ML20081A762
| ML20081A762 | |
| Person / Time | |
|---|---|
| Site: | Calvert Cliffs  |
| Issue date: | 12/31/1994 |
| From: | Crooke E, Denton R, Poindexter C BALTIMORE GAS & ELECTRIC CO. |
| To: | NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM) |
| References | |
| NUDOCS 9503150285 | |
| Download: ML20081A762 (68) | |
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Rostar E. DENTON Baltimore Gas and Electric Company Vice President Calvert Giffs Nuclear Power Plant Nuclear Energy it50 Calvert Oiffs Parkway Lusby, Maryland 20657 410 586-2200 Ext.4455 Iml 410 260-4455 Baltimore March 10,1995 U. S. Nuclear Regulatoiy Commission Washington, DC 20555 ATTENTION:
Document Control Desk
SUBJECT:
Calvert Cliffs Nuclear Power Plant Unit Nos.1 & 2; Docket Nos. 50-317 & 50-318 1994 Annual Report in accordance with the requirements of 10 CFR 50.71(b), enclosed please find a copy of the Baltimore Gas and Electric Company's 1994 Annual Report to its shareholders.
Should you have questions regarding this matter, we will be pleased to discuss them with you.
Very truly yours, d
RED /DWM/bjd Enclosure l
cc:
P. R. Wilson, NRC l
(Without Enclosure)
D. A. Brune, Esquire J. E. Silberg, Esquire L. B. Marsh, NRC D G. Mcdonald, Jr., NRC i
T T. Martin, NRC l
R.1. McLean, DNR J 11. Walter, PSC 9'503150285 941231 h.
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1994 ANNUAL REPORT TO SH AREHOLDERS
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Clean Natural Gas l-l, BGE: Still Your Best Choice
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Highlights Contents 1994 1993
% Change 1.
We're Committed to Remaining Your Best Investment Choice-What does thefuture holdfor the utility l
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industry? How will BGE respond? In his annualletter to shareholders, Chairman
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$ 1.81
$ 1.77 2.3 %
0.12 0.08 50.0 %
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$ 1.93
$ 1.85 4.3 %
Christian H. Poindexter discusses why
$ 1.51
$ 1.47 2.7 %
BGE is still a smart investment choice.
147.1 145.1 1.4 %
10.63 %
10.39 %
2.3 %.
$18.42
$17.94 2.7 %
5.
We're Earning Our Customers'
$ 22%
$ 25%
(12.8) %
Confidence Every Day Building tighter bonds with our customers is key, says Firsident and Chief Operating Oficer Edward A. Crooke. His letter 'ooks at
$2,127
$2,112 0.7 %
BGE's performance in 1994, with an eye on 421 433 (2.8) %
our goalsfor 1995-and beyond.
235 1%
19.9 %
$2,783
$2.741 1.5 %
8.
BGE at a Glance
$ 324
$ 310 4.5 %
$ 184
$ 268 6.0 g Here's a snapshot ofBGE and its subsia.
including ourproducts and markets, our
$6,986
$6,820 2.4 %
1994 results, significant developments in our 1,158 1,167 (0.8) %
industries, and a look at what's ahead.
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$8,144
$7,987 2.0 %
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$ 449
$ 455 (1.3) %
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- 10. BGE: Still Your Best Choice
$ 319
$ 307 3.9 %
Drawing on nearly 180 years ofexperience.
we're committed to excellence in everything we do: serving our customers, staying cost-27.5 26.8 2.5 %
conscious, pivviding energy products and 108.7 108.0 0.6 %
services tofit our customers'needs, making the most ofour diverssfied businesses, and investing in the quality ofhfe in our l
conununity.
Earnings and Dividends Declared Common Stock Market Price I
per Share of Common Stock and Book Value
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- 20. Glossary of Terms l~~ll 515 g;3 _ _ _ _ _ _ _. _ _. _ _..
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- 21. Financial Contents un -
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- 58. BGE Boards of Directors and Officers 3,
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- 63. Shareholder Information
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@ This annual report is printed on recycledpaper; which was nuulefront the SIX) tons of waste paper BGE recycles each year.
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GE has supplied energy to customers in Central Marylandfor nearly 180 years.
While the utility industry is changing rapidly, our customers know that one thing doesn't change: our reputation for quality people, products, and services.
I In 1994, we strengthened our conunionent to giving our customers the best valuefor their energy dollar; while working to keep our costs as low as possible.
That' why we're the best energy choice they s
can make.
We have also strengthened our conunitment to continuously impmving our perfonnance as an t
investment. Strong, pmfitable, stable, we've been paying uninterrupted dividendsfor 84 years.
That's why we're still one of the best investment choices you can make.
The cover of this year's annual report illustrates our dedication to our core utility businesses: affont-able electricity and natund gas. We intend to keep doing what we already de well---even as we begin exciting and pmfitable enterprises in gas bmkering, real-time pricing, new energy technologies, home i
pmducts and services, and diversified bitsinesses.
Yesterday, today, and tomormw. BGE: Stillyour best choice.
. Corporate Profile i
i Baltimore Gas and in milli <ms. excret per-simre amoumis 5
Electric Company i
Comnmn Stock Data
. Combines a core utility bu.,iness (electric and gas)
Earnings per share with diversifL-d, nonutility UtiHty operation 7.
Diversified activities operations Total i
+ Serves 2,300 square miles m Central h1aryland with Dividends declared per share i
electricity, and 617 square Average shares outstanding miles wn. h natural gas Return on averace common equity Book value per share-year-end iloids assets of over hiarket price per share-year-end
$8 billion in utility and j
nonutility operations Financial Data
+ Earned combined revenues Revenues of $2.8 billion in 1994 Electric from titility and diversified Gas i
operations Diversined activities I
Employs 8,100 full-time Total workers as hlarjland's ninth Net income large.st employer Earnings applicable to common stock Amts
- Is the nation's oldest pas company and one of the Utility De ned earliest electric utilities Total BGEserres Utility construction expenditures i
More han 2.6 million BGE investment in Constellation Maryland residents Companies More than I million mility s m Data electne customers Electric system sales-megawatt-hours
+ More than 535,000 Gas sales-dekatherms gas customers Pennsylvania
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Chairman's Letter to Shareholders We're Committed to Remaining YOUR BEST INVESTMENT Choice In 1994, BGE made solidprogress in a rapidly changing energy industry. We took aggressive steps to improve our cost structure. We're trvitalizing virtually every part of
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our business to support our mission: achieving complete customer satisfaction by providing superior energy products and services. And we successfidly countered our competition's every move by giving our customers a better valuepr their energy dollars.
Still, the Inte test of our abilities will come in the nextfew years asfederal and state
,a rrgulatory changes reshape our industry. That's the crux ofrny message-to share with i
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you my thoughts on what lies before us, how we will respond, and why BGE remains y
jour best investment choice.
Christian H. Poindexter Wyears,look back over the past few henI
- We made excellent strides in improving I'm delighted by how far our cost structure by reducing operating we've come, and how fast. In a and maintenance costs 6 percent below letter that follows this one, Ed Crooke,
'93 levels.
BGE Stock Fares BGE's President and Chief Operating Officer,
. We downsized our labor force about Better Than Market describes our 1994 accomplishments at greater 13 percent through special retirement, m,
length. Let me give you a few highlights.
severance, and career-assistance programs,
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- Common-stock earnings increased by reaching our lowest employment level
$16 million, or 6 percent, over 1993, as a since 1975.
result of record cold weather last winter, a And earnings from our Constellation offset by unseasonably mild temperatures subsidiaries increased 16 percent over 1993.
in late summer and fall.
Rising interest rates Last year was not without its disappointments, and uncertainty over
- BGE increased its annual dividend last though. Fear of the unknown-namely, how the industry competition spring 3 percent, to $1.52 per share, the first electric industry will handle competition-combined to cause the utihty to do so after two other large utilities combined with rising interest rates to cause our value ofelectric stocks cut dividends deeply-stock price to decline by nearly 13 percent. This to decline in 1994.
- Our people and systems performed excep-was not too bad, however, compared to the Dow BGE' stockfared rela-l s
tionally well throughout an incredibly harsh Jones Utility Average, which dropped almost
'irely well howere';
winter that shattered demand records for 21 percent.
darrasingjust undu both gas and electricity.
13 perrent. That was New Regulations Transform Gas Business inuch better than the
- We added more than 9.500 new gas The regulatory changes we're experiencing on Dow Jones Utility customers and 160 miles of new gas mains.
the electric side of our business are similar to Arcrage, whichfell by exceeding 1993's growth by over 50 percent.
those we've experienced in the natural gas ahnost 21 perrent.
industry over the past decade. The effons of i
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the Federal Energy Regulatory Commission
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- g (FERC) to stimulate competition in the gas industry culminated in Order 636, which Sp-yl g'
unbundled gas-service elements. Now gas users c
3 have an array of purchasing, transponation, 1 '
brokering, and storage options from which to
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liefore Order 636, we bought gas primarily from the pipelines. Now flGE and otuer kical g
g distribution companies buy gas directly from
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i transportation and stocp. IlGE's large gas customers are arranging for their own supplies,
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- mummmen, tion to W a 'acilities. Although the Maryland
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tigating options for reforming the state's pas t
regulation, ilGE is now beginning to take
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advantage of new growth opportunities made t
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Electric Regulatory Changes Ahead J nuary 17. The PSC plans to issue a general A "7h be competitive, you Over the past two years FERC ias been policy statement in June of 1995 on changes have to thinA liAe a i
carrying out the basic tenets of the Energy recommended for Maryland's electric industry. compctaor; says Pmject Policy Act of 1992. Its top priority is to Manager Pete fluote, right, promote efficiency by ensuring a competitive BGE Responds to PSC Inquiry ho m m s An orm -
bulk power market through equal access to I welcome the PSC's examination into electric rion of a strudl-scalcAible utility transmission systems. Last November, utility regulation as an important step toward plant I1GE is budding at our i
FERC also began examining the ro'c of power reducing the uncertainty in the financial Perryman site to meet peaA pooling and electric utility restructuring in an markets. As we told the PSC in our response, demand. "We're kept the era of increased competition.
we believe there are only two practical oixanianion sman, the alternatives for the course that regulation accountabihty c/ car and State regulators are mming just as quickly to gircn the budda irucntires redefine the electrie energy market. Last
,.y n. duce costs. " 3ap /fuote, September, Maryland's PSC announced it Under the first alternative, which I believe 3hmrn with Pmject Contnds would hold hearings in 1995 to consider embodies the spirit of the Energy Policy Act.
Administrator Ron lla#ance. -
electric utility restructuring, the impact of the ma:Let for electric generation is opened up. /ti a nw A ' hat's paying competition, and regulatory reform. In its issue This will allow utilities and independent power c6 e E w:s to nalire paper called "New Directions in Energy producers to offer their generating capacity to man-milhon o/ar Regulations." the PSC defined possible hical utilities, and utility custruers to continue ^arings by the time the lanuganan onnbustion scenarios ranging from limited to fuli. mpeti-to buy energy from their kical utility. This
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tion. IlGE fileo its response with the PSC on choice would require little regulatory reform.
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i The second alternative is to allow retail compe-quality of senice, we creend dedicated teams of tition, under which all customers could choose employees to serve the needs of specific their generation suppliers. Generation would be customer groups-for example, large industrials, fully competitive without rate regulation; trans-hospitals, schools, and govemment agencies.
mission and distribution would continue to be We're developing a marketing strategy that first l
regulated. This option would require a dramatic identifies customers with the most revenue l
change in the way we're regulated cur <ently.
BGE Gas Prices potential. Next, we will estabbsh quantifiable Well Below Average marketing and sales plans that include complete Unfortunatuy, we can't wait for FERC and the icmu ru n,w portfolios of products, senices, and price offer-PSC to define the future before we start ings for various customer segments. And we're preparing for it. To make sure we're ready for M
stengthem.ng our team by fdling certain critical any eventuality, we're planning along two M
marketmg positions with people who have
"#E*" # E successful track records in competitive industries.
l Re first path extends decisions we made in Ml Expansion of our gas bus. mess is a key element carly 1994. It assumes that keeping our genera-M of our marketing strategy as well. We now
- t. ion and distribution businesser with.m a smgle E
serve about 30 percent of our electric service i
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ecmpany is still our best option. We'd continue
-m territory with gas, leaving room for s.igmficant operating as a combination gas and electric M
growth. Our res.dential gas prices average i
utd. ity while kioking to increase revenues from about 20 percent less than those of nearby local 50 m
70 so
'm nonmidiu.onal sources. The second planning path will prepare us to separate into mdividual bus.i.
Gas business expan-distribution companies, giving us a strong nesses if regulators decide unbundling electnc sinn is a gey cfeinent advantage. And customers are requesting gas ofBGE' irrenue.
for both home and business use because,t's s
i services is in the best interests of consumers.
gmwth strategy. Our clean, affordable, and dependable. Our ultimate Our current tranaission system and pooling chrts air helped by goal is to reposition ourselves as a full-service aurangement probably will change no matter thefact that our energy company that is the provider of choice.
what scenario the PSC chooses, although it residential gas price will continue to be federally regulated. A is about 20perrent No matter what ERC and the PSC ultimately team of BGE employees is at work with the lower than the m
Re #as Price following objectives: develop a structure that price competition in the ciectric market.That's doesn't harm reliability, maintain a fair rate of why we will continue to reduce our operating, return on our investment, and ensure that the rnaintenance, and capital expenditu es and interests of BGE's customers and shareholders have set aggressive targets to redue: total are represented.
generation costs.
Distritation Itemmins Key Strategic Asset Investment rating agencies are also giving far Regardless of uhich path we ultimately take, more weight to generation costs when j. dg.mg u
we're likely to maintain the franchn.e status of utih.. ties' imancial health. They believe utih..ues the electric and gas distnbution systems, which w th low-cost generation will maintain or even
- give us direct links to our customers. Our goal, improve the.ir credit ratings because they,re therefore, is to increase the encryy products better able to keep old customers and attract and senices we offer as a gas and electne new ones. The agencies are also paying close distribut on bus. mess.
attenuon to the percentage of revenues a utility Cmating competitively priced products and receives from industrial sales, reasoning that l
services is the work of our newly fomied those revenues are most vulnerable to competi-Marketing & Sales Division. To improve our tion. So the lower the percentage, the better.
On both counts, BGE looks go(xi. Our average home electronics sales and service businesses industrial rate is more than 20 percent below for decades, we've now broadened our scope the regional average. And BGE's reliance on to increase revenues and strengthen customer industrial sales is among the lowest in the Mid-ties. In December, BGE purchased Maryland Atlantic region. In fact, industrial customers Environmental Systems, Inc. (MESI), a provided only 10 percent of BGE's total elec-company specializing in the installation and tric system revenues in 1994. Two other factors senice of commercial and residential heating.
l also improve our competitive position: We air conditioning, and plumbing. MESI's owner have no municipal utilities or other large and president, William 11. Munn, was named wholesale customers withm our senice terri-President and Chief Executive Officer of tory, and we don't have to incur heavy capital BGE Ilome Pmducts & Services effective expenses to meet Clean Air Act requirements.
January 1,1995.
a Diversifled Businesses Build Custonner Velee l
We'll Reesein e Yleid Oriented inveetnoont
$3 By voting las: May to increase our dividend, Our diverst'ied businesses will continue to
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l BGE's Board of Directors showed its confi-provide profit opportunities, but with one desummastw?
m>g dence in BGE's financial strength, flexibility.
important difference. In 1991, we adopted
,a a synergistic approach to total customer ggj and competitive position. But we also wanted service. The combined talents of BGE and
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to send a clear message to our investors: We Constellation iloidings developed a proposal f 6862.%lloffr) plan to remain the yield-oriented equity invest-that beludes a 10-year contract with the Johns k$
2 ment we have always been. All our long-term flopkins llospital and University, one of our NO8IDI5 }
financial targets and competitive strategies largest customers. The proposal, which will be J
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support this goal.
finalized in early 1995, addresses some of b-i b -
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Now more than ever, success is in our own L 1 8eggand a~
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liopkins' Ley energy and real estate needs m.
cya hands. We wd. l continue to respond to our new return for a long-term commitment. The t.
business environment in ways that enable us to
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llopkins' proposal m. eludes a long-term energy supply contract, building construction, and pmduce higher earnings that will suppon divi-c
' Strategies :
dend growth. This no doubt influenced your energy systems management.
imtial decision to mvest in BGE..andIhope.it Besides working closely with BGE to Support will continue to do so. We're committed to providing even higher levels of customer suppon the utility's existing customers, the this goal',,
Constellation Companies will continue to satisfaction and service reliability. And as we pursue their individual obkclives. Constellation reach that goal, you, our investors, will share Energy is taking action to further enhance the in the rewards.
pmfitability of its 24 wholesale power projects, I thank y(.u for your continued confidence w hile exploring growth opportunities in North in BGE.
and South America. Constellation Real Estate Group will continue to reduce real estate assets by selling fully mature projects at reasonable values. The company also plans to add 15 or more assisted living facilities for seniors.
('l f Our newly fonned BGE ilome Products &
Christian 11. Poindexter Services subsidiary will also enhance our Cnainnan of the Ifoun/ and ability to be a full senice energy company.
Chief Eaccutive OITicer Although we've been in the appliance and February 10. IWS
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President's Letter to Shareholders We're Earning Our CUSTOMERS' CONFIDENCE Every Day in years past, we measured our success with statistics on the nuts and bohs of nmning a utility. Kilowatt-hours and dekatnenns sold. Degree-days and system upgrades. Plants l
under construction and rate cases under review.
in i995, these traditional measures of operating perfonnance arr not suficient. What counts even more today is our ability to earn our customers' confidence-day in, day out.
In a competitive snarlet, combination companies have an inherent advantage. M can ofer our customers one-stop slwppingfor energy pn> ducts and services, an important y
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distiaction at a time when customers are discovering they have options.
L Edwant A. Crooke l
e must be adamant about identi-more kilowatt-hour output from less resource fying and delivering senices that input in the power production process. Last llGE Generation cet ur customers' needs. That year our fossil plants decreased their average Costs Decrease Faster Than Region's mean meeting several criteria that directly and ur.it cost of power generation by over
< cms en An-,, n-o indirectly benefit our customers and strengtten 10 percent. And we are creating a more our relationship with them.
flexible and efficient fossil work force by cross-g_
training plant personnel to perform a full range h MM w o
competitive Position knproved of operations and maintenance work.
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In 1994, our strategies drew votes of confi-In 1994, we reduced nuclear generation costs dence from the financial community. Several by 14 percent over 1993. In the year ahead, we q
investment agencies improved BGE's credit w 11 strive to shorten our nuclear outages and to
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g outlook, citing the strength of our financial reduce operating costs, as well as explore the performance and aggressive cost cutting. We benefits of renewing the operating licenses of m m m m e ww
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reduced operating and maintenance costs by Calven Cliffs' two nuclear units due to expire m. a.,,,,,,,,~m 545 million and held the line on construction in 2014 and 2016.
n Over the past t/ure expenditures. In 1995, we plan to reduce years. ItGE has talen construction expenditures by $100 million, Although cost awareness is now a part of our 1-apprssive steps to or 22 percent.
daily operations, we are guarding agamst I
trduce total genem-ovemalous cost cutting. We will not sacrifice S.ince g neration is the area of our business our long-term ability to deliver superior
,my cgy,3,y p,rpan, most at sk to competition, we am hmmg on customer senice by focusing strictly on short-for competition. 3teps enhancing the price competitiveness of our elec-term savings. Going forward, we will I
that have caused those costs to decirase tric generating plants. This will require us to get emphasize reducing costs primarily through muchfaster slum pnxluctivity gains.
PJM average.
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system that wdl supply air conditioning to groups of office buildings. And we offered our f
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f.acet of gas expansion-operations, plai mg, e
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for comersions to gas heat.
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As Chris mentioned in his letter, late last year i
the PSC appmved our entry into the gas-l brokering business. Until now HGE only of f cred transportation services to its delivery service customers from their gas suppliers.
With gas brokering, those customers now has e I
ihe option of purchasing brokered gas from BGE. Brokering also gives us the opportunity
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to carn a profit on our ability to provide the
@e lowest price gas senice. The key to success in a
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cconomical packages that best meet our yp g; _
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I customers' needs and bu)ing preferences.
l storms hit the Baltimore area. Beginning on Christmas and ending in early i
KDst Winter Redefined Customer Service Afan h, the extirme cold bn>Le long-standing demand recordsfor both elec-l Last winter foreser changed our understanding tricity and gas. During that time, BGE cmployers sawjust about evervthing:
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of customer service. From Christmas '43 to jn>:en coalpiles: tires shattering under the weight ofice; a baby bom in an
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carty March of 44, UGE battled its way through automobile; rain, sicct. snow. ice, and lightning in the same stonn; and l
sit ice and snow storms. One of the most record nmnbers of abnost cycrvthing from bnden mains to service calls.
l memorable began on.Ianuary I5, u hen an arctic Hmmghout it all. BGE cmployces perses cred "I was cold. tin d and wet.
cohl front sent temperatures plummeting below but the etfort was worth it. " says Overh. ud Afa hanic Kenny Younger. "Our y;
rero u ith a windchilI of minus 40 degrees. The cn ws work storm duty ucit. Each time. uejust Lept going until we got the ircord breaking cold fro /c everything it came in von er ba<A on.'
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contact with-fuel, lubricants, and fuel lines.
others. Even more impressive, our employees Our problems were compounded by icy mads, worked through these crises with no significant rail lines, and waterways that greatly slowed oil personal injuries or motor vehicle accidents and coal shipments to our power plants.
while on the job.
On January 18, the PJM (Pennsylvania-New investing Today For Better Service Tomorrow Jersey-Maryland) Interconnection, a power The storms reaffirmed what we've always pc>l of eignt Mid-Atlantic electric companies, known: To our customers, there's no substitute hit a new all-time winter electric peak of for reliable service. And although competition 41,350 megawatts. While the PJM system's will initially focus on price, what will deter-capacity is 55,(XX) megawatts, only 40,(XX) mine long-term success will be our ability to megawatts were available during the peak hour deliver the right combination of price and A In 1994. BGE won s rvi e. We have developed an aggressive because of several planned and unplanned the covered Eagle pr gram t impr ve ur distribution system, outages..At 8 a.m. the fobowing morning, BGE Awardfor superior mainly through a strong focus on preventive set an all-time electric peak demand 17 percent customer servicefrom higher than our previous winter recori the American Gas maintenance-improvements designed to Association and reduce by half the number of sustained The PJM companies had no cho. ice but to Edison Electric customer outages over the next four years. On begin emergency measures, lead management Institute. Two davs the transmission side of our business, last year programs were activitated across the entire after an airtic cold we improved system stability and access to system. Customers were asked to reduce wave set new demand power outside our service territory by energy consumption, and controlled rotatag reconis last Januarv.
completing the last leg of the 500-kilovolt outages were initiated throughout the PJM to BGE created a Screte transmission loop around V7ashington, D.C.
protect the integrity of the system. BGE's share Weather Payment of the outages was activated for about four Option that gare m hvo an Ning Tradition hours out of a six-hour period. They averaged customers the ability I said in my introduction to this letter that we between 5 and 10 minutes each and affected to SPiradpayment of see success as the ability to maintain customer 15,(XXI to 45,(XX) customers at a clip.
their January bills confidence. We have a unique advantage over 3creral months meeting that goal because we have an enduring On the gas side of our business, it was a record-without additional tradition of quality people, products, and r:etting week as well. On January 19, we charges. About services. This tradition has never been more surpassed a 12-year demand record for natural 114,000 customer 3 strongly tested or perfoimed so well as in 1994.
gas by 10 percent. During that weck, new daily tool advantage of this I want to thank our employees for their extraor-sendout records were set, our peak-shasing Payment optmn.
dirmry elTorts over the past year.
plant established new production records, while our propane air plant achieved a remarkable You'll learn more about our accomplishments 91 percent rated capacity five out of seven days and plans for the future in the pages that follow.
that week.
Tl.anks to the tireless dedication of BGE's employees, both our electric and gas systems withstood the winter strain. In the wake of some of the worst weather our region has ever exprienced, our employees demonstrated the t
attributes that set them apart absolute compe-Edward A. Crooke tency under fire, unwavering dedication to President and Chief Operating Officer duty, and a remarkable capacity for helping February 10,1995 1
l 7.
BGE at a Glance
=
t Products and Markets Key 1994 Rssults Electric
. Owns and operates 10 generating plants, including
- Decreased fossil generation costs by 10 percent and two units at Calvert Clifts Nuclear Power Plant nuclear generation ecsts by 14 percent below 1993 (CCNPP); is pan owner of Keystone Conemaugh,
. Signed BGE's largest customer, Bethlehem Steel, to a and Safe liarbor generating plants in Pennsylvania; 10-year contract manages electric assets of 56 billion
- Signed agreement with PECO EnerFy Company to
+ Pmvides electricity and related services to purchase 140 megawatts (MW) of electricity for 25 yres over i million customers in 2,300-squarr-mile service territory in Central Maryland a increased system stability and access to power from g
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+ Belongs to PJM (Pennsylvania-New Jersey-500-kV transmission loop amund Washington, D.C.
Maryland) Interconnection, a power pool of eight
. On January 19, set all-time hourly peak demand record Mid-Atlantic companies that provides reliability and the opponunity for bulk power sales of 6.077 MW os electricity-a 17 percent increase over g
Gas
- Provides residential storage and distribution as
+ Launched aggressive expansion ple.n to increase gas sales well as commercial delisery through two gas plants
, Secured PSC approval to ofter gas-brokering service to and 10 gate stations in and around Bahimore large gas customers
- ~~
+ Serves nearly $50,(XX) customers in
, Installed 161 miles of gas main, an 80 percent increase p_ -
617-square-mile service territory mer 1993 growth
- Acts as gas broker for large industrial and
. Added 9,500 new gas customers, a 50 percent increase
(
commercial customers, which requires kicating, over 1993 growth M
buying, and transmitting gas i
cI a
+ On January 19, set all-time record for daily sendout of natural gas at 762,0(X) dekatherms-a 10 percent increase over the previous high Constellation Holdings
- Constellation lioldings, Inc. (CHI) consists of three
. CHI pannered with BGE in a pmposal to provide Johns businesses contributing to BGE profits and objectives llopkins llospital and University with research facility
-' Qd y
+ Constellation EnerFy, Inc. (CEI) develops, owns, and central energy sersices, including construction and M'
md operates 24 w holesale power projects in the U.S.,
ongoing building and energy services management; the k.
and holds operations and maintenance contracts in pmposal will be finalized in early 1995
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14 other plants
+ CEl's wholesale power projects had a solid operating
+ Constellation Real Estate Group, Inc. (CREG) year, panicularly the company's coal-and develops, owns, and operates commercial properties wood-fueled plants
- Constellatian Investments, Inc. (Cil) provides
- CREG sold, at a profit, two shopping centers and one current income from investments in securities, office building; increased occupancy rate on all developed partnerst.ips, and financial services companies properties to 94 percent l
BOE Hoene Products
- Provides resenue growth opponunities in markets
- Created new subsidiary, BGE Home Products &
O Services relating to core gas and electric businesses Services, Inc. (HPS) in July 1994 g
7
+ Markets home appliances, electmnics, replacement
- Defeated legislative challenge to BGE's right to expand windows and doors, kitchen remodeling, installation into nonregulated markets p
of commercial and residential heating and air-
, Acquired Maryland Environmental Systems, Inc., a 7
conditioning systems, and plumbing services company specializing in installation and service of
+ Operates 1I retail stores throughout service territory commercial and residential heating. air conditioning.
+ Pmsides repair service and otters service contracts and plumbing for appliances, electronics, and heating and cooling
.M equipment 8,
In the Industry What's Ahead
$'[$',1
- The Federal Energy Regulatory Commission a Reduce generation costs and impmve system (FERC) opened inquiry on issues relating to power efficiency to reposition BGE as one of the lowest pooling and utihty restructuring priced PJM companies by 1998
. California's Public Utility Commission proposes
. Prepare for possibility of attail competition u-i open access for all ch ctric customers by 2002 by developing a plan to unbundle generation,
. Maryland Publi Service Commission (PSC) transmission, and distribution capabilities begins process of examining regulatory reform Expand real-time pricing and off-site s
for Maryland utilities; a general policy order is meter reading pilot programs l
expected in mid-1995
. Es aluate benefits of renewing operating licenses 3
of CCNPP's two nuclear units that will expire in o twa swi sw2 swa tw4 4 BGE's electric system sales of 27.6 billion kWh
,g g
==a R.*mmi were a 2.5 percent increase over 1993 esas emmemi swa imlo.utal saici,of Gas i s,,m. m,*n,..,
= l'ERC recommends more open access to gas
- Expand gas distGbution system to areas of high distribution systems, creates electronic bulletin board residential growth so system for supply and pricing transfer
. Route gas mains to increase conversions from
(
- Gas Industry Standards Board created to govern other fuels i
transactions in deregulated marketplace
. Seek opportunities to expand territory 3o
, j
- East Coast Natural Gas Co-op formed to enhanec
- Expand gavbrokering business reF onal senice and supply reliability i
- Further unbundling of gas services expected I
a PSC releases draf t recommendations for further in late 1995 l
so unbundling of gas services in Maryland
- inn swi Iw) iwi swa 4 BGE's overall gas sales increased i percent in 1994,
((#l",'[(,
including a 4 percent increase in sales to industr;al eres imw.uma customers Halumore Area
- The expansion of wholesale power business
- Clll will continue to partner with utility to retain comn cretal amce oaupanc) increases opponunities for utilities to use energy existing customers and attract new ones to BGE'6 expertise through nonregulated power subsidiaries service territory nm
+ International energy markets provide growth
- CREG will continue to reduce existing real estate opportunity for U.S. utilities assets, expand senice business, and invest in select, m
- Demand for senior-living faci'ities accelerates pr fitable new pniects as significant ponion of population approaches
- CEI will continue to develop, own, and operate retirement age energy supply pniects in the U.S.. w hile exploring
- Economic trends point to upswing in real estate growth opportunities in North and South America "g
market
- Constellatien will further expand in the senior R.
i hvirg area with emphasis on the development, 1*l
'*2 3*d 4 CREG commercial office properties reached ownership, and operation of assisted-living facilities asas cimacibiam ke.ii.e.=(miue 94 percent occupancy in 1994, outperforming area in the Mid Atlantic region som 84lmmm uein,oinan w,yr average for commercial occupancy rates by 9 percent liome Pratucts a seruces
- General upswing in retail growth continues
= Position IIPS to increase market share
% ales Mm
. Growth in consumer sides is due to new product
+ locate new retail stores in tures forecasting high 9
4 in 1994,66 percent of HPS sales were in major introductions and increased emphasis on larger residential growth stores with broader pnxluet selections
. Capture a significant share of the untapped market for heat pumn and air-conditioning service contracts appliances and electronics sales,31 percent in apptb ance service, and 3 percent in kitchen remodeling mese Appim.mii kunmu wac.
ming Apphaswr scoace mista bhhcw ken *hny 9.
BGE: Still Your Best Choice Because CUSTOMER SERVICE Is a Top Priority
" Ten years ago, customer sen ice was reacting to what customers said they needed," says Tom Brady, BGE's Vice President of Customer Service & Distribution. "Today, we've taken steps to stay ahead in a competitive market so we can pmvide service a
imimwements before customers have to ask. "
service Customers In 1994, we reorganized the areas of our business that directly serve our customers Can Roh On to meet their needs better. We consolidated After price, service relia-our customer service and distribution areas and bility is our customers' reorganized our Marketing & Sales Division. We highest priority. One way divided our customers into categories according we have responded to this need is by A BGE's ofsite meter-to the market segrnents they belonged to--for investigating every opportunity to enhance:
trading pm/ect calls example, hospitals, schools, county governments, the reliability of our electric systems, including for a phased in installa-and large industrial users. Den we assigned developing new technologies.
tion of 200.000 radio-equippedgas and account representatives to each segment. By In 1994, BGE created Silicon Power Networks electric meters to focusing on customer segments, we're personal-General Partnership, a partnership that is collect data without izing our service and getting to know our developing a new switch that will virtually entering customers' customers' businesses as well.
eliminate the time it takes a large company's homes or businesses.
Maximiring Our Employee Advantage backup electric system to restart after a power
..p, the customer; this in 1994 BGE customer surveys confirmed intermption. This switch is being field tested nuans a more accurate what we already knew-our employees are one this year-bill. Ki BGE, it mea is j
of our greatest resources. We want to develop ne reliability of our electric distribution that resource even more to strengthen our O'" M"# h""
system is also a priority. In 1994, a team er customer service efTorts. We have improved employees was asked to identify distribution training and qualifications for account represen-problems and develop a long-term, cost-y r
tatives, linked compensation to performance, efTective plan to improve system reliability-we replaced 85.000 and empowered employees to take immediate The Genesis team, as it is called, has recom-meiers with only one actions to satisfy customers. In addition, mended a number of improvements that are billing pmblem. Wie BGE executives meet regularly with eur q expected to reduce sustained customer outages pmud ofthat nrord "
andustrial customers to gain a better under-by nearly 50 percent over the next four years.
Tippett says.
standing of their business and service needs.
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A Rcliability is Leyfor large industrial custorners. A rnornentary power dn>p can halt criticalpnocesses and incur huge costs. In = arinership with Silicon Power Corp.
(5PCO), flGE is developing and testing a pnotorvpe device to address the pn>blern.
"The solid-state switch safely allows cornrncn ial custorncrs to switch so backup power soun es instantaneously," says \\Mdt Afendenhall, BGE's ChiefElectrical Designer on the pn> ject, center; with SPCO's Harshad Alchta, CEO and President, left, and John Schwart:enberg, SPCO's chity' engineer The swin h is a good cransple of how impnwing customer service can also lead to new revenue suunts. Several large industrial customers. as well as other utilitics, have altrady esperssed interest in the switch.
> Previding superior customer service is thejob of the morr than S. HD HGE at:d subsidiary employees. Efforts to impnwe our customer service include moving our employccs closer to thepont lines of service by impnwing training and cmpowering workers to tale actions to mect customer needs on the spot.
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9 A knpniving the way we work was an important part ofIlGE's efforts to reduce costs in 1994. A good c2 ample was Calven CIWs'saltwaterpipe replacement pn> ject, a critical component ofIV94's Unit One n: fueling outage. The project, which brought together employces of flGE's Afobile Alaintenance Fon e and Calven Chffs Nuclear Power Plant, was a tn mendous success.
"I'hnsugh thonough pa'-planning, outstanding teamwork, and a commitment to safety, the pn> ject team replaced a cnicial piping system ahead ofschedule and u cil under budget. saving mil' ions ofdollars. " says Senior Engineer Ken ihoone.
Some pn> ject team members shownpom hppont. are Todd Cuba and 7?rry flatch. Standing air \\\\ayne flodnar, Ken floone. Chris Davenport, and 3 file Ibimanowski.
12.
BGE: Still Your Best Choice Because COST AWARENESS Is Keeping Us Competitively Priced "In a competitive envimnment, customers svant the best valuefor
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their money, and that creates an obligationfor businesses to be asvare of their costs. " says Chuck Shivery, BGE* Chief Financial s
Oficer "This is not a new ideafor BGE. The changing market has pmmpted us io continuouslyfind more efective ways to work. "
We're making greater Last year's annual report outlined our actions to reduce costs by using use of purchased power 1
resources more effectively. That contracts to meet long-Q fg _m meant studying every function in the company term demand, and we're "W
to eliminate those not contributing to 13GE's taking steps to get j
mission: to achieve complete customer maximum value from satisfaction by providing superior energy our existing plants. In particular, we're looking A As BGEcxploirdhow products and services.
into the feasibility of renewing the operating to operate moir comperi-licenses of the Calvert Cliffs Nuclear Power tirely, our Printing
.Those. iatives have produced tangible mit p
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results. In 1994, we reduced our operating and pmre it could beat any maintenance expenses more than $45 million Exploring New Opportunitias for Efficiency muside piinter's piice s.
from 1993, a 6 percent decrrase. We've also Cost awareness is leading us to explore new
..In a highly competitive projected a $100 million--or 22 percent--
systems and technologies that help us remain bidding pmcess, we won decrease in construction expenditures in 1995, competitively priced.
the contract against some and have concentrated our capital spending on An example is our Business Information
" ' " ^ ',
transmi,sion and distribution system upgrades.
Syster; which will incorporate the latest Moreover, we set aggressive cost-reduction computer technology to support our financial,
,h,, y yy targets to position BGE among the lowest planning and budgeting, cost control, and with Printing Pmduction priced regional utilities m generatmg costs.
procurement processes. When complete in Coonlinator Glen We're Generating at Lower Costs 1996, the Business Infonnation System will Rdmadge, centci: and Competitive success aans owning or having provide BGE with timely, more detailed data Printing Estimator /
j access to the lowest cost sources of energy.
about the costs and profitability of our products ccon/inator Kevin l
One strategy to achieve low-cost generation is and services. And that will help us make Atatthews. "Even our to avoid building new plants. We're investi-better-informed decisions.
com/vtinrs acknowledge our shopi quality work pating ways to meet projected increases and high chicncy,"
I in electric demand without new construction.
says Novalskv.
i t
l 13.
l 1
1
BGE: Still Your Best Choice Because We're Bringing Customers PRODUCTS AND SERVICES l
They Need and Want "We've redefined ourselves to get infront of the competitive a.
market," says Steve Wood, BGE's Vice President ofMarketing &
Sales. "We're not looking to be one thing to all customers. We're working to be a total energy company. "
f Our Lifestyle and f
B GE's Marketing and Sales Division is helping transform BGE from a steady Process Options g
.j' supplier of a few energy forms to a consist of energy t.-
e company capable of meeting any energy need choices, such as heat-with diverse pmducts and services.
pump servicing, appli-ance sales, and fuel-conversion programs.
A In a two-year Last year, we brought in a marketing consultmg Pmject and Afaintenance Options include BGEpilotprogram, firm to help us develop a true customer-driven project design and construction for residential AfcCormick & Company, marketing appmach. With the firm's assistance, and commercial customen, as well as appli-Incorporated, the largest we reorganized our marketing and sales func-SP ce annptmy in the i
ance service and sales. And our Pavment and tions and created a new marketing plan. The
- ' '# ###'"# "" 'N*#
Financing Options consist of flexible financing resait is a streamlined organization that is leading P ring. a nunynem d
alternatives, such as budget billing, energy-that ic:s customers run BGE's transition to a total energy company.
project financing, and financing installatme of equipment more cost-effi-Offering Flexible Packages of energy-efficient lighting systems for industrial cientiv hv scheduling Products and Services and commercial customen.
power use when electric A key part of our marketing approach is to ofter Responding With New Products ran's am low Hexible products and services. We,ve grouped i
c're c ntinually evaluating energy needs "Real-time pricing could all our products and senices into packages or and strategic opportunities to offer new save AfcCormick as energy options that can be customized to meet products and services.
much as $200.000 a the needs of large and small customers.
year;" says BGE Sem.or An example is the creation of our gas-Our Encigv Supplv Options consist of our core Engineer Anne Eisele,
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bmWng sWm in WEs budness area 3hown with AfcConnick products of full senice electric and gas. This package also expands our energy options with
""#"E"*#" *#".
OP on C mPC
/ndustried Engineer Pete tively purchasm.g their natural gas through Petmssian. AfcCormick less traditional offerings, such as on-site genera-l P ans us use n'al-time n T 0
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3M'3nEC tion and a new district chilled-water cooling acquisition f n tural g s and transportation pricing when operating option. Our district chilled-wate partnership will from BGE's connection points with interstate equipment in its blending otter businesses an energy-efficient cooling pipeanes to customers' meters.
andpackagm.g plants.
i system supplied fmm a central plant operated l
by BGE.
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-n energy products and services, we are greatly espanding om gas business. In thefidl of 1994, the PSC appnived BGE's plans to enter the natural gas-bn>Lering business, a new market f
resultingfrom xas industry deregula: ion.
"For thejirst time. BGE is buying and selling gas as a
'y commmhtyfor its delivery-service customers, instead of simply acting as the carrierfi>r gas delivery," says Afary Afadigan, y
Natural Gas h1arketer; shown in the compcmy's gas 1
contnulinom.
t
}j 4 in i9(M. BGE responded to customers' trquestsfor gasfor w,
A both home and business use by installing 161 miles of new gas unain and adJing morr than 9,500 new customers.
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that includes hmy-tenn energy supply, building a>nstruction, and enerxv systern vnanagernent. Constellation Real Estate Gn>up President Rand Grillin. right, discuues the pn> ject svith HGE s
\\ ice President of Afarleting & Sales Steve \\\\ hod and Hopkins' Vice Prc.sident of Facdities Sally AfacConnell.
"\\\\i 're svorling to derclop tighter energy partnerships svith our
' Q' ' ~pqq:ytwM; custorners and svith HGEh subsidianes to sernce those custorners,"
--R,o.3 cm WXL ;~
cc n
Uhod sayt "Whenever our customers think of.encryy, see svant them y~ 3.dn to think of HGE. '
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> In 1Y%, BGE prepared to espand its home appliance and a+
clectn onic sales and service busincues by creatine a nese subsidian 4%,
BGE Home Pn> ducts & Services.
"H1ren I talk to customers. I can see theyfeel xmlabout dealing snth us because of our nputation. I' hat \\ trust-something that 1
docsn 't < ome in a toolbot. " says ficating Ik chnician lisrry Krause.
l an employee ef the nor subsidiarv "Uk 've buik that innt over tune.
h \\ one <!f the thines Ilike best about swearine this unifonn. '
\\ 6.
1 BGE: Still Your Best Choice l
Because Our DIVERSIFIED BUSINESSES Add Value Competition is changing the relationship between BGE and its diversified businesses by ilhuninating a combined stirngth that benefits both sides. " Competition is a two-way street, While opening doorsfor others to compete in our territory, it opens doorsfor BGE and its subsidiaries," says Bruce Ambler; President and CEO of BGE's Constellation Holdings.
^
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j ownership and management of wholesale BGE's diversified subsidiaries, w hich are s
grouped under Constellation iloidings energy projects. Constellation Real Estate and BGE Ilome Pmducts & Services Gnmp is reducing its holdings, whik capitalize on opportunities in nontraditional moving from an asset-based to a service-Bruce M. Ambler areas such as wholesale power projects, real oriented company that will market its expertise in estate, financial investments, health services, construction, asset management, and property and appliance sales and service contracts.
development. Constellation Health Services, a division of the Real Estate Group,is developing
., g, o bh m'on working Together for success over 15 assisted-living pmjects for seniors at sites Last year our Constellation Companies throughout the Mid-Atlantic states. Constellation ofBGE's utility worked with BGE to develop proposals based inmunents continues to provide a financial base on customer requirements and devised plans to f current income and financial emdibility to CXPerlence with meet specific needs. A good example was the support the Constellation Companies, while also proposal to provide energy and real estate providing cost-etTective management of BGE's services to the Johns flopkins llospital and pendon plan and nuclear decommissioning fund.
caperience in University.
BGE Creates New Subsidiary BGE will construct a state-of-the-art ice storage nonregulated b 19 reated the BGE Home Products &
system and provide a new electrical supply Services subsidiary to oversee our 11 appliance markets git.es u3 arrangement to meet ilopkins' energy savings and home electronics centers, plus our gas and reliability needs. Constellation Energy has and electric appliance service business. In a powerfid proposed operating most of Ilopkins' energy December, llome Products & Services increased systems. Constellation Real Estate Group plans its capabilities by purchasing Maryland UdPodfdRf' to develop high quality research space for the E,nv.ironmental Systems, Inc. (MESl), a especially m.
Johns llopkins University. And BGE will successf ul local business providing service and continue to supply gas and electne service to or heating, air conditioning, energy triaining mstallat on f.
meet llopkins, expansion plans. The proposed management, plumbing and electrical systems contract has a 10-year term.
for residential, commercial, and industrial customers. "
Diversified Businesses Are Pursuing Growth customers. MESI's owner and president.
Our diversified businesses are indu idually William H. Munn. was named President and pursuing grewth opportunities as well.
Chief Executive Officer of BGE ilome Products Constellation Enemy continues successful
& Services effective January 1,1995.
j I7.
BGE: Still Your Best Choice Because We 're INVESTING IN THE FUTURE of Our Communities We view our community eforts as investments ofcompany resoutres that willpay dividends in thefuture. "We will work in areas that represent the greatest community challenges--weas such as economic development, envinmmental protection, energy conservation, and social issues," says Joe liernan, BGE's Vice President of Corporate Affairs. our objective is to help impmve the quality ofhfe and business in hfaryland. "
ast year. IlGE surveyed 5,(XX) Maryland in concert with federal and state leaders, asking their opinions of agencies, we worked on an impor-IlGE's community programs. They tant wetlands mitigation project.
told us they have high expectations for BGE Required to mitigate for 15 acres A unen BGEextended involvement in effons to addn ss community of wetlands affected by construction a transmission line problems. And we're listening, of a transmission line, we created the 22-acre through sensitive Patuxent Wildlife Viewing Area that will open wertandt, irgulations We're Focusing on Economic Devolepment to the public this year. The U.S. Fish and
'rqunrd us to assess As a major Maryland business and employer, the imIsact and re1> lace W,ildlife Scru.ce has hailed the Patuxent BGE recognizes that the community.s future is disturbed wetlands.
wetlands project as one of the finest examples of linked to hs economic health, in 1994, we BGE wentfurther by created wetlands it has ever seen.
collaborated with government and private designing a new agencies to help make Maryland more in 1994, we also committed a significant 22-acir wetland and attractive for businesses to i >cate or expand.
portion of our corporate contribetions budget creating a public to ongoing suppon M cmd hebpment 4 *dW" We've restmetured our own economic pmgmnw Our eady dMM hebpment Tufatuxent wtlands development office so that ilGE can play a grant program awarded funds totaling air a girat example of greater role in encouraging businesses to move
$1.1 million to be paid over three years.
how pmducrire the to or expand in the state. We,re also proposing Grants were awarded to programs that Partner 3 hip between an economic development rate for new and address the ef9ets that family problems--such industry andgorem-expandmg Maryland businesses; the rate would l
as teen pregnancy, drug and alcohol addiction, "C"' C"" be " 5"J"
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provide a reduction in energy costs for a five-BGE Enrimnmental and a lack of parenting skills-have on year perimi. %.e will submit this proposal m.
Scientist Joe Barley.
young children.
1995 to the PSC for approval, investing Where We Can Have an impact Our employees are also well known for their opportunityfor the in 1994, we launched several projects that illus-servic e to the community. In 1994, nearly comp <my to demonstrate trate our commitment to investing in the future.
6,(XX) BGE employees and retirees volunteered i'3 Commitment
'"C"Ci*"*C"'"I at 128 community events, raising $1.3 million.
irspcmsibility. "
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A in September; ilGE announced a major nfocusing ofits corporate contributions strategy with the award of $1.1 million in grants over the next thn e years to seven early childhood derclopment pnugrams.
"\\Wre shifted ourfocus towant early childhood development because Minority Contracts I
we can male a greater social impact by traching children at a younger U'*"' ' ' "Y Isidlwns el thHarsI axe and by strengthening their parents 'hfe skills, " says Malinda Small,
}
Corparate Contributions Administrator. Smallis shown with children at sw v
the l'arring I'amily frarning Center; a grant rrcipient, which helps p<nents ofyoung childtrn derchop pcurnting, literacy, andjob skills.
sw
> llGE's economic development elkirts include a highly successful l'rocwrment Opportunity I'n> gram, which works to cnsure minority-
%20 and women ownedfinns have equalopportunities to work with flGE.
yu 1hnmxh the program \\ efforts, our contracts with minority and women-g owned businesses n>se to $50 million last year.
vw, um vm en: um 19.
Glossary of Terms bulk power transaction-an exchange of power between localdistribution company-a company that transports bulk power suppliers and wholesale customers, usually to natural gas from the pipeline to gas customers through a gas improve reliability and/or reduce costs, distribution delivery system.
capacity-the maximum amount of power a generating unit municipal utility-a utility system owned and operated by a or plant is capable of producing, measured in kilowatts or municipality that usually, but not always, provides service megawatts.
only within its boundaries.
~
combina an utility-a utility that offers more than one type off-site meter reading-a system of gas and electric meters of service, such as electric and gas.
equipped with electronic transmitters that enables a utility to collect data through a handheld device without entering delircry scrrice customer-a utility customer that buys gas customers, homes and businesses.
from one source then contracts with the local utility to transport it through the utility's gas distribution system.
Order 636-the Federal Energy Regulatory Commission ruling that unbundled gas services, giving users a variety of district chilled-water system-a central plant wsth a contm-purchasing, transportation, brokering and storage options.
uous loop d.istnbution system that supph.es chilled water for space cooling to muhiple buildings, eliminating the need for PJAf (Pennsylmnia-New Jersey-Afaryland bulky individual refrigeration sptems.
Interconnection}-a Mid-Athmtic power pool consisting of eight electric companies.
distribution-m the electne business, the system of substa-tions, transfonners, poles, and wires that connects customers' powerpool-two or more interconnected electric systems businesses and homes with the utility's transmission system; planned, operated, and maintained to supply power in the in the gas business, the system of gas mains and service lines most reliable and economical manner for their combined that connects interstate customers with gas pipelines.
load requirements.
Energy Policy Act of1992-legislation passed by Congress real-timepricing-a rate system that provide customers to pmmote efficiency m the electric energy market by price information on a real-time basis, which enables these allowing competition for bulk power.
customers to save money by running equipment when electric rates are low.
fmnchise-the exclusive nght to sell electricity or d.utnbute natural gas in a specified geographical area subject to restructuring-realigning a utility's business components, government regulations for a fixed or perpetual tenn.
in order to increase management efficiencies and
" E#
gas brokering-the proecss of buying gas from suppliers for resale to individual gas users, a new business created by gas retail competition-allowing electric customers to choose industry deregulation.
their energy suppliers.
gate station-the point in the natural gas transportation rotating outages-deliberately shutting off service to groups sptem w here natural gas enters the local utility's of customers during periods of unusually high demand to I
distribution system.
preserve system integrity.
genemtion-assets required to produce electrical energy, transmission-the system of cables, high tension wires, including boilers, turbines, electric generators, and support towers, and transformers that connect generating plants to systems.
distribution systems.
load management programs-actions designed to reduce unhundling-segregating a comprehensive sersice into its electric demand during peak generating periods, individual components.
wholesale wheeling-use of another utility's transmission facilities to move large quantities of electricity.
20.
)
l
Fin a n cial. C o n t e n t s Utility Construction Expenditures 22.
Utility Operating Statistics hidiume pf Dullass
,w, _
24.
Selected Financial Data su, 26.
Management's Discussion and Analysis 5* *
'~
34.
Report of Management 34.
Report ofIndependent Auditors s2m 35.
Consolidated Statements of Income
$1tN) 36.
Consolidated Balance Sheets 1990 IWI IW2 IW.4 IW4 IWS
"*8 38.
Consolidated Statements of Cash Flows conunaam m e AUowam e for f und-39.
Consolidated Statements of Common Uncd Durmg Om=rnaam 40.
Consolidated Statements of Capitalization 42.
Consolidated Statements of Income Taxes Return on Average Conunon hjuity 43.
Notes to Consolidated Financial Statements
- 25 -
58.
BGE Boards of Directors and Officers 62.
Five-Year Statistical Summary 63.
Shareholder information n
4% -
- g 1990 IWI IW2 19h4 19W Uectric l'eak Load 1994 Operating Exgnsen ihn Ilvur Mepunrrs
?,(ng)
Purdwd I ucl and i.nergy 50 27 gp operathms 503) itNXi h
Duns e Y) e klaintenasue 5006 Gmirma sem k
- 3py, Dmdendn $(ul#
Dwerufied sG& A M).fu's I#U Prefereme 5 k in k St 7 Ann i
ii guys Tanes 5fil3 3
k p
19W 1991 IW2 1993 1994 e e humnwt Peak en um Winter Prak lid lttmorr gds ark $ ['$fritic C0!rtjkirty arad Subsidtarie s 2l, e
Utility Operating Statistics 1994 1993 1992 1991 1990 Electric Operatlog Statistics Revenues (in Thousando Resi(k ntial
$ 931,711
$ 931,643
$ 839,954 5 882,591
$ 718,032 Commercial 852,989 869,829 842.694 850.038 758,573 Industrial 205,611 199,042 201,950 212,864 194,951 System Sales 1,990,311 2/XX),514 1,884,598 1,945,493 1,671,556 Interchange Sales 118,027 91,543 t>4,323 23,845 26,629 Other 19,083 20.090 16,611 21,531 13.359 Total
$2,127,421
$2,112,147
$1,965,532
$ 1,990.869
$1.711.544 Sales (in Thousands)-Mwn Residential 10,670 10.614 9,735 10.097 9,283 Commercial 12,351 12,395 11,909 11,707 11,352 Industrial 4,433 3,763 3f63 3.708 3.743 System Sales 27,454 26,772 25,307 25,512 24,378 Interchange Sales 5,684 4,149 3,180 1,166 1,088 Total 33,138 30,921 28.487 26.678 25,466 Customers Residential 978,591 968,212 956,570 939,734 930,880 Commercial 101,957 100,820 99,673 98,254 96,567 Induitrial 3,967 3,800 3,761 3,584 3,526 Total 1,084,515 1.072,832 1,060,004 1JMI,572 1,030,973 Average Use per Residential Customer-kwu 10,903 10,963 10,177 10,744 9,973 Average Rate per Kwu (System Saleo-e Residential 8.73 8.78 8.63 8.74 7.73 Commercial 6.91 7.02 7.08 7.26 6.68 Industrial 4.64 5.29 5.51 5.74 5.21 Peak lead (One-hour)-uw 6.038 5,876 5,558 5,910 5,477 Capabihty at Summer Peak-uw 6,722 6,701 6,687 6fd)8 6,159 System lead I: actor 54.7 9 55.2%
54.84 52.49 54.1 %
Gas Operating Statistics Revenues On Thousando Residential
$ 262,736
$ 265fd)1
$ 242,737
$ 220,653
$ 218,967 Commercial thcludmg Dehvery Senice 121,005 121,832 112,147 96,189 89,573 Delivery Senice 2,285 3,287 3,591 3,031 3,3(M Industrial thcluding Delivery Senice 20,140 22,250 21,123 14,855 32,439 Delivery Senice 9,635 12,920 14.290 14.288 17,851 Other 5,448 7,273 6,511 6,777 9,197 Total
$ 421,249
$ 433,163
$ 400,399
$ 355.793
$ 371,331 Sales tin Thousando-nin Residential 40,279 40,029 39JM2 36,519 35,026 Commercial lacluding Dehvery Senice 23,712 23,830 23,478 20,687 18,164 Delivery Senice 6,490 7,428 7,102 6,433 5,872 Industrial thcludmg Deinery Service 4,410 5.298 5,314 3/d)5 7,305 Delittry Senice 33,837 31,390 33,638 34,240 34,720 Total 108,728 107,975 108,574 101,484 101.087
~
Cui.tomers Residential 498,152 491,165 486,863 482,085 482.680 Commercial 37,891 37,518 37JXX) 36,561 35,953 i
l Industrial 1,354 1,353 1,412 1,385 1,401 Total 537,397 530.036 525.275 520.031 520.034 Ascrape Use per Reiidential Customer-Therms 809 815 802 758 726 Average Rate per Therm-$
Residential
.65
.66
.62
.60
.63 Commercial (thcluding Dehrery Senice)
.51
.51
.48
.46
.49 Industrial tiscludmg Dehrery Senice) 46
.42
.40
.41
.44 Peak Day Sendout-in n 761,900 657,7(X) 609.2(X) 610.200 653,900 Peak Day Capabihty-t>t H 847,(XXI 847,(NX) 847,(XX) 817/XK) 853JXX) l'adm operatmg statutu s do swt nfiret she rhnunatwn ofinten tunpmr trarna< tums.
Cers un prwrar,u amounti hase lven reclaudied to conform to the curarnt year 's prriensarmn.
22, Baltinwrr Gas andI:icctric Cornpany and Subsidiaries u_.._.....
1989 1988 1987 1986 1985 1984 Compound Growth 5-Year 10-Year 5 M8,883 5 620f>60 5 594,283
$ 575,774 5 528,676 5 491J)69 7.50%
6.619 668.819 627/>61 610.011 611,500 566,365 525,738 4.98 4.96 I91,796 177,366 181,034 192,189 196.656 182.47l 1.40 1.20 1,509,498 1,425.687 1,385.328 1,379,463 1,291.697 1.199,278 5.69 5.20 17,802 43,919 32,368 93,365 53,583 100,4u9 45.98 1.62
~
19.556 22,528 18.264 11,733 19.055 23,120 (0.49)
(1.90) 51,546.856
$1,492.134 51,435,960 51,484,561 51,364.335 51,322,867 6.58 4.87 9,451 9,196 8,521 7,798 7,084 6,897 2.46 4.46 11,079 10,636 10,014 9,383 8,829 8,390 2.20 3.94 4,261 4,148 4.040 4,055 3,786 3.948 0.79 1.17 24,79l 23,980 22,575 21.236 I9,699 19,235 2.06 3.62 595 2.052 1,266 4.010 1.956 2.794 57.05 7.36 I
25.386 26,032 23,841 25.246 21,655 22.029 5.47 4.17 913.910 895.881 876,826 853,976 831,423 811,771 1.38 1.89 95,102 92,639 39,121 85,816 82,751 79,846 1.40 2.47 3,132 2,585 2,521 2.522 2,5(4 2,560 4.84 4.48 1,012.144 991,105 968,468 942,314 916,678 894,177 1.39 1.95 10,341 10,265 9,718 9,131 8,520 8.496 1.06 2.53 6.87 6.75 6.97 7.38 7.46 7.12 4.91 21)6 61M 5.90 6 09 6.52 6.41 6.27 2.73 0.98 4.50 4.28 4.48 4.74 5.19 4.62 0.61 014 5,304 5,381 5,190 4.618 4,458 4,230 2.63 3.62 6.164 5,930 5.888 5,797 5.586 5,498 1,75 2.03 57.49 54.69-
$3.29 56.39 55.4 9 55.29 (0.96)
(0.09) 5 242,389
$ 225,035 5 242,240 5 258,975 5 256,499 5 293,158 1.63 (1.09)
I12.630 105,352 110,384 125.448 128,737 160,877 1.44 (2.8 I) 4,409 2,748 3,216 2,825 2,234 695 (l2.32) 12.M i
18,363 23.679 19.869 29,312 43.620 79,596 1.86 (12.84) 22,661 16.616 20,276 15,600 15.861 12,948 (l5.72)
(2.91) l 11.349 8,106 19.471 13Jd)9 6.358 6.055 (13.65)
(1.05)
$ 411,801 5 381,536 5 415.456 5 445,769 5 453,309 5 553,329 0.45 (2.69) l 39.806 40,140 38,142 38,630 36,381 39,906 0.24 0.09 l
21,9M 22.738 20,M3 21.607 21.636 25.247 1.54 (0.63) 5.778 5.025 5,272 4.M3 4,079 1.301 2.35 17.43 1
I 3.697 5.824 4.038 5.587 8.272 13,790 3.59 (10.77) 39.452 35,802 34.846 26,909 26.513 21.227 (3.02) 4.77 110.697 109.529 102,941 97,376 96.881 101.471 (0.36) 0.69 482,538 482.011 482,023 482.394 481.188 480,613 0.64 0.36 35,790 35,431 34.820 34.398 33.870 33,483 1.15 1.24 1,398 1,311 1,289 1,295 1,305 1,348 (0.64) 0.(M
$ 19,726 5I8.753 518,132 518.087 516.363 515.444 0.67 0.42 825 833 791 801 756 830 (0.39) 10.26) 61
.56
.M
.67 71
.73 1.28 (1.15)
.51
.46
.54
.58
.60
.M (2.24)
.50
.4 I
.49
.52
.53
.58 (l.65)
(2.29) 663.2(k) 669.5(x) 636JKK) 624,700 677,3(X) 607.200 2.81 2.30
{
761,0t X) 793JXK) 731JXX) 748JXXI 827JX)0 827,000 2.16 0.24 Balnnu mr Gas ami Dectric Com;unt and Subsuharues 23.
Selected Financial Data 1994 1993 1992 1991 1990 tDollar amounn in thousands.
Summary of Operations Total Revenues
$2,782,985
$2.741,385
$2,559,536
$2,514.631
$2.248,613 Expenses Other Than Interest and Income Taxes 2.147,726 2,124,993 2.024,227 2.026.910 1,922,498 locome From Operations 635,259 616,392 535,309 487,721 326,115 Other income 32,365 20,310 22.132 28,095 34,488 income liefore Interest and income Taxes 667,624 636,702 557.441 515,816 360,603 Interest Expense 190,154 188.764 189,747 196.588 165.205 Income liefore income Taxes 477,470 447,938 367,694 319,228 195.398 Income Taxes 153,853 138.072 103.347 85.547 19,952 income liefore Cumulative Effect of Changes in Accounting Methods 323,617 309.866 264.347 233.681 175,446 Cumulative Effect of Change in the Mettux! of Accounting for income Taxes 19,745 Cumulative Effect of Change in the Method of AccountinF or Unbilled Revenues. Net of Taxes 37,754 f
Net income 323,617 309.866 264,347 253,426 213,2(X)
Preferred and Preference Stock Dividends 39,922 41.839 42,247 42,746 40.261 Earnings Applicable to Common Stock
$ 283.695
$ 268,027
$ 222,100
$ 210.680
$ 172.939 Earnings Per Share of Common Stock liefore Cumulative Effect of Changes in Accounting Mednis
$1.93
$1.85
$1.63
$1.51
$1.09 Cumulatis e Effect of Change in the Method of Accounting for income Taxes
.16 Cumulatise Effect of Change in the Method of Accountmg for Unbilled Resenues
.31 Total Earnings Per Share of Common Stock
$1.93
$1.85
$1.63
$1.67
$1.40 Dividends Declarrd Per Share of Common Stock
$1.51
$1.47
$1.43
$1.40
$1.40 Ratio of Earnings to Fixed Charges 3.14 3.00 2.65 2.27 1,78 Ratio of Earnings to Fixed Charges and Preferred and Preference Stock Dividends Combined 2.47 2.34 2.08 1.82 1.47 Financial Statistics at Year End Total Assets
$8,143,538
$7,987.039
$7,374.357
$7,137,989
$6.710.375 Capitalization long-ierm debt
$2,584,932
$2.823,144
$2.376,950
$2,390,115
$2,193,844 Preferred stock 59,185 59.185 59,185 59,185 59,185 Redeemable preference stock 279,500 342,500 395.500 398.500 365,(XX)
Preference stock not subject to mandatory redemption 150,000 150.000 110,(XX) 110.0(X)
I 10,(XX) l Common shareholders' equity 2,717,866 2.620.511 2.534,639 2,153,306 2.073.158
'Iotal capitalization
$5,791.483
$5.995.340
$5.476.274
$5.111.106
$4.801.187 liook Value Per Share of Common Stock
$18.42
$17.94
$17.63
$17.00
$16.58 Number of Common Shareholders 81,505 82,287 80,371 71,131 73.049 Cri wn pruar year amowas have f.<rn rn lantficJ to conform to the current prar's persentarum.
24.
Haltimore Gas and Dectric Company and Subsidiaries
i 1
1989 1988 1987 1986 1985 1984 Compound Growth wept per Aare amounts) 5-Year 10-Year
$2,104,403
$1,989,660
$1,941,382
$2,005,344
$1,879,208
$1,932,399 5.75 %
3.71 %
1,624,850 1,487.891 1,413.714 1,494.050 1.383,998 1.464.071 5.74 3.91 479,553 501.769 527,668 511,294 495,210 468,328 5.78 3.10 27,960 18,735 18,600 17.244 14.120 20.595 2.97 4.62 507.513
$20,504 546,268 528,538 509,330 488,923 5.M 3.16 149.593 123,996 115,802 112.742 110.202 98,648 4.92 6.78 357,920 396,508 430,466 415,796 399.128 390,275 5.93 2.N 81,629 93,096 130,368 141,177 151,828 146.360 13.51 0.50 276,291 303,412 3(X),098 274,619 247,300 243,915 3.21 2.87 276.291 303.412 300.09C 274,619 247,300 243,915 3.21 2.87 32.381 29,375 26,406 26,876 27.370 27.580 4.28 3.77 5 243.910
$ 274.037
$ 273.692
$ 247,743
$ 219.930
$ 216.335 3.07 2.75
)
$2.03 52.31 52.31
$2.10
$1.87 51.85 (1.01) 0.42 52.03 52.31
$2.31
$2.10
$1.87 51.85 (1.01) 0.42
$1.38 51.32
$1.25
$1.18
$1.11
$1.03 1.82 3.90 3.02 3.71
- 4. I7 4.19 4.14 4.23 0.78 (2.94) 2.44 2.94 3.26 3.20 3.08 3.10 0.24 (2.25) 55,985.679 55.126.362 54.780,167 54.582.670 54,273.721 54.050.450 6.35 7.23 52,076.620 51,769,066
$ 1.707,407
$1,596.275
$1,494,442
$1,414,285 4.48 6.22 59,185 59,185 59,I85 59,185 59,185 59,185 322,800 229,600 186.400 50.000 80.(XX) 90.(KK)
(2.84) 12.00 Il0,(xx) l l0.(XX) 110,(XX) llo,(XX) 175,(X)0 175,(KK) 6.40 (1.53) 2.001.188 1.885.245 1,755.368 1.629.795 1.521.960 1.433,776 6.31 6.60 54.569.793 54.053.(N6 53.818,360
$3.445.255 53.330.587
$3.172.246 4.85 6.20
]
$16.60 515.85 514.83
$13.81
$12.91
$12.16 2.10 4.24 75,762 79.808 82,281 76,972 79,474 81,601 1.47 (0.01 )
Baltunorr Cas and Elatric Company and SubsiJiaries 25.
Management's Discussion and Analysis of Financial Condition and Results of Operations This annual report presents the financial condition and results of Eff ective July 1,1994. BGE formed a wholly owned operations of Baltimore Gas and Electric Company (BGE) and subsidiary, BGE liome Products & Sersices, Inc. (IIPS),
its subsidiaries (collectively, the Company). Among other infor-consisting of BGE's existing merchandise and gas and appliance mation, it provides Consolidated Financial Statements. Notes to service operations. IIPS' revenues and expenses are included in Consolidated Financial Statements (Notes), Utility Operating diversified businesses revenues and diversified businesses Statistics, and Selected Financial Data. The following discussion selling, general, and administrative expenses, respectively. Prior-explains factors that significantly affect the Company's results of year amounts have been reclassified to conform with the current oprations, liquidity, and capital resources.
year's presentation.
Results of Operations on sales; and competition in the generation and sale of electricity.
The base rate increases authorized by the PSC in April 1993 Earnings per Share of Common Stock favorably affected utility earnings through April 1994. Several Consolidated earnings per share were $1.93 for 1994 and $1.85 electric fuel rate cases now pending before the PSC 6scussed in for 1993, an increase of 5.08 and $.22 from prior-ycr_r amounts, Notes I and 13 could also affect future yean,' carnings.
respectively. 'Ihe changes in earnings per share reflect a higher Future competition may also affect earnings in ways that are level of camings applicable to common stock, offset panially by not possible to predict (see discussion on page 33).
the larger number of outstanding common shares. The summary Earnings f rom diversified businesses, which primarily below presents the earningvper share amounts.
represent the operations of Constellation llo! dings, Inc. (Clii) and its subsidiaries (collectively, the Constellation Companies) 1994 1993 1992 and BGE ilome Products & Services, Inc. (11PS), increased Utihty business
$1.81
$ 1.77 51.52 during 1994 and decreased during 1993. The reasons for these Diversified businesses
.12
.08
.1I changes are discussed in the " Diversified Businesses Earnings" Total
$1.93 51.85 51.63 section on pages 30 and 31.
Earnings Applicable tc, Cvma Stoc,s Effect of Weather on Utility Sales Earnings applicable to common stock increased 515.7 million in Weather conditions affect BGE's utility sales. BGE measures 1994 and 545.9 million in 1993. The 1994 increase reflects weather conditions using degree days. A degree day is the higher utility and diversified businesses camings. The 1993 difference between the average daily actuai temperature and the increase reflects higher utility earnings. $ lightly offset by lower baseline temperature of 65 degrees. Ilotter weather during the carnings from disersified businesses.
summer, measured by more cooling degree days, results in Utility carnings increased in 1994 compared to the prior year greater demand for electricity to operate cooling systems.
due to three principal factors: low er operations and maintenance Conversely, cooler weather during the summer, measured by expenses; an increase in the allowance for funds used during fewer cooling degree days, results in less demand for electricity construction; and greater sales of electricity. 'Ihe higher sales of to operate cooling systems. Colder weather during the winter, as electricity are primarily due to un increased number of customers measured by greater heating degree days, results in greater compared to 1993. The 1994 earnings increase was offset demand for electricity and gas to operate heating systems.
panially by higher depreciation and amortization expense, which Conversely, warmer weather during the winter, measured by includes the write-off of cenain Perryman costs (see discussion fewer heating degree days, results in less demand for electricity on page 29). Ut hty earnings increased in 1993 over 1992 and gas to operate heating systems. The degree-days chart below because BGE sold more electricity than in the previous year and presents information regardmg cooling and heating degree days because of increased base rates. Three factors produced the for 1994 and 1993.
increase in sales of electricity: the summer of 1993 was hotter 3n Year than 1992; commercial customers used more electricity; and the 1994 1993 Average number of residential customers increased.1he effect of weather Cooling degree days 949 865 804 on utility sales is discussed below. The 1993 earnings increases Deentage change were ofb.et partially by higher operations and maintenance spared to prior year 9.7%
22.39 expenses, depreciation and amortization expense, property taxes, neating degree days 4.670 4.959 4301 and the effect of the Onmibus Budget Reconciliation Ac' of 1993 Percentage change (1993 Tax Acth w hich increased the federal corporate income tax compared to prior year (5.8)%
to.3)G tate to 359 from 349.
The following factors influence BGE's ut hty operations earnings: regulation by the Public Sersiec Commission of Mary land (PSC); the ef f ect of w cather and economic conditions 26.
Bahimorv Gas and Dectric Compcmy and Subsidiaries
I BGE Utility Revenues and Sales April 1993 rate order and an increased recovery of eligible Electric revenues changed during 1994 and 1993 because of the electric conservation program costs through the energy conser-following factors:
vation surcharge.
1994 1993 The April 1993 rate order for an annualized electric base rate unm ans) increase of $84.9 million provided for a higher level of operating System sales volumes
$ 9.9
$112.4 expenses and a return on BGE's higher level of electric rate base.
Bae rates 1.4 58.5 The order also reduced the authorized rate of return to 9.40%
Fuel rates (21.5)
(55.0) from the previous rate of 9.94%.
Revenues from system sales (10.2)
I15.9 Under the energy conservation surcharge,if the PSC deter-
+
Interchange sales 26.5 27.2 mines that BGE is earning in excess of its authorized rate of Other revenues (1.9) 3.5 return, BGE will have to refund (by means of lowering future Total electric revenues
$ 14.4 5146.6 surcharges) a portion of energy conservation surcharge revenues to its customers. The portion subject to the refund is compen-Electric system sales represent volumes sold to customers sation for foregone sales from conservation programs and incen-within BGE's service territory at rates determined by the PSC.
tives for achieving conservation goals and will be refunded to These amoums exclude interchange sales, discussed separately customers with interest beginning in the ensuing July when the later. Below is a comparison of the changes in electric system annual resetting of the conservation surcharge rates occurs. BGE hales volumes.
earned in excess ofits authorized rate of return on electric opera-1994 1993 tions for the period July 1,1993 through June 30,1994. As a result, BGE deferred the portion of electric energy conservation Residential 0.5%
90%
mvenues subject to refund for the period December 1993 through Commercial (0.4) 4.1 November 1994. The deferral of these billings totaled $20.1 Industrial 17.8 2.7 g;
Total 2.5 5.8 Changes m. fuel rate revenues result from the operation of the electric fuel rate formula. The fuel rate formula is designed to '
Sales to residential and commercial customers were essen-recover the actual cost of fuel, net of revenues from interchange tially unchanged from the prior year due to three factors: the sala (see Notes 1 and 13). Changes in fuel rate revenues and number of customers increased; higher sales from extreme inte.shange sales normally do not affect earnings. However, if weather conditions early in the year slightly exceeded lower sales the PSC were to disallow recovery of any pan of these costs, from milder weather in the second half of the year; and usage-earnings would be reduced as discussed in Note 13.
per-customer decreased. Sales to industrial customers reDect Fuel rate revenues decreased during txith 1994 and 1993 due primarily an increase in the sale of electricity to Bethlehem Steel, to a lower fuel rate, offset partially by increased electric system which purchased more electricity from BGE due to increased sales volumes. The rate was lower in both years because of a steel production and the fact that Bethlehem Steelis now less-costly twenty-four month generation mix from greater purchasing its full electricity requirements from BGE. Bethlehem generation at the Calvert Cliffs Nuclear Power Plant compared to Steel is still producing power with its own generating facility, but the previous year. BGE expects electric fuel rate revenues to is now selling the output from this facility to BGE rather than remain relatively constant through 1995.
using the power to reduce its requirements. Hotter summer Interchange sales are sales of BGE's energy to the weather was the main reason for the increase in total sales in Pennsylvania-New Jersey-Maryland Interconnection (PJM), a 1993. The sales increases to the residential and commercial regional power pool of eight member companies including BGE.
customers renect significantly hotter summer weather, and to a Interchange sales occur after BGE has satisfied the demand for lesser extent. increased usage and customer growth. Sales to the its own system sales of electricity, if BGE's available generation industrial class reDect increased sales of electricity to Bethlehem is the least costly available to PJM utilities. Interchange sales Steel to support its increased steel production during 1993.
increased during 1994 and 1993 because BGE had a less-costly Base rates increased slightly during 1994 due to the remaining generation mix than other PJM utilities. The less-costly mit ef fect of the PSC's April 1993 rate order, offset panially by the renects greater generation from the Brandon Shores Power Plant deferral of the ponion of energy conservation surcharge billings and the operation of the Calvert Cliffs Nuclear Power Plant.
subject to refund. Base rates increased in 1993 due to the PSC's flahimarr Gas and Dactrw Compmy and %bsidiann 27.
Gas revenues decreased during 1994 and increased during Changes in gas cost adjustment revenues result primarily from 1993 because of the fallowing factors:
the operation of the purchased gas adjustment clauses which are 1994 1993 designed to recover actual gas costs (see Note 1). Changes in gas (in millmns) cost adjustment revenues normally do not affect earnings. Gas Sales volumes 53.6
$ 06 cost adjustment revenues decreased during 1994 primarily Base rates 2.4 2.6 because of decreased prices of purchased gas and slightly lower Gas cost adjustment revenues (16.1) 28.8 sales volumes subject to the clauses. Gas cost adjustment Other revenues (1.8) 0.8 revenues increased during 1993 primarily because of increased Total gas resenues
$(11.9)
$32.8 prices to recover higher costs of purchased gas and higher sales volumes subject to gas cost adjustment clauses. Delivery service sales volumes are not subject to gas cost adjustment clauses ne changes in gas sales volumes compared to the year before because delivery service customers purchase their gas directly from thi d parties.
Residential 0.6%
2.5%
DGE Util2y Fueland Energy Expenses Commercial (3.4) 2.2 I:lectric fuel and purebased energy expenses were as follows:
Industrial 4.2 (5.8) 1994 1993 1992 Total 0.7 (0.6) t/n millions)
Actual costs
$541.2 $483.9 $445.2 Total gas sales increased during 1994 because of higher sales Net recovery of costs to residential and industrial customers, offset partially by lower under electric fuel rate sales to commercial customers. Sales to industrial customers clause (see Note 1) 1.1 50.7 111.0 reflect primarily greater usage of natural gas by Bethlehem Steel.
Total expense
$542.3 $534 6 $556.2 Sales to commercial and industrial customers were negatively impacted because delivery service customers either voluntarily Actual electric fuel and purchased energy costs increased switched their fuel source from natural as to alternate fuels, or F
during 1994 as a result of a more costly actual generation mix were involuntarily interrupted by 13GE as a result of extreme and an increase in the net output of electricity generated to meet winter weather conditions in the first quarter of 1994.
the demand of HGE's system and the PJM system. The cost of Interruptible customers maintain alternate fuel sources and pay the actual generation mix increased due to higher purchased reduced rates in exchange for HGE's right to interrupt service energy costs and schedul-d outages at the Calvert Cliffs Nuclear during periods of peak demand. Total gas sales decreased during Power Plant in 1994. Actual electric fuel and purchased energy 1993 because of lower sales to industrial customers, offset costs during 1993 increased for two reasons: a higher net output panially by increased sales to the remainder of the gas-system of electricity generated to meet the demand of BGE's system and customers. Sales to industrial customers decreased primarily the PJM system and higher purchased-capacity costs under the because of lower use of delis ery service gas by Bethlehem Steel Pennsylvania Power & Light Company Energy and Capacity and interruptible senice customers, who mereased their use of Purchase Agreement.
alternalise fuels. Gas sales to Bethlehem Steel also decreased Purchased gas expenses were as follows:
because of a maintenance outage at their L-Blast furnace. The 1994 1993 1992 increases in sales to the residential and commercial classes of tin millions) customers reflect the colder winter weather during the first Actual costs
$222.7 $246.4
$213.6 quarter of 1993 and an increase in the number of customers.
Net (deferral) recovery of costs liase rates increased slightly in 1994 due to an increased under purchased gas adjustment recovery of eligible pas conservation program costs through the clause (see Note 1) 1.9 (3.7 )
0.5 energy consen ation surtharge. Base rates increased in 1993 for Total expense
$224.6 $242.7
$214.1 two reasons: the PSC's April 1993 rate order and an increased recosery of eligible gas conservation program costs through the energy conservation surcharge. The April 1993 rate order for an annualved gas base rate increase of $1.6 million provided a return on BGE's higher level of gas rate base.
28.
Italtimme Gas and Electric Company and Subsidiaries l
i i
1 l
Actual purchased gas costs decreased during 1994 for two partially by the 1993 reversal of the $9.8 million charge origi-reasons: lower gas prices and lower output associated with the nally recorded in 1992 for termination benefits associated with decreased demand for BGE gas. The lower gas prices reflect -
the Company's 1992 VSERP to reflect the ratemaking treatment market conditions and take-or-pay and other supplier refunds, adopted by the PSC in its April 1993 rate order.
offset by higher costs related to the implementation of Federal Op rations expense is expected to be reduced in 1995 due to Energy Regulatory Commission (FERC) Order 636 and higher the realization of a full year of cost savings from the employee demand charges. Actual purchased gas costs increased in 1993 reduction programs and continuing cost conttul efforts. These for three reasons: higher gas prices caused by market conditions; lower costs are expected to exceed other increases in operations higher reservation charges; and higher output to meet greater expenses.
demand for BGE gas.
Maintenance expense decreased during 1994 due primarily to l
Purchased gas costs exclude gas purchased by delivery service lower costs at the Calvert Cliffs Nuclear Power Plant. Mainte-customers, including Bethlehem Steel, who obtain gas directly nance expense increased in 1993 because of higher labor costs from third parties. Future purchased gas costs are expected to and higher costs at the Calvert Cliffs Nuclear Power Plant.
increase due to transition costs incurred by BGE gas pipeline Depreciation and amortization expense incicased during 1994 suppliers in implementing FERC Order No. 636. These transition because of the write-off of certain Perryman costs discussed cotts, if approved by FERC, will be passed on to BGE customers below. Additionally, depreciation and amortization expense through the purchased gas adjustment clause, increased in 1994 and 1993 because of higher depreciable plant in service and higher levels of energy conservation program Other Operating Expenses costs. The increase in depreciable plant in service resulted from in 1994, in order to more accurately reflect utility operations the addition of electric transmission and distribution plant and expense, BGE reclassified the amortization of deferred energy certain capital additions at the Calvert Cliffs Nuclear Power Plant conservation expenditures and deferred nuclear expenditures from during 1994 and 1993.
operations expense to depreciation and amortization expense. In Initially, BGE had planned to build two combined cycle addition, BGE reclassified diversified businesses' expenses from generating units at its Perryman site. However, due to significant operations expense to diversified businesses-selling, general, changes in the environment in which utilities operate, BGE now and administrative expense. Prior-year amounts have been reclas-has no plans to construct the second combined cycle generating sified to confonn with the current year's presentation.
unit. Accordingly, during the third quarter of 1994, BGE wrote Operations expense decreased during 1994 primarily due to off $15.7 million of the costs associated with that second labor savings achieved as a result of the Company's employee combined cycle unit. This write-off reduced after-tax earnings reduction programs discussed in Note 7 and continuing cost during 1994 by $11.0 million or 7 cents per share. Work on the control efforts. These savings offset higher expense from the first 140mw combustion turbine at Perryman continues to be on amortization of the cost of the 1993 and 1992 Voluntary Special whedule for commercial operation in 1995.
Early Retirement Programs (VSERP) and a $10.0 million charge Depreciation and amortization expense in 1995 will be for a bonus paid to employees in lieu of a general wage increase, affected by the completion of a facility-specific study of the cost in addition, operations expense for 1994 decreased because oper-to decommission the Calvert Cliffs Nuclear Power Plant. This ations expense for 1993 included a $17.2 million charge for study generated a higher decommissioning cost than the prior certain employee reduction programs, offset partially by a credit estimate which will increase depreciation expense $9 million to expense equivalent to the 59.8 million cost of termination annually. In addition, the PSC issued an order adjusting BGE's
{
benefits associated with the Company's 1992 VSERP.
utility plant depreciation rates to reflect the results of a detailed Operations expense increased during 1993 due to higher labor depreciation study. The new depreciation rates att expected to costs, employee reduction expenses (see Note 7), postretirement result in an increase in depreciation accruals of approximately
)
benefit expenses resulting from the implementation of Statement
$21 million annually. BGE plans to defer the increased depreci-l of Financial Accounting Standards No.106 (see Note 6), and ation accruals for recovery in a future base rate proceeding, higher nuclear operating costs. These increases were offset consistent with previous rate actions of the PSC.
i IMhimarr Gm mul Electric Conymy and Subsidiaries 29.
l
~
Taxes other than income taxes increased slightly during 1994 Diversified Businesses Earnings due primarily lo higher property taxes re*ulting frota higher Eamings per share from diversified businesses were:
levels of utility plant in service. Taxes other than income taxes 1994 1993 1992 increased during 1993 because of higher pmperty taxes from the additmn of Brandon Shores Unit 2 to the taxable base effective Constellation Holdings,Inc.
I Power generation systems
$.10
$.07 5.08 July 1,1992, higher franchise taxes because of the increase in Financial investments
.03
.10
.09 total electric and gas revenues, and increased payroll taxes.
Real estate development and senior inflation affects the Company thmugh increased operating liv ng facilities
(.03)
(.04)
(.05) expenses and bigher replacement costs for utility plant assets.
Effeet of 1993 Tax Act (St)
~
Although timely rate increases can lessen the effects of inflation
- Gther
(.01)
(.01 )
(.01) the reFulatory process imposes a time lag which can delay BGE's recovery of increased costs. There is a reFulatory lag primarily Total Constellation iloidings, Inc.
.09
.08
.11 because rate increases are based on historical costs rather than E Home Pmducts & SerWees,Ix. A3 pmjected costs. The PSC has historically allowed recovery of the Total disersified businesses
$.12
$.08
$.1 I cost of nplacinF plant assets, together with the opportunity to earn a fair return on 13GE's investment, beginning at the time of The Constellation Companies' power generation systems replrement.
business includes the development, ownership, management, and operation of wholesale power generating pnjects in which the Other income and Expenses Constellation Companies hold ownership interests, as well as the The allowance for funds used during construction ( AFC) provision of services to power generation projects under oper-increased during 1994 because of a higher Sel of construction ation and maintenance contracts. Power generation systems work in progress which was offset partially by the lower AFC earnings increased in 1994 primarily due to payments for the rate established by the PSC in the April 1993 rate order. AFC curtailment of output at two wholesale power generating projects was essentially unchanged in 1993 because a higher level of as discussed below. Power generation systems earnings during construction work in progress was ofTset by the lower AFC rate 1993 were essentially unchanged. Earnings for 1993 include discussed almve.
$8.0 million of energy tax credits on the commercial operation of Net other income and deductions increased in 1994 primarily the Puna geothermal plant, offset by costs incurred at the Panther due to a lower lesel of charitable contributicas and ains realized Creek waste-coal pmject in order to resolve fuel quality and F
on the sale of receivables.
other start-up problems.
Capitalited interest decreased during 1994 due to lower capi-The Constellation Companies' investment in wholesale power talized interest on the Constellation Companies' power gener-generating projects includes $177 million representing ownership ation systems, ofTset partially by the accruai by BGE of carrying interests ir. : s projects which sell electricity in Califomia under charges on electric deferred fuct costs excluded from rate base Interim Stara ro Offer No. 4 power purchase agreements. Under (see Note $t Capitalized interest increased during 1993 due to these agreem uts, the projects supply electricity to purchasing the accrual of carrying charges on electne deferred fuel costs utilities at a fixed rate for the first ten years of the agreements excluded from rate base.
and at variable rates based on the utilities
- avoided cost for the income tax expense increned during both years because of remaining term of the agreementt Avoided cost generally repre-higher pre-tas carnings. The 1993 increase also reflects the effect sents a utility's next lowest cost generation to service the of the 1093 Tat Act, which increased the fedecal corporate demands on its system. These power generation pmjects are income tax rate to 35% fiom 349, retroactive to January 1.1993.
scheduled to convert to supplying electricity at avoided cost rates As a resuh, income tax expense related to 1993 operations in various years beginning in late 1996 through the end of 2(XX).
increased by $4.6 million and the Company's deferred income As a result of dechnes in purchasing utilities' avoided costs tax li Niity in:reased by $20.1 million. The Company deferred subsequent to the inception of these agreements, revenues at
$12.8 millior, of the increase in the deferred income tax liability these projects based on current avoided cost lesels would be applicable to utility operations for recovery through future rates substantially lower than resenues presently being realized under and charged the remaining $7.3 million to income tax expense.
the fixed price terms of the agreements. If current avoided cost j
Of this $7.3 million charged ta expense, $5.8 million pertains to lesels were to continue into 1996 and beyond, the Conste!!ation the Constelhtion Companies as discussed on page 31.
Companies could experience reduced earnings or incur losses j
associated with these projects, which could be significant. The
{
Constellation Companies are investigating and pursuing alterna-
+
30.
ELdrimmt Gas and Electric Compmy and Subsidwrics
tives for certain of these power generation projects including, but The Constellation Companies' real estate portfolio has experi.
rot limited to, repowering the projects to reduce operating costs, enced continuing carrying costs and depreciation. Additionally, reneFotiating the power purchase agreements, and selling its the Constellation Companies have been expensing rather than ownership interests in the projects. Two of these wholesale power capitalizing interest on certain undeveloped land where devel-generating pnsects,in which the Constellation Companies' opment activities were at minimallevels.These factors have investment totals $27.4 milhon, have executed agreements with affected earnings negatively and are expected to continue to do Pacific Gas & Electric (PG&E) providing for the curtailment of so until the levels of undeveloped land are reduced. Cash flow
.i output through the etal of the fixed price period in return for from real estate operations has been insufficient to cover the debt payments from PG&E. The payments from PG&E during the service requirements of certain of these projects. Resulting cash i
curtailment period will bt niiivia t to fully amortize the existing shortfalls have been satisfied through cash inrusions from pn9ect finance debt. Ilowever, following the curtaihnent period, Constellation Holdings, Inc., which obtained the funds through a the projects remain contractually obligated to commence combination of cash flow generated by other Constellation prmiuction of electricity at the avoided cost rates, which could Companies and its corporate bormwings. To the extent the real result in reduced earnings or losses for the reasons desenbed estate market continues to improve, earnings from real estate shove. The Company cannot predict the impact that these matters activities are expected to improve also.
regarding any of the 16 pmjects may have on the Constellation The Constellation Companies continued investment in real Companies or the Company, but the impact could be material.
estate projects is a function of market demand, interest rates, I
Earnings from the Constellation Companies' portfolio of credit availability, and the strength of the economy in general.
financial investments include capital gains and losses, dividends.
The Constellation Companies' Management believes that income from financial limited partnerships, and income from although the real estate market has impmved, until the economy financial guaranty insurance companies. Financial in estment reDects sustained growth and the excess inventory in the market eamings decreased during 1994 due to reduced earnings from in the Baltimore-Washington corridor goes down, real estate I
the investment portfolio. Additionally,1993 results reflected a values will not improve significantly. If the Constellation 56.1 million gain fmm the sale of a portion of an investment in Companies were to sell ' heir real estate projects in the current a Anancial guaranty insmance company. Earnings increased depressed market, losses would occur in amounts difficult to slightly in 1993 as compared to 1992 because this gain was determine. Depending upon market conditions, future sales could substantially offset by lower investment income resulting fmm also result in losses. In addition, were the Constellation the dechne in the size of the investment portfolio due to the sale Companies to change their intent about any project from an of selected assets to prmide liquidity for ongoing businesses of intent to hold until market conditions improve to an intent to sell, the Constellation Companies.
applicable accounting rules would require a write-down of the i
The Constellation Companin' real estate development project to market value at the time of such change in intent if j
& us includes land under devehipment; office buildings; retail market value is beiow book value.
,4 n; commercial projects; an entertainment, dir.ing and retail The Eticd of the 1993 Tax Act represents a 55.8 million co..,/
in Orlando, Florida; a mixed-use planned-unit-charge to income tax expense to reDect the increase in the deselopment; and senior living facihties. The majority of these Constellation Companies' deferred income tax liability because projects are in the Baltimore-Washington corridor. They have of the increase in the federal corrorate tax rate.
leen affected adversely by the depressed real estr.c market and BGE Ilome Products & Services earnings increased during economic conditions, resulting in reduced demand for the 1994 primarily due to a gain on the sale of receivables.
pun:hase or lease of available land, office and retail space, j
Eamings from real estate development ir. creased slightly Enrironmental Matters during 1994 due to gains recognized from the sale of two retail The Companp is subject to increasingly stringent federal, state, centers, an office buildmg. and interests in two senior living and kical laws and regulations relatirig to improving or main-facihties. He increases in diversified businesses
- revenues and in taining the quality of the environment. These laws and regula-selling, general, and administratise expenses reDect the proceeds tions require the Company to remo e or remedy the effect on the of these sales and the cost of the facilities sold, wectively.
environment of the disposal or release of specified substances at Earnings from real estate development and ser.
ving facilities ongoing and foimer operating sites, inch. ding Environmenta!.
were essentially unchanged :n 1993 because a 52.1 million gain Protection Agency Superfund sites. Details regarding these on the sale of a substantial portion of the imestment in senior matters, including financial information, are presented in living facihties was othet by greater operating losses at other real Note 13 and in the Company's Annual Report on Form 10-K estate projects. ne senior living facilities which were sold under item 1. Business - Environmental Matters.
conuibuted real estate revenues and operating expenses of appraimately $17 million and $16 million, respectisely,in 1993.
3 Mtimar Gas and Hectric Commmy and hbnharws 3},
Liquidity and Capital Resources Capital Requirements The Company's capital requirements reflect the capital-intensive years 1992 through 1994, along with estimated amounts for the tuture of the utility business. Actual capital requirements for the years 1995 through 1997, are reflected below.
1992 1993 1994 1995 1996 1997 (In nillions)
Utility Business:
Construction expenditures (excluding AFC)
Electric 5 292 5 360 5339 5233 5219
$206 i
Gas 36 51 68 61 71 84 Common 39 44 42 56 50 35 l
Total construction expenditures 367 455 449 350 340 325 AIC 22 23 34 35 18 13 Nuclear fuel (uranium purchases and processing charges) 40 47 42 48 50 52 Deferred energy conservation expenditures 20 33 41 44 43 29 Deferred nuclear expenditures 16 14 8
Retirunent of long-term 6bt and redemption of preference stock 486 907 203 268 98 164 Total utility business 951 1,479 777 745 549 583 Diversified Businesses:
Retiremem of long-term debt i18 222 37 55 65 125 Investment requirements 80 78 51 66 70 40 Total disersified businesses 198 300 88 122 135 165 Total 51.149 51.779 5865 5867 5684 5748
- GE Utility Capital Requirements tively, of the funds required for BGE*s capital requirements BGEN construction program is subject to continuous review and exclusive of retirements and redemptions of debt and preference modification, and actual expenditures may vary from the esti-stock. In addition, in 1994,570 million of cash was pmvided by mates above. Electric construction expenditures include the the sale of certain BGE and HPS receivables (see Note 13).
installation of two 5.(XX) kilowatt diesel generators at Calvert During the three-year period 1995 through 1997, the Company Clif fs Nuclear Power Plant, one of which is scheduled to be expects to pmvide thmugh utility operations 100'k of the funds placed in service in 1995 and the second in 1996; the construc-required for BGE4 t.apital requirements, exclusive of retirements tion of a 140-megawatt combution turbine at Perryman, and redemptions.
scheduled to be placed in service in 1995, w hich the PSC autho.
Utility capital requirements not met through the internal gener-rized in an order dated March 25,1993; and improvements in ation of cash are met through the issuance of debt and equity i
BGEi existing generating plants and its transmission and distrib-securities. During the three-year period ended December 31, ution facilities. Future electric expenditures do not include addi-1994, BGE's issuances of long-term debt, preference stock, and tional generating units.
common stock were $1,55 / million,5130 million, and 5448 During 1994,1993, and 1992 the internal generation of cash million, respectively, During the same period retirements and from utility operations provided 729,719, and 819 respec-redemptkms of BGE's icng-tenn debt and preference stock f
32.
Baltimore Gas and Electric Company and Subsidiaries
totaled $1,425 million and $149 million, respectively, exclusive estate properties, additional cash may become available through of cny redemption premiums or discounts. The increase in the sale of projects (for additional information see the discussion issuances and retirements of long-term debt during 1993 reflects of the real estate business and market on page 31). The ability of the refinancing of a significant portion of BGE's debt in order to the Constellation Companies to sell or liquidate assets described take advantage of the favorable interest rate market. The amount above will depend on market conditions, and no assurances can and timing of future issuances and redemptions will depend upon be given that such sales or liquidations can be made. Also, to market condition and BGE's actual capital requirements.
provide additional liquidity to meet interim financial needs, CHI De Constellation Companies' capital requirements are has entered into a $50 million revolving credit agreement.
discuased below in the section titled " Diversified Businesses Capital Requirements. Debt and Liquidity." The Constellation Investment Requirements Companies plan to meet their capital requirements with a combi-The investment requirements of the Constellation Companics nation of debt and internal generation of cash from their opera-include its portion of equity funding to committed projects under tions. Additionally, from time to time, BGE may make loans to development, as well as net loans made to project partnerships.
Constellation Holdings, Inc., or contribute equity to enhance the investment requirements for the years 1995 through 1997 reflect capital structure of Constellation Holdings, Inc.
the Constellation Companies' estimate of funding for ongoing and anticipated projects and are subject to continuous review and Diemified flusinesses Capital Requirements modification. Actualinvestment requirements may vary signifi-Del >r und Liquidity cantly from the amounts on page 32 because of the type and The Constellation Companies intend to meet capital requirements number of projects selected for development, the impact of by refinancing debt as it comes due and tinough internally market conditions on those projects, the ability to obtain generated cash. These internal sources include cash that may be financing, and the availability of internally generated cash. The generated from operations, sale of assets, and cash generated by Constellation Companies have met their investment requirements tax benefits earned by the Constellation Companies. In the event in the past through the internal generation of cash and through the Constellation Companies can obtain reasonable value for real borrowings from institutional ' enders.
Response to Regulatory Change regulatory changes in its utility business. These strategies may include internal restructurings involving the complete or partial Electric utdities presently face competition in the construction separation of its generation, transmission and distribution busi-of generating units to meet future load growth and in the sale of nesses, acquisitions of related or onrelated businesses, business electricity in the bulk power markets. Electric utilities also face combinations, and additions to or dispositions of portions of its the future prospect of competition for electric sales to retail franchised service territories. BGE may from time to time be customers. It is not possible to predict currently the ultimate engaged in preliminary discussions, either internally or with effect competition will have on BGE's camings in future years.
third parties, regarding one or more of these potential strategies.
y in respor e to the competitive forces and regulatory changes, as No assurances can be given as to w hether any potential trans-discuwed in Part 1 of BGE's Reports on Form ISK under the action of the type described above may actually occur, or as to headings Business or Competition, BGE from time to time will the ultimate effect thereof on the financial condition or compet-consider various strategies designed to enhance its competitise itive position of BGE.
position and to increase its ability to adapt to and anticipate Bahinwrr Gas wu! Dectnc Com;uny and Subsidmnes 33.
Report of_ Management LThe manafement of BGE is responsible for the information and conducts periodic reviews to maintain the effectiveness of l representations in the Company's financial statements. He internal control procedures.
Company prepares the financial statements in accordance with Coopers & Lybrand L.L.P., independent auditors, audit the generally accepted accounting principles based upon available financial statements and express their opinion about them. They_
. facts and circumstances and management's best estimates and audit in accordance with generally accepted auditing standards. -
]
judgments of known cra.utions.
The Audit Committee of the Board of Directors, which i
The Company maintains an accounting system and related consists of four outside Directors, meets periodically with -
system of internal controls designed to provide reasonable Management, intemal auditors, and Coopers & Lybrand L.L.P. to assurance that the financial records are accurate and that the -
review the activities of each in discharging their responsibilities.
.J
' Company's assets are protected. The Company's staff of internal The internal audit staff and Coopers & Lybrand LLP. have free 3
auditors, which reports directly to the Chairman of the Board, access to the Audit Committee.
i r
0 $m,,,)
.S L
M Christian H. Poi dexter Charles W. Shivery Chairman of the Board Chief Financial Officer i
Report of Independent Auditors lb the Sharrholders of i
Baltimore Gas and Electric Company I
i We have audited the accompanying consolidated balance sheets We believe that our audits provide a reasonable basis for our j
and statements of capitalization of Baltimore Gas and Electric opinion.
i Company and Subsidiaries at December 31,1994 and 1993, and In our opinion, the financial statements referred to above the related consolidated statements of income, cash flows, present fairly, in all material respects, the consolidated financial common shareholders' equity, and income taxes for each of the position of Baltimore Gas and Electric Company and three years in the period ended December 31,1994. These Subsidiaries at December 31,1994 and 1993, and the consoli-financial statements are the responsibility of the Company's dated resuhs of their operations and their cash flows for each of i
Management. Our responsibility is to express an opinion on these the three years in the period ended December 31,1994 in financial statements based on our audits.
conformity with generally accepted accounting principles.
We conducted our audits in accordance with generally As discussed in Note 13 to the consolidated financial state-accepted auditiy standards nose standards require that we plan ments, the Public Service Commission of Maryland is currently and perform the audit to obtain reasonable assurance about reviewing the replacement energy costs resulting from the 1989-w hether the financial statements are free of material 1991 outages at the Company's nuclear power plant, and the j
misstatement. An audit includes examining, on a test basis, Company established in 1990 a reserve of $35 million for the 5
evidence suppor'ing the amounts and disclosures in the financial possible disallowance of replacement energy costs. The ultimate statements. An audit also includes assessing the accounting prin.
outcome of the fuel rate proceedings, however, cannot be deter-ciples used and significant estimates made by Management, as mined but may result in a disallowance in excess of the reserve i
well as evaluating the overall financial statement presentation.
prmided.
{
Coopers & Lyhand L.L.P.
Baltimore, Maryland
,lanuary 20,1995 l
1 I
I h
34, Baltimore Gas and Dectric Company and Subsidiaries i
I I
Consolidated Statements of Income l
3 i
. Mar Ended Derember 31, 1994 1993 1992
. (In thousands, e.scept per share amounts)
- Revenues '
O Electric
$2,126,581
$2,112,147
$1,965,532 I
Gas -
421,249 433,163 400,399
.p
' Diversified businesses 235,155 1%,075 193.605 i
Total revenues 2,782,985 2,741,385 2.559.536 l
l
.' '. Expenses Other Than Interest and Income Taxes Electric fuel and purchased energy 542,314
' 534,628 556,184 l
Ges purchased for resale 224,590 242,685
^14,103 j
. Operations
$45,413 574,073 537,593
' Mcintenance 164,892 181,208 172,248 i
Diversified businesses - selling, general, and administrative 174,834 143,654 131,580 Depreciation and amortization 295,950 253,913
~ 229,515 i
Taxes other than income taxes 199,733 194,832 183,004 j
Total expenses other than interest and income taxes 2.147,726 2,124,993 2,024,227
~ Income from Operations 635,259 616.392 535,309 Other income
' Allowance for equity funds used during construction 21,746 14,492 13,892 Equity in earnings of Safe liarbor Water Power Corporation 4,349 4.243 4,267 Net other income and deductions 6.270 1.575 3,973 Tottd other income 32,365 20,310 22.132 Income Before Interest and income Taxes 667,624 636,702 557,441 Interect Expense Interest charges 214,347 212.971 211,712 Capitalized interest (12,427)
(16.167)
(13,800)
Allowance for lerowed funds used during construction (11,766)
(8.640)
(8,165)
Net interest expense 190,154 188.764 189.747 income Before income Taxes 477,470 447,938 367,694 Income Taxes 153,853 138,072 103,347 Net income 323,617 309,866 -
264.347 Preferred and Preference Stock Dividends 39,922 41,839 42,247
. Earnings Applicable to Common Stock
$ 283,695
$ 268,027
$ 222,100 Averege Shares of Common Stock Outstanding 147,100 145,072 136,248
- Frinings Per Share of Common Sto:k
$1.93
$1.85
$1.63 See Notes to Cowlid.ned financial Stvements.
Cersah: prior-year amounts h,m been reclasstfled to nugorm to the curwn! year's presentation.
Baltirrunre Cuss amt Elecide Company and Subsidiaries 35.
s Consolidated Balance Sheets I
' At December 31.
1994 1993-l L
un shtmsands)
Assets
' Current Assets.
' Cash and cash equivalents
$ 38,590 S' 84,236 j..
Accounts receivable (net of allowance for uncollectibles) 314,842 401,853 Fuel stocks 70,627 70,233 Materials and supplies 149,614 _
145.130 l Prepaid taxes other than income taxes -
57,740 54,237
. I Other 47,022 -
~ 38,971 i
Total current assets 678,435 794,660 Investments and Other Assets Real estate projects 471,435.
487,397 Power generation systems 311,960 298,514 Financial investments 224,340
.213,315 Nuclear decommissioning trust fund 66,891 56,207
- Safe liarbor Water Pc,wer Corporation 34,168 -
34,138:
j Senior living facilities 11,540 2,005 Other 58,824 65,355 Total investments t.nd other assets 1,179,158 1,156,931
[
Utility Plant Plant in senice Electric 5,929,996 5,713,259 Gas 616,823 557,942
' l Common 511.016 487,740 l
5 Total plant in senice 7,057,835 6,758,941 Accumulated depreciation (2,305J72)
(2,161,984)
Net plant in s,enice 4,752,463 4,5 %,957 j
Construction work in progress 506,030 436,440 Nuclear fuel (net of amortir.ation) 134,012 139,424 j
Plant held for future use 24,320 24,066 Net utility plant 5,416,825 5.1%,887 Deferred Charges
{
Regulatory assets 773,034 768.125 j
Other 96,086 70,436 l
Total deferred charges 869,120 838.561 i
- Total Assets
_ $8,143,538
$7,987,039 i
~ I See Notes so Cumsohdated nmmcial Statements.
h i
?
i e
f 0
0$ 0 f
h e9
Consolidated Balance Sheets As December 3/,
1994 1993 (in thousands)
Webilities and Capitalization Current Liabilities Short-term borrowings
$ 63,700 Current portions of long-term debt and preference stock 323,675 44,516 Accounts payable 181,931 195,534 Customer deposits 24,891 22,345 Accrued taxes 19,585 20,623 Accrued interest 60,348 58,541 Dividends declared 66,012 63,966 Accrued vacation costs 30,917 35,546 Other 30,857 38,716 Total current liabilities 801,916 479,787 Deferred Credits and Other IJabilities Deferred income taxes 1,156,429 1,067,611 Deferred investment tax credits 119,394 157,426 Pension and postemployment benefits 138,835 183,043 Decommissioning of federal uranium enrichment facilities 45,836 46,858 Other 59,645 56,974 Total deferred credits and other liabilities 1,550,139 1,511,912 Capitari.ation Long-tenn debt 2,584,932 2.823,144 Preferred stock 59,185 59,185 Redeemable pn ference stock 279,500 342,500 Preference stock not subject to mandatory redemption 150,000 150,000 Common shareholders' equity 2,717,866 2,620,511 Total capitalization 5,791,483 5,995,340 s
Commitments, Guarantees, and Contingencies - See Note 13 l
Tr4al Liabilities and Capitalization
$8,143,538
$7,987,039 See Nous to ConsolidareJ linancial Stasements-e Baltimorr Gas and Electric Company and Subsidiaries 37.
Consolidated Statements of Cash Flows 1994 1993 1992 y Lnded Dr< ember 31, IIn thousandO Cash Flows From Operating Actisities Net income
$ 323,617
$ 309,866
$ 264,347 Adjustments to reconcile to net cash provided Ly operating activities Depreciation and amortization 351,064 314,027 273,549 Deferred income taxes 79,278 53,057 26,914 Investment tax credit adjustments (8,192)
(8,444)
(8.854)
Defen'ed fuel costs 11,461 51,445 105,430 Accrued pension and postemployment benefits (41,113)
(25,276)
Allowance for equity funds used during construction (21,746)
(14.492)
(13,892)
Equity in earnings of af filiates and joint ventures (neo (20,225)
(4,655)
(11,525)
Changes in current assen other than sale of accounts receivable (10.536)
(37,252)
(26,206)
Changes in current liabilities, other than short term borrowings (24,447) 71,153 (9,614)
Other 7,153 (6,643)
(31,005)
Net cash provided by operating activities 646,314 702,786 569,144 Cash Flows From Financing Activities Proceeds from issuance of Short-tenn borrowings (net) 63,700 (11,900)
(139,600) leng-term debt 207,169 1,206,350 603,400 Preference stmL 128,776 Common nock 31,869 57,379 355,759 Proceeds from sale of receivables 70,000 Reacquisition of long-term debt (240,853)
(1,012,514)
(687.052)
Redemption of preference stock (4,406)
(144,310)
(2,924)
Common stock dividends paid (220,152)
(211,137)
(l89,180)
Preferred and preference stock dividends paid (39,950)
(42,425)
(42,300)
Other (437)
(7,094)
(399) l Net cash used in financing activities jl31,060)
(36,875)
(102,2%)
Cash Flows From Investing Activities Utility construction expenditures (including AFC)
(48.,,059)
(477,878)
(389,416)
Allowance for equity funds used during construction 21,746 14,492 13,892 l
Nuclear fuel expenditures (42,089)
(47,329)
(39,486) l Dcferred nuclear espenditures (8,393)
(13,791)
(15,809)
Deferred energy conservation expenditures (40,440)
(32,909)
(19,918) l Contributions to nuclear decommiwioning trust fund (9,780)
(9,699)
(8,900)
Purchases of marketable equity securities (52,099)
(46,820)
(49,003)
Sales of marketable equity securities 40,585 33,754 56.690 Other financial ins estments 2,469 19.589 44,929 Real estate projects 14,926 (30,330)
(23,385)
Power pencration systems (1,116)
(25.841)
(31,483)
Other (3,650) 8.965 4,746 Net cash used in ins esting actisities (560,900)
(608,797)
(457,143)
Net Increase (Decrease) in Cash and Cash Equivalents (45,646) 57,114 9.705 Cash and Cash Equivalents at Beginning of Year 84.236 27,122 17,417 Cash and Cash Equivalents at End of Year
$ 38,590
$ 84,236
$ 27.122 Other Cash Flow Information Cash paio during the year for:
Intuest (net of amounts capitahied)
$ 184,441
$ 183,266 5 183.209 income taxes
$ 112,923
$ 126.034
$ 87,693
,\\re Meres to ConwhJarrJ l snancoal 5 asementw Certam pesor-year amosmn han e been urs landied so umform to the e urrent year :s presentatum.
38.
Baltmune Gas and Dcctric Company and Subsidiaries
Consolidated Strtements of Common Shareholders' Equity Unrealized Loss on Available Pension Common Stock Retained For Sale Liability Total Years Ended December 31.1W4, /W3. and /W2 Shares Amount Earnings Securities Adjustment Amount
(,'n tiumsandd 11alance nt December 31,1991 126,690 $ 979,211
$1,174,095
$2.153,306 Net income 264.347 264,347 Dividends declared Preferred and preference stock (42,247)
(42,247)
Common stock ($1.43 per share)
(196,601)
(196.601)
Common stock issued 17.098 356,230 356,230 Other (4)
(439) 43 (396)
Balance at December 31,1992 143,784 1,335,(X)2 1,199,637 2,534,639 Net income 309,866 309,866 Disidends declared Preferred and preference stock (41,839)
(41,839)
Common stock ($1.47 per share)
(213,407)
(213,407)
Common stock issued 2,250 57,379 57,379 Other (917)
(3,1I7)
(4,034)
Pension liability adjustment (33,990)
(33,990)
Deferred taxes on pension hability adjustment i1,897 11,897 Balince at December 31,1993 146,034 1,391,464 1.251,140 (22,093) 2,620,511 Net income 323,617 323,617 Dividends declared Preferred and preference stock (39,922)
(39,922)
Common snick ($1.51 per share)
(222,180)
(222,180)
Common stock issued 1,493 33,869 33,869 Other 45 45 Net unrealized loss on securities (5,609)
(5,609)
Deferred taxes on net unrealized loss on securities 1,963 1,963 Pension liability adjustment 8,573 8,573 Deferred taxes on pension fiability adjustment (3,001)
(3,001)
Italance at December 31,1994 g/27 $1,425,378
$1,312,655
$(3,646)
$(16,521) $2,717,866 See Notes to Cemwfutated Fmancial Ssarements.
Baltimore Gas and Dectric Commmy and SubsiJsaries 39.
e
Consolidated Statements of Capitalization At Decemlvr 3/,
1994 1993 (in thousands) long-Term Debt Firr,t Refunding Mortgage Bonds of EGE 9X% Series, due October 15,1995
$188,014
$ 200,000 g,
5%% Series, due April 15,1996 26,454 26,585 6W% Series, due August 1,1997 24,935 24,957 7% Series, due December 15,1998 28,638 Floating rate series, due April 15,1999 125,000 8.40% Series, due October 15,1999 96,225 100,000 L.
$X% Series, due July 15,2000 125,000 125,000 l
7%% Series,due April 15,2001 59,911 l
8X% Series, due August 15,2001 122,430 124,980 l
7X% Series, due January 1,2002 49,957 49,999 l
7X% Series, due July 1,2002 124,850
.25,000 l
SW% Installment Series, due July 15,2002 11,650 12,080 6M% Series, due February 15,2003 124,947 125,000 6%% Series, duc July 1,2003 124,925 125,000 SM% Series, due April 15,2004 125,000 125,000 6.80% Series, due September 15, 2(XM 20,000 7W% Series, duc January 15,2007 125,000 125,000 6%% Series, due March 15,2008 125,000 125,0C0 6.90% Installment Series, due September 15,2009 55,000 7W% Series, due March I,2023 124,998 124,998 7%% Series,due April 15,2023 100,000 100,000 Total First Refunding Mongage Bonds 1,744,385 1,802,148 Other long-term debt of BGE Medium-term notes, Series A 10,500 23,500 Medium-tenn notes, Series B 100,000 100,000 Medium-term notes, Series C 173,050 173,050 Pollution control loan, due July 1,2011 36,000 36,000 Pon facilities loan, due June 1,2013 48,000 48,000 Adjustable rate pollution control loan, duc July 1,2014 20,000 20,000 l
5.55% Pollution control revenue refunding loan, due July 15,2014 47,000 47,000 Economic development loan, due December I,2018 35,000 35,000 6.00% Pollution control revenue refunding loan, due April 1,2024 75,000 Total other long-tenn debt of BGE 544,550 482,550 leng term debt of Constellation Companies Mortgage and construction loans and other collateralized notes 7.679, due October 1.1995 13,000 Variable rates, due through 2009 116,613 151,251 7.73'7c, due March 15,2009 6,152 6,465 Unsecured notes 440,000 440,000 Total long-term debt of Constellation Companies 575,765 597,716 Unamortiied discount and premiurn (17,593)
(17,754)
Current portion of long-term debt (262,175)
(41,516)
Total long-term debt 2,584,932 2,823.144 ccmtmaed em page 41 See kres to Comudadated Fmancial Statements 40.
Baltimore Gas and Electric Company and Subsidiaries
Consolidated Statements of Capitalization At December 31.
1994 1993 (In housands>
Preferred Stock Cumulative, $100 par value,1,000,(XX) shares authorized Seriez B,4%%,222,92I shares outstanding, callable at $110 per share
$ 22,292
$ 22,292 Series C,4%,68,928 shares outstanding, callable at $105 per share 6,893 6,893 Series D,5.40%,300,(XX) shares outstanding, callable at $101 per share 30,000 30.,000 Total preferred stock 59,185 59,185 Preference Stock Cumulative, $100 par value,6,500,000 shairs authorized Redeemable preference stock 7.50%,1986 Series,455,(XX) and 470.000 shares outstanding. Callable at $105 per share prior to October 1,1996 and at lesser amounts thereafter 45,500 47,000 6.75%,1987 Series 455,000 and 485,000 shares outstanding. Callable at
$104.50 per share prior to April 1,1997 and at lesser amounts thereafter 45,500 48,500 6.95%,1987 Series,500,000 shares outstanding 50,000 50,000 7.80%,1989 Series,500,000 shares outstanding 50,000 50,000 813%,1989 Series,500,(XX) shares outstanding 50,000 50,000 8.625%,1990 Series,650,(X)0 shares outstanding 65,000 65,000 7.85 %,1991 Series, 350.(XX) shares outstanding 35,000 35,000 Current portion of redeemable preference stock (61,500)
(3,000)
Total redeemable preference stock 279,500 342,500 Preference stock not subject to mandatory redemption 7.78%,1973 Series,2(X),000 shares outstanding, callable at $101 per share 20,000 20,000 7.125%,1993 Series,400,000 shares outstanding, not callable prior to July 1,2003 40,000 40,000 6.97%,1993 Series,500,000 shares outstanding, not callable prior to October 1,2003 50,000 50,000 6.70%,1993 Series,400,000 shares outstanding, not callable prior to January I,20(M 40,000 40.000 Total preference stock not subject to mandatory redemption 150,000 150,000 Common Shareholders' Eqtiity Common stock without par value, 175,000,000 shares authorized; 147,527,114 and 146,034,014 shares iwued and outstanding at December 31,1994 and 1993, respectively (At December 31, 1994,166,893 shares were resersed for the Employee Savings Plan and 3,277,655 shares were reserved for the Dividend Reinvestment and Stock Purchase Plan.)
1,425,378 1,391,464 Retained earnings 1,312,655 1,251,140 Unrealized loss on available for sale securities (3,646)
Pension liabihty adjustment (16,521)
(22,093)
Totr,! common shareholders' equity 2,717,866 2,620,511 Total Capitalitation
$5,791,483
$5,995.340 See Notes to C<mwhdated Financial Statements.
d I
Baltimore Gas and Elertric Cawnpany and Subsidiaries 41,
(
Consolidated Statements of income Taxes rear Ended Der ember 31, 1994 1993 1992 iDollar amounts in thouumds)
Income Taxes
~
Current
$ 82,767
$ 93,459
$ 85,287 Ikferred Change in tax elfect of temporary differences 88,8 %
63,972 44,975 Change in income taxes recoverable through future rates (8,580)
(30.086)
(18,061)
Deferred taxes credited (charged) to shareholders' equity (1,038) 11,897 Deferred taxes charged to expense 79,278 45,783 26.914 liffect on deferred taxes of enacted change in federal corporate income tax rate Increase in deferred tax liability 20,105 Income taxes recoverable through future rates (12,831)
Defetxd taxes charged to expense 7,274 Investment tax credit adjustments (8.192)
(8.444)
(8.854)
Income taxes per Consolidated Statements of Income
$153,853
$138,072
$103,347 Reconciliation of income Taxes Computed at Statutory Federal Rate to Total Income Taxes income before income taxes
$477,470
$447,938
$367,694 Statutory federal income tax rate 35 %
35 %
34 %
income taxes computed at i,tatutory federal rate 167,115 156,778 125.016 Increases (decreases) in income taxes due to Depreciation differences not normalized on regulated activities 9,791 9,253 8,955 Allowance for equity funds used dunng construction (7,611)
(5,072)
(4,723J Amortitation of deferred investment tax credits (8,164)
(8,444)
(8,854)
Tax credits flowed through to income (1,754)
(9,736)
(8(M)
Change in federal corporate income tax rate charged to expense 7,274 Amortitation of deferred tax rate differential on regulated activines (1,885)
(5,789)
(7,365)
Other (3,639)
(6,192)
(8.878)
Total income taxes
$153,853
$138,072 5103,347 liffective federalincome tax rate 32.2%
30.b4 28 I %
At Decendier 31, 1994 1993 Ucierred income Taxes tDattar amounts m thousando Deferred tax habilities Accelerated depreciation
$ 840,376
$ 789,165 Allowance for funds used durine construction 208,726 202,490 income taxes recoverable through future rates 93,952 90,950 Deferred termination and postemployment costs 53,749 55,890 Deferred fuel costs 41,507 45,518 1.everaged leases 31,948 32,613 Percentage repair allowance 36,630 35,431 Other 148,064 125.850 Total deferred tax liabilities 1,454,952 1,377,907 Ikferred tax assets Attemative minimum tax 71,074 73,203 Accrued pension and postemployment benefit costs 51,163 64.065 Ikferrrd investment tax credits 52,288 55,099 Other 123,998 117,929 Total deferred tax assets 298,523 310,296 Deferred income taxes per Consolidated Balance Sheets
$1,156,429
$ l,067.611 5es ho tes so C<mwlulated 1inam ut! Sientenscontc.
s 42, Baltimore Gas and Electric Company and Subsidiaries
Notes to Consolidated Financial Statements Note 1. Significant Accounting Policies Nature of the Business The purchased gas adjustment is based on recent annual Baltimore Gas and Electric Company (BGE) and Subsidiaries volumes of gas and the related current prices charged by BGE's (collectively, the Company) is primarily an electric and gas utility gas suppliers. Any deferred underrecoveries or overrecoveries of serving a territory which encompawes Baltimore City and all or purchased gas costs for the twelve months ended November 30 put of nine Central Maryland counties. The Company is slso each year are chargal or credited to customers over the ensuing engaged in diversified businesses as described further in Note 3.
calendar year.
Principles of Consolidation income Taxes The consohdated financial statements include the accounts of The deferred tax liability represents the tax effect of temporary BGE and all subsidiaries in which BGE owns directly or indi-differences between the financial statement and tax bases of rectly a majority of the voting stock. Intercompany balances and assets and liabilities. It is measured using presently enacted tax l
transactions have been eliminated in consolidation. Under this rates. The portion of BGE's deferred tax liability applicable to i
policy, the accounts of Constellation iloidings, Inc. and its utility operations which has not been renected in current service subsidiarica (collectively, the Constellation Companies), BGE rates represents income taxes recoverable through future rates. It i
llome Pnxlucts & Services, Inc. OIPS) and BNG, Inc. are has been recorded as a regulatory asset on the balance sheet.
l consolidated in the financial statements, and Safe liarbor Water Deferred income tax expense represents the net change in the Power Corporation is reponed under the equity method.
deferred tax liabihty and regulatory asset during the year, l
Corporate joint ventures, pannerships, and affiliated companies exclusive of amounts charged or credited to common share l
in u hich a 20% to 504 voting interest is held are accounted for holders' equity.
under the equity method, unless control is evident, in which case Current tax espense consists solely of regular tax. In certain the entity is consolidated. Insestments in power generation prior years, tax expense included an alternative minimum tax systems and certain financial investments in whien less than a (AMT) that can be canied forward indefinitely as tax credits to 209 voting interest is held are accounted for under the cost future years in which the regular tax liability exceeds the AMT method. unlew significant influence is exercised over the liability. As of December 31,1994, this carryforward totaled entity, in w hich case the investment is accounted for under the
$71.1 million.
equity method.
The investment tax credit (lTC) associated with BGE's regu-lated utility operations has been deferred and is amortized to Regulation of Utility Operations income ratably over the lives of the subject propeny. ITC and BGE's utility operation, are subject to regulation by the Public other tax credits associated with nonregulated diversified busi-Aervice Commiwion of Maryland (PSC). The accounting policies nesses other than leveraged leases are flowed through to income.
and practices used in the determination of sersice rates are also BGE's utility revenue from system sales is subject to the generally used for financial reporting purposes in accordance Maryland public service company franchise tax in lieu of a state with generally accepted accounting principles for regulated income tax. The franchise tax is included in taxes other than industries. See Note 5.
income taxes in the Consolidated Statements of income.
UtWty Revenues inventory Valuation BGli recognires utility revenues as sen ice is rendercd to customers.
Fuel stocks and materials and supplies are generally stated at average cost.
Fueland Purchased Enery Costs Subject to the approval of the PSC, the cost of fuel used in gener-Real Estate Projects ating electricity, net of revenues from interchange sales, and the Real estate projects consist of the Constellation Companies' cost of gas sold may be recovered through zero-based electric investment in rental and operating properties and properties fuel rate See Note 13) and purchased gas adjustment clauses, under development. Rental and operating properties are held for respectisely. The difference between actual fuel costs and fuel investment. Properties under development are held for future l
revenues is deferred on the balance sheet to be recovered from or development and sale. Costs incurred in the acquisition and refunded to customers in future periods.
actise deselopment of such properties are capitalized. Rental and l
The electric fuel rate fonnula is based upon the latest operating propenies and properties under development are stated twenty-four month generation mix and the latest three-month at cost unless the amount invested exceeds the amounts expected aserage fuel cost for each generating unit. The fuel rate does not to be recovered through operations and sales. In these cases, r
change unlew the calculated rate is more than 59 above or the projects are written down to the amount estimated to be below the rate then in effect.
recoverable.
Balnmow Gan and 1Jutric Compsm; and hbsidiaries 43.
pm
!nrestments and Other Assets ownership interest in these plants is 20.99% and 10.56%, respec.
The Company adopted Statement of Financial Accounting tively, and represents a net investment of $143 million as of Standards No. I15 (Statement No. I15)," Accounting for Certain December 31,1994. Financing and accounting for these prop-Investments in Debt and Equity Secunties," effective January 1, erties are the same as for wholly owned utility plant.
1994. Securities subject to the requirements of Statement No. I15 Nuclear fuel expenditures are amonized as a component of are reported at fair salue as of December 31,1994. Certain of actual fuel costs based on the energy produced over the life of Constellation Companies' marketable equity securities totaling the fuel. Fees for the future disposal of spent fuel are paid quar-
$24.3 million are classified as trading securities. These securities terly to the Department of Energy and are accrued based on the are reported as other cunent assets, and unrealized gains and kilowatt-hours of electricity sold. Nuclear fuel expenses are losses are included in diversified businesses revenues. The subject to recovery through the electric fuel rate.
investments comprising the nuclear decommissioning trust fund Nuclear decommissioning costs are accrued by and recovered and certain marketable equity securities of CHI are classified as through a unking fund methodology. In its April 1993 rate order, available for sale. Unrealized gains and kisses on these securities, the PSC granted BGE revenue to accumulate a decommissioning as well as Clil's portion of unrealized gains and losses on secu-reserve of $336 million in 1992 dollars by the end of Calvert rities of equity-method investees, are tr;orded in shareholders' Cliffs
- service life in 2016, adjusted to reflect expected inflation, equity. At December 31,1993 marketsole equity securities are to decommission the radioactive portion of the plant. The total stated at the lower of cost or market value.
decommissioning reserve of $109.8 million and $93.4 million at December 31,1994 and 1993, respectively, is included in accu-Utility Plant, Depreciation and Amortization, mulated depreciation in the Consolidated Balance Sheets. In and Decommissioning accordance with Nuclear Regulatory Commission (NRC) regula-Utility plant is stated at original cost, which includes material, tions, BGE has established an external decommissioning trust to labor, and, w here applicable, construction overhead costs and an which a portion of accrued decommissioning costs have been allowance for funds used during construction. Additions to utility contributed.
plant and replacements of units of property are capitalized to The NRC requires utihties to provide financial assurance that utility plant accounts. Utility plant retired or otherwise disposed they will accumulate sufficient fur.ls to pay for the cost of of is charged to accumulated depreciation. Maintenance and nuclear decommissioning based upm either a generic NRC repairs of property and replacements of items of property deter-formula or a f acility-specific decommissioning cost estimate. The mined to be less than a unit of propeny are charged to mainte-Company completed a facility-specific study in 1995 w hich generated an estimate of $521 million in 1993 dollars to decom-nance expense.
Depreciation is generally computed using composite mission the radioactive portion of the plant.The Company plans straight.line rates applied to the aserage investment in classes of to use the facility-specific cost estimate as a basis for recording depreciable property, Vehicles are depreciated based on their esti-decommissioning expense in 1995, for funding these costs, and mated useful lives. Effective in 1995, BGE revised its utility providing the requisite financial assurance.
plant depreciation rates to reDect the results of a detailed depreci-ation study. The new rates are expected to result in an increase in Allowancefor Funds Used During Construction depreciation accruals of approximately $21 million annually.
and Capitali:cd Interest Depreciation expense for 1994 includes the write-off of The allowance for funds used during construction ( AFC) is an cenain costs at BGE's Perryman site. Initially, BGE had planned accounting procedure which capitalizes the cost of funds used to to build two combined cycle generating units at this site. How-finance utility construction projects as part of utility plant on the eser, due to significant changes in the environment in w hich util-balance sheet, crediting the cost as a noncash item on the ircome ities operate, BGE now has no plans to construct the second statement. The cost of borrowed and equity funds is segregated combined cycle generating unit. Accordingly, during the third between interest expense and other income, respectively. BGE quarter of 1994 BGE wrote off $15.7 million of the costs asso-recovers the capitalized AFC and a return thereon after the ciated with that second combmed cycle unit. This write-off re-related utility phnt is placed in service and included in depre-duced af ter-tax earnings during 1994 by $11.0 mill on or 7 cents ciable assets and rate base.
pr share. Also in 1994, BGE reclassified the amonization of Prior to April 23,1993, the Company accrued AFC at a pre-deferred energy conservation expenditures and deferred nuclear tax rate of 9.94%, compounded annually. Effective April 24, expenditures from operations expense to depreciation and amoni-1993, a rate order of the PSC reduced the pre-tax AFC rate to ration expense. Prior year amounts base been reclassified to 9.404, compounded annually.
conform with the current year's presentation.
The Constellation Companies capitalize interest on qualifying BGE owns an undivided interest in the Keystone and real estate and power generation development projects. BGE Conemaugh electric generatinF plants located in w estern capitalizes int, rest on carrying charges accrued on certain Pennsylvama, as well as in the transmission line w hich transports deferred fuel costs as discussed in Note 5.
the plant,' output to the jomt owners' service terntories. BGE's 44.
Haltimore Gas and Dectric Commmy and Subsidiaries
i lLong-Term Debt
' ments purchased with a maturity of three months or less are The discoimt or premium and expense of issuance associated '
considered to be cash equivalents.
with long-term debt are deferred and amortized over the original lives of the respective debt issues. Gains and losses on the reac-Accounting Standards issued
quisition of debt are amortized over the remaining original lives The Financial Accounting Standards Board has issued Statement
. 'of the issuances.
of Financial Accounting Standards Nos, i14 and 118, regarding accounting for impairment of a loan, effective January 1,1995.
' Cmh Flows Adoption of these statements is not expected to have a material
- For the purpose of reporting cash flows, highly liquid invest-impact on the Company's financial statements, Not) 2. Segment Information 1994 1993 1992
- (in thousands)
Electric Nonaffiliated revenues
$2,126,581
$2,112,147
$1,965,532 Affiliated revenues 840 Total revenues 2,127,421 2,112,147 1,965,532 Income fmm operations
$39,739 534,185 438,057 Depreciation and amortization 252,273 219,735 197,853 Construction expenditures (including AFC) 406,928 419,519 346,728 Identifiable assets at December 31 6,123,194 6,012.225 5,494.354 Gas Total revenues (nonaffilated)
$ 421,249
$ 433,163
$ 400,399 income from operations 35,205 34,738 40,598 Depreciation and amortization 32,478 23,875 _
21,513 Construction expenditures (including AFC) 76,131 58,359 42,688 Identifiable assets at December 31 733,624 690,783 575,513 Diversified Businesses Nonaffiliated revenues
$ 235,155
$ 196,075
$ 193.605 Affiliated revenues 15,649 6,825 6,468 Total revenues 250,804 202,900 200,073 Income from operations 60,315 47,46 56,654 Depreciation and amortization 11,199
. 10,303 10,149 Identifiable assets at December 31
.1,158,162 1,166,997 1,090,667 Total Nonaffliated resenues
$2,782,985
$2.741,385
$2,559.536
~
Affiliated revenues 16,489 6,825 6,468 Intercompany eliminations (16,489)
(6.825)
(6,468)
Total revenues 2,782,985 -
2,741,385 2,559,536 Income from operations 635,259 616,392 535,309
~ Depreciation and amortization 295,950 253,913 229,515 Construction expenditures (including AFC) 483,059 477,878 389,416-Identifiable assets at December 31 8,014,980 7,870,005 7,160,534 Other assets at December 31 128,558 117.034 213,823 Total assets at December 31 8,143,538 7,987,039 7,374,357 Cers,un pruwwar anruwas have been m lass (wd w exnfram w the current year h presentati<m.
I Baltimorr Gas and Electric Company and Subsidiaries 45,
=
Note 3. Subeldlary Informatkn Diversified businesses consist of the operations of Constellation sidiary, BGE Home Pmducts & Services, Inc., which engages in iloidings, Inc. and its subsidiaries, BGE Ilome Products &
the businesses of appliance and consumer electmnics sales and Services, Inc. (IIPS), and BNG, Inc. Diversified businesses' service; heating, ventilation, and air conditioning system sales, operating expenses have been reclassified as diversified busi-installation and service; and home impmvements and services.
nesses-selling, general, and administrative expense in the consoli-BNG, Inc. is a wholly owned subsidiary which engages in dated statements of income. Prior-year amounts have been natural gas brokering, reclassified to conform with the current year's presentation.
BGE's investment in Safe 11 arbor Water Power Corporation.
Constellation iloidings, Inc., a wholly owned subsidiary, a producer of hydroelectric power, represents two-thirds of Safe holds all of the stock of three other subsidiaries, Constellation Harbor's total capital stock, including one-half of the voting Real Estate Group, Inc., Constellation Energy, Inc., and stock, and a two-thirds interest in its retained earnings.
Constellation Investments, Inc. These companies are engaged in The following is condensed financial information for real estate development and ownership of senior living facilities; Constellation IIoldings, Inc. and its subsidiaries. The condensed development, ownership, and operation of power generation financial information does not reflect the climination ofinter-systems; and financial investments, respectively.
company balances or transactions which are eliminated in the Effective July 1,1994, BGE formed a wholly owned sub-Company's consolidated financial statementc.
1994 1993 1992 (in thousands. except per share amounts)
Income Statements Revenues l
Real estate projects
$ 106,915
$ 77,598
$ 76,582 l
Power generation systems 41.301 24,971 28,084 Financial investments 12.126 21,195 21.485 Total revenues 160,342 123,764 126,151 Expenses other than interest and income taxes 107,267 80,707 77.154 income from operations 53,075 43,057 48,997 Interest expense (45,782)
(47,845)
(43,903)
Capitaliicd interest 10,776 14,702 13,800 Income tas benefit (expenw)
(4,305) 1,984 (3,637)
Net income
$ 13,764 11.898
$ 15.257 Contribution to the Comnany's earnings per share of common stock
.09
.08
.11 Balance Sheets Current assets
$ 53,034
$ 54,039
$ 29,899 Noncurrent assets 1,055,056 1.036.507 990.273 Total assets
$1,108,090
$1,090.546
$1,020.172 Current liabilities
$ 70,670
$ 24,201
$ 113,4G4 Noncurrent liabilities 718,846 759,048 611,370 Shareholder's equity 318.574 307,297 295.398 Total liabilities and shareholder's equity
$1.108,090
$1,090.546
$1.020.172 I
l l
i 46.
Baltimore Gas and Dectric Company and Subsidiaries l
l
1 Note 4. Real Estate Projects and Financial Investments Real estate projects consist of the following investments held by The Constellation Companies' marketable equity securities the Constellation Companies:
and the investments comprising the nuclear decommissioning Ai zurember 31.
1994 1991 trust fund are classified as available for sale. The fair value and du thousando gross unrealized gains and losses for available for sale securities, Properties under development 5267,483 5249,473 exclusive of $3.2 million of unrealized net losses on securities of Rental and operating properties equity-method investees, are as fo!!ows:
(net of accumulated Fair Unrealized Unrealized depreciation) 203,000 237,194 AtIk uinber R m.t
\\'alue Gains Loss Other real estate ventures 952 730 un kmnds)
Total 5471.435 5487.397 Marketable equity securities 5 51,175 51,276
$ 1.859 U.S. government agency 5,102 113 Financialinvestments consist of the following investments State rnunicipal bonds 58.034 929 2.599 held by the Constellation Companies:
Total
$114.311 52.205 54.571 At Ikt ember 31,
!994 l993 l
Un thou3anda)
Contractual maturities of debt securities:
In',urance companies 5 87,700 5 83.275
"" '#"'"'""d' )
Marketable equity securities 51,175 42,681 ss t n 1 year 5 -
Financial limited partnerships 48,014 44,903 l-5 years J 3,855 Ixveraged leases 37,451 38,669 5-10 years 46.010 Other securities 3.787 More than 10 years 4.765 Total
$224,340
$213.315 Total 3M.630 Gross realized gains and losses on available for sale securities totaled 51.1 million and 53.1 million, respectis ely, in 1994. Nei realir.ed gains from financial investments totaled 56.5 million m 1993 and $91 million in 1992.
Note 5. Regulatory Assets Certain utility expenses and credits nonnally reflected in income income taxes recoverable through future rates represent prin-are deferred on the balance sheet as regulatory assets and liabil-cipally the tax effect of depreciation differences not normalized itit s and are recognized in incame as the related amounts are and the allowance for equity funds used during construction, included m service rate:; and recovered from or refunded to offsct by unamortized defenrd tax rate differentials and deferred customers in utility revenues, a ne following table sets forth taxes on deferred ITC. These amounts are amortized as the BGE's regulatory awets.
related temporary differences reverse. See Note 1 for a further At lkrember 31.
1994 1993 discussion of income taxes.
Un shousands; Deferred fuel costs represent the difference between actual Income taxes recoverable fuel costs and the fuel rate revenues under BGE's fuel clauses through future rates
$268,436 5259,856 (see Note 1). Deferred fuel costs are reduced as they are collected Deferred fuel costs 118,591 130.052 from customers.
un enemered costs deferred under the fuel clauses were fenx e it n benefit costs 79,979 96,793 Deferred postemployment A' Ikremher 31.
1994 1993 benefit costs 73,591 62,892 un thousando ikfened cost of Electric decomn.iwioning federal Costs deferred
$152,815 5155,901 uranmm enrichment facilities 52,748 49,562 Reserve for possible Ikferred energy consenation disallow ance of replacement expenditures 45.534 38,655 energy costs (see Note 13)
(35,000)
(35 000) k Deferred emironmental costs 35.015 32,966 Net electric 117,815 120,901 Other 8.203 10.623 Gas 776 9.151 Total 5773.034 5768.125 Total
$ 118.591 5130.052
(
Ba!nmore Gas and Ikctric Com{smv and SuMharies 47.
Deferred nuclear expenditures represent the net unamonized mer a 15-year period uith escalation for inflation and are based balance of certain operations and maintenance costs which are upon the amount of uranium enriched by DOE for each utility.
being amonized over the remaining life of the Calvert Cliffs These costs are being amortized over the contribution period as a Nuclear Powen Plant in accordance with orders of the PSC, cost of fuel.
These expenditures consist of costs incurred from 1979 through Deferred energy conservation expenditures represent the net 1982 for inspecting and repairing seismic pipe supports, expendi-unamortized balance of certain operations costs which are being tures incurred from 1989 through 1994 associated with nonre-amortired over five years in accordance with orders of the PSC.
curring phases of certain nuclear operations projects, and These expenditures consist of labor, materials, and indirect costs expenditures incurred during 1990 for investigarmg leaks in the associated with the conservation programs approved by the PSC.
~
pressurifer heater sleeves.
Deferred environmental costs represent the estimated costs of Deferred tennination benefit costs represent the net unamor-investigating contamination and perfonning certain remediation tired balance of the cost of certain termination benefits (see Note activities at contaminated Company-owned sites (see Note 13).
- 7) applicable to BGE's regulated operations. These costs are These costs are generally amortized over the estimated term of being amortized ever a five-year perind in accordance with rate the remediation process.
actions of the PSC.
Electric deferred feel costs in excess of $72.8 million are Deferred postemploy ment benefit costs represent the excess of excluded from rate base by the PSC for ratemaking purposes.
such costs recognized in accordance with Statements of I'inancial Effective April 24,1993, BGE has been authorized by the PSC to Accounting Standards No.106 and No. I12 over the amounts accrue carrying charges on deferred fuel costs in excess of $72.8 reflected in utility rates. These costs will be amortiicd over a 15-million, net of related deferred income taxes. These carrying year period beginning in 1998 (see Note 6).
charges are accrued prospectively at the 9.40% authorized rat-Deferred cost of decommissioning iederal uranium enrich-return. The income effect of the equity funds portion of the ment facili ies represents the unamortired portion of BGE's carrying charges is being deferred until such amounts are t
required contributions to a fund for decommissioning and decon-recosered in utility service rates subsequent to the completion of taminating the Department of Energy's (DOE) uranium enrich-the fuel rate proceeding examining the 1989-1991 outages at ment facihties. The Energy Policy Act of 1992 requires domestic Calvert Cliffs Nuclear Power Plant as discussed in Note 13.
utihiics to make such contnbutions, w hich are generally payable Note 6. Pension and Postemployment Benefits Pernion Benefits minimum amount required under Internal Revenue Service regu-he Company t,ponsors several noncontributory defined benefit lations using the projected unit credit cost method. Plan assets et pension plans, the largest of w hich (the Pension Plan) covers December 31,1994 consisted primarily of marketable fixed substantially all BGE employees and certain employees of the income and equity securities, group annuity contracts, and Constellation Companies and llPS. The other plans, w hich are short-term investments.
not material in amount, prmide supplemental benefits to certain The tables on page 49 set forth the combined funded status of non-employee directors and Ley employees. Benefits under the the plans and the composition of total net pension cost. At plans are generally based on age, years of service, and compen.
December 31,1994 and 1993, the accumulated pension oblig-sation levelt ation was greater than the fair value of the Pension Plan's assets.
Prior senice cost associated with retroactive plan amend-As a result, the Company recorded an additional pension liability, ments is amortired on a straight line basis over the average a portion of w hich was charged to shareholders' equity.
l remaining service period of active employees.
Net pension cost shown below does not include the cost of The Company's funding policy is to contribute at least the termination benefits described in Note 7.
48.
Bahimorr Gas and Darric Compmy and Subsidiaries
At l>nember 31, 1994 1993 tin alwnsandsJ Vested benefit obligation
$622,445
$677,069 Nonvested benefit obligation 8,838 11,359 Accumulated benefit obligation 631,283 688,428 Projected benefits related to increase in future compensation levels 82,815 109,161 Pndected benefit obligation 714,098 797,589_
Plan assets at fair value (614,284)
(605,629)
Prcsected benefit obligation less plan assets 99,814 191,960 Unrecognized prior service cost (23,863)
(21,252)
Unrecognized net k>ss (112.546)
(148,450)
Pension liability adjustment 52,177 58,553 Unamortired net asset from adoption of FASB Statement No. 87 1,586 1,812 Accrued pension liabihty
$ 17,168 5 82.623 Year I:nded December 31, 1994 1993 1992 (in shousands)
Components of net pemion cost Service cost-benefits carned during the period
$15.015
$11,645
$11.771 Interest cost on pniected benefit obligation 58,723 51,183 47,355 Actual return on plan assets 7,932 (56,225)
(33,685)
Net amortization and deferral (60,071) 6,591 (12,257)
Total net pension cost 2: 199 13,194 13,184 Amour,, capitalized as construction cost (2,578)
(1,800)
(1,839)
Amount charged to expense
$19,021 511.394 511.345 The Company also sponsors a defined contribution savings plan chang. in the methe 4 of accounting for postretirement benefits covering all eligible BGE employees and cenain employees of the other than pensions from the pay-as-you-go method used prior to Constellation Companies and HPS. Under this plan, the Company 1993 to the accrual method. The transition obligation existing at makes contributims on behalf of participants. Company the beginning of 1993 is being amortized over a 20-year period.
contributions to this plan totaled $8.7 million, $9.0 million, in April 1993, the PSC issued a rate order authorizing BGE to and $14.8 million in 1994,1993, and 1992, respectively.
recognize in operating expense one-half of the annual increase in l
PRB costs applicable to regulated operations as a result of the Postrctirement Beoefits adoption of Statement No.106 and to defer the remainder of the The Company sponsors defined benefit postretirement health annual % crease in these costs for inclusion in BGE's next base care and life insurance plans which coser substantially all BGE rate proceeding. In accordance with the PSC's Order, the increase employees and certain employees of the Constellation in annual PRB costs applicable to regulated operations for the Companies and ilPS. Benefits under the plans are generally period January through April 1993, net of amounts capitalized as based on age, years of senice, and pension benefit levels. The construction cost, has been deferred. This amount, which totaled pmtretirement benefit (PRB) plans are unfunded. Substantially
$5.7 million, as well as all amounts to be deferred prior to all of the health care plans are contributory, and participant completion of BGE's next base rate proceeding, will be amor-contributions for employees who retire after June 30,1992 are tired over a 15-year period beginning in 1998 in accordance with based on age and y ears of senice. Retirce contnbutions increase the PSC's Order. His phase-in approach meets the guidelines commensurate w ith the espected increase in medical costs. The established by the Emerging Issues Task Force of the Financial postretirement life insurance plan is noncontributory.
Accounting Standards Board for deferring postretirement benefit EfTecth e January 1,1993, the Company adopted Statement of costs as a regulatory asset. Accrual-basis PRB costs applicable to financial Accounting Standards No.106, which requires a nonregulated operations are charFed to expense.
f l
ILdtimore Gas arul Electne Compmy and Suinidiaries 49.
_________m___.___
=
De following table sets forth the components of the accumu-lated pwtretirement benefit obligation and a reconciliation of these amounts to the accrued postretirement benefit liability.
Ar Decemtwr 31, 1994 1993 Life Life fiealth Care Insurance llealth Care Insurance (In rhmnands)
Accumulated postretirement benefit obligation:
Retirees
$161,134
$45,146
$182,638
$45,461 I;ully eligible active employees 15,777 101 19,177 839 Other active employees 44,371 12,597 58.832 15.377 Total accumulated postretirement benefit obligation 221,282 57,844 260.647 61,677 Unrecognized transition obligation (158,725)
(46,081)
(179,764)
(48.641) iJnrecognized net gain (loss) 1,238 (2,141)
(36.675)
(9,072)
Accrued pmtretirement benefit habihty
$ 63,795
$ 9.622
$ 44.208 5 3.964 l
The following table sets forth the composition of net post-an accrual method, as of December 31,1993. The liability for retirement benefit cost. Net postretirement benefit cost shown these benefits totaled $48 million and $52 million as of below does not include the cost of termination benefits described December 31,1994 and 1993, respectively. The portion of the in Note 7.
December 31,1993 liability attributable to regulated activities rear emled Dr em/vr 31.
1994 1993 was deferred. The amounts deferred will be amortized over a tin thouiand.,;
15-year period beginning in 1998. The adoption of Statement Nei postretirement benefit cost ~
No. I12 did not have a material impact on net inceme.
Sers ice cost-benefits earned during the period
$5,035 5 4,373 Assumptions Interest cost on accumulated pwtretirement The pension and postemployment benefit liabilities were deter-benefit obhgation 23,037 20.451 mined using the following assumptions.
Amortization of transition obligation i1,700 12,021 At December 31.
1994 1993 Net amortization and deferral 646 Assumptions:
Total net postretirement benefit cost 40,418 36.845 Discount rate 8.5%
7.5%
Amount capitalized as construction cost (5,773)
(5,898)
AveraFe increase in Amount deferred (10,213)
(11,%5) future compensation levels 4.0%
4.5%
Amount charged to expense
$24,432
$18.982 Expected long-term rate of return on assets 9.0%
9.5%
Postretirement benefit costs recognized under the pay-as-you-The health care inflation rates for 1994 are assumed to be 9.0%
Fo method in 1992 totaled $11.7 million, of uhich $1.9 million was capitalized and the remainder was charged to expense.
for Medicare-eligible retirees and 11.5% for retirees not covered by Medicare. Both rates are assumed to decrease by 0.5%
Other Postemployment Benefits annually to an ultimate rate of 5.5% in the years 2001 and 2006, The Company provides certain pay continuation payments and respectively. A one percentage point increase in the health care inflation rate from the assumed rates would increase the accum-health and hfe insurance benefits to employees of BGE and certain employees of the Constellation Companies and IIPS w ho ulated postretirement benefit obligation by approximately are detennined to be disabled under BGirs Long-Term Disability
$35 million as of December 31,1994 and would increase the Plan. The Company adopted Statement of Financial Accounting aggregate of the service cost and interest cost components of Standards No. I12, which requires a change in the method of postretirement benefit cost by approximately $4 million annually, accounting for these benefits from the pay-as-you-go method to 5O.
Baltimore Gas and Electric Company and Subsidiaries
)
Note 7. Termination Benefits BGE ofTered a Voluntary Special Early Retirement Program (the BGE offered a second Voluntary Special Early Retirement 1992 VSERP) to eligible employees who retired during the Program (the 1993 VSERP) to eligible employees who retired as period February 1,1992 through April 1,1992. In accordance of February 1,1994. The one-time cost of the 1993 VSERP with Statement of Financial Accounting Standa-ds No. 88, consisted of enhanced pension and postretirement benefits. In "Ernployers' Accounting for Settlements and Curtailments of addition to the 1993 VSERP, further employee reductions have Defined Benefit Pension Plans and for Termination Benefits," the been accomplished through the elimination of certain positions, one-time cost of termination benefits associated with the 1992 and various programs have been offered to employees impacted VSERP, which consisted principally of an enhanced pension by the eliminations. In accordance with Statement No. 88, the benefit, was recognized 3n 1992 and reduced net income by one-time cost of termination benefits associated with the 1993
$6.6 million, or 5 cents per common share. In April 1993, the VSERP and various programs, w hich totaled $105.5 million, was PSC authorized BGE to amortire this charge over a five-year recognited in 1993. The $88.3 million portion of 1993 VSERP period for ratemaking purpm.es. Accordingly, BGE established a attributable to regulated activities was deferred and is being regulatory asset and recorded a corresponding credit to operating amortized over a five-year period for ratemaking purposes, expense for this amount. The reversal of the 1992 VSERP in beginning in February 1994, consistent with previous rate actions l
April 1993 increased net income by $6.6 million, or 5 cents per of the PSC. The $17.2 million remaining cost of termination common share.
benefits was charged to expense in 1993.
Note 8. Short-Term Borrowings Infonnation concerning commercial paper notes and lines of are at the banks' prime rates, base interest rates, or at various credit is set forth below. In support of the lines of credit, the money market rates.
Company pays commitment fees. Borrowings under the lines 1994 1993 1992 (IMlar amounts in thousand0 BGE's Commercial Paper Notes I orrowings outstanding at December 31
$ 63,700 5
5 11.900 Weighted average interest rate of notes outstanding at December 31 6.10 %
3.629 Unused hnes of credit supporting commercial paper notes at December 31
$148,000
$208,000
$203.000 Masimum borrowings during the year 187,500 96.900 393.650 Average daily bonowings during the year (a) 74,001 10,322 98.892 Weighted aserage interest rate for the year tb) 4.83 9 3.289 4.799 Constellation Companies' l.ines of Credit Borrowings outstandmg at December 31 5
5 Weighted average interest rate of borrowings outstanding at December 31
- 9
- 9 Unused hnes of credit at December 31 5
5 20.000 5
Masimum borrow ings during the year 60.670 Average daily bormwings during the year ta) 31,773 Weighted aserage interest rate for the year (b)
- 9 6.019 1*
(a) The sum ofdollar day s of outstandmg borrowings divided by the number ofdays in the period.
l (b) Total interrst accrued durmy the period divided by average daily borrrm ings.
1*
Kdumorr Gas and I:lectnc Commmy and Subsidiaries 5l.
l l
Note 9. Long-Term Debt First Refunding Mortgage Bonds of BGE Long-Term Debt of Constellation Companies Substantially aP of the principal properties and franchises owned The mortgage and construction loans and other collateralized by BGE, as well as the capital stock of Constellation Holdings, notes have varying terms. The $116.6 million of variable rate Inc., Safe Harbor Water Power Corguration, HPS and BNG, ine-,
notes require periodic payment of principal and interest with are subject to the lien of the mongage under w hich BGE's various maturities from September 1995 through July 2009. The outstanding First Refunding Mortgage Bonds have been issued.
$13 million,7 679 mongage note requires monthly interest On August i of cath car, BGE is required to pay to the payments and is due October 1,1995. The $6.2 million,7.73%
3 mortgage trustee an annual sinking fund payment equal to 19 of mortgage note requires quarterly principal and interest payments the largest principal amount of Mortgage Bonds outstanding through March 15,2009.
under the mongage during the precedmg twehe months. Such The unsecured notes outstanding as of December 31,1994 funds are to be used, as prosided in the mortgage, for the mature in accordance with the following schedule:
purchase and retirement by the trustee of Mortgage Bonds of any Amount series other than the SWG Installment Series of 2002, the 94%
(In thousands)
Series of 1995, the 8.409 Series of I999, the $W% Series of 8.359,due August 28,1995
$ 20.(XK) 2MX). the 8%G Series of 2(X)l, the 7%% Series of 2002, the 6M9 8.719, due August 28,19%
23,0(K)
Series of 2003, the 6X% Series of 2003, the SWG Series of 2fMM, 6.199, due September 9,1996 10,(XX) the 7M4 Series of 2007, and the 6%4 Series of 2008.
8.939, due August 28,1997 52,0(K) 6.65%, due September 9,1997 15,(XX)
Other Long-krm Debt of BGE 8.239, due October 15,1997 30,000 BGE maintains resolving credit agreements that expire at various 7.05G, due April 22,1998 25,(XX) times during 1996 and 1997, UnJer the terms of the agreements, 7.06G, due September 9,1998 20.0(X)
BGE may, at its option, obtain loans at various interest rates. A 8.48%, due October 15,1998 75,(XX) commitment fee is paid on the daily average of the unborrowed 7.30%, due April 22,1999 90,(KK) portmn of the commitment. At December 31,1994, BGE had 8.73%, due October 15,1999 15,0(X) no Imnowings under these res ohing credit agreements and 7.55%, due April 22,2tXX) 35,(XX) had available $125 million of unused capacity under these 7.439, due September 9,2fXX) 30JXK) agreements.
The Medium-term Notes Series A mature in February 1996.
The weighted aserage interest rate for notes outstanding at The Constellation Compam.es entered into an unsc:ured December 31, 1994 is 8.229.
revolving credit agreement on December 9,1994 in the amount The Medium-term Notes Series B mature at vious dates of $50 million. This agreement matures December 9,1997 and from July 1998 through September 2006. The weig. *ed average will be used to provide hquidity for general corporate purposes.
interest rate for notes outstanding at December 31,1994 is As of December 31,1994, the Constellation Compames nad no gyq,
borrowings under this agreement.
The Medium-term Notes Series C mature at varicus dates from June 1996 through June 2(X)3. The weighted average Weighted Arerage Interest Ratesfor Pariable Rate Debt interest rate for no:es outstandmg at December 31,1994 is The weighted aserage interest rates for variable rate debt during 7.16G.
1994 and 1993 were as fs llows:
The principal amounts of the SMG Installment Series 1994 1993 Mortgage Bonds payable each year are as follows:
BGE Itar Wating rate series trortgage tunds 4.91 %
ttu shomando Pollution control loan 2,80 2.39 1995 through 1997 5 605 Pon facilities loan 3.02 2.53 U)98 and 1999 tm Adjustable rate [ullution control loan 3.13 3.00 2 tux) and 2001 gn5 onomic development loan 3.00 2.49 2002 6,725 Constellation Companies Mortgage and construction loans and other collateralized notes 7,27 6.26 Loans under credit agreements 5.94 52, Balummr Gas and Dectric Compmy and Subsidiaries
Aggregate Maturities Constellation De combined aggregate rnaturities and sinking fund require-l'rar BGE Companies ments for all of the Company's kmg-term borrowings for each of (In shousands) the nr at five years are as follows:
1995 5206,063 5 56.112 1996 71,997 65,201 1997 80,653 125,389 1998 55,3 %
134,973 1999 251,467 116,425 Note 10. Redeemable Preference Stock The 6.95%,1987 Series and the 7.80%,1989 Series are subject De combined aggregate redemption requirements for all to mandatory redemption in their entirety at par on October 1, series of redeemable preference stock for each of the next five 1995 and.luly 1,1997, respectively.
years are as follows:
De following heries are subject to an annual mandatory l'rar redemption of the number of shares shown below at par (In shousands) beginning in the year shown below. At BGE's option, an addi-1995 561,500 tional number of shares, not to exceed the same number as are 1996 26,(XX) mandatory, may be redeemed at par in any year, commencing in 1997 83,000 the same year in which the mandatory redemption begins. He 1998 33,(XX) 8.259,1989 Series, the 8.625%,1990 Series, and the 7.85%,
1999 33,000 1991 Series listed below are not redeemable except through oper-ation of a sinking fund.
With regard to payment of dividends or assets available in the Beg,mn, g event of liquidation, preferred stock ranks prior to preference and m
Series Shares Year common stock; all issues of preference stock, whether subject to 7.504,1986 Series 15,(XX) 1992 mandatory redemption or not, rank equally; and all preference 6.75%,1987 Series 15,000 1993 stock ranks prior to common stock.
8.259,1989 Series 100,000 1995 8.625%,1990 Series 130,000 1996 7.85%, 1991 Series 70,000 1997 Nota 11, Leases The Company, as lessee, contracts for certain facilities and Certain of the Constellation Companies, as lessor, have equipment under lease agreements with various expiration dates entered into operatmg leases for office and retail space. These and renewal options. Consistent with the regulatory treatment, leases expire over periods ranging from 1 to 22 years, with lease payments for utility operations are charged to expense.
options to renew. The net book value of property under operating Lease expense, w hich is comprised primarily of operating leases, leases was $148.8 million at December 31,1994. He future totaled $12.7 million, $13.8 million, and $14.0 million for the minimum rentals to be received under onerating leases in effect years ended 1994,1993, and 1992, respectisely.
at December 31,1994 are as follows:
I-The future minimum lease pay ments at December 31,1994 33.yr for long-tenn noneancelable operating leases are as follows:
gfu,housand3)
>i-ar 1995 5 13,143 (In thousands) 1996 12,233 1993 5 4.185 1997 11,062 I
1996 3,881 1998 9,718 1997 3,447 1999 9.082 1998 2,971 Thet wfter 73,693 I999 I 409 Total minimum rentals 5128.931 Dereafter 5,347 Total mimmum lease pay ments
$21.240 (kdtinunt Gas ami Gertric Cmnismy and Sulnidiarin 53.
_______.___--_a
o
=
Note 12. Taxes Other Than income Taxes Taxes other than income taxes were as follows:
l' ear EnJed December 31, 1994 1993 1992 (in th<msands)
Real and permnal property
$112,492
$107,958
$100,419 Public service company franchise 48,143 48,693 45,654 Social security 35,269 35.724.
34,911 Other 10,307 9,836 9,355 Total taxes other than income taxes 206,211 202,211 190,339 Amounts included above charged to accounts other than taxes (6,478)
(7,379)
(7,335)
Taxes other than income taxes per Consolidated Statements of Income
$199,733
$194.832 5183.004-Note 13. Commitments, Guarantees, and Contingencies Commitments had sold $30 million and $40 million of receivables, respectively, BGE has made substantial commitments in connection with its under these agreements, construction program for 1995 and subsequent years. In addition, ilGE has entered into two long-term contracts for the purchase of Guamntees electric generating capacity and energy. The contracts expire in BGE has agreed to guarantee two-thirds of certain indebtedness 2001 and 2013. Total payments under these contracts were $69.4, incurred by Safe liarbor Water Power Corporation. The amount of
$68.7, and $60.6 million during 1994,1993, and 1992, respec-such indebtedness totals $35 million, of which $23.3 million repre-tisely. At December 31,1994, the estimated future payments for sents BGE'uham of the guarantee. BGE assesses that the risk of capacity and energy that BGE is obligated to buy under these material loss on the loans guaranteed is minimal.'
contracts are as follows:
As ef December 31,1994, the total outstanding loans and letters of credit of certain power generation and real estate projects guar-Ibar anteed by the Constellation Companies were $31.2 million. Also, fin rheum /s) the Constellation Companies have agreed to Fuarantee certain other 1995 5 65,249 borrowings of various power generation and real estate projects.
1996 62,880 The Company has assessed that the risk of material loss on the 1997 60,068 loans guaranteed and perfonnance guarantees is minimal.
1998 60.699 I999 60,558 ErwironmentalMatters 1hereafter 272.826 The Clean Air Act of 1990 (the Act) contains two titles designed to Total payments
$582.280 reduce emissions of sulfur dioxide and nitrogen oxide (NO ) from x
electric get rating stations. Title IV contains provisions for Certain of the Constellation Companies have committed to compliance in two separate phases. Phase 1 of Title IV became contribute additional capital and to make additional loans to certain etTective January 1,1995, and Phase 11 of Title IV must be imple-atriliates, joint ventures, and partnerships in w hich they have an mented by 2000. BGE met the requirements of Phase I by interest. As of December 31,1994, the total amount of investment installing flue gas desulfurization systems and fuel switching and requirements committed to by the Constellation Companies is through unit retimments. BGE is currently examining what actions
$43.6 million.
will be required in order to comply with Phase 11 of the Act.
In December,1994. BGE and IIPS entered into agreements llowever, BGE anticipates that compliance will be attained by with a financial institution w hereby BGE and llPS can sell on an some combination of fuel switching, flue gas desulfurization, unit ongoing hasis up to an aggregate of $40 million and $50 million, retirements, or allowance trading.
nspectively, of an undisided interest in a designated pool of At this time, plans for complying with NO control require-x customer receivables. Under the terms of the agreements, BGE and ments under Title 1 of the Act are less certain because all imple-IIPS have limited recourse on the receivables and have recorded a mentation regulations have not yet been finalized by the govern-reserse for credit losses. At December 31.1994. BGE and ilPS ment. It is expected that by the year 1999 these regulations will
$4 Baltimore Gas and Electric Company and Subsidiaries x___-____
require additional NO controls for ozone attainment at BGE's BGE and other operators of commercial nuclear power plants x
- generating plants and at other BGE facilities.The controls will in the United States are required to purchase insurance to coser result in additional expenditures that are difficult to predict prior to claims of cenain nuclear workers. Other non-governmental the issuance of such regulations. Based on existing and proposed commercial nuclear facilities may also purchase such insurance, omne nonattainment regulations, BGE currently estimates that the Coverage of up to $400 million is provided for claims against NO controls at BGE's generating plants will cost approximately BGE or others insured by these policies for radiation injuries.
g
$70 million. BGE is currently unable to predict the cost of com-If cenain claims were made under these policies, BGE and all pliance with the additional requirements at other BGE facilities.
policyholders could be assessed, with BGE's share being up to BGE has been notified by the Environmental Protection
$6.08 million in any one year.
3_
Agency and several state agencies that it is being considered a For physical damage to Calvert Cliffs, BGE has $2.75 billion of potentially responsible party (PRP) with respect to the cleanup of property insurance, including $1.4 billion from an industry mutual
- certain environmentally contaminated sites owned and operated by insurance company. If accidents at any insured plants cause a short-y.
third parties. In addition, a subsidiary of Constellation Holdings, fall of funds at the industry mutual, BGE and all policyholders Inc. ha. Seen named as a defendant in a case concerning an alleged could be assessed, with BGE's share being up to $14.3 million.
environme: Ally contaminated site owned and operated by a third if an outage at Calven Cliffs is caused by an insured physical party. Cleanup costs for these sites cannot be estimated, except that damage loss and lasts more than 21 weeks, BGE has up to BGE's 15.79% share of the possible cleanup costs at one of these
$473.2 million per unit of insurance, provided by the same sites, Metal Bank of America, a metal reclaimer in Philadelphia, industry mutual insurance company for replacement power costs.
could exceed amounts recognized by up to approximately This amount can be reduced by up to $94.6 million per unit if an
$14 million based on the highest estimate of costs in the range of outage to both units at Calvert Clifts is caused by a singular reasonably possible ahernatives. Although the cleanup costs for insured physical damage loss. If an outage at any insured plant certain of the remaining sites could be significant, BGE believes causes a short-fall of funds at the industry mutual, BGE and all that the resolution of these matters will not have a material etTect policyholders could be assessed, with BGE's share being up to on its financial position or results of operations.
$9.4 million.
Also, BGE is coordinating investigation of several former gas manufacturing plant sites, including exploration of corrective action Recoremhility of Electric Fuel Costs options to remove coal tar. However, no formal legal proceedings By statute, actual electric fuel costs are recoverable so long as the have been instituted. BGE has recognized estimated environmental PSC finds that BGE demonstrates that, among other things,it has costs at these sites totaling $37,9 million as of December 31,1994.
maintained the productive capacity of its generating plants at a
'these costs, net of accumulated amortization, have been deferred reasonable level. The PSC and Maryland's highest appellate court as a regulatory asset (see Note 5). The technology for cleaning up have interpreted this as permitting a subjective evaluation of each such sites, is still developing, and potential remedies for these sites unplanned outage at BGE's generating plants to determine whether has e not been identified. Cleanup costs in excess of the amounts or not BGE had implemented all reasonable and cost etTective recognized which could be significant in total, cannot presently be maintenance and operating control procedures appropriate for estimated.
preventing the outage. Effective January 1,1987, the PSC autho-rited the establishment of the Generating Unit Performance NuclearInsurance Program (GUPP) to measure, annually, utility compliance with An accident or an extended outage at either unit of the Calvert maintaining the productive capacity of generating plants at Cliffs Nuclear Power Plant could has e a substantial ads erse effect reasonable levels by establishing a system-wide generating perfor-on BGE. 'the primary contingencies resulting from an incident at mance target and individual perfonnance targets for each base k>ad the Calvert Cliffs plant would involve the physical damage to the generating unit. In future fuel rate hearings, actual generating plant, the recoverability of replacement pmer costs and BGE's perfonnance after adjustment for planned outages will be liability to third parties for property damage and bodily injury, compared to the system-wide target and,if met, should signify that BGE maintains various insurance policies for these contingencies.
BGE has complied with the requirements c' Maryland law. Failure
'Ihe costs that could result from a major accident or an extended to meet the system-wide target will result in review of each unit's l_-
outage at either of the Calvert Clith units could exceed the adjusted actual generating performance versus its performance f
' coverage limits.
target in determining compliance with the law and the basis for In addition, in the event of an incident at any commercial possibly imposing a penalty on BGE. Panies to fuel rate hearings miclear ptm er plant in the country. BGE could be assessed for a may still question the prudence of BGE's actions or inactions with portion of any third party claims associated with the incident.
respect to any given generating plant outage, which could result in Under the provisions of the Price Anderson Act, the limit for third the dis:dlowance of replacement energy costs by the PSC.
party claims from a nuclear incident is $8.92 billion. If third party Since the two units at BGE's Cahert Cliffs Nuclear Power claims relating to such an incident eweed $2(U million (the Plant utilize BGE's lowest cost fuel, replacement energy costs amount of primary insurance), BGE's share of the total liability for associated with outages at these units can be significant. BGE third party claims coldd be up to $159 million per incident, that cannot estimate the amount of replacement energy costs that could would be payable at a rate of $20 million per year, f
l Baltimore Gas and Electric Compmy and hkidiaries 55.
e
-~
be challenged or disallowed in future fuct rate proceedings, but mmainder of 1989 and 285 days of 1990 to undergo maintenance such amounts could be material and modification work to enhance the reliability of various safety In October 1988, BGE filed its first fuel rate application for a systems, to repair equipment, and to perform required periodic change in its electric fuel rate under the GUPP program. The surveillance tests. Unit 2, which retumed to senice on May 4, resultant case before the PSC covers BGE's operating performance 1991, remained out of service for the remainder of 1989,1990, and in calendar year 1987, and BGE's filing demonstrated that it met the first part of 1991 to repair the pressurizer, perfonn maintenance the system-wide and individual nuclear plant performance targets and modification work, and complete the refueling. The for 1987. In Nosember 1989, testimony was filed on behalf of replacement energy costs associated with these extended outages Maryland People's Counsel alleging that seven outages at the for both units at Calven ClitTs, concluding with the return to Calvert Cliffs plant in 1987 were due to management imprudence service of Unit 2, is estimated to be $458 million.
and that the replacement energy costs associated with those In a December 1990 order issued by the PSC in a BGE base outages shoulJ be disallowed by the Commission. Total rate proceeding, the PSC found that cema operations and mainte-replacement energy costs associated with the 1987 outages wem nance expenses incurred at Calvert Cliffs during the test year approximately $33 milhon.
should not be recovered from ratepayers. The PSC found that this in May 1989, BGE filed its fuel rate case in which 1988 perfor-work, w hich was performed during the 1989-1990 Unit I outage mance was to be examined. BGE met the system-wide and nuclear and fell within the test year, was avoidable and caused by BGE plant perfonnance targets in 1988. People's Counsel alleges that actions which were deficient.
BGE impmdently managed several outages at Calvert Cliffs, and The Commission noted in the order that its review and findings BGE estimates that the total replacement encryy costs associated on these issues pertain to the reasonableness of BGE's test-year with these 1988 outages were approximately $2 million.
operations and maintenance e>penses for purposes of setting base On November 14,1991, a llearing Examiner at the PSC issued rates and not to the responsibility for replacement power costs a proposed Ord r, w hich became final on December 17,1991 and associated with the outages at Calvert Clifts. The PSC stated that concluded that ao disallowance was warranted. The llearing its decision in the base rate case will have no res judicata (binding) l Examiner fouad that BGE maintained the productive capacity of efTect in the fuel rate proceeding examining the 1989-1991 the Plant at a reasonable level, noting that it produced a near outages. The work characterized as avoidable significantly record amount of peer and exceeded the GUPP standard. Based increased the duration of the Unit I outage. Despite the PSC's on this record, the Order concluded there was sufficient cause to statement regarding no binding efTect, BGE recognizes that the excuse any asoidable failures to maintain productive capacity at views expressed by the PSC make the full recovery of all of the higher levels.
replacement enerFy costs associated with the Unit I outage During 1989,1990, and 1991, BGE experienced extended doubtful. Therefore,in December 1990 BGE recorded a provision outages at its Calvert Cliffs Nuclear Power Plant. In the Spring of of $35 million against the possible disallowance of such costs.
1989, a leak was discosered around the Unit 2 pressuriier heater BGE cannot determine whether replacement energy costs may be sleeves during a refueling outage. BGE shut down Unit I as a disallowed in the present fuel rate proceedings in excess of the precautionary measure on May 6,1989 to inspect for similar leaks provision, but such amounts could be material.
and none were found. Ilowever, Unit I was out of senice for the i
l Note 14 Fair Value of Finanetal Instruments The following table presents the can3 ng value and fair value of financial instruments included in the Consolidated Balance Sheets.
i AI Dn ember 31.
1994 1993 Carrying Fair Carrying Fair Amount Value Amount Value Iin thousanJO Current awets
$ 382,776
$ 382,776
$ 496,919
$ 496 919 In esiments and other assets 138,978 137,782 125,G46 129,752 Cunent liabihties 768,932 768,932 443,968 443,968 Capitalization 2,864,432 2,699,103 3,165h44 3.303,616 56.
Baltimoor Gas and Decmc Compmy and Subsidiaries l
Financial instruments included in current assets are cash and values. These investments include partnership investments in cash equivalents. net accounts receivable, trading securities, and public and private equity and debt securities, pannership invest-miscellaneous h>ans receivable of the Constellation Companies.
ments in solar poweted energy production facilities, and invest-Financial instruments included in current liabilities represent total ments in stock tmsts.
current liabilities from the balance sheet excluding accrued Financial instruments included in capitalization are long-term vacrtion costs. ne carrying amount of current assets and current debt and redeemable preference stock. The fair value of fixed-liibilities approsimates fair value because of the short maturity rate long-term debt and redeemable preference stock is estimated of these instruments.
using quoted market prices where available or by discounting Investments and other assets include investments in common remaining cash flows at the current market rate. The carrying end preferred securities, which are classified as financial invest-amount of variable-rate long-term debt approximates fair value.
ments in the balance sheet, and the nuclear decommissioning BGE and the Constellation Companies have loan guarantees trust fund. The fair value of investments and other assets is based totalling $23.3 million and 517.0 million, respectively, at on quoted market prices where available. Cenain investments December 31,1994 and $26.7 and $36.0 million, respectively, at with a carrying amount of $70 million at December 31,1994 and December 31,1993 for which it is not practicable to determine 1993 are escluded from the amounts shown in investments and fair value, it is not anticipated that these loan guarantees will other assets be,;ause it was not practicable to determine their fair need to be funded.
Not) 15. Quarterly Financial Data (Unaudited)
The following data are unaudited but, in the opinion of Manage-periods generally occurring during the summer and winter ment, include all adjustments necessary for a fair presentation.
months Accordingly, comparisons among quarters of a year may BGE's utility business is seasonal in nature with the peak sales not be indicative of overall trends and changes in operations.
Quarter Ended Year Ended March 31 June 30 September 30 December 31 December 31 1994 (in thousands, exceptper-share amounts)
Res enues 5767,686 5651,152 5753,878 5610,269 52,782,985 income from operations 162,559 136,778 232,472 103,450 635,259 Net income 82.145 66,708 126.616 48,148 323,617 Earnings applicable to common ock 72,114 56,687 116,714 38,180 283,695 r
Earnings per share of common stock 0 49-0.39 0.79 0.26 1.93 1993 Resenues 5701,785 5583,812 5793,968 5661,820 52.741,385 locome from operations 135,429 106,890 287,519 86,554 616,392 Net income 65,796 55,876 157,058 31,136 309,866 Earmngs applicable to common stock 55.276 45,300 146,511 20.940 268,027 Earnings per share of common stock O.38 0 31 1.01 0.14 1.85 Results for thefirst quarter of Iw4 reflect a $10.0 million one. time bonus paid to employees in lieu of a general increase.
j Resultsfor the thiniquaner of IW4 n flect the $15.7 rmilion ($11.0 million after tan) write-offof cenain Perrynum costs (see Note 1J.
Resuitsfor the second quaner of IW3 wficct the wversal of the cost of the termination benefits associated with the IW2 Mduntary Special j
l'arly Retirement Pn gram (see Note 7!
j Resultsfor the third quaner of JW3 reficct the efects of the Omnibus Budget Reconciliation Act ofIW3.
j I
Resuhs for thefourth quaner of IW3 wfiect the cost <!f cenain termination L nefits Isee Note 7).
The sum of the quanerly earnings tser share amounts may not equal the totalfor the year due to changes in the as erage number of shaws outstandmx thnrughout the year Certain priorocar amounts have been reclassified to conform to the curwns year's presentation.
l 1
Haltimow Gas and Dertric Compsm; and Sihidnaries
$7.
l l
l BGE Boards of Directors 1
Coard of Directors J. Ow en Cole,65, Crooke has been a BGE director since 1988 amiis a member of the i
Celtimore Gas and Doctric Company Chainnan of the Roan 4
' S 1
Blue Cnoss and Blue executive committee.
Christian iI. Poindexter.
Shield of Afarvland. Inc.,
h 56 'hairman of the g
3ames R. Curtiss, Esq.,
j Owinnan of the Inn' Boardand Chief comrmnee. hrst
>p 41, Partner; B7nston &
i lhecutive Of#cer
{
and l'irst National Bank Alagland Bancorp,
_fa Strawn. Whington, D.C.
-l Baltimore Gas and f
of Afarvland. Baltimort-partner at the law finn of ?
Y Elcctric Company Mr. Poindeuer has served Blue Cross and Blue Shield of Maryland is Winston & Strawn since as llGli's Chamnan, CEO and Chainnan a health insurance provider, and Mr. Cole 1993. A commissioner of of the Ikurd of Constellation iloidinp a was elected as Chainnan in January 1995, the Nuclear Regulatory Cornmission from i
BGE subsidiary, since 1993. lie was Vice Mr. Cole also serves as chairman of the 1988 to 1993, he has been a BGE director I
Chainnan of the Board from 1989 to 1993.
trust committee of First Maryland Bancoip, since 1994 and serves on the committees on in 1994, he was elected a director of the a bank holdmg company, and First National nuclear power and workplace diversity.
i newly fonned subsidiary. BGE ilome Bank of Maryland since 1994. From 1988 j
Pnslucts & Senices. Ile has been a BGE to 1994, he sened as chainnan of the exec-i director since 1988 and is a member of the utive committees of the Board of Directors Jerome W. Geckle,65,
-[g executise comminee.
of both companies. Mr. Cole has been a ni'rd Owirman of the 3
I ;'
BGE director since 1977 and serves as Boan4 PHH Corp <> ration II. Furlong Baldwin,63, chainnan of the audit committee and as a Baltimmr 1
Giairman of the Bmmi member of the committee on management.
Mr. Geckle was Chainnan of Plill l
and Chi <f Lunair,.
l Of#<rr Aferrantile Dan A. Colussy, 63, rekication. and management services BanAshairs Cormrution, Owirman ofthe Bel
- 4.
company, from 1979 to 1989. He also Baltimore and ChiefLnecutive W
u served as that company's CEO i.mm 1979 At Mercantile Bankshares, Of#cer, UNC v
o-to 1988. Now retired, he is also a director a bank holJmp company. Mr. Baldwin has
/ncorporated. Annapidis.
"U been Chainnan since 1984 and CEO since Afar land subsidiary. Mr. Geckle has been a director 1976. lie has also sened as Chainnan ami oluwy has sen ed as of BGE since 1980, chairs the committec CEO of Mercantile Safe Deposit and Trust President of UNC incorporated, an aviation on management, and serves on the long-Company since 1976. In addition. he is a c o co m Peny. Im m to u as ranFe Mmtyy commh director of IIGE's Cons.cIlation iloidmp elected CEO in 1984, and became subsidiary. A BGE director since 1988, Chairman in 1989. A BGE director since Martin L Grass,41, Mr. Baldain is a member of the executive I"#
I"'#b "' ""
"U conunittee and chairs the long-range committee or management and chairs the Operating Of#cri; stratep* comnuttee.
comminee on nuclear powcr.
Rite Aid Corporation.
~
Camp Hill, Permsylvania h [:
Bnerh B. B)mn 62
~. - ' " " ~ ' '
Mr. Grassjoined Rite Aid
~
Edu ard A. Crmke,56, funner Cowrsmoman, p
g,f Corporation, the largest t!mted States House of penning Oj#cer, retail drug chain in the U.S.. in ]978 and Nrpinentarirn.
Adi moir Gas and was elected to its Ik>ard of Directors in Tn derie (, 4fanIand l
1982. lie has served as that company's President and COO since 1989. In addition.
After sening snen
~
Mr. Crooke has been successise tenus as a he is hee Chainnan.1reasurer, and 4
President of BGE since l
Congrewwoman from 19'8 to 1992. Mrs Director of Super ihtA Foods. Inc.. a
!988 and COO since 1992, in adJaion. he Byron was elected to the JG. E biurd in Ilarrisburg, Pennsylvania-based food
. he Boant M t
I 1993 A membei of the auda commutee w holesaler and retailer. Mr. Graw was BGE Ilome Pnwiucts & S.en ices, a new and the comnuttee on nuclear power, she elected to BGE's boani effective January 1.
subsidiary created m 1994. lie also is a also chairs the comnunce on uoikplace 1995, and is a member of the audit and director of Constellation liddmes. Mr.
- ~ ;rsity.
long-range strategy committees.
$8.
Balnmorr Gas and Electric Comjunv und SuiniJiaries
\\
1
)
l BGE Boards of Directors l
)
l Freeman A.
George I Russell, Jr.,
y ~"]
Audit Committee tirabowski 111,44 Esq.,65, Partner. Piper W
Cornrised of outside directors. this lg
{i
& Afarbury. Italtimore A
Prnident. University.:l committee recommends an auditing firm.
Alaryland. Ilahinmir l
hir. Russell has been a discusses the scope of the examination with C"*@
panner at the 11altimore that firm. and res iews annual financial state-President of the law finn of Piper &
ments. Additior. ally, this committee meets University of h1aryland.
hiarbury since 1986. A with the manager of BGE's auditing Italtimore County, smee 1993 Dr.
ducctor of 13Gli since 1988, he is a department to ensure adequate internal lirabowski served as Interim President member of the audit and executive auditing. It invites comments and recom-from 1992 to 1993. Executis e Vice committees.
mendations from the auditing firm President from 1990 to 1992, and Vice concerning the system of internal controh Provost from 1987 to 1990. A director of
"" " " " " " "E I tichael D. Sullivan, F
~ +
IlGE since 1994, he a a membe. of the
$$, Chairman of 4
audit, esecunve and workplace Comm.ttee on Nuclear Power i
the floard. M.ase g
. h.
f
'Ihis committee monitors the performance dn ers.ity commmeet lom/unli Rncarth f
and safety of the Cahen Clifls Nuclear Nancy I.ampton,52.
Group. Joppa.
Power Plant. The committee confers with Chairman and Chief Alar land BGE management, senior plant manage-I# " ""#
13erum e Ot/i< cr.
Mr. Sulhvan became the Chamnan of A,ceri< un /#c and d
"I""'
- "" " ' " " " "U "
Archlent Imurnin e
^
lombardi Research Group and Waye the full board with recommendations.
laboratories, ha.r products compan;cs, in Companp/ Kentm Ay.
1995. Formerly, he w as CEO and Louiwille Kentuckv Comm.ittee on Management Preudent of Meny-Go-Round Enterprises, 1
Ms. I.ampton has been Chairman and Inc., a speiahy retailing company, from The duties of this committee include CEO of American late and Accident 1982 to 19 % Mr. Sullhan has been a recommending nominees for directors and Insurance since 1972, $he has sened as a llGli director since 1992 and is a member officert in addition,it makes recommenda-IlGE dnector since 1994 and is on the of the committees on management and tions on remuneration arrangements for long-range strategy comnuttee and the long range strategy.
directors and officers. Comprised of committee on workplace dnersity.
dimeton from outside the company, this 4
committee aho considers shareholder Chanm in Dimron George V. McGowan, recommendations for board nominees.
67,fonner Chairman of Effectne January 1,1995, Martin L i
Grass was elected to the Board of Committee on Workplace Diversity the lioim/ un.1 Chu:/
D rectors, replacmg Paul G. Miller.
1his committee prmides input to
.t j
13rrutisc Ollicri:
i, who retired from the lloard of Directors
)
/tairemorr Gas and management in setting and achievmg filectric Comomy effectne December 31,1994.
employee dnersity goals. It provides mer-In e.
- ion to hn sight of iroplementation of diversity pw BGE Chamnan and C1:0.
Committees of the floard strategies and evaluates results 4
3 fron.
< to 1992. Mr. McGow an aho Executhe Committee served as Chairman of the lloard of The ewcuth e comminee exercises most long-Range Strategy Committee l
IIGlW Constellanon iloidmps subudiary.
of the pmers of the board in managing "this committee oversees des elopment of the
)
A dm ctor at ilGE since 1950. he chairs company business between meetmps of company's long-range st.ategie yuah. It the esecutne comnunce and n a member the full board This comnuttee may not, reviews the appropnateness of mese goals and of the comnuttee on nuclear pmer howeser declare dnidends, auiHn/c approves presentanons to the bmrd regarding stot L issues, recommend to shareholders the implementation of significant strategic
)
any action requiring shareholders' initiativet This committee aho res iews major appros al. amend by law s, or regulatory. environmental, and public pohey appnn e mergers issues as well as technological advances that may aflect company operanons.
Halnmour Gas an.1 Liectri, Compun and Musanes
$9,
BGE Boards of Directors and Officers cog erate ornser*
G. Dowell Schwartz, Jr.
Board of Directors Seltensore aos and Electric Conapany Vice President, General Services ca s.n.es== Holdlags,Inc.
Age: 58 Years of service: 36 Christian 11. Poindexter Christian 11. Poindexter Chairman of the Board and Chief Chairman of the Doard. Constellation Charles W. Shivery Executive Officer Holdings; Chairman of the Board and Vice President. Finance & Accounting Age: 56 Years of service: 27 Chief Executive Officer. Baltimore Chief Financial Officer and Secretary Age: 49 Years of service: 22 Gas and Electric Company; member Edward A.Crooke
/
President and Chief Operating Officer Joseph A.Tiernan Age: 56 Years of service: 26 Bruce M. Ambler ViceIbident, Corporate Affairs Age: 56 Years of service: 26 Ptesident and Chief Executive Officer,.
George C. Creel "E*; *** '
Senior Vice President, Genetation smcc1989 Stephen E Wood Age: 60 Years of scryice: 39 Vice President, Marketing i Sales Age: 42 Years of service: 18
- 11. Furlong Baldwin Thomas E Brady Chairman of the Board and Chief Vice President, Customer Service Executive Officer, Mercantile Ri rd M. Bange,Jr.
maksharen Corporation (bank holding Controller and Psistant Secretary Age: 45 Years of 6ervice: 25 Sany). Bahimore; member since t
Age: 50 Years of senice: 23 198't, arves on audit committee lierbert D. Coss, Jr.
Lynne H. Church Vice President. Gas Edward A.Crooke Treasurer and Assistant Secretary Age: 60 Tears of service: 38 President and Chief Operating Officer.
Age: 51 Years of service: 10 Bahimore Gas anJ Electric Company:
Robert E. Denton inember since 1993 Timmas E. Rustin, Jr.
Vice Pnmdent. Nuclear Energy Assistant Treasurer Age: 51 Years of senice: 24 Roger W. Gale g
y,,7, or,,,n.g,; 3 g President, Washington International Carserlo Doyle Energy Grup (energy consuhing),
Vice President, Electric Interconnection Changesin Offkcrs Washington D.C.; new member as of
& Transmission Stephen E Wood former manager of 1995; s.erves on audit committee Age: 50 Years of service: 23 Special Customer Projects, was elected to the position of Vice President, Jerome W. Geckle Jon M. Files Marketing & Sales, effective Retired Chairman of the Board, PHil Vice President. Management Services October 1.1994.
Corporation (vehicle, rekication, and Age: 59 Years of service: 37 management serv ces), Baltimore:
member since 1985; chairman of Ronald W. Im man committee on management Vice President, Fossil Energy Age: 50 Wars of senice: 26 4
6B.
Baltimorr Gas and Urrtric Company and Subsidiaries
BGE Boards of Directors and Officers r
Edward W. Kay Offleets Edward A.Crooke Retired Co-Chairman and Chief Cenetonation Headings, Inc.
Chairman of the Board, BGE Home
. Operating Officer, Ernst & Young Products & Services: President and Chief t
Christian 11. Poindexter hertified public accountants).
Operating Officer, Baltimore Chairman of the Board, VhshinFton, D.C.: member since 1988
" " ^ "
""'P"")
Constellation lioldings, Inc.
chairman of audit committee Christian H. Poindexter i
Brth : M. Ambler George c owan Chairman of the Board and Chief President and Chief Executive Officer, Former Chairman of the Board and Chief Executive Officer, Baltimore Gas and Constellation Holdings,Inc.
accutive Officer, Baltimore Gas and Electric Company
)
Acting President, Constellation Electric Company; member since 1983
"#'EI' '"#'
William H. Munn l
Miyo A. Shattuck 111 President and Chief Executive Officer, Steven D. Kesler Prera, dent and Chief Operating Officer, BGE Home Products & Services 1
President, Constellation Alex. Brown, Inc, (investment banking I
g and securities brokerage), Baltimore; Changes in Directors member since 1994; serves on committee Randal! M. Griffin Effective January 1,1995, William H.
'"' *"""E#**"I President, Constellation Real Estate Munn was elected Pwsident and Group, Inc.
Chief Executive Officer of BGE Home Bernard C. Trueschler Products & Services. Mr. Munn was the Funner Chairman of the Board and James W. Jeffcoat president and owner of Maryland Chief E.xecutive Officer, Baltimore 1
i esident. Constellation Health Environmental Systems, Inc., a Maryland-Gas and Electric Company; member sen ices. Inc.
based company speciahzing n the since 1983 mstallation and service of commercial aubert E. Windham and residential heating, air conditioning, Changes in Directors itesident Church Street Stanon,Inc.
plumbing, and electrical systems. BGE Effective January 1,1995, Roger W. Gale purchased MES1in December 1994.
was elected to the hard of Directors of Constellation Holdings. Dr. Gale is the i
Immder and President of the Washington N
Intemational Energy Group, w hich Board of Directors BGE Henee Products & Services, Inc.
provides advice, analysis, and tracking to BGE Henne Products & Servlees, Inc.
Edward A.Crooke executives on utility iwues.
BGE Home Pmducts & Senices was Chairman of the Board created as a wholly owned subsidiary of Paul G. Miller retiad from the Board of altanore as and Electric Company on W 11 am H. Munn Directors, effective December 31,1994.
July 1.1994. The new subsidiary President and Chief Executive Officer combined the related activities of merchandise sales with gas and appliance E. Frank Bender operations and will allow BGE greater Vice President, Merchandise freedom to operate in a competitive marketplace.
4 Balrimore Gas apud Electdc Corrt(ssity arul Subsidianes
(, ;,
Five-Year Statistical Summary 1994 1993 1992 1991 1990 Common Stock Data Quarterly Eamings Per Share Firu Quarter
$.49
$.38
$.37
$.40
$.54 Second Quarter
.39
.31
.20
.38
.23 Third Quaner
.79 1.01
.84
.84
.72 Fourth Quarter
.26
.14
.22
.05
(.09)
Total
$1.93
$1.85
$1.63
$1.67
$1.40 Divklends Dividendy Declared Per Share
$1.51
$1.47
$1.43
$1.40
$1.40 Dividends Paid Per Share 1.50 1.46 1.42 1.40 1.40 Dividend Payout Ratio 78.2 %
79.5 %
87.7 %
83.8 %
100.0 %
Market Prices liigh
$25M
$27X
$24%
$22%
$234 low 204 22%
19%
17M 16%
Close 22%
25%
23%
22%
18%
Capital Structure Consolidated long-Term Debt 46.1 %
47.4%
46.1%
47.8%
47.9%
Short. Term Debi 1.0 0.2 3.8 4.1 Preferred and Preference Stock 8.9 9.2 9.8 10.1 10.2 Common Shareholders' E?quity 44.0 43.4 43.9 38.3 37.8 i
Utility Only long-Tenn Debt 43.6%
44.5 %
42.99 45.6 %
45.0 %
Short. Term Debt 1.2 0.3 3.4 3.6 Preferred and Preference Stock 10.5 10.9 11.6 12.1 12.3 Common Shareholders' Equity 44.7 44.6 45.2 38.9 39.1 The sum of the quarterly earrung per sharr unumrits trusy not <<tual the totalfor the year ulue to t luanges in the as erage number of staares outstarulirug thermghout the year I
I l'
l E
62.
Italtimarr Gas wsd Electric Cennpany and Subsidiaries l
c Shareholder Infcrmation t
I Ceaunen Stock Divhlends and Price Ranges 1994 1993 Dhidend Price Dividend Price Declared -
liigh law Declared liigh lew First Quarter
$.37
$ 25%
$ 22%
$.36
$ 26%
$ 22%
Second Quarter
.38 24 %
20 %
.37 26 %
23 %
Third Quaner
.38 23 %
20%
.37 27 %
25 %
Fourth Quarter
.38 23%
21 %
.37 26%
23 %
Total
$ l.51
$ 147
)
Dividend Policy Annual Meeting The common stock is entitled to dividends uhen and as declared The armual meeting of shareholders will be held at 2:00 p.m.
by the Board of Directors. There are no limitations in any inden-on Tuesday, April 18,1995, at the Omni inner liarbor flotel, ture or other agmements on payment of dividends, lioiders of 101 West Fayette Street, Baltimore, Maryland.
preferred t,tock (firs 0 and holders of preference stock (nex0, however, are entitled to receive, when and as declared from the Ferne 10 M surplus or net pn4ts, cumulative yearly dividends at the Exed Upon written request, the company will furnish, without preferential rate specified for each series and no more, payable charge, a copy of its Form 10-K annual report, including quarterly. They areaso entitled to receive, when due, the applic, financial statements, after it is filed with the Securities and able preference sr ;L redemption payments before any dividend Exchange Commission in March 1995. Requests should be on the common stock shall be paid or set apan, Dividends hase addressed to Charles W. Shivery, Chief Financial Officer been paid on the common stock continuously since 1910. Future and Secretary, Vice President-Finance & Accounting, dividends depend upon future earnings, the financial condition of P. O. Box 1475, Baltimore, Maryland 21203-1475, the company, and other factors. Quarterly dividends were declared on the common stxk during 1994 and 1993 in the amounts Auditors shown above.
Coopers & Lybrand LLP, Comunen Stock Dividend Dates Executive Offices Record dates are normally on the 10th of March, June, September, Gas and Electric Building and Dr.anner. Quarterly dividends are customarily mailed to Charles Center c n shareholder on or about the 1st of April. July October, Baltimore, Maryland 21201 and January, Mail:
P.O. Box 1475 llattimore, Maryland 21203-1475 Dividend Reinvestment and Stock Purchase Plan The company's Dividend Reinvestment and Stock Purchase Plan Sharsheiders' inquiries and Assistance provides an opportunity for holders of the company's common Shareholders desiring assistance with lost or stolen stock stock to acquire addnional shares of such stock in a convenient certificates or dividend checks, name changes, address changes, and economical manner. Participants in the plan may reinvest cash stock transfers, or other matters should call the shareholder digidends on all or a portion of their siwes of common stock services representatives on our toll-free telephone numbers.
and/or make ortional cash payments.
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Stock Trading
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The enmpany',s co nmon stock, w hich is traded under the ticker symbol ilGh,, is listed on the New T ork, Chicago, and Pacific Within Maryland 1-800 492-2861 stock exchanges, and has unhsted trading prisileges on the Boston, Outside of Maryland 1-800-258-0499 Cincinnati, and Philadelphia exchanges. As of December 31,1994,
'frDD licaring Impaired 1-800-492-5539 3
there were 81,505 common sharrholders of record.
letters should be addressed t Behimore Gas and Eier Company Transfer Agent and Registrar Shareho:dcr Services llartis Trust and Savings Bank P.O. Ilox IM2 Clucago, Illinois ilattimore, Maryland 21203-1642 63.
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P O. hox 1475 Baltimore, Maryland 21203-1475 5
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