles Center Baltimore, Maryland 21201 OlVf DEND REINVESTMENT Mail: P.O. Bot 1473 AND STOCK PURCH ASE PLAN Baltimore, Mary land 21203-1475 The company's Dividend Reinvestment and Stock Purchase Plan pmvides an opportunity for hoklers of the company's common SH AREHOLDERS' lNQUtRtES AND ASSISTANCE stock to acquire additional shares of such stock in a convenient and Shareholders desiring assistance with lost or stolen stock certifi-economical manner. Participants in the plan may reinvest cash cates or dividend checks, name changes, address changes, stock dividends on all or a portion of their shares of common stock and/or transfers, or other matters should call the shareholder services p make optional cash pay memt representatis es on our toll-free telephone numbers. l l- The following toli-free telephone numbers are available ]
l STOCK TH ADiNG during our business hours,8:00 a.m. to'4:4$ p.m.:
. The companyN common stock, w hich is traded under the ticker Baltimore Metropcditan Area (410)783-5920 i! sy mbol BGE, is listed on the New York. Chicago, and Pacific stock Within Maryland ' l-80(k492-2861 enhanges, and has unlisted trading privileges on the Boston, Outside of Maryland - .1-80(k2584)499 - 3
, Cincinnati, and Philadelphia exchanges. As of Dewmber 31,1993, 'ITYATD llearing Impaired 1-80(k492-5539 t
' there were 82,287 common thareholders of record. Letters shouhl be addressed to:
Baltimore Gas and Electric Company
Ilarris Trust and Seings Bank P.O. Bos 1642
}. Chicago, Illinois' Baltimore, Maryland 21203 lM2
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e-FO. Itat 1479 (talnnrorc. Manlan,!21XU 1475
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