ML20087C474
| ML20087C474 | |
| Person / Time | |
|---|---|
| Site: | Calvert Cliffs  |
| Issue date: | 07/31/1995 |
| From: | Denton R BALTIMORE GAS & ELECTRIC CO. |
| To: | NRC (Affiliation Not Assigned) |
| References | |
| NUDOCS 9508090208 | |
| Download: ML20087C474 (10) | |
Text
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ROBERT E DENTON Baltimore Gas and Electric Company Vice President Calvert Cliffs Nuclear Power Plant Nuclear Energy 1650 Calvert Cliffs Parkway Lusby, Maryland 20657 410 586 2200 Ext.4455 Local 410 260-4455 Laltimore July 31,1995 U. S. Nuclear Regulatory Conunission Washington, DC 20555 ATTENTION:
Director, Nuclear Reactor Regulation
SUBJECT:
Calvert Cliffs Nuclear Power Plant Unit Nos.1 & 2; Docket Nos. 50-317 & 50-318 Ouarantee of Retrospective Premium In accordance with the requirements of 10 CFR 140.21, we are submitting our guarantee of payment of deferred premiums for our Calvert Cliffs Nuclear Power Plant reactors. Accordingly, we are enclosing herewith:
Exhibit I A copy of the 1994 Annual Report to Shareholders of Baltimore Gas and Electric Company containing certified financial statements.
j ExhibitII A copy of quarterly financial statements as of June 30,1995.
Exhibit til A copy of Projected Cash Flow for the twelve months ended July 31,1996.
l Exhibit IV Narrative statement on curtailment / deferment of capital expenditures (if any) to ensure that retrospective premiums up to $10 million per reactor per year for each nuclear incident would be available for payment.
Should you have questions regarding this matter, we will be pleased to discuss them with you.
Very truly yours, 1
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RED /MDM/bjd
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Enclosures e r c r, n n 9508090208 950731
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-Document Control Desk July 31,1995 -
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'(Without Enclosures) i Document Control Desk, NRC D. A Brune, Esquire J. E. Silberg, Esquire L. B. Marsh, NRC D. G. Mcdonald, Jr., NRC l
T. T. Martin, NRC P. R. Wilson, NRC R. I. McLean, DNR J. H. Walter, PSC I
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7 1994 ANNUAL REPORT TO SII ARElIOLDERS GE has supplied energy ro custorners in Central Marylandfor nearly ISO years.
\\\\1 rile the utility industry is changing Reliable and A ffordable Electricity rapidly, our custorners know that one thing doesn t V
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change: our orputationfor quality people, povducts.
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and services.
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continuously intpniving ourperforinarrce as air investinent. Str<ntg, pn>Jitable, stable, we've been 5
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That's why we're still one ofthe best invesunent p
Gas choices you can nuake.
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The cover of this year's annual trport illustrates Yk;
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able electricity and natural gas. \\\\'e intend to keep doing what we altrady do well-even as we begin exciting andpn>]itable enterprises in gas bmlering.
BGE: Sti1l Your aest Choicc tral.tirne pricing. new energy technologies, home pnulucts and services, and diversified businesses.
Yesterday, today, and tomornne BGE: Stillyour best choice, n =
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Corporate Profile lii g h li g h t s Contents Afrimore Gis and h =tri as. <= <rn s'er shiar a=e'ainer 1994 iMt 4 Change 1.
We're Committed to Remaining Electric Connpuny Your Best Investment Choice
- Combines a core utstery Stock Data M7mtr,Aws rhefutuar twelfur the arility tz,uness (chtric and gas)
Eamings penhare j,,f,y,,y? lAnr mill RGE restwent? In his with diversified, nonutshty Utihty opent' ms
$ U1 5 E77 2.3 %
u ammad terrer to sharchdders, Cl=eirnum Deversified actinties 0.12 0 08 50 0 %
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$ 1.93
$ 1.85 43 %
Christiarr 11. Poidem rdiu seises why gg gg Dividemis declared per share
$ l.51
$ 1.47 2.7 %
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electricity, and 617 mtuare Return on average cannrrum equity 10.63 %
1039%
23 %
""I" Book value per share-year-end
$18.42 517.94 2.7 %
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We're Earning Our Customers' a ll.4ds assets of'mer hisket prke per dare-year-end
$ 224 5 254 (12.8) %
Confidence Every Day
$8 tntium in utihty and Building righter bruts whh ear russmers is matihty opemtie ytnancial Data Arv. says President ural Chief Operarmg
- Eamed ctvnbined revenues Revenues Opurr Edusmi A. Crrede. Ilis terrer had s nr of $2.8 tallion in 1994 Elaine
$2,127
$2.112 0.7 %
scEs perf;nnweny in 19us. mith an ew on frtwn utility and diversified Gas 421 433 (2.8) %
,.7 p,fy, f 995_,,,g f,p,,d g
operasmins Diversified activities 235 196 19.9 %
Employs 8,1(x) fu!!-time Total
$2.783
$2,741 1.5 %
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B at a Gance wiriers as Maryland's ninth Net inciune
$ 324
$ 310 4.5 %
larFest employer Earnrngs apphcable to comnum stock
$ 284
$ 268 6.0 %
- N'8 8 8*9'#"8 'f 8CE "*# I" 8"h'id'ari-
Assets imbshng mr pnulurts and makers, mr Ley 8"
Utility
$ 6,986
$6.820 2.4 %
1998 resmits, signiflamt Jewhpnents in rwr thversified 1,158 t,167 (0,85 %
irmlustries. and a lemk ar wiun'k alwski.
Total
$ 8,144
$7.987 2.0 %
BGE scrivs Utihty constructim espenditures
$ 449
$ 455 (13) %
- kkne than 2.6 milhon BGE investment in Constellation
- 10. BGE:Still Your Best Choice Ms> tand residents Companies
$ 319
$ 307 3.9 %
D'uwmg <= nearly 130yrars rfcaperiemy, we'rr crwunined to escellence in esvrything
- hkwe than I milInot (Intuty sseeena Data ur do: serving emr rusinruwrs staying cost-Electric system sales-vergawart-lunirs 27.5 26.8 2.5 %
rrwsrires, enailing energy Pa*ha-rs <md
- hkire than 535,011)
Gas sales-dekarherms 108.7 108.0 0.6 %
sen*ys nofit car rustomers'needs. nading C"**"
the nw>st afcmr diversified twsinesses. <md imesting in the qmdity ofhfe in crer Pennsyhania
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Earnings and Diddends Declared Common Stock htarket Price per Share of Common Stock and IkmA Vatue E
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- 21. Hnancial Contents v, g4 si.
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- 58. BGE Boards of Directors and Officers
- 63. Sharehokler Informatton
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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 revitalizing virtually every part of our business to support our mission: achieving complete customer satisfaction by pmviding superior energy pmducts and services. And we successfidly countered our competition 's every move by giving our customers a better valuefor their energy dollars.
Still, the true test of our abilities will come in the nextfew years asfederal and state regulatory changes reshape our industry. That's the crux of my message-to share with c'
you my thoughts on what lies before us, how we will respond, and why BGE remains
" f your best investment choice.
Christian H. Poindexter hen I
- We made excellent strides in improving Wyears,look back over the past few 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, u*m length. Let me give you a few highlights.
severance, and career-assistance programs,
- Common-stock earnings increased by reaching our lowest employment level since 1975.
$16 million, or 6 percent, over 1993, as a result of record cold weather last winter,
- 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
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utility 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. 'Ihis to decline in 1994.
BGE' stockfared irla-
- Our people and systems performed excep-was not too bad, however, compared to the Dow s
firel #cil, howeve';
tionally well throughout an incredibly harsh Jones Utility Average, which dropped almost J
winter that shattered demand records for 21 percent.
decreasingjust under 13 percent. That was both gas and electricity.
New negulations Transform aos sah much better than the a 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 Average, whichfellby exceeding 1993's growth by over 50 percent.
those we've experienced in the natural gas alnmst 21 percent.
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industry over the past decade. The efforts of 1
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(FERC) to stimulate competition in the gas h*
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Sir unbundled gas-service elements. Now gas users h!
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transportation and storage. BGE's large gas
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tion to their facilities. Although the Maryland
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Electric Regulatory Changes Ahead i
Over the past two years. FERC has been J nu ry 17.The PSC plans to issue a general A "To be competitive, you carrying out the basic tenets of the Energy p licy statement in June of 1995 on changes have to think like a Policy Act of 1992. Its top priority is to recommended for Maryland's electric industry, competitor says Pmject Manager Pete Buote, nght, promote efTiciency by ensuring a competitive BGE Responds to PSC Inquiry ha ovnsecs the constme-bulk power market through equal access to I welcome the PSC's examination into electric tion ofa small-scale. flexible utility transmission systems. Last November, utility regulation as an important step toward plant BGEis building at our FERC also began examining the role of power reducing the uncertainty in the financial Perryman site to mccrpeak 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 organiration small, the i
I alternatives for the course that regulation accountability c/ car and State regulators are moving just as quickly t g
gi en the builderincentives redefine the electric energy market. Last to irduce costs " says Buote.
September, Maryland's PSC announced it Under the first alternative, which I believe shown with Pmject Controls would hold hearings in 1995 to consider embodies the spirit of the Energy Policy Act.
Administrator Ron Ballance.
electric utility restructuring, the impact of the market for electric generation is opened up. h's a strategy that' paying s
competition, and regulatory reform. In its issue This will allow utilities and independent power of BGEexpects to italize paper called "New Directions in Energy pmducers to offer their pencrating cgacity to mu'ri-million-dollar Regulations," the PSC defined possible kical utilities, and utility customers to continue savings by the time the scenarios ranging from limited to full competi-to buy energy from their kral utility. This
,1& megawatt nimbustion turbine unit annes on une tion. BGE filed its response with the PSC on choice would require little regulatory reform.
m 1995.
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- ne second allemative is to allow retait compe-quality of service, we created 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
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regulated. This option would require a dramatic identifies customers with the most revenue l
change in the way we're regulated currently.
BGE Gas Prices potential. Next, we will establish quantifiable
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Well Below Average marketing and sales plans that include complete Unfortunately, we can't wait for FERC and the
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portfoh.os of products, senices, and price offer-PSC to define the future befor'e we start
. ings for various customer segments. And we're preparing for it. To make sure we're ready for M
l any eventuality, we're plann.mg along two
- strengthening our team by filling certain entical
-(a marketmg positions with people who have scparate paths.
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The first path extends decisions we made in j
- Expansion of our gas business is a key element 1
early 1994. It assumes that keeping our genera-m.~
I of our marketing svategy as well. We now tion and distribut.on businesses with.m a smgle l
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, serve about 30 percent of our electric service company is still our best option. We,d continue wa,....'*~
territory with gas, leavm.g room for s.igmficant operating as a combination gas and electric 1
growth. Our res.dential gas prices average i
i utility while lookm.g to increase revenues from 1
about 20 percent less than those of nearby local a
90 nontraditional sources. The second planning path d.istnbution companies, giving us a strong wd. l prepare us to separate mto individual bus.t.
Gas busm.ess expan-nesses if regulators decide unbundling electric sion is a luey element advantage. And customers are requesting gas services is in the best interests of consumers.
o/BGE's revenue-for both home and business use because it's gmwth strategy. Our clean, affordable, and dependable. Our ultimate Our current transmission system and pooling efforts are helped by goal is to reposition ourselves as a full-senice arrangement probably will change no matter thefact that our energy company that is the provider of choice, what scenario the PSC chooses, although it irsidentialgas price will continue to be federally regulated. A is about 20 percent No matter what FERC and the PSC ultimately team of BGE employees is at work with the lower than the following objectives: develop a structure that amage gas price doesn't harm reliability, maintain a fair rate of why we will continue to reduce our operating, return on our investment, and ensure that th maintenance, and capital expenditures and interests of BGE's customers and shareholders have set aggressive targets to reduce total are represented.
generation costs.
Distribution Romains Key Strategic Asset Investment rating agencies are also g..iving far Regardless of which path we ultimately take, more weight to generation costs when j. dging u
we're likely to maintam the fnmch.ise status of utilities' financial health. They believe utilities the electne and gas distribution systems, which with low-cost generation will maintain or even give us direct links to our customers. Our goal, improve their credit ratings because they're therefore, is to increase the energy products better able to keep old customers and attract and services we offer as a gas and electric new ones The agencies are also paying close d.istnbution business.
attention to the percentage of revenues a utility Creating competitively priced products and receives from industrial sales, reasoning that services is the work of'our newly formed those revenues are most vulnerable to competi-Marketing & Sales Division. To improve our tion. So the lower the percentage, the better.
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On both counts, BGE looks good. 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 service of commercial and residential heating, also improve our competitive position: We
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'1 air conditioning, and plumbing. MESI's owner have no municipal utilities or other large f
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..OV President and Chief Executive Officer of tory, and we don't have to incur heavy capital
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BGE Home Products & Services effective expenses to meet Clean Air Act requirements.
{t Diversified Businesses Build Customer Value
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We'll Romain a Ylead Oriented investaient NM. $$h BGE's Board of Directors showed its confi-N By voting last May to increase our dividend, Our diversified businesses will continue to hh$dQ provide profit opportunities, but with one important difference. In 1994, we adopted
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M'I dence in BGE's financial strength, flexibility, a synergistic approach to total customer yy' g
and competitive position. But we also wanted h
Y'i-4 to send a clear message to our investors: We service. The combined talents of BGE and m
Constellation Holdings developed a proposal e
7 plan to remain the yield-oriented equity invest-that includes a 10-year contract with the Johns
$ M UU ment we have always been. All our long-term f[I O
llopkins Hospital and University, one of our j
financial targets and competitive strategies largest customers. The proposal, which will be y
support this goal.
finalized in early 1995, addresses some of M
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Now more than ever, success is in our own ex. _
.+u llopkins'icey energy and real estate needs m.
pifa T els drid ?o return for a long-term commitment. The y<
4 hands. We will continue to respond to our new n
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.S bus. mess environment in ways that enable us to c. comper.,r,ve' y Hopkins' proposal includes a long-term energy
,o produce higher earnings that will support divi-p supply contract, building construction, and r
.4 energy systems management.
E - Strategies 4,q dend growth. This no doubt influened your o
mitial decision to invest in BGE, and I hope it Besides working closely with BGE to SHPPort -
will continue to do so. We're committed to support the utility's existing customers, the
' _ this goal *,,
providing even higher levels of customer Constellation Companies will continue to satisfaction and service reliability. And as we pursue their individual objectives. Constellation reach that goal, you, our investors, will share Energy is taking action to further enhance the in the rewards.
profitability of its 24 wholesale power projects, while exploring growth opportunities in North I thank you for your continued confidence
.m BGE..
and South America. Constellation Real Estate Group will continue to reduce real estate assets by selling fully mature projects at reasonable velues. The company also plans to add 15 or more assisted-living facilities for seniors.
(7,f Our newly formed BGE Home Products &
Ser ices subsidiary will also enhance our Christian H. Poindexter ability to be a full-service energy company.
Chairman of the Boani and Although we've been in the appliance and Chief Executive Oficer February 10,1995 4.
President's Letter to Shareholders
'We 're Earning Our CUSTOMERS' CONFIDENCE Every Day
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In years past, we measured our success with statistics on the nuts and Exdts of nmning a utility. Kilowatt-hours and dekatherms sold. Degree-days and system upgrades. Plants under construction and rate cases under review.
In 1995, these traditional measures ofoperating performance are not suficient. What counts even more today is our ability to earn our customers' confidence--< lay in, day out.
In a competitive market, combination companies have an inherent advantage. We can ofer our customers one-stop shoppingfor energy products and services, an important b
distinction at a time when customers are discovering they have options.
F Edward A. Crooke more kilowatt-hour output from less resource We must be adamant about identi-ng a gs as t
input in k power Wudon pmss. 6t BGE Generation meet our customers' needs. That year our fossil plants decreased their average Costs Decrease Faster Than Region's means meeting several criteria that directly and unit cost of power generation by over
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indirectly benefit our customers and strengthen 10 percent. And we are creating a more 43_ _ _ _ _ _ _
our relationship with them, flexible and efficient fossil work force by cross-l training plant personnel to perform a full range gg l_
competitive Position improved f perations and maintenance work.
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 u j
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outlook, citing the strength of our financial reduce operating costs, as well as explore the investment agencies improved BGE's credit will strive to shorten our nuclear outages and to
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perfonnance and aggressive cost cutting. We benefits of renewing the operating licenses of m2
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reduced operating and maintenance costs by Calvert Cliffs' two nuclear units due to expire 4,,
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$45 million and held the line on construction in 2014 and 2016.
Over the past three expenditures. In 1995, we plan to reduce 3 cars, BGE has taken construction expenditures by $100 million, Although cost awareness is now a part of our aggressive steps to or 22 percent.
daily operations, we are guarding against verzealous cost cutting. We will not sacrifice reduce totalgenera-Since generation is the area of our business our long-term ability to deliver superior tion costs toptrpare m st at risk to competition, we are focus.mg on customer service by focusing strictly on short-
.. for competition, steps enhancing the price competitiveness of our elec-tenn savings. Going forward, we will that have caused those costs to decirase tric generating phtnts. This will require us to get emphasize reducing costs primarily through j
muchfaster than productivity gains.
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We S -M Our Customer Focus y
C Because customer service is a top pnonty, we gp 44 7{, 1 ( g-must move beyond simply supplying gas and
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clectricity. Last year, we countered every
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y groups of of0ce buildings. And we offered our j
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customers a full range of services for their
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energy facilities from construction to operation and maintenance contracts.
N.g We also greatly advanced our efTorts to bring g
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facet of gas expansion-operations, planm.ng, y'
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sions to areas forecasting high growth. Along
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W those mains, we will maximize opportunities for conversions to gas heat.
As Chris mentioned in his letter, late last year the PSC approved our entry into the gas-brokering business. Until now, BGE only offered transportation services to its delivery service customers from their gas suppliers.
l With gas brokering, those customers now have l
the option of purchasing brokered gas from BGE Brokering also gives us the opportunity to earn a profit on our ability to provide the 7
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lowest price gas service. The key to success in v'
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I this business will be our ability to put together h4
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customers' needs and buying preferences.
A During the winter of '93 '94, a seemingly endless succession ofintense j
storms hit the Bahimore area. Beginning on Christmas and ending in early l
Last Winter Redet1ned Customer Service Afarth, the extreme cold broke long-standing demand recordsfor both elec-l Last winter fon'ver changed our understanding tricity and gas. During that time, BGE employees sawjust about everything:
of customer service. From Christmas '93 to fmzen coal piles; trees shattering under the weight ofice; a baby born in an 1
carly March o('94. BGE battled its way through automobile; rain, sleet, snow, ice, and lightning in the same storm; and sin ice and snow storms. One of the most record numbers of almost everything,from broken mains to service calls.
memorable began on January 15, when an arctic 1hroughout it all, BGE employees persevered. "I was cold, tired. and wet, cold (mnt sent temperatun's plummeting below but the efon was worth it," says Overhead Alechanic Kenny Younger. "Our rero with a windchill of minus 40 degrees. The crews work storm duty well. Each time, wejust kept going until we got the record-breaking cold fnve everything it came in power back on. "
6.
contact with-fuel, lubricants, and fuel lines.
others. Even more impressive, our employees
- Our problems were compounded by icy roads, worked through thase crises with no significant raillines, 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 Fool of eight Mid-Atlantic electric ccmpar.ses 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 55,000 megawatts, only 40,000 mine long-term success will be our ability to megawatts were available during the peak hour de er the right combination of price and A In 1994, BGE won
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because of several planned and unplanned the coreted Eagle pr gram to improve our distribution system, outages. At 8 a.m. the following morning, BGE Awardfor superior inly through a strong focus on preventive set an all-time electric peak demand 17 percent customer servicefrom higher than our previous winter record.
the American Ga, maintenance-improvements designed to Association and reduce by half the number of sustained The PJM companies had no cho. ice but t Edison Electric customer outages over the next four years. On begin emergency measures. Load management Institute. Two days the transmission side of our business,last year programs were activitated across the entire after an arctic cold we improved system stability and access to system. Customers were asked to reduce
.vare set new demand power outside our service territory by energy consumption, and controlled rotatmg records last January completing the last leg of the 500-kilovolt outages were initiated throughout the PJM to BGE cirated a Severe transmission loop around Washington, D.C.
protect the integrity of the system. BGE's share weather Payment m me an uring Tm of the outages was activated for about four Option that gave 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 alTected to sPreadpayment of see success as the ability to maintain customer 15,000 to 45,000 customers at a clip, their January bills confidence. We have a unique advantage over several 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 setting 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 customers strongly tested or performed so well as in 1994.
gas by 10 percent. During that week, new daily took advantage of this I want to thank our employees for their extraor-sendout records were set, our peak-shaving Payment option, dinary efforts 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 week.
that follow.
Thanks 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 experienced, our employees demonstrated the j
attributes that set them apart: absolute compe.
Edward A. Crooke l
tency under lhe, unwavering dedication to President and Chief Operating Oficer duty, and a remarkable capacity for helping February 10,1995 l
7.
BGE at a Glance Products and IWarkets Key 1994 Results Electric
- Owns and operates 10 generating plants, including -
. Decreased fossil generation costs by 10 percent and two units at Calvert Cliffs Nuclear Power Plant nuclear generation costs by 14 percent below 1993 (CCNPP); is part owner of Keystone, Conemaugh,
, Signed BGE's largest customer, Bethlehem Steel, to a
- and Safe Harbor generating plants in Pennsylvania; 10-year contract manages electric assets of $6 billion
- Signed agreement with PECO Energy Company to
+ Provides electricity and related services to pun:hase 140 megawatts (MW) of electricity for 25 years over i million customers in 2,300-square-mile service territory in Central Maryland e increased system stability and access to power from outside cur service territory by completing last leg of
- Belongs to PJM (Pennsylvania-New Jersey-500-kV transmission loop around Washington, D.C.
Maryland) Interconnection, a power pool of eight Mid-Atlan e mmpanies that provides reliability
. On Januan 19, set all-time hourly peak demand record c
and the opportunity for bulk power sales f 6,077 MW of electricity-a 17 percent increase over the previous winter high Gas
- Provides residential storage and distribution as
- Launched aggressive expansion plan to increase gas sales well as commercial delivery through two gas plants
, Secured PSC approval to offer gas-brokering service to and 10 gate stations in and around Baltimore large gas customers
. Serves nearly 550,000 customers in
- Installed 161 miles of gas main, an 80 percent increase 617-square-mile service territory over 1993 growth
- Acts as gas broker for large industrial and
. Added 9,500 new gas customers, a 50 percent increase commercial customers, which requires locating, i
over 1993 growth L
' buying and transmitting gas
- On January 19, set all-time record for daily sendout of natural gas at 762,000 dekathenns-a 10 percent mcrease over the previous high ConsteHation Holdings. Constellation Holdings, Iac. (CHI) consists of three
- CHI partnered with BGE in a proposal to provide Johns businesses contributing to BGE profits and objectives Hopkins Hospital and University with research facility
. Constellation Energy, Inc. (CEI) develops, owns, and central energy senices, including construction and l
and operates 24 wholesale power projects in the U.S.,
ongoing building and energy services management; the I
g and holds operations and maintenance contracts in proposal will be finalized in early 1995 l
14 other plants
- CEl's wholesale power projects had a solid operating
- Constellation Real Estate Group, Inc. (CREG) year, particularly the company's coal-and develops, owns, and operates commercial properties wood-fueled plants
. Constellation 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 partnerships, and financial senices companies Properties to 94 percent Bet Home Products
- Provides revenue growth opportunities in markets
. Created new subsidiary, BGE Home Products &
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relating to core gas and electric businesses Services, Inc. (HPS) in July 1994
- Markets home appliances, electronics, replxement
. Defeated legislative challenge to BGE's right to expand r
windows and doors, kitchen remodeling, installation into nonregulated markets Y
of commercial and residential heating and air-
- Acquired Maryland Environmental Systems, Inc., a g
conditioning systems, and plumbing senices company specializing in installation and service of
- Operates 11 retail stores throughout senice territory commercial and residential heating, air conditioning,
. Provides repair service and offers senice contracts and plumbing for appliances, electronics, and heating and cooling equipment 8.
in the Industry What's Ahead NO.,,,
- The Federal Energy Regulatory Commissi,n
- Reduce generation costs and improve system a
(FERC) opened inquiry on issues relating t, power efficiency to reposition BGE as one of the lowest n---
pooling and utility restructuring priced PJM companies by 1998
- California's Public Utility Commission proposes
- Prepare for possibility of retail competition n
g-j' open access for all electric customers by 2002 by developing a plan to unbundle generation, j
' L
- H begins process of examining regulatory reform
. Expand real-time pricing and off-site 1 !.
I for Maryland utilities; a general policy order is meter-reading pilot programs f
expected in mid-1995
. Evaluate benefits of renewing operating licenses 3
o<i d 1.
li of CCNPP's two nuclear units that will expire in two twi iw2 iwiim 4 BGE's electric system sales of 27.5 billion kWh 2014 and 2016 lame Rc.alenud Were a 1.5 percent increase over 1993 m,as c-n.a sus imimareal Mf[us,,,,,,
- FERC recommends more open access to gas
- Expand gas distribution system to areas of high distribution systems, creates electronic bulletin board residential growth w
system for supply and pricing transfer
. Route gas mains to increase conversions from I
l
- Gas Industry Stnndards Fourd created to govem other fuels h
I transactions in deregulated marketplace
. Seek opportunities to expand territory w
i
- East Coast Natural Gas Co-op foimed to enhance
. Expand gas-brokering business regional senice and supply reliability
- Further unbundling of gas services expected
- PSC releases draft recommendations for further in late 1995 j
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. 1, unbundling of gas services in Maryland swu twa tw2 iw) im 4 BGE's overall gais sales increased 1 percent in 1994,
((*,jjg including a 4 percent increase in sales to Industrial we imhanal customers Baltimore Area
- The expansion of wholesale power business
- CHI will continue to partner with utility to retain icNial Omce Occupanc) increases opportunities for utilities to use energy existing customers and attract new ones to BGE's expertise through nonregulated power subsidianes senice terntory im
- 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,
)
- Demand for senior-living facilities accelerates profitable new projects 8"5 -
as significant portion of population approaches
- CEI will continue to develop, own, and operate m.
retirement age energy supply projects in the U.S., while exploring
- Economic trends point to upswing in real estate growth opportunities in North and South America "g
market
- Constellation will further expand in the senior m H, L-living area with emphasis on the development, iwi iwa iwi 8*
4 CREG commercial office properties reached ownership, and operation of assiste<!-living facilities
" C""*"*"* Ran= on=r 94 percent occupancy in 1994, outperforming area in the Mid-Atlantic region
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mverage for commercial occupancy rates by 9 percent H,mw Preducts & Screes
- General upswing in retail growth continues
- Position llPS to increase market share S Ica Mit Growth in consumer sales is due to new product
- Locate new retail stores in areas forecasting high
- introductions and increased emphasis on larger residential growth stores with broader product selections
. Capture a significant share of the untapped market 4 in 1994,66 percent of HPS sales Were in major appliances and electronics sales,31 percent in appib ance service, and 3 percent in kitchen remodelity emes Awnw.mi nueni.m sae, mang ApplianM seme saan Otchen Rmictmg 9.
BGE: Still Your Best Choice Because L
CUSTOMER SERVICE Is a Top Priority
" Ten years ago, customer service was reacting to what customers
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said they needed," says Tom Brady, BGE' Vice President of s
Customer service & Distribution. "Today, we've taken steps to stay ahead in a competitive market so we can provide service
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imptvvements before customers have to ask. "
service customers In 1994, we reorganized the areas of our business that directly serve our customers can nely 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 accord'.ng we have responded to this need is by A BGE' of-site meter-s to the market segments they belonged to-for investigating every opportunity to enhance reading project calls example, hospitals, schools, county govemments, the reliability of our electric systems, including for a phased-in installa-and large industrial users. Then we assigned developing new technologies.
rion of200,000 radio-equipped gas and i
account representatives to each segment. By In 19s'4, BGE created Silicon Power Networks electric merces to i
focusing on customer segments, we're perstmal-General Partnership, a partnership that is collect data without izing our senice 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.
Maximizing our Evnployee Advantage backup electric system to restart after a power "To the customer; this in 1994. BGE customer surveys confirmed interruption. This switch is being field tested means a more accurate what we already knew--our employees are one this year.
bill. To BCE, it means l
of our greatest resources. We want to develop The reliability of our electric distribution that resource even more to strengthen our system is also a priority. In 1994, a team of customer service efforts. We have improved employees was asked to identify distribution training and qualifications for account represen-problems and develop a long-term, cost-tatives, linked compensation to performance, y
t ar effective plan to improve system reliability.
we replaced 85,000 and empowered employees to take immediate
.Ihe Genesis team, as it is called, has recom-meters with only one actions to satisfy customers. In addition' mended a number ofimprovements that are billing pmblem. We're BGE executives meet regularly with our top expected to reduce sustained customer outages pivud of that record,"
industrial customers to gain a better under-by nearly 50 percent over the next four years.
TiPPett says.
standing of their business and senice needs.
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A Reliability is keyfor large industrial customers. A momentary power dmp can halt i
l criticalpmcesses and incur huge costs. In a partnership with Silicon Power Corp.
3 (SPCO), BGE is developing and testing a pmtotype device to address the problern.
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.l "The solid-state switch safely allows commercialcustomers to switch to backup j
power sources instantaneously," says Walt Mendenhall, BGE's ChiefElectrical Designer on the pmject, center; with SPCO's Harshad Mehta, CEO and President, left, end John Schwartzenberg. SPCO's chiefengineer:
The switch is a gocui example ofhow impmving customer service can also lead to '
new revenue sources. Severa! la:ye industrial customers, as well as other utilities,.
have already expressed intenst in the switch.
> Pmviding superior custome" service is thejob of the more than 8.100 BGE and -
subsidiary employees. E. forts to impmve our customer service include moving our
. employees closer to thefront lines ofservice by impmving training and empowering workers to take actions to meet customer needs on the spot.
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f A impmvang the way we work was an important :> art ofBGE's eforts to reduce costs in 1994. A goodexample was Calvert ChDs'saltwaterpipe replacement pnfect, a critical component of1994's Unit One refueling outage.17:e project, which bmught sopher employees ofBGE's Afobile Afaintenance Force and Calvert Citys Nuclear Power Plant, was a tremendous success.
4 "Through thomugh pre-planning, outstanding teamwork, and a commitment to sqfety, the project team replaced a crucialpiping systern ahead ofschedule and well under budget, saving millions ofdollars," says Senior Engineer Ken Boone.
Some pnyect team members shownfmm leftfmnt, are Todd Cuba and Terry Hatch. Standing are Wayne Bodnar: Ken Boone, Chris Davenport, and
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BGE: Still Your Best Choice Because COST AWARENES S Is Keeping Us Competitively Priced "In a competitive envimnment, customers want the bcst valuefor their money, and that creates an obligationfor businesses to be aware of their costs," says Chuck Shivery, BGE's ChiefFinancial Oficer. "This is not a new ideafor BGE. The changing market has pnnnyted vs to continuouslyfind more effective ways to work."
We'n making greater Last year's annual report outlined our actions to reduce costs by using use c/ purchased power s
resources more effectively. That contracts to meet long-meant studying every function in the company term demand, and we're
, faa n
h4 to climinate those not contributing to BGE's taking steps to get
,,j mission: to achieve complete customer maximum value from satisfaction by providing superior energy our existing plants. In panicular, we're looking A As BGE explored how products and services, into the feasibility of renewing the operating to operate more competi-licenses of the Calvert Cliffs Nuclear Power tirely, our Printing Those initiatives have produced tangible S Tic'3 U"I' 3e' o"' 'o I
Plant units due to expire in 2014 and 2016.
results in 1994, we reduced our operating and pmve it could beat any maintenance expenses more than $45 million Exploring New Opportunities for Efficiency outside printer's prices.
from 1993, a 6 percent decrease. 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 transmission and distribution system upgrades.
System, which will incorporate the latest Moreover, we set aggressive cost-reduction computer technology to suppon our financial, m,a vI s n
targets to position BGE among the lowest planning and budgeting, cost control, and with Printing Pmductmn i
pnced regional utilities in generating costs.
procurement processes. When complete in Coordinator Glen We're Generating at Lower costs 1996, the Business Information System will Talmadge, center, and Competitive success means owning or having provide BGE with timely, more detailed data Printing Estimator /
access to the lowest cost sources of energy, about the costs and profitability of our products Coonlinator Kevin One strategy to achieve low-cost generation is and services. And that will help us make Matthews. "Even our to avoid building new plants. We're investi-better-informed decisions.
competitors acknowledge our shop's quality work gating ways to meet pmjected increases and high eficiency,"
in electric demand without new construction.
says Km'alsky.
13.
BGE: Still Your Best Choice Because We're Bringing Customers PRODUCTS AND SERVICES They Need and Want "We've redefined ourselves to get infront of the competitive tnarket," says steve Wood, BGE's Vice President ofMarketing &
sales. "We're not looking to be one thing to all customers. We're a
working to be a total energy company. "
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Our Lifestyle and f
f B GE's Marketing and Sales Division is helping transform BGE from a steady Process Options g
supplier of a few energy Ibnns to a consist of energy company capable of meeting any energy need choices, such as heat-with diverse products and scraces.
pump servicing, appli-ance sales, and fuel-conversion programs.
A In a two-year last year, we brought in a marketing consulting Pmject and Afaintenance Options include BGEpilotpmgram, firm to help us develop a true customer-driven project design and construction for residential AfcCormick & Company, marketing approach. With the finn's assistance, and commercial customers, as well as appli-Incorporated, the largest we reorganized our marketing and sales func-SP re Company in the i
ance service and sales. And our Payment and tions and created a new marketing plan. The
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Financing Options consist of flexible financing result is a stn amlined organization that is leading alternatives, such as budget billing, energy-that lets customers run BGE's transition to a total energy company.
project financing, and financing installation of
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Offering Flexible Packages of energy-efficient lighting systems for industrial ciently by scheduling Products and Services and commercial customers.
power use when electric A key part of our marketing approach is to offer Responding With New Products mies au low flexible products and services. We,ve grouped We're continually evaluating energy needs
."Real-time pricing could all our pnxiucts and services into packages or and strategic opportunities to offer new save AfcCormick as energy options that can be customized to meet products and servicev.
much as $200,000 a the needs of large and small customers.
year,,, says BGE 5emor An example is the creation of our gas-Our Energy Supply Options consist of our core Engineer Anne Eisele, prafucts of full-schice electric and gas. This brokering serves in IM This busmess area shown with AfcConnick L
rs g s custone tk opdon okornpeu-Industrial Engineer Pete package also expands our energy options with tively purchasing the.ir natural gas through Permssian. AfcCormick less traditional offetings, such as on-site genera-GE. Under this option, we will arrange for plans to use mal. time tion and a new district chilled-water cooling acquis tion of natural gas and transportation pricing when operating option. Our district chilled-water partnership will from BGE's connection points with interstate equipment in its blending offer businesses an energy-etricient cooling pipelines to customers' meters, and packagm.g plants.
system supplied from a central plett operated by BGE.
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- no yw a vj vuu a ejjursa su prvvsue u cumpscsc punjuno vj energy products and services, we are greatly expanding our gas business. In thefall of1994, the PSC appmved BGE's plans to enter the natural gas-brokering business, a new market 4
resultingfrom gas industry deregulation.
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"For thefirst time, BGE is buying and selling gas as a wminodityfor its delivery-service customers; instead ofsimply acting as the carrierfor gas delivery," says Mary Madigan, Natural Gas Marketer; shown in the company's gas
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. 4 In 1994, BGE responded to customers' requestsfor gasfor.
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s both home and business use by installing 161 miles ofnew gas main and adding more than 9,500 new customers.
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that includes long-term energy supply, building construction, and energy system management. Constellation Real Estate Gmup President Rand Grif]in, right, discusses the pmject with BGE's Vice President of Afarketing & Sales Steve Wood and Hopkins' t
Vice President of Facilities Sally AfacConnell.
"We're uvrking to develop tighter energypartnerships with our T: 39 ";
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Wood says. "Whenever our customers think ofenergy, we want them
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> In 1994, BGE prepared to expand its home appliance and l
electmnic sales and service businesses by creating a new subsidiary,
.y BGE Home Pmducts & Services.
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with us because ofour reputation. That' trust-something that s
doesn t come in a toolbox," says Heating Technician Larry Krause, an employee of the new subsidiary. "We've built that trust over time.
It's one of the things Ilike best about wearing this umform. "
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16, i
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BGE: S till'Your Best Choice Because Our DIVERSIFIED BUSINESSES Add Value Competition is changing the relationship between BGE and its diversifled businesses by ilhuninating a combined strength that benefits both sides. " Competition is a
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two-way street. While opening doorsfor others to compete in our territory, it opens doors for BGE and its subsidiaries," says Bruce Ambler; President and CEO of BGE's Constellation Holdings.
ownership and management of wholesale BGE's diversified subsidiaries, which are grouped under Constellation lioldings energy pmjects. Constellation Real Evrate and BGE Ilome Products & Services Gmup is nxlucing its holdings, while capitalize on opportunities in nontraditional moving from an asse* based to a senice-BruceM Ambler areas such as wholesale pour projects, real oriented company ths, wd. l market its expenise in estate, financial investments, health services, construction, asset management, and propeny and appliance sales and service contracts, development. Constellation Health Senices, a division of the Real Estate Group, is developing "The combination working Together for success ver 15 assisted-living projects for seniors at sites Last year our Constellation Companies throughout the hiid-Atlantic states. Constellation ofBGE's utihty worked with BGE to develop proposals based Investments continues to provide a financial base on customer requirements and devised plans to f cunent income and financial credibility to experience with meet specific needs. A good example was the suppon the Constellation Companics, while als proposal to provide energy and real estate dnMdis' providing cost-elTective management of BGE s services to the Johns llopkins llospital and pen on plan and nuclear decommissioning fund.
experience in University.
BGE Creates New Subsidiary BGE will construct a state-of-the-art ice storage nonregidated In 1994, we created the BGE Home Pmducts &
system and provide a new electrical supply Services subsidiary to oversee our 1I appliance rk arrangement to meet ilopkins' energy savings and home electronics centers, plus our gas and reliability needs. Constellation Energy has and electne appliance service business. In a powerftd proposed operating most of Ilopkins, energy December, }{ome Products & Services increased systems. Constellation Real Estate Group plans its capabilities by purchasing Maryland advantage, to develop high quality research space for the Environmental Systems, Inc. (MESI), a Johns llopkins University. And BGE will CSPecially m.
successful local business providing service and continue to supply gas and electric service t installation for heating, air conditioning, energy retaining meet ilopkins 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 diversilled businesses are individually William II. Munn, was named President and pursuing growth opportunities as well.
Chief Executive Officer of BGE Ilome Products C<miellation Energy continues successful
& Services etTective January 1,1995.
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BGE: Still Your Best Choice Because We 're INVESTING IN THE FUTURE of Our Communities We view our community efforts as investments ofcompany resoutres that willpay dividends in thefuture. "We will work in areas that represent the greatest community challenges-areas such as economic development, environmentalprotection, energy conservation, and social issues," says Joe Tiernan, BGE's Vice President of Corporate Affairs. "Our
~
objective is to help impmve the quality of hfe and business in Maryland. "
ast year. BGE surveyed 5,000 Maryland In concert with federal and state leaders, asking their opinions of agencies, we worked on an impor-BGE's community programs. They tant wetlands mitigation project.
told us they have high expectations for BGE Required to mitigate for 15 acres A When BGEextended involvement in efforts to address 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 wetlandr, regulations
,,r* Focusing on Economic Development to the public this year. The U.S. Fish and required us to assess As a maj.or Maryland business and employer, Wildlife Service has hailed the Patuxent the impact and i lace BGE recognizes that the community,s future is disturbed wetlands, weti nds project as one of the finest examples of linked to its economic health. In 1994, we RGE wentfurther by
creat d wetlands it has ever seen.
collaborated with govemment and private desi @ m -
agencies to help make Maryland more In 1994, we also committed a significant 22-acre wetland and l
attractive for businesses to locate or expand.
portion of our corporate contributions budget creating a public j
We've restructured our own economic to ongoing support of childhood development wildlife viewing area.
development office so that BGE can play a pr grams. Our early childhood development "The Pannent wetlands greater role in encouraging businesses to move grant program awarded funds totaling are a great example of
$1.1 milli n to be paid over three years.
how productive the 1
to or expand in the state. We're also proposing an economic development rate for new and Grants were awarded to programs that partnership between expanding Maryland businesses; the rate would address the effects that family problems-such industry and govern-provide a reduction in energy costs for a five-as teen pregnancy, drug and alcohol addiction, ment can be. says
""*"*#"#dI and a lack of parenting skills-have on year period. We will submit this proposal in y ung 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_
service to the community. In 1994, nearly company to demonstrate trate our commitment to investing in the future.
6,000 BGE employees and retirees volunteered its commitment
'O #"rir"nmental at 128 community events, raising $1.3 million.
responsibility. "
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contributions strategy with the awant of$1,1 million in grants over the next three years to seven early childhood development pmgrams.
l "We've shifted ourfocus toward early childhood development because Minority Contracts we can make a greater social impact by reaching children at a younger
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' age and by strengthening theirparents'hfe skills," says Malinda Small, Corporate Contributions Administrator Smaliis shown with children at '
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the Farring Family Exarning Center, a grant recipient, which helps parents ofyoung children develop parenting, literacy, andJob skills.
530-
> BGE's economic development eforts include a highly successful Pmcurement Opportunity Pmgram, which works to ensure minority-520 ~
<md women-ownedfirms have equal opportunities to work with BGE, s,o Thmugh the prvgram's efforts, our contracts with minority and women-g
' owned businesses rose to $50 million last yean I9ss 19ss n990 1992 1994 i
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1 Glossary of Terms i
bulk power transaction-an exchange of power between local distribution 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 pr xlucing, measured in kilowatts or municipality that usually, but not always, provides service megawatts.
only within its boundaries, combination 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 delivery service 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 wnth a contm-purchasing, transportation, brokering and storage options.
uous loop distribution system that supph.es chilled water for space cooling to multiple buildings, eliminating the need for PJM (Pennsylvania-New Jersey-Maryland bulky individual refrigeration systems.
Interconnection)-a Mid-Atlantic power pool consisting of eight electric companies.
distribution-m. the electric business, the system of substa-tions, transformers, 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 promote efficiency in the electric energy market by price information on a r:al-time basis, which enables these allowing competition for bulk power.
customers to save money by running equipment when electric rates are low.
franchise-the exclus.ive nght to sell electricity or distribute natural gas in a specified geographical area subject to restructuring-realigning a utility's business components, government regulations for a fixed or perpetual term.
in order to increase management efficiencies and
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gas brokering-the process 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 transponation rotating outages-deliberately shutting off service to groups system where natural gas enters the kical utility's of customers during periods of unusually high demand to distribution system.
preserve system integrity.
genemtion-assets required to pnxiuce 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 unbundling-segregating a comprehensive service 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.
Financial Contents Utility Constnxtion Expenditures 22.
Utility Operating Statistics Mullum efikallars w... _.. _ _ _ _
24.
Selected Financial Data 26.
Management's Discussion and Analysis in 5""
~
~ ' -
34.
Report of Management
- 34.
Report of Independent Auditors s2ro 35.
Consolidated Statements of income sum 36.
Consolidated Balance Sheets IWO IW1 JW2 IW) 1994 (W$
- "J 38.
Consolidated Statements of Cash Flows
== o-=-mm m um Allowance fm Ful.
39.
Consolidated Statements of Common
""d """"8 Shareholders' Equity 40.
Consolidated Statements of Capitalization 42.
Consolidated Statements of Income Taxes Return on Average Conunon Equity 43.
Notes to Consolidated Financial Statements 25 --- - - - - -
58.
BGE Boards of Directors and Officers 62.
Five-Year Statistical Summary 63.
Shareholder Information 6%--------------
4g.. __ _ _ _. _ _.
25-------------
[hi[ lhi lh b h3 19N Electric Peak Load 1994 Operating Expenses chw Heer.Mrgawans 7,0ln.
Pim:hased Fwl arklEnergy 9).27 6fAU D** M Sao
}-
Buu hiaimenwe 50m com.swa Dnktends $0M Diverufwd sGAA 502 -
3,(.u u I
23m p,,g,,,,y,"{,"k v
d 9 7 A
m Il Tues 5013 taxn
~
(WO IW1 IW2 1993 IW4 stva summer Peak em Hinter Peak Baltimow Gas and Electric Compmy and Subsidiaries 21.
1 1
W
~
1 7
Utilit;y Operating Statistics 1994' 1993-1992 1991'-
1990 l
. Electric Operating Statistics -
- Revenues (In Thousands).
~ Residential,
$ 931,711
' $ 931,643
$ 839,954 -
$ 882,59I.
$. 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 -
. 2,000,514 1,884,598 1,945,493-11,671.556
.i 11nterchange Sales 118,027 :
91,543.
64.323 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 r
Sales (In ThousandsFMwn '
~
9,283-1 t
. Residential -
10,670 10,614 9.735 -
10,097 Commercial 12,351:
12,395 11,909 11,707 11,352-1 Industrial -
4,433 '
3,763' 3,663 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
% 8,212 956,570 939,734 930,880
- Commercial 101,957-100,820 99,673 98,254 -
., %,567 Industrial 3,967 3,800 '
3,761 3,584 3,526 Total 1.084,515 1,072,832
~ 1,060,0N
~ 1,041,572 -
.1,030,973.
fAverage Use per Residential Customer-xwn -
10,903 10,% 3 10,177 10,744 9,973
- Average Rate per Kwis (System SalesFt l
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 J
. Peak Load (One-hourFMw 6,038 5,876 5,558
. 5,910
.5,477 1
Capability at Summer Peak-Mw.
6,722 6,701 6,687 6,608 6,159 L.~
-i
. System lead Factor 54,7 %
55.2 %
54.8 %
52.4% -
54.1 %
^
= Cas Operating Statistics -
'f Revenues (In Thousands) -
Residential >
$ 262,736
$ 265,601
$ 242,737 ~
$. 220,653
$ : 218,967' Commercial Excluding Delivery Service 121,005 121,832 112,147
%,189 89,573 L
Delivery Service 2,285 3,287 3,591 3,031
-3,304 l
Industrial
'l Excluding Delivery Service 20,140 22,250 21.123 14,855 -
32,439 Delivery Service.
9,635 12,920 14,290 14,288 17,851:
Other -
- 5,448 '
7,273 6,51I 6,777 9,197 1
+
Total
$ 421.249
$ 433,163
$ 400.399
$ 355,793
$ - 371,331 -
Sales (In ThousandsbpTu Residential 40,279
~ 40,029 39,042'
-36,519-35,026' Commercial Excluding Delivery Service 23,712 _
23,830 23,478
.20,687 -
18,164 Delivery Service 6,490
'7,428 7,102' 6,433-
. 5,872' Industrial -
.D
. Excluding Delivery Service 4,410 5,298 -
.5,314 -
3,605 z 7,305 Delivery Service 33,837.
31,390 -
33,638
'34,240 34,720 Total 108,728 107,975 -
.108,574 101,484
-101,087:
Customers -
.i
' Residential 498,152 491,165 '
'486,863
- 482,085 g 482,680:
J Commercial 37,891 37,518 37,000 36,561 35,953 Industrial 1,354 1,353 1,412 1,385 -
1,401-i Total '
537,397 530,036 525,275 520,031
'520,034 i Average Use per Residential Customer-Therms 809 815 802 758 726'-
Average Rate perTherm-$
Residential
.65
.66
.62
.60
.63 '
Commercial (Excluding Delivery Service)
.51
.51
.48
.46
.49 Industrial (Excluding Delivery Service)
.46
.42
.40
.41
. 44 :
Peak Day Sendout-DTH 761,900 657,700 609,200 610.200 653,900
- i Peak Day Capability-oril 847,000 847,000 847,000 817,000 853,000
- Utility opemting statistics do not reflect the elimination ofintercompany transactiems.
Certain prior year amm,nts have been reclassified to cortform to the current year's presentation.
22.
Baltimotr Gas and E7ectric Company and Subsidiaries
-]
E 1989-1988 1987 1986 1985 1984 Compound Growth 5-Year 10-Year
$ 648,883
$ 620,660
$ 594.283
$ 575,774
$ 528,676
$ 491,069 7.50%
6.61%
668,819 '
627,661 610,011 611,500 566365 525,738 4.98 4.96 191,796 177,366 181,034 192,189 196,656 182,471 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 53,583 100,469 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
$ 1,435,960
$ 1,484,561
$1,364335
$1,322,867 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 9383 8,829 8390 2.20 3.94 4,261 4,148 4,G40 4,055 3,786 3,948 0.79 1.17 24,791 23,980 22,575 21,236 19,699 19,235 2.06 3.62 595 2,052 1,266 4,010 1,956 2,794 57.05 736 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 89,121 85,816 82,751 79,846 1.40 2.47 3,132 2,585 2,521 2,522 2,504 2,560 4.84 4.48 -
1,012,144 991,105 968,468 942,314 916,678 894,177 139 1,95 10,341 10,265 9,7I8 9,131 8,520 8,496 1.06 2.53 6.87 6.75 6.97 7.38 7,46 7.12 4.91 2.06 6.04 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 0.04 5,3G4 5,381 5,190 4,618 4,458 4,230 2.63 3.62 6,lM 5,930 5,888 5,797 5,586 5,498 1.75 2.03 57.4 %
54.6 %
53.2%
56.3%
55.4 %
55.2 %
(0.96)
(0.09)
$ 242,389
$ 225,035 5 242,240
$ 258,975
$ 256A99
$ 293,158 1.63 (1.09) 112,630 105,352 II0384 125,448 128,737 160,877 1.44 (2.8I) 4,409 2,748 3,216 2,825 2,234 695 (12.32) 12.M 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 (15.72)
(2,91)
I1,349 8,106 I9,471 13,609 6,358 6.055 (l3.65)
(l.05)
$ 411,801
$ 381.536
$ 415,456
$ 445,769
$ 453309
$ 553,329 0.45 (2.69) 39,806 40,140 38,142 38,630 36,381 39,906 0.24 0.09 21,9M 22,738 20,M3 21,607 21,636 25,247 1.54 (0.63) -
5,778 5,025 5,?72 4.643 4,079 1301 2.35 17,43 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 96 881 101,47I (036) 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) 0.04 519,726 518,753 518.I32 518.087 516363 515,444 0.67
. 0.42 825 833 791 801 756 830 (039)
. (0.26)
.61
.56
.M
.67
.71
.73 1.28 (1.15)
.51 46
.54
.58
.60
.64 (2.24)
.50
.41
.49
.52
.53
.58 (l.65)
(2.29) 663,200 669,500 636,000 624,700 677,300 607.200 2.81 2.30 761,000 793,000 731,000 748,000 827,000 827,000 2.16 0.24 Baltinwre Gas and Electric Cornpany and Subsidiaries 23,
Selected Financial Data 1994 1993 1992 1991 1990 (Dollar amounts in thousamis,
- Summary of Operations Total Revenues
$2,782,985
$2.741385
$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 Income 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 Before Interest and Income Taxes 667,624 636,702 557,441 515,816 360,603 Interest Expense 190,154 188,764 189,747 1%,588 165,205 Income Before 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 Before Cumulative Effect of Changes in Accounting Methods 323,617 309,866 264,347 233,681 175,446 Cumulative Effect of Change in the Method of Accounting for Income Taxes 19,745 Cumulative Effect of Change in the Method of Accounting for Unbilled Revenues, Net of Taxes 37,754 Net Income 323,617 309,866 264,347 253,426 213,200 Preferred and Preference Stock Dividends 39,922 41,839 42,247 42,746 40,261 Eamings Applicable to Common Stock
$ 283,695
$ 268,027
$ 222.100
$ 210,680
$ 172,939 Earnings Per Share of Common Stock Before Cumulative Effect of Changes in Accounting Methods
$1.93
$1.85
$1.63
$1.51
$1.09 Cumulative Effect of Change in the Method of Accounting for income Taxes
.16 Cumulative Effect of Change in the Method of Accounting for Unbilled Revenues
.31 Total Earnings Per Share of Common Stock
$1.93
$1.85
$1.63
$1.67
$1.40 Dividends Declared 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 2.47 234 2.08 1,82 1.47 Financial Statistics at Year End Total Assets
$8,143,538
$7,987,039
$7,374357
$7,137,989
$6,710,375 Capitalization long-term 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 279,500 342,500 395,500 398,500 365,000 Preference stock not subject to mandatory redemption 150,000 150,000 110,000 110,000 110,000 Common shareholders' equity 2,717,866 2.620,511 2,534,639 2,153,306 2,073.158 Total capitalization
$5,791,483
$5,995340
$5,476,274
$5,111.106
$4,801.187 Book 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 Certain prior. year amounts have been reclassified to conform to the current year's presentation.
24.
Baltimore Gas and Electric Company and Subsidiaries l
i i
1989 1988 1987 1986 1985 1984 Compound Growth except per Aare amounts)
$~ Year 10-Yeat j
$2,1N,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 4.62 507,513 520,504 546,268 528,538 509,330 488,923 5.64 3.16
-149,593 123,996 115,802 112,742 110,202 98,M8 4.92 6.78 357,920 396,508 430,466 415,796 399,128 390,275 5.93 234 81,629 93.096 130,368 141.177 151,828 146,360 13.51 0.50 276,291 303,412 300,098 274,619 247,300 243,915 3.21 2.87 276,291 303,412 300,098 274,619 247,300 243,915 3.21 2.87 32,381 29,375 26.406 26,876 27,370 27,580 4.28 3.77
$ 243.910
$ 274,037
$ 273,692
$ 247.743
$ 219,930
$ 216.335 3.07 2.75
$2.03
$2.31
$2.31
$2.10
$1.87
$1.85 (1.01) 0.42
$2.03
$2.31
$2.31
$2.10
$1.87
$1.85 (1.01) 0.42
$1.38
$1.32
$1.25
$1.18
$1.11
$1.03 1.82 3,90 3.02 3.71 4.17 4,I9 4.I4 4.23 0.78 (2.94) 2.44 2.94 3.26 3.20 3.08 3.10 0.24 (2.25)
$5.985,679
$5.126,362
$4,780.167
$4.582.670
$4,273,721
$4.050,450 6.35 7.23
$2,076,620
$1,769,066
$1,707,407
$1,596 275
$1,494,442 51,414.285 4.48 6.22 59,185 59,185 59,185 59,185 59,185 59,185 322,800 229,600 186,400 50,000 80,000 90,000 (2.84) 12.00 110,(XX) 110,(XX)
Il0,(XX) 110,000 175,000 175,000 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
$4.569,793
$4,053,096
$3.818,360
$3,445,255
$3.330,587
$3,172.246 4,85 6.20
$16.60
$15.85
$14.83
$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)
Baltinun Gas and Electric Compcmy and Subsidiaries 25.
Management's Discussion and Analysis of 3
Financial Condition and Results of Operations This annual report presents the financial condition and results of Effective July 1,1994, BGE formed a wholly owned operations of Baltimore Gas and Electric Company (BGE) and subsidiary, BGE Ilome Products & Services, 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 Fmancial 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 operations, liquidity, and capital resources.
year's presentation.
R:sults of Operations on sales; and competition in the generation and sale of electricity.
The base rate increases authorized by the PSC in April 1993
' Earn /ngs 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 discussed in for 1993, an increase of $.08 and $.22 from prior-year amounts, Notes I and 13 could also affect future years' carnings.
respectively. The changes in earnings per share reflect a higher Future competition may also affect earnings in ways that are level of earnings applicable to common stock, offset partially by not possible to predict (see discussion on page 33).
the larger number of outstanding common shares. 'Ihe summary Earnings from diversified businesses, which primarily below presents the earnings-per-share amounts.
represent the operations of Constellation lloldings,Inc. (CIII) and its subsidiaries (collectively, the Constellation Companies) 1994 1993 1992 and BGE Ilome Products & Services, Inc. (HPS), increased Utility business
$1.81
$1.77
$1.52 during 1994 and decreased during 1993. The reasons for these Disersified businesses
,12
.08
.11 changes are discussed in the " Diversified Businesses Earnings" Total
$1.93
$ 1.85
$1.63 section on pages 30 and 31.
Earnings Applicable to Common Stock Effect of Weather on Utility Sales Earnings applicable to common stock increased $15.7 million in Weather conditions affect BGE's utility sales. BGE rneasures 1994 and $45.9 million in 1993. The 1994 increase reflects weather conditions using degree days. A degree day is the higher utihty and diversified businesses earnings. The 1993 difference between the average daily actual temperature and the increase reflects higher utility earnings, slightly offset by lower baseline temperature of 65 degrees. Ilotter weather during the carnings from diversified businesses.
summer, measured by more cooling degree days. results in Utility earnings increased in 1994 compared to the prior year greater demand for electricity to operate cooling systems.
due to three principal factors: lower 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. The higher sales of to operate cooling systems. Colder weather during the winter, as electricity are primarily due to an 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.
partially by higher depreciation and amortization expense, which Conversely, warmer weather during the winter, measured by includes the write-off of certain Perryman costs (see discussion fewer heating degree days, results in less demand for electricity on page 291 Utility 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 regarding cooling and heating degree days because of inercased base rates. Three factors produced the for 1994 and 1993.
increase in sales of electricity: the summer of 1993 was hotter 30-Year than 1992; commercial customers used more electricity; and the 1994 1993 Average number of residential customers increased. The effect of weather Cooling degree days 949 865 804 on utility sales is discussed below. The 1993 earnings increases Percentage change were olTset partially by higher operations and maintenance compared to prior year 9.7%
22.3 %
expenses, depreciation and amortization expense, property taxes, lleating degree days 4,670 4,959 4.901 and the effect of the Omnibus Budget Reconciliatien Act of 1993 Percentage change (1993 Tax Act), which increased the federal corporate income tax compared to prior year (5.8)%
(0.3J%
rate to 35% from 34%.
The following factors influence HGE's utility operations earnings: regulation by the Public Service Commission of Maryland (PSC); the effect of weather and economic conditions 26; Balrimore Gas and Electric Compcmy and Subsidiaries
' 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 (In munonn 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 De 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) 115.9 Under the energy conservation surcharge,if the PSC deter-Interchange sales 26.5 27.2 mines that BGE is earning in excess ofits authorized rate of Other revenues (1.9) 3.5 return, BGE will have to refund (by means of lowering future surcharges) a portion of energy conservation surcharge revenues Total electric revenues
$ 14.4
$146.6 to its customers. The portion subject to the refund is compen.
sation for foregone sales from conservation programs and incen-Electric system sales represent volumes sold to customers within BGE's service territory at rates determined by the PSC.
tives for achieving conservation goals and will be refunded to These amounts exclude interchange sales, discussed separately customers with interest beginninl; 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 earned in excess of its authorized rate of return on electric opera-sales volumes.
1994 1993 tions for the period July 1,1993 through June 30,1994. As a result, BGE deferred the portion of electrie energy conservation Residential 0.5%
9.07c revenues 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 in 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 I
tially unchanged from the prior year due to three factors: the sales (see Notes I and 13). Changes in fuel rate revenues and number of customers increased; higher sales from extreme interchange 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 part of these costs, I
I 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 reflect Fuel rate revenues decreased during both 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 l
steel production and the fact that Bethlehem Steel is 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 reflect 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 industrir.1 class reflect increased sales of electricity to Bethlehem is the least costly available to PJM utilities. Interchange sales Steel to suppon 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 utili'ies. The less-costly mit effect of the PSC's April 1993 rate order, offset partially by the reflects 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 Baltimon" Gas and Electric Conymy and Subsidiaries 27.
1
- Gas revenues decreased during 1994 and increased during Changes in gas cost adjustment revenues result primarily from.
1993 because of the following 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 un millions) cost adjustment revenues normally do not affect earnings. Gas
.< Sales volumes -
$ 3.6
$ 0.6 cost adjustment revenues decrased 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 revenuesJ (1.8) 0.8 revenues increased during 1993 primarily because ofincreased 1
- Total gas revenues
$(11.9)
$32.8 -
- Prices to recover higher costs of purchased gas and higher sales -
j volumes subject to gas cost adjustment clauses. Delivery service Thd changes in gas sales volumes compared to the year before sales volumes are not subject to gas cost adjustment clauses.
because delivery service customers purchase their gas directly were:
from third parties.
1994 1993 r
Residential 0.6%
2.5%
BGE Utility Fueland Energy Expenses Commercial (3.4) 2.2 Electric fuel and purchased energy expenses were as follows:
Industrial 4.2 (5.8) 1994 1993 1992 1
Total 0.7 (0.6)
Un millions)
Actual costs
$541.2 $483.9 $445.2 Total gas sales increased during 1994 because of higher sales Net recovery of costs 1 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 i
switched their fuel source from natural gas to alternate fuels, or during 1994 as a result of a more costly actual generation mix were involuntarily interrupted by BGE 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 BGE's system and the PJM system. The cost of Interruptible customers maintain attemate fuel sources and pay the actual generation mix increased due to higher purchased reduced rates in exchange for BGE's right to interrupt service energy costs and scheduled 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 partially 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 oflower use of delivery service gas by Bethlehem Steel Pennsylvania Power & Light Company Energy and Capacity and interruptible service customers, who mereased their use of
_1
~'
Purchase Agreement.
alternative 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 ein mitv.ms) -
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 Base rates increased slightly in 1994 due to an increased under purchased gas adjustment recovery of eligible gas conservation program costs through the clause (see Note 1) 1.9 (3.7) 0.5
~
energy conservation surcharge. 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 recovery of eligible gas conservation program costs through the energy conservation surcharge. The April 1993 rate order for an I
annualized gas base rate increase of $1.6 million provided a return on BGE's high'er level of gas rate base.
1 1
28.
Balrimore Gas amt Electric Company and Subsidiaries
~
.~
l 4
i Actual purchased gas costs decreased during 1994 for two partially by the 1993 reversal of the $9.8 million charge o igi.
reasons: lower gas prices and lower output associated with the nally recorded in 1992 for termination benefits associated with l
decreased demand for BGE gas. He lower gas prices reflect the Company's 1992 VSERP to reflect the ratemaking treatren j
mcrket 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 Operations 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 control efforts. nese 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
. 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 increased during 1994 cuppliers in implementing FERC Order No. 636. %ese transition because of the write-off of certain Perryman costs discussed costs, 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. He 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.
ogerations 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 conform 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. Ris write-off reduced after-tax carnings a
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 schedule 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 $9.8 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 renect the results of a detailed Operations expense increased during 1993 due to higher labor depreciation study. Re new depreciation rates are expected to costs, employee reduction expenses (see Note 7), postretirement result in an increase in depreciation accruals of approximately luncfit expenses resulting from the implementation of Statement
$21 million annually. BGE plans to defer the increased depreci-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 l
I Baltimorr Gas and Dectric Company and Subsidiaries 29.
~.
i 1
'I Taxes other than income taxes increased slightly during 1994 '
Diversified Businesses Earnings due primarily to higher property taxes resulting from higher Earnings per share from diversified businesses were:
levels of utility plant in service. Taxes other than income taxes 1994 1993 1992
+
' ncreased during 1993 because of higher property taxes from the i
addition of Brandon Shores Unit 2 to the taxable base effectiv Constellation lloldings, Inc.
I Power generation systems 5.10 5.07
$.08
. July 1,1992, higher franchise taxes because of the increase in Finandr,1 ;.: vestments
.03
.10
.09 -
total electric and gas revenues, and increased payroll taxes.
Real estate development and senior Innation affects the Company through mereased operating living facilities
(.03)
(.N)
(.05) expenses and higher replacement costs for utility plant assets.
Effect of 1993 Tax Act
(.N)
Although timely rate increases can lessen the effects of inHation, Other
(.01)
(.01)
I.01) the regulatory process imposes a time lag which can delay BGE's
.08
.11 recovery of mereased costs. There is a regulatory tag primarily because rate increases are based on historical costs rather than BGE ilome Products & Services, Inc..03 l
projected costs. The PSC has historically allowed recovery of the Total diversified businesses
$.12
$.08-
$.11 cost of replacing plant assets, together with the opportunity to earn a fair retum on BGE's investment, beginning at the time of The Constellation Companies' power generation systems replacement.
business includes the development, ownership, management, and operation of wholesale power generating projects 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 level of construction ation and maintenance contracts. Power generation systems work in progress which was offset partially by the lower AFC earnN increased in 1994 primarily due to payments for the rate established by the PSC in the April 1993 rate order AFC curtainnent 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 offset by the lower AFC rate 1993 were essentially unchanged. Earnings for 1993 include discussed above.
$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 r
due to a lower level of charitable contributions and gains realized Creek waste-coal project in order to resolve fuel quality and on the sale of receivables, other start-up problems.
Capitalized interest decreased during 1994 due to lower capi-De Constellation Companies' investment in wholesale power talized interest on the Constellation Companies' power gener-generating projects includes $177 million representing ownership ation systems, offset partially by the accrual by BGE of carrying interests in 16 projects which sell electricity in Califomia under charges on electrie deferred fuel costs excluded from rate base Interim Standard Offer No. 4 power purchase agreements. Under (see Note 5). Capitalized interest increased during 1993 due to these agreements. the projects supply electricity to purchasing the accrual of carrying charges on electric deferred fuel costs utilities at a fixed rate for the first ten years of the agreements 3
excluded from rate base.
and at variable rates based on the utilities' avoided cost for the Income tax expense increased during both years because of remaining term of the agreements. Avoided cost generally repre-higher pre-tax earnings. The 1993 increase also reflects the effect sents a utility's next lowest cost generation to service the -
of the 1993 Tas Act, which increased the federal corporate demands on its system. These power generation projects are.
. income tax rate to 35% from 34%, retroactive to January 1,1993, scheduled to convert to supplying electricity at avoided cost rates
{
As a result, income tax expense related to 1993 operations in various years beginning in late 1996 through the end of 2000.
increased by $4.6 million and the Company's deferred income As a result of declines in purchasing utilities' avoided costs
.l tax liability increased by $20.1 million. He Company deferred subsequent to the inception of these agreements, revenues at ;
$12.8 million of the increase in the deferred income tax liability these projects based on current avoided cost levels would bc
{
applicable to utility operations for recovery through future rates substantially lower than revenues 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 -
l Of this $7.3 million charged to expense, $5.8 million pertains to levels were to continue into 1996 and beyond, the Constellation the Constellation Companies as discussed on page 31.
Companies could experience reduced earnings or incur losses i
associated with these projects, which could be significant. The -
Constellation Companies are investigating and pursuing alterna-i 30.
Baltimore Gas and Dectric Company and Subsidiaries
.2 -
r
1 1
tives for certain of these power generation projects including, but he Constellation Companies' real estate portfolio has experi-not limited to, repowering the projects to reduce operating costs, enced continuing carrying costs and depreciation. Additionally, renegotiating the power purchase agreements, and selling its the Constellation Companies have been expensing rather than L ownership interests in the pmjects. Two of these wholesale power capitalizing interest on certain undeveloped land where devel-generating projects, in which the Constellation Companies' opment activities were at minimal levels. These factors have investment totals $27.4 million, 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 output through the end 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 requircments of certain of these projects. Resulting cash curtailment period will be sufficient to fully amortize the existing shortfalls have been satisfied through cash infusions from project finance debt. Ilowever, following the curtailment period.
Constellation lloldings, Inc., which obtained the funds thmugh a the projects remain contractually obligated to commence combination of cash flow generated by other Constellation production of electricity at the avoided cost rates, which could Companies and its corporate borrowings. To the extent the real result in reduced earnings or losses for the reasons desenbed estate market continues to improve, earnings from real estate above. ne Company cannot predict the impact that these matters activities are expected to improve also.
regarding any of the 16 projects 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.
Earnings from the Constellation Companies' portfolio of credit availability, and the strength of the economy in general.
financial investrnents 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 improved, until the economy financial guaranty insurance companies. Financial investment reflects sustained growth and the excess inventory in the market earning decreased during 1994 due to reduced earnings from in the Baltimore-Washington corridor goes down, real estate the investment portfolio. Additionally,1993 results reflected a values will not improve significantly. If the Constellation
$6.1 million gain from tbc sale of a portion of an investment in Companies were to sell their real estate projects in the current a financial guaranty insurance company. Earnings increased depressed market, losses would occur in amounts difficult to slightly in i993 as compared to 1992 because this gain was detennine. Depending upon market conditions, future sales could substantir.Ily offset by lower investment income resulting from also result in losses. In addition, were the Constellation the decline 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 provide 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 The Constellation Companies' real estate development project to market value at the time of such change in intent if business includes land under development; office buildings; retail market value is below book value.
projects; commercial projects; an entenainment, dining and retail The Effect of the 1993 Tax Act represents a $5.8 million complex in Orlando Florida; a mixed-use planned-unit-charge to income tax expense to reflect the increase in the deselopment; and senior living facilities. The majority of these Constellation Companies' deferred income tax liability because projects are in the llaltimore-Washington corridor. They have of the increase in the federal corporate tax rate.
been affected adversely by the depressed real estate market and BGE liome Products & Services earnings increased during economic conditions, resulting in reduced demand for the 1994 primarily due to a gain on the sale of receivables.
purchase or lease of available land, office, and retail space.
Earnings from real estate development increased slightly Environmental Matters during 1994 due to gains recognized from the sale of two retail The Company is subject to increasingly stringent federal, state, centers, an office building, and interests in two senior living and local laws and regulations relating to improving or main-facilities. The increases in diversified businesses' revenues and in taining the quality of the environment. These laws and regula.
selling, general, and administrative expenses reficct the proceeds tions require the Company to remove or remedy the effect on the of these sales and the cost of the facilities sold, respectively.
environment of the disposal or release of specified substances at Earnings from real estate development and senior living facilities ongoing and former operating sites, including Environmental.
were essentially unchanged in 1993 because a $2.1 million gain Protection Agency Superfund sites. Details regarding these or the sale of a substantial portion of the investment in senior matters, including financial information, are presented in hving facilities was offset by greater operating losses at other real Note 13 and in the Company's Annual Report on Form 10-K estate projects The senior living facilities which were sold under item 1. Business - Environmental Matters.
contributed real estate revenues and operating expenses of approximately $17 million and $16 million. respectively, in 1993.
Bahinwrr Gas aml Electric Compmy and subsidiaries 31,
Uquidity and Capital Resources Capital Requirements The Company's capital requirements reflect the capital-intensive years 1992 through 1994, along with estimated amounts for the nature of the utility business. Actual capital requirements for the years 1995 through 1997, are reflected below.
I992 1993 1904 1995 1996 i997 (In millions)
Utility Business:
Construction expenditures (excluding AFC)
Electric 5 292 5 360
$339
$233
$219
$206 Gas 36 51 68 61 71 84 Common 39 44 42 56 50 35 Total construction expenditures 367 455 449 350 340 325 AFC 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
Retirement of long-term debt and redemption of preference stock 486 907 203 268 98 164 Total utility business 951 1,479 777 745 549 583 Diversified Businesses:
Retirement cf long-tenu debt i18 222 37 56 65 125' Investment requirements 80 78 51 66 70 40 Total diversified businesses 198 300 88 122 135 165 Total
$1.149
$1.779 5865 5867 5684 5748 BGE Utility Capital Requirements tively, of the funds required for BGE's capital requirements BGE's 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, $70 million of cash was provided by mates above. Electric construction expenditures include the the sale of certain BGE and HPS receivables (see Note 13).
installation of two 5,000 kilowatt diesel generators at Calvert During the three-year period 1995 through 1997, the Company Cliffs Nuclear Power Plant, one of which is scheduled to be expects to provide through utility operations 100% of the funds placed in service in 1995 and the second in 1996; the construe.
required for BGE's capital requirements, exclusive of retirements tion of a 140-megawatt combustion turbine at Perryman, and redemptions, scheduled to be placed in service in 1995, which 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 BGE's existing generating plants and its transmission and distrib-securities. During the three-year period ended December 31, ution facilities. Future cicetric expenditures do not include addi-1994, BGE's issuances of long-term debt, preference stock, and tional enerating units.
common stock were $1,557 million, $130 million, and $448 F
During 1994,1993, and 1992, the internal generation of cash million, respectively. During the same period, retirements and from utility operations provided 729,71%, and 81% respec.
redemptions of BGE's long-term debt and preference stock 32.
Ikdtimore Gas and Electric Company and Subsidiaries
tot:. led $1,425 million and $149 million, respectively, exclusive estate pmperties, additional cash may become available through of any redemption premiums or discounts. The increase in the sale of projects (for additional information see the discussion l
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 l
market conditions and BGE's actual capital requirements.
provide additional liquidity to meet interim financial needs, Clil l
De Constellation Companies' capital requirements are has entered into a $50 million revolving credit agreement.
l discussed below in the section titled " Diversified Businesses Capital Requirements - Debt and Liquidity." He Constellation Investment Requirrments Companies plan to meet their capital requirements with a combi-The investment requirements of the Constellation Companies j
nation of debt and intemal 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 iloidings, Inc., or contribute equity to enhance the Investment requirements for the years 1995 through 1997 reflect capital structure of Constellation iloidings, Inc.
the Constellation Companies' estimate of funding for ongoing and anticipated projects and are subject to continuous review and Diversified Businesses Capital Requirements modification. Actualinvestment requirements may vary signifi-Debt and 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 througn internall) 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 tx>rrowings from institutional lenders.
tesponse to Regulatory Change regulatory changes in its utility business. These strategies may i
l include internal restructurings involving the complete or partial l
Electric utilities 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 unrelated 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 intemally or with effect competition will have on BGE's earnings in future years.
third parties, regarding one or more of these potential strategies, in response to the competitive forces and regulatory changes, as No assurances can be given as to whether any potential trans-discussed in Part 1 of BGE's Reports on Form 104 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 competitive itive position of BGE.
position and to increase its ability to adapt to and anticipate 1
I 1
I Bahimore Gas and Electric Company and Subsidiaries 33.
l
d' 1
-Report of Management The management of BGE is responsible for the information and conducts periodic reviews to maintain the effectiveness of representations in the Company's nnancial statements. The
. internal control procedures.
- Company prepares the financial statements in accordance with
. Coopers & Lybrand LL.P., independent auditors, audit the generally accepted accounting principles based upon available Snancial statements and express their opinion about them. They '
J facts and circumstances and management's best estimates and.
audit in accordance with generally accepted auditing standards.
, judgments of known conditions.
The Audit Committee of the Board of Directors, which 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, internal auditors, and Coopers & Lybrand LLP, to cssurance that the Dnancial records are accurate and that the review the activities of each in discharging their responsibilities.
Company's assets are protected. The Company's staff ofinternal The internal audit staff and Coopers & Lybrand LLP. have free auditors, which reports directly to the Chairman of the Board, access to the Audit Committee.
0 h.)
\\
Christian II. Poi dexter Charles W. Shivery Chairman of the Board Chief Fmancial Of6cer -
Report of Independ'ent Auditors To the Shareholders of Baltimore Gas and Electric Company We have audited the accompanying consolidated balance sheets We believe that our audits provide a reasonable basis for our and statements of capitalization of Baltimore Gas and Electric opinion.-
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 results of their operations and their cash flows for each of Management. Our responsibility is to express an opinion on thew 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 auditing standards 'Ihose 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-whether the financial statements are free of material 1991 outages at the Company's nuclear power plant, and the :
misstatement. An audit includes examining, on a test basis, Company established in 1990 a reserve of $35 million for the evidence supporting the amounts and disciosures 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 well as evaluating the overall financial statement presentation, provided.
Coopers & Lybrand LLP.
Baltimore, Maryland January 20,1995 34.
Baltimore Gas and Electric Company and Subsidiaries
Consolidated Statements'of Income L
Year Duled December 31, 1994 1993 1992 (in thousands, except per sharr amounts)
Revenues.
Electric '
$2,126,581
$2,112,147.
$1,%5,532 Ga-421,249 433,163-400,399-
' Diversified businesses 235,155 1%,075 193,605' Total revenues 2,782,985 2,741385' 2,559.536 -
. Expenses Other Than Interest and Income Taxes
- Electric fuel and purchw;d energy 542,314 534,628 556,184 Gas purclused for resale 224,590 242,685 214,103 Operations
~ 545,413
' 574,073 537,593 Maintenance 164,892 181,208 172,248 Diversified _ businesses - selling, general,'and administrative 174,834 143,654-131,580' Depreciation and amortization 295,950 253,913
'229,515.
Taxes other than income taxes 199,733 194,832 183,004 Total expenses other than interest and income taxes 2,147,726 2,124,993 2,024,227 Income from Operations '
635,259 616,392 '
535309 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 l 4,267 Net other income and deductions 6,270 1,575 3,973 Total other income 32J65 20,310 22,132
- Income Before Interest and Income Taxes 667,624 -
636,702
'557,441 Interest Expense Interest charges -
214,347
. 212,971-211,712 Capitalized interest
- (12,427)
(16,167)
(13,800)-
+
Allowance for borrowed funds used during construction (11.766)
(8,Gt0)
(8,165)
Net interest expense 190,154 188,764' 189,747 '
Income Before income Taxes 477,470 447,938 367,694 1
Income Taxes 153,853 138,072 103,347
]
- N:t Income 323,617 309,866-
.'264,347 Preferred and Preference Stock Dividends 39,922 41,839 42,247
, Ecrnings Applicable to Common Stock
$ 283,695'
$ 268,027 :
- $ 222.100 1
Aver;ge Shares of Common Stock Outstanding 147,100 145,072 136,248
' Earnings Per Share of Common Stock
$1.93
$1.85 -
$1.63 See Notes to Consolidated FinancialStasements.
Cenain prior-year amounts have been reclassified to conform to the current year's presentation.
6.
Baltimore Gas and Electric Crnnpany ahd Subsidiaries 35,
.1 n_
3,7 Consolidated Balance Sheets
~
'At December 31, 1994 1993 (In thousands)
~ Assets
= Current Assets
' Cash and cash equivalents
' $. 38,590
$ 84,236 Accounts receivable (net of allowance for uncollectibles) 314,842 401,853 Fuel stocks '
- 70,627 70,233
' Materials and supplies '
149,614
-145,130 Prepaid taxes other than income taxes
'57,740 54,237 Other 47,022 38,971 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 Power Corporation 34,168 34,138 Senior living facilities
.11,540 2,005 Other 58,824' 65,355 Totalinvestments and other assets 1,179,158 1,156,931 Utility Plant Plant in service Electric 5,929,996.
5,713,259 Gas 616,823 557,942 Common SI1,016 487,740 Total plant in service 7,057,835 6,758,941:
Accumulated depreciation (2J05,372)
(2,161,984)
Net plant in service 4,752,463 '
4,5 %,957 '
Construction work in progress 506,030 436,440
- Nuclear fuel (net of amortization) 134,012 139,424 Plant held for future use
- 24,320 24,066 -
Net utility plant 5,416,825 5,196,887 Deferred Charges Regulatory assets 773,034 768.125
- Other
%,086 70,436 -
Total deferred charges 869,120 838,561 Total Assets
$8,143,538
$7,987,039 See Notes to Consolidated FinandalStatements.
36.'
Baltimore Gas and Electnc Company and Subsidiaries
Consolidated Balance Sheets
'As December 31, 1994 1993 (in Ilwusands)
IJabilities and Capitalisation Current Liabilities Short-term borrowings
$ 63,700 Current portions of long-term debt and preference stock 323,675 44,516 Accotmts 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 Liabilities Deferred income taxes 1,156,429
-1,067,611 Deferred investment tax credits 149,394 157,426:.
Pension and postemployment benefits 138,835
.183A43 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 Capitalization Long-term debt 2,584,932 2,823,144 Preferred stock 59,185
. 59,185 ~
Redeemable preference 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 Commitments, Guarantees, and Contingencies - See Note 13 Total Liabilities and Capitalization
$8,143,538
$7,987,039
~ See Notes to Gmsolidated Financial Statements Baltinwre Gas and Electric Company and Subsidiaries 37.
m
.I
. Consolidated Statements. of Cash' Flows 1
i i
I
' fraf Ended' December 31.
1994 1993 1992 (in thousands)
< Cash Flows From Operating Activities
' Net income '
$ 323,617
$ 309,866
$ : 264,347 -
i Adjustments to reconcile to net cash provided by operating activities p-Depreciation and amortization 351,064 314,027 273,549.
f Deferred income taxes 79,278 53,057 26,914 i
Investment tax credit adjustments (8,192)
(8,444)
(8,854) t Deferred fuel costs 11.461 51,445 105,430 Accrued pension and postemployment benefits (41,113)
(25,276)
Allowance for equity funds used during construs. ion (21,746)
(14,492)
(13,892)'
Equity in earnings of affiliates and joint venwres (net)
(20,225)
(4,655)
-(11,525)
. Changes in current assets 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) -
r Other
. 7,153 (6.643)
(31.005)
Net cash provided by operating activities 646,314 702.786 j69,144 Cash Flows From Financing Activities i
Proceeds from issuance of Short-term borrowings (net) 63,700 (11,900)
(139,600) 1 Long-term debt
~ 207,169 1,2 %,350 603,400.
Preference stock
- 28,776 Common stock 33,869 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)
.(189,180).
Preferred and preference stock dividends @
'(39,950)
(42,0.5)
-(42,300)
Other (437)
(7.094)
(399)-
Net cash used in financing activities (131,060) -
-(36,875)
(102.2%) -
Cash Flows From investing Activities (477,878)
(389,416)
't Utility construction expenditures (including AFC)
(483,059)
Allowance for equity funds used during construction 21,7 6 14,492 13,892 -
Nuclear fuel expenditures (42,089)
(47.329)
-(39,486) 4 Deferred nuclear expenditures (8,393)
(13,791)
-(15,809) 3 Deferred energy conservation expenditures (40,440)
(32,909)
(19,918)
Contributions to nuclear decommissioning trust fund (9,780)
. (9,699)
(8,900)
- I
- Purchases of marketable equity securities (52,099)
(46,820).
(49,003)
Sales of marketable equity securities 40,585 33,754 56,690 Other financialinvestments 2,469.
19,589 44,929 I
Real estate projects 14,926 (30,330)
(23,3851 Power generation systems (1,116)
(26,841)
(31,483)
Other.
(3,650),
8,965 4,746 Net cash usr/ ;nvesting activities (560,900)
(608,797)
(457,143)
V Net Increast (f% ease)in Cash and Cash Equivalents (45,646) 57,114 9,705 Cash and Cast Equivalents at Beginning of Year 84,236 27,122 17,417 i
Cash and Cast Equivalents at End of Year
$ 38,590
' $ ' 84,236
$ 27.122 f
Other Cash Flow Information Cash paid during the year for:
Interest (net of amot.nts capitalired)
$ 184,441
$ 183,266
$ 183,209 income taxes
$ 112,923
$ 126.034
$ 87,693 see Neses to Cornalidated Financial Statements.
Certain prior year amounts how been arrlanified to confonn to the current year k pursentation.
38.
Baltimore Gas and Electric Company and Subsidiaries l
. Consolidated: Statements of Common ' Shareholders' Equity i
)
1 Unrealized
'i Loss on
. Available.
Pension Common Stock Retained For Sale -
Liability Total:
Years Ended December 31,1994,1993, and 1992 Shares - Amount Earnings Securities - Adjustment ' Amount -
l (in tlwusands)
Balance at December 31,1991 126,690 $ 979,211
$1,174.095
$2,153,306 l
. Net income 264,347 264,347 Dividends declared p
1%ferred and preference stock (42,247)
(42,247)
Iemmon stock ($1.43 per share)
(1%,601).
'(196,601) i
' Common stock issued 17,098 356,230
.356,230-Other '
(4)'
(439) 43 (3%) -
{
Balance at December 31,1992 143,784 1,335,002 1,199,637 2.534,639 l
l Net income 309,866 309,866 Dividends declared I
' Preferred and preference stock (41,839)
(41,839)
.}
Common stock ($1.47 per share)
(213,407)
. (213,407) j Common stock issued '
2,250 57,379 57,379 Other (917)
(3.117)
(4,034)
Pension liability adjustment (33,990)
-(33,990)
Deferred taxes on pension liability adjustment 11,897 11,897.
.j Balance at December 31,1993 146,034 1,391,464 1,251,140 (22,093) - 2,620,511-Net income 323,617
- 323,617 Dividends declarrd Preferred and preference stock (39,922)
(39,922)'
l
' Common stock ($1.51 per share)
(222,180)
(222,180)
Common stock issued 1,493 33,869 33,869 l
Other 45 Net unrealized loss on securities
. 45 (5,609)
(5,609)
Deferred taxes on net unrealized loss on securities 1,963
'8,573 1,963 Pension liability adjustment 8,573 -
i Deferred taxes on pension liability ndjustment -
(3,001) -
(3,001) j Balance at December 31,1994 147,527 $1,425,378
$1,312,655
$(3,646)
$(16,521) $2,717,866 See Notes ks Consohdated Financial Statements.
i i
'I I
I l
Baltimore Gas and Electric Company and Subsidiaries
- 39,
~.
R
. Consolidated / Statements of Capitalization
=
As December 31.
1994' s1993
. Un honsands).
- Inng Term Debt.
First Refunding Mortgage. Bonds of BGE L
. 9W% Series, due October 15,1995
$188,014.
$ 200,000 SM% Series, due April 15,1996 26,454 26,585
- 6%% 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
%,225 100,000 SM% Series, due July 15,2000
. 125,000 125,000 -
s
' 7%% Series,due April 15,2001 59,911 8X% Series, due August 15,2001 122,430 124,980 7X% Series, due January 1,2002 49,957 49,999 7X% Series, due July 1,2002 124,850 125,000 5M% Installment Series, duc July 15,2002 11,650 12,080 6M% Series, due Febmary 15,2003 124,947 125,000 6W% Series, due July 1,2003 124,925 125,000 SM% Series, due April 15,2004 125,000 125,000-6.80% Series, due September 15,2004 20,000 7M% Series, due January 15,2007 125.000 125,000 6X% Series, due March 15,2008 125,000 125,000 l'
6.90% Installment Series, due September 15,2009 55,000 7M% Series, due March 1,2023 124,998 124,998 7M% Series, due April 15,2023 100,000 100,000 Total First Refunding Mortgage Bonds 1,744,385 1,802,148 Other long-term debt of BGE Medium-term notes, Series A 10,500 23,500 Medium-term 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 48,6 %
- 48,000 Adjustable rate pollution control loan, due July 1,2014 20,000 20,000 5.55% Pollution control revenue refunding loan, due July 15,2014 47,000 47,000 Economic development loan, due December 1,2018 35,000-35,000-6.00% Pollution control revenue refunding loan, due April 1,2024
_, 75,000 Total other long-term debt of BGE 544,550 482,550 Long-term debt of Constellation Companies Mongage and construction loans and other collateralized notes 7.67%, due October 1,1995 13,000 i
Variable rates, due through 2009 116,613 L 151,251 7,73%, 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 Unamortized discount and premium (17,593)
(17,754) -
Current portion oflong-term debt (262,175)
(41,516)
Total long-term debt 2,584,932 2.823 S 4 cemtinuedon page 41 See Notes so Consolidated Financial Statements.
l l
40.
Baltimore Gas and Electric Company and Subsidiaries E
a
- I f
E
' Consolid' ted-Statements of _ Capitalization a
i At December 31, 1994 1993 (in thousands)
+
~ Preferred Stock
~
Cumulative, $100 par value, 1,000,000 shares authorized Series B,44%,222,921 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 30,000 30,000-Series D,5.40%,300,000 shares outstanding, callable at $101 per share Tota!peferred stock 59,185 -
59,185-Preference Stock Cumulative, $100 par value,6,500,000 shares authorized Redeemable preference stock 7.50%,1986 Series 455,000 and 470,000 shares outstanding. Caliable at $105 per share prior to October 1,19% and at lesser amounts thereafter 45,500 47,000 6,75%,1987 Series,455,000 and 485,000 shares outstanding. Callable at 004.50 per share prior to April 1,1997 and at lesser amounts thereafter 45,500 48,500 6.0%,1987 Series,500,000 shares outstanding 50,000 50,000 7.80%,1989 Series,500,000 shares outstanding 50,000 50,000
' 8.25%,1989 Series,500,000 shares outstanding 50,000 50,000 8.625%,1990 Series,650,000 shares outstanding 65,000 65,000 7.85 %,1991 Series,350,000 shares outstanding 35,000 35,000 -
Current portion of redeemable preference stock (61,500).
(3,000)
Total redeemable preference stock 279,500 342,500
'i Preference stock not subject to mandatory redemption 7?it%,1973 Series,200,000 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 1,2004 40,000 40,000 -
Total preference stock not subject to mandatory redemption 150,000 150,000 l
i Common Shareholders' Equity i
Common stock without par value,175,000,000 shares authorized; 147,527,114 and 146,034,014 shares issued and outstanding at December 31,1994 and 1993, respectively. (At December 31, 1994,166,893 shares were reserved for the Employee Savings Plan and 3,277,655 shares ~
I were reserved for the Dividend Reinvestment and Stock Purchase Plan.)
1,425,378 1,391,464
. Retained earnings 1,312,655 1,251,140 J
Unrealized loss on available for sale securities (3,646) j Pension liability adjustment (16,521)
(22.093) j Total common shareholders' equity 2,717,866 2.620,511 l
Total Capitalizats::
$5,791,483
$5,995,340 See Notes to Const Wated Fira mcial Statements.
l l
l
.l j
i 1
Baltimon" Gas and Electric Company and Subsidiaries 41, l
Consolidated ~ Statements of Income Taxes Year fmfedikccmher 31.
1994 1993 1992 (hdlar amounts in thousands)
Income Taxes Cunent
$ 82,767
$ 93,459
$ 85,287 Deferred Change in tax effect of temporary differences 88,8 %
63,972 44,975-Change in income taxes recoverable through future rates (8,580)
(30,086)
(18.061) i Deferred taxes credited (charged) to shareholders' equity (1,038)
I1,897 Deferred taxes charged to expense 79.278 45,783 26,914 Effect on deferred taxes cf enacted change in federal corporate income tax rate Increase in deferred tax liability 20,105 Income taxes recoverable through future rates (12,831)-
Deferred 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 statutory 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 during construction (7,611)
(5,072)
(4,723)
Amortization of deferred investment tax credits (8,164)
(8,444)
(8,854)
Tax credits flowed through to income (1,754)
(9.736)
(804)
Change in federal corporate income tax rate charged to expense 7,274 t
Amortization of deferred tax rate differential on regulated activities (1,885)
- (5,789)
(7.365)
Other (3,639)
(6,192)
(8.878)
Total income taxes
$153,853
$138,072
$103,347 Effective federalincome tax rate 32.2 %
30.8%
28.1 %
At December 31, 1994 1993 Deferred Income Taxes Indlar amounts m thousands)
Deferred tax liabilities Accelerated depreciation
$ 840,376
$ 789,165 Allowance for funds used during construction 208,726 202,490 incorne 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 Leveraged leases 31,948-32,613 Percentage repair allowance 36,630 35,431 Other 148,064 125,850 Total deferred tax habilities 1,454,952 1,377.907 Deferred tax assets Alternative minimum tax 71,074 73,203 Accrued pension and postemployment benefit costs 51,163 64,065 Deferred 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
$1,067,611 See Nures so Cemwihted Timmcial Statements 42, Baltimarr 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 (collective *, the Campany) is primarily an electric and gas utility gas suppliers. Any deferred underrecoveries or overrecoveries of servir.g a territory which encompasses Baltimore City and all or purchased gas costs for the twelve months ended November 30 part of nine Central Maryland counties. The Company is also each year are charged 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 con olidated 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 transactions have been eliminated in consolidation. Under this rates. The ponion of BGE's deferred tax liability applicable to plicy, the accotmts of Constellation Holdings, Inc. and its utility operations which has not been reflected in current service subsidiaries (collectively, the Constellation Companies), BGE rates represents income taxes recoverable through future rates. It ilome Prmlucts & Services, Inc. (IIPS) and BNG, Inc. are has been recorded as a regulatory asset on the balance sheet, consolidated in the financial statements, and Safe liarbor Water Deferred income tax expense represents the net change in the Power Corporation is reported under the equity method, deferred tax liability and regulatory asset during the year, Corporate joint ventures, partnerships, and affiliated companies exclusive of amounts charged or credited to common share-in which a 20% to 509 voting interest is held are accounted for holders' equity.
under the equity methml, unless control is evident, in which case Current tax expense consists solely of regular tax. In cenain the entity is consolidated. Investments in power generation prior years, tax expense included an alternative minimum tax systems and certain financialinvestments in which less than a (AMT) that can be carried forward indefinitely as tax credits to 20% voting interest is held are accounted for under the cost future years in which the regular tax liability exceeds the AMT method, unless 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.
He investment tax credit (ITC) 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 property. ITC and BGE's utility operations are subject to regulation by the Public other tax credits associated with nonregulated diversified busi-Service Commi.,sion of Maryland (PSC). The accounting policies nesses other than leveraged leases are flowed through to income.
and practices used in the determination of service 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 accountmg pnnciples 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, Utility Revenues inventory Valuation BGE recognizes utility revenues as service is rendered to customers.
Fuel stocks and materials and supplies are generally stated at average cost.
Fueland Purchased Energy 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 respectively. The difference between actual fuel costs and fuel investment. Properties under development are held for future 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.
active development of such properties are capitalized. Rental and The electric fuel rate formula is based upon the latest operating properties 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 everage fuel cost for each generating unit. The fuel rate does not to be recovered through operations and sales. In these cases, change unless the calculated rate is more than 5% above or the projects are written down to the amount estimated to be below the rate then in effect.
recoverable.
IIaltimore Gas and I:lectric Canpany and Subsidiaries 43,
l l
Investments and Other Assets ownership interest in these plants is 20.99% and 10.56%, respec-i The Company adopted Statement of Financial Accounting tively, and represents a net investment of $143 million as of Standards No. I15 (Statement No. I15)," Accounting for Certain December 31,1994. Financing and accounting for these prop-Investments in Debt and Equity Securities," effective January 1, erties are the same as for wholly owned utility plant.
1994. Securities subject to the requirements of Statement No. !!$
Nuclear fuel expenditures are amortized as a component of are reported at fair value 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 current 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 Clll are classified as through a sinking fund methodology. In its April 1993 rate order, available for sale. Unrealized gains and losses on these securities, the PSC granted BGE revenue to accumulate a decommissioning as well as Clll'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 recorded in shareholders' Cliffs' service life in 2016, adjusted to reflect expected inflation, equity. At December 31,1993 marketable 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 meludes material, tions, BGE has established an external decommissioning trust to labor, and, where applicable, construction on I costs and an which a portion of accrued decommissioning costs have been allowance for funds used during construction. Addmons to utility contributed, plant and replacements of units of property are capitalized to The NRC requires utilities to provide financial assurance that utility plant accounts. Utility plant retired or otherwise disposed they will accumulate sufficient funds to pay for the cost of of is charged to accumulated depreciation. Maintenance and nuclear decommissioning based upon either a generic NRC repairs of property and replacements of items of property deter-formula or a facility-specific decommissioning cost estimate. The mined to be less than a unit of property are charged to mainte-Company completed a facility-specific study in 1995 which nance expense.
generated an estimate of $521 million in 1993 dollars to decom-Depreciation is generally computed using composite mission the radioactive portion of the plant. The Company plans straight-line rates applied to the average 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 reflect 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 Capitalized Interest Depreciatir,n expense for 1994 includes the write-off of The allowance for funds used during construction (AFC) is an certain costs at BGE's Perryman site. Initially, BGE had planned accounting procedure which capitalizes the cost of funds used to to build two cambined cycle generating units at this site. How-finance utility construction projects as part of utility plant on the ever, due to significant changes in the environment in which util-balance het, crediting the cost as a noncash item on the income ities operate, BGE now has no plans to construct the second stysnent. 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 vrote off $15.7 million of the costs asso-recovers the capitalized AFC and a return thereon after the ciated with that second combined cycle unit. This write-off re-related utility plant is placed in service and included in depre-duced after-tax earnirgs during 1994 by $11.0 million or 7 cents ciable assets and rate base, per share. Also in 1944, BGE reclassified the amortization 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 oper0tions expense to depreciation and amorti-1993, a rate order of the PSC reduced the pre-tax AFC rate to ration expense. Prior-year 1 mounts have been reclassified to 9.40%, compounded annually.
conform with the cunent 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 generating plants heated in whtem capitalizes interest on carrying charges accrued on certain Pennsylvania, as well as in the transmission line which transports deferred fuel costs as discussed in Note 5.
the plants' output to the joint owners' service territories. BGE's 44, Balrimore Gas and Dectric Company and Subsidiaries
long-Term Debt ments purchased with a maturity of three months or less are The discount 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, cffective January 1,1995.
Cash 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.
Note 2. Segment Information 1994 1993 1992 (In shousands)
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 from 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 Identinable assets at December 31 6,123,194 6,012,225 5,494,354 Gas 5
Total revenues (nonaf0 lated)
$ 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 Identinable assets at December 31 733,624 690,783 575,513 Diversified Businesses Nonaffiliated revenues
$ 235,155
$ 196,075
$ 193,605 Arnliated revenues 15,649 6.825 6,468 Total revenues 250,804 202.900 200,073-Income from operations 60,315 47,469 56,654 Depreciation and amortization 11,199 10,303 10,149 Idenufiable asvts at December 31 1,158,162 1,166,997 1,090,667 Totti Nonaffiliated revenues
$2,782,985
$2,741,385
$2,559,536 Afriliated revenues 16,489 6,825 6,468 Intercompany eliminations (16,489)
(6.825)
(6,468)
Total revenues 2,782,985 2,741,385 2,559,536 Income from operations 635,259 616,392 535,309 Depreciation and amortization 295,950 253,913 229,515 Construction expenditures (including AIC) 483,059 47?,878 389,416 Identifiable assets at December 31 8,014,980 7,870,005 7,160.534 Other assets at December 31 128,558 117,034 213,823 Total assets at December 31 8,143,538 7,987,039 7.374,357 Certam prwe-war amounts have been welawfied ks cemfemn w the current year's pwsenkuun Baltimore Gas and Electric Cornpany and Subsidiaries 4$,
u
' Note 3. Subeldiary information Diversified businesses consist of the operations of Constellation sidiary, BGE Ilome Products & Services, Inc., which engages in iloidings, Inc. and its subsidiaries, BGE liome Products &
the businesses of appliance und consumer electronics 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 improvements 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 invenment in Safe liarbor Water Power Corporation, Constellation IIoldings, 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 liarbor'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 infomiation for.
real estate development and ownership of senior living facilities:
Constellation lloldings, Inc. and its subsidiaries. The condensed development, ownership, and operation of power generation financial information does not reflect the elimination of inter-systems; and financial investments, respectively, company balances or transactions which are eliminated in the Effective July 1,1994, BGE fonned a wholly owned sub-Company's consolidated financial statements.
U 1994 1993 1992 tin thousands, except per share anumnts)
Income Statements Revenues Real estate projects
$ 106,915 5 77,598
$ 76,582 Power Feneration systems 41,301 24,971 28,084 Fmancial investments 12,126 21,195 21,485 Total revenues 160,342 123,764 126,151 Expenses uumi 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)
Capitalized interest 10,776 14,702 13,800.
I Income tax benefit (expense)
(4,305) 1.984 (3.637)
Net income
$ 13,764 11,898
$ 15.257 Contribution to the Company's earnings per share of common stock
.09
.08
.I1
!!alance Sheets Current assets
$ 53,034 5 54.039
$ 29.899 Noncurrent assets 1,055,056 1.036,507 990,273 Total awts
$1,108.090
$1.090.546
$ 1,020.172 Current liabilities
$ 70,670
$ 24,201 5 113,404 Noncurrent liabilities 718,846 759,D48 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
46.
Baltimore Gas and Electric Company and Subsidiaries
[
' Note 4. Real Estate Projects and Financial Investments Neal estate projects consist of the following investments held by The Constellation Companies' marketable equity securities L
, the Constellation Companies:
and the investments comprising the nuclear decommissioning At December 31, 1994 1993 trust fund are classified as available for sale. The fair value and (in t/umsandst gross unrealized gains and losses for available for sale securities, Properties under development
$267,483
$249,473 exclusive of $3.2 million of unrealized net losses on securities of Rental and operating properties equity-method investees, are as follows:
(net of accumulated Fair Unrealized Unrealized depreciation) 203,000 237,194 At December 31,19%s Value Gains Loss Other real estate ventures 952 730 (in thousands)
Total
$471,435
$487.397 Marketable equity securities
$ 51,175
$1,276
$1,859 U.S. govemment agency 5,102 113 State munici al bonds 58,034 929 2,599 P
Financial investments consist of the following investments Total
$114.311
$2.205 -
$4.571 held by the Constellation Companies:
At December 31, 1994 1993 fin thousand3)
Contractual maturities of debt securities:
Insurance companies
$ 87,700
$ 83,275
,,, g, Marketabic equity securities 51,175 42,681 Less than 1 year 5 -
Fmanc,al hmned partnerships 48,014 44,903 i
1-5 years 13,855
' Leveraged 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
$64.630 i
Gross realized gains and losses on available for sale securities totaled $1.1 million and $3.1 million, respectively, in 1994. Net realized gains from financial investments totaled $6.5 million in 1993 and $9.8 million in 1992.
E e
Note 5, Regulatory Assets Certain utility expenses and credits normally 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 ities and are recognized in income as the related amounts are and the allowance for equity funds used during construction, included in service rates and recovered from or refunded to offset by unamortized deferred tax rate differentials and deferred customers in utility resenues. The follor.ing table sets forth taxes on deferred ITC These amounts are amortized as the BGE's regulatory assets.
related temporary differences reverse. See Note i for a further Ai Decem/vr 31, 1994 1993 discussion of income taxes.
(in thousam/s)
Deferred fuel costs represent the difference between actual Income taxes recoverable fuel costs and the fuel rate revenues under BGE's fuel clauses J
through future rates
$268,436
$259,856 (see Note 1). Deferred fuel costs are reduced as they are collected Deferred fuel costs 118,591 130,052 from customers.
Deferred nuclear expenditures 90,937 86,726 The underrecovered costs deferred under the fuel clauses were -
Deferred termination 33 fg;jg,g i
benefit costs 79,979 96,793 J
Deferred postemployment At December 31, 1994 1993 4
benefit costs 73,591 62.892 II" '!"*3""d3)
Deferred cost of Electric decommissioning federal Costs deferred.
$152,815
$155,901 uranium enrichment facilities 52,748 49,562-Reserve for possible D:ferred energy conservation disallowance of replacement expenditures 45,534 38,655 energy costs (see Note 13)
(35,000)
(35,000) j Deferred environmental costs 35,015 32,966 Net electric 117,815 120,901 i
Other 8,203 10.623 Gas 776 9,151 Total
$773,034
$76x.125 Total
$118.591
$130.052 l
Baltimm Gas and Electric Company and Subsidiaries 47,
i Deferred nuclear expenditures represent the net unamortized over a 15-year period with 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 amortized over the remaining life of the Calvert ClitTs These costs are being amortized over the contribution period as a Nuclear Power Plant in accordance with orders of the PSC.
cost of fuel.
These expenditures comist 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-amortized 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 investigating leaks in the associated with the conservation programs approved by the PSC.
pressurizer heater sleeves.
Deferred environmental costs represent the estimated costs of Deferred termination benefit costs represent the net unamor-investigating contamination and performing certain remediation tized 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-bing amortized over a five-year period in accordance with rate the remediation procca actions of the PSC.
Electric deferred fuel costs in excess of $72.8 million are Deferred postemployment benefit costs represent the excess of excluded from rate base by (Se PSC for ratemaking purposes.
such costs recognized in accordance with Statements of Financial 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 amortized 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 rate of Deferred cost of decommissioning federal uranium enrich-retum. The income effect of the equity funJs portion of the ment facilities represents the unamortized portion of BGE's carrying charges is being deferred until such amounts are required contributions to a fund for decommissioning and decon-recovered 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 facilities. The Energy Policy Act of 1992 requires domestic Calvert Cliffs Nuclear Power Plant as discussed in Note 13.
utilities to make such contributions, which are generally payable Note G. Pension and Postemployment Benefits Pension Benefits minimum amount required under Internal Revenue Service regu-The Company sponsors several noncontributory defined benefit lations using the projected unit credit cost method. Plan assets at pmion plans, the 'arFest 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 ilPS. The other plans, which are short-term investme nts.
not material in amount, provide supplemental benefits to certain The tables on page 49 set forth the combined funded status of non-employee directors and key employees. Benefits under the the plans and the co'nposition of total net pension cost. At plans are generally based on age, years of service, and compen-December 31,199J and 1993, the accumulated pension oblig-sation levels, ation was greater 11an the fair value of the Pension Plan's assets.
Prior service cmt 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 uverage a portion of which was charged to shareholders' equity.
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.
Baltimore Gas and Elec tric Compcmy and Subsidiaries
- At December 31.
1994 1993 Iin shousands)
Vested benefit obligation
$622,445 5677,069
- Nonvested benefit obligation 8,838 11,359 Accumulated benent obligation 631,283 688,428 Projected benefits related to increase in future compensation levels 82,815 109,161 Projected benefit obligation 714,098 797,589 Plan assets at fair value (614,284)
(605.629)
Projected benefit obligation less plan assets 99,814 191,960 Unrecognized prior service cost (23,863)
(21,252)
Uurecognized net kws (112,546)
(148,450)
Pension !iabili'y adjustment 52,177 58,553 Unamortized net asset from adoption of FASB Statement No. 87 1,586 1.812 Accrued pension liability
$ 17,168
$ 8?.423 Frur I:nded Derrmher 31, 1994 1993 1992
'~
tin thousands)
Components of net pension cost Service cost-beneGts carned during the period
$15,015
$11,645
$11,771 Interest cost on projected benefit obligation 58,723 51,183 47,355 Actual return on plan assets 7,932 (56,225) 0 3,685)
Net amortization and deferral (60,071) 6,591 (12,257)
Total net pension cost 21,599 13,194 13,184 Amount capitalized as construction cost (2,578)
(1,800)
(1,839)
Amount charged to expense
$19.021
$11.394
$11.345 The Company also sponsors a defined contribution savings plan change in the method of accounting for postretirement benefits covering all eligible BGE employees and certain 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 contributions 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, $5.0 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 PRB costs applicable to regulated operations as a result of the Postretirement Benefits adoption of Statement No.106 and to defer the remainder of the The Company sponsors defined benefit postretirement health annualincrease in these costs for inclusion in BGE's next base i
care and life insurance plans which cover substantially all BGE rate proceeding. In acconlance 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 HPS. Benefits under the plans are generally period January through April 1993, net of amounts capitalized as based on age, years of service, and pension benefit levels. The construction cost, has been deferred. This amount, which totaled postretirement benc0: (PRB) plans are unfunded. Substantially
$5.7 million, as well as all amounts to be deferred prior to til 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 witn based on age and years of service. Retiree contributions increase the PSC's Order. This phase-in approach meets the guidelines commensurate with the expected 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 Effective January 1,1993, the Company adopted Statement of costs as a regulatory asset. Accrual-basis PRB costs applicable to Financial Accounting Standards No.106, whEh requires a nonregulated operations are charged to expense.
Sdrimmr Gas and Dectric Company and Subsidiaries 49,
'Y:
}
p s
y
,l s
l:LThe following table sets forth the components of the accumu-
' lated postretirement benefit obligation and a reconciliation of j
> these amounts to the accrued postretirement benefit liability, l
. As December 3/.
1994 1993
+
Life Life llealth Care Insurance-flealth Care ~ Insurance -
t (In thousands) -
Accumulated po,tretirement benefit obligation:
Retirees
$161,134
$45,146
$182,638
$45,461
. Fully eligible active employees.
15,777 101 19,177 839:
j Other active emplayces 44.171 12,597 58,832 15,377 4
Total necumulated postretirement benefit obligation 221,182 57,844.
260,647 61,6771 Unrecognized transition obligation (158,725)
(46,081).
t 179,764)
- (48,641)
(9.072) -
'I Unrecognized net gain (loss) 1,238 (2,141)
(36,675)
. Accrued postretirement benefit liability
$ 63,795
$ 9,622 1 44.208
$ 3.964 -
L
'Ihe following table sets forth th; composition of net post-an accrual method, as of December 31,1993. The liability for' i
retirement benefit cost. Net postretirement benefit cost shown these benefits totaled $48 million and $52 million as of r
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
' Y ar ended December 31, 1994 1993 was deferred.The amounts deferred will be amortized over a (in thousand,;
15-year period beginning in 1998. The adoption of Statement L
~ Net postretirement benefit cost:
No. I12 did not have a material impact on net income.
Service cost-benefits earned during the period
$ 5,035
$ 4,373 Assumptions j
laterest cost on accumulated postretirement The pension and po~ employment benefit liabilities were deter--
y benefit obligation 23,037 :
20,451 mined using the following assumptions.
[
Amortization of transition obligation 11,700 12,021 At necember 31, 1994 1993 Net amortization and deferral 646 Assumptions:
Total net postretirement benefit cost -
40,418 36,845 Discoun' rate.
8.5%
' 7.5%
t Amount capitalized as construction cost (5,773)
. (5,898)
Average increase in -.
.4.5%;
-[
Amount deferred (10,213)
(11.965) future compensation levels 4.0% -
Amount charged to expense
$24,432
$18.982 Expected long-term rate of return on assets 9.0%
9.5%
i Postretirement benefit costs recognized under the pay-as-you-The health care inflation rates for 1994 are assumed to be 9.0%
go method in 1992 totaled $11.7 million, of which $1.9 million was capitalized and the remainder was charged to expense, f r 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 pmvides certain pay continuation payments and respectively. A one percentage point increase in the health care j
inflation rate from the assumed rates would increase the accum-
- health and life insurance benefits to employees of BGE and certain employees of the Constellation Companies and IIPS who ulated postretirement benefit obligation by approximately.
are determined to be disabled under BGE's leng-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 i
k 50.
Baltimarr Gas and Electric Company and Subsidiaries
Note 7. Terminotion Benefits '
= BGE offered 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 t with Statement of Financial Accounting Standards No. 88, consisted of enhanced pension and postretirement benefits. In
" Employers' 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 in 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, which totaled $105.5 million, was PSC authorized BGE to amortize this charge over a five-year recognized in 1993. The $88.3 million portion of 1993 VSERP priod for ratemaking purposes. 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 VSERPin beginning in February 1994, consistent with previous rate actions -
. 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 Information 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 commitinent fees. Borrowings under the lines 1994 1993 1992 Wallar amounts in shousands)
BGE's Commercial Paper Notes Borrowings outstanding at December 31
$ 63,700
$ 11,900 Weighted average interest rate of notes outstanding at December 31
- 6.10%
~%.
3.62%
Unused lines of crer, supporting commercial paper notes at December 31
$148,000 ;
$208,000
$203,000 Maximu n borrowings during the year 187,500 96,900 393,650 Average daily borrowings during the year (a) 74,001 10,322 98.892 Weighted average interest rate for the year (b) 4.83 %
3.28 %
4.79 %
Constellation Companies' Lines of Credit Borrowings outstanding at December 31 Weighted average interest rate of borrowings outstanding at December 31
- Unused lines of credit at December 31
$ 20.000 Maximum borrowings during the year 60,670 Average daily borrowings during the year (a) 31,773 Weighted average interest rate for the year (b) 6.01 %
. (a) The sum ofdollar days ofoutsmnding bonowings divided by the number ofdays in the period.
' (b) Total interest accrued during the period divided by average daily bormwings.
Baltimore Gas and Elvtric Compcmy and Subsidiaries
$1.
I Noto 9. l.ong-Term Debt i
- First Refunding Mortgage Bonds of BGE Long-Term Debt of Constellation Companies Substantially all of the principal properties and franchises owned The mongage 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 flarbor Water Power Corporation, HPS and BNG, Inc.,
notes require periodic payment of principal and interest with are subject to the lien of the mortgage under which BGE's various maturities from September 1995 through July 2009. The outstanding First Refunding Mortgage Bonds have been issued.
$13 million,7.67% mortgage note requires monthly interest t
On August I of each year, BGE is required to pay to the payments and is due October 1,1995. The $6.2 million 7.73%
mortgage trustee an annual sinking fund payment equal to 1% of mortgage note requires quarterly principal and interest payments the largest principal amount of Mortgage Bonds outstanding through March 15,2009.
under the mortgage during the preceding twelve months. Such The unsecured notes outstanding as of December 31,1994
- funds are to be used, as provided in the mortgage, for the mature in accordance with the following schedule:
purchase and retirement by the trustee of Mortgage Bonds of any Ammmr series other than the SM% installment Series of 2002, the 9%%
g,3
,g Series of 1995, the 8.40% Series of 1999, the SM% Series of 8.35%, due August 28,1995
$ 20,000 '
2000, the 8X% Series of 2001, the 7%% Series of 2002, the 6M%
8.71%, due August 28,1996 23,(XX)
Series of'2003, the 6X% Series of 2003, the SM% Series of 2048, 6.19%, due September 9,1996 10,000 the 7M4 Series of 2007, and the 6%% Series of 2008.
8.939, due August 28,1997 52,000 6.654, due September 9,1997 15,000 Other Long Term Debt of BGE 8.23%, due October 15,1997 30fXX)
+
BGE maintains revolving credit agreements ' hat expire at various 7.05%, due April 22,1998 25,0(X) times during 1996 and 1997. Under the terms of the agreements, 7.06%, due September 9,1998 20,000 BGE may, at its option, obtain loans at various interest rates. A 8.48%, due October 15,1998 75,000 commitment fee is paid on the daily average of the unborrowed 7.30%, due April 22,1999 90,000
. portion of the commitment. At December 31,1994, BGE had l
8.73%, due October 15,1999 15,000 no borrowings under these revolving credit agreements and 7.55%, due April 22,2000 -
35,000 had available $125 million of unused capacity under these 7.43%, due September 9,2(XX) 30,000 Total
$440,000 le ium-term Notes Series A mature in February 1996.
The weighted average interest rate for notes outstanding at December 31,1994 is 8.22%,
e Constellatmn Compam.es entered into an unsecured The Medium-term Notes Series B mature at various dates m lung credit agreement on December 9,1994 in the amount -
from July 1998 through September 2006. The weighted average "I $50 milh,on. This agreement matures December 9,1997 and interest rate for notes outstanding at December 31,1994 is will be used to provide hquidity for general corporate purposes.
8.43 %,
As of December 31,1994, the Constellation Companies had no The Medium-term Notes Series C mature at various dates borrowings under this agreement.
from June 1996 through June 2003. The weighted average f
age Intyrest Ratesfor Variable Rate Debt interest rate for notes outstanding at December 31,1994 is g e 7.16%.
The weighted average mterest rates for variable rate debt during 1994 and 1993 were as fonows:
The principal amounts of the SMW Installment Series Mortgage Bonds payable each year are as follows:
1994 1993 BGE Year lin thmands)
"E '*
E'
~
ud n c neolI an 2.80 2.39 1995 through 1997
$ 605 Pet facilities loan 3.02 2.53' 1998 and 1999 690 A
taw rate poHudon connot loan 3J3 32
]
2@0 and 2001 865 2002 6,725 k'n mic development loan 3.00 2.49 Constellation Companies
- Mortgage and construction loans and other collateralized notes 7.27 6.26.
Loans under credit agreements 5.94 52.
Bahimore Gas and Electric Company and Subsidiaries
.w
,y x
~-- -- '
~ +
~
'Q 1O i
, y Aggregate Maturities :
- Constellation I
The combi.ned aggregate' maturities and sinking fund require-Year BGE Companies -
d e
[ ments for all of the Company's long-term borrowings for each of (in t/musands) '
) the next five years are as follows:
1995
$206,063.
. $ ' 56,112 '
1996 71,997-
.65,201 -
l 1997 80,653 125,389 -
1998-553 %
134,973 1999 251,467 116,425 e
Note 10' Redeemablo Preference Stock.
l The 6.95%,1987 Series and the 7,80%',1989 Series are subject The combined aggregate redemption requirements for all 1 to mandatory redemption in their entin ty at par on October 1, series of redeemable preference stock for each of the next five.
- j 1995 and July 1,1997, respectively.
years are as follows:
1*
ne following series are subject to an annual mandatory Year U
L redemption of the number of shares shown below at par (In t/musands)
'I
, j beginning in the year shown below. At BGE's option, an addi-1995
$61,500 -
tional number of shares, not to exceed the same number as are 1996 26,000 4
s mandatory, may be rede:med at par in any year, commencing in 1997 83,000
- the same year in which the mandatory redemption begins. The 1998 33,000/
- 0.25% 1989 Series, the 8.625%,1990 Series, and the 7.85%,
1999
- 33,000 L l
1991 Series listed below are not redeemable except through oper-Jation of a sinking fund-With regard to payment of dividends or assets available in the y
Beg, n, g event of liquidation, preferred stock ranks prior to preference and '
d mm common stock; all issues of preference stock, whether subject to t l
Series Shares Year
- 7.50%,1986 Series 15,000 1992 mandatory redemption or not, rank equally; and all preference 6.75%,1987 Series 15,000 1993 stock ranks prior to common stock..
- 4 8.25%,1989 Series 100.000 -
1995
]
8.625%,- 1990 Series 130,000 1996
'1 7.03 %,1991 Series 70,000 1997 A,
i Note 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 operating leases for office and retail space. These
- and renewal options. Consistent with the regulatory treatment, leases expire over periods ranging from 1 m 22 years, with lease payments for utility operations are charged to expense.
options to renew. De net book value of property under operating Lease expense,' which is comprised primarily of operating leases, leases was $148.8 million at December 31,1994. The future totsled $12,7 million, $13.8 million, and $14.0 million for the minimum rentals to be received under operating leases in effect -.
' years ended 1994,1993, and 1992, respectively, at December 31,1994 are as follows:
l The future minimum lease payments at December 31.1994 Year i
- for long-term noncancelable operating leases are as follows:
jfy,f,,,, ands) rear 1995
$ 13,143 (In ilunaands) 1996 12,233 1995
$ 4,185 -
1997.
11,062
^
4 1996 3,881 1998 9,718' 1997 3,447 '
1999 9,082 1998.
2.971 Thereafter
.'73,693 I
1999 1,409
. Total minimum rentals
$128,931 increafter '
5.347
- Total minimum lease payments
$21.240 '
- &dtirmnr Gas ami Electric C<mymny ami Subsidiaries 53, i
w h
/
i[
f Note 12. Taxes Other Than income Taxes Taxes other than income taxes were as follows:
Year Ended December 31,:
1994 l993 1992' (in thousands) '
~ Real and personal 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 L Total taxes other than income taxes 206,211 202,211 190,339 J Amounts included above charged to accounts other than taxes (6,478)
(7.379)
~ 7.335)
(
- Taxes other than income taxes per Consolidated Statements ofIncome
$199,733
$194.832 -
$183.004 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 pmgram for 1995 and subsequent years. In addition, BGE 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 cenain indebtedness 2001 and 2013. Total payments under these contracts were $69.4, incuned by Safe Harbor Water Power Corporation.The cmount of :
. $68.7, and $60.6 million during 1994,1993, and 1992, respec-such indebtedness totals $35 million, of which $23.3 million repre- :
~ tively. At December 31, M4, the estimated future payments for sents BGE's share 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 a.e as follows:
As of December 31,1994, the total outstanding loans and letters of credit of certain power generation and real estate projects guar-anteed by the Constellation Companies wen: $31.2 million. Also.
Ivar
. the Constellation Companies have agreed to guarantee certain other
- (In shousands) 1995
$ 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 performance guarantees is minimal.
1998 60.699 1%9 60,558 EnvironmentalMatters Thereafter 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 3
electric generating 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 effective January 1,1995, and Phase II of Title IV must be imple-affiliates, joint ventures, and parc.ierships in which they have an mented by 2000. BGE met the requirements of Phase I by interest. As of December 31,1904.the total amount ofinvestment
. installing flue gas desulfurization systems and fuel switching and requirements committed to by the Uonstellation Companies is through unit retirements. BGE is currently examining what actions -
$43.6 million.
will be required in order to comply with Phase II of the Act.
In December,1994, BGE and llPS entered into agreements 11 wever, BGE anticipates that compliance will be attained by with a financial institutvon whereby BGE and llPS can sell on an some combination of fuel switching, flue gas desulfurization, unit -
ongoing basis up to an aggregate of $40 million and $50 million, retirements, or allowance trading.
respectively, of an undivided interest in a designated pool of At this time, plans for complying with NO control require-x customer receivables. Under the tem,3 of the agreements, BGE and ments under Title i of the Act are less cenain because all imple-HPS have limited recourse on the receivables and have recorded a mentation regulations have not yet been finalized by the govem-reserve for enxtit losses. At December 31,1994, BGE and HPS -
ment it is expected that by the year 1999 these regulations will 54, Baltimore Gas and Electric Compcmy and Subsidiaries
. 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 cover result in additional expenditures that are difficult to predict prior to claims of certain nuclear workers. Other non-governmental the iwuance of such regulations. Based on existing and proposed commercial nuclear facilities may also purchase such insurance.
o7one nonattainment regulations, BGE cunently estimates that the Coverage of up to $4(X) 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.
x
$70 million. BGE is currently unable to predict the cost of com-If certain 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.
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 propeny 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-third parties. In addition, a subsidiary of Constellation Holdings, fall of funds at the industry mutual, BGE and all policy holders Inc. has been named as a defendant in a case concerning an alleged could be assessed, with BGE's share being up to $14.3 million.
em ironmentally contaminated site owned and operated by a third if an outage at Calvert Cliffs is caused by an insured physical pany. 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 ClitTs is caused by a singular reasonably possible alternatives. 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 elTect 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 Recm'erability of Electric Fuct Costs options to remove coal tar. Ilow ever, no fonnal legal proceedings By statute, actual electric fuel costs are recoverable so long as the h.n e been instituted. BGE has recognized estimated environmental PSC linds that BGE d monstrates 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 amonization, 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 have not been identified. Cleanup costs in excess of the amounts or not BGE had implemented all reasonable and cost elTective recognized, w hich could be significant in total, carmot presently be maintenance and operating control procedures appropriate for estimated.
preventing the outage. Effective January 1,1987, the PSC autho-rized the establishment of the Generating Unit Performance Nuclear Insurance 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 hase a substantial adverse etTect 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 load the Cahert Cliffs plant would imolve the physical damage to the generating unit. In future fuel rate hearings, actual generating plant, the recoverability of replacement power costs and BGE's performance 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, shoukt signify that BGE maintains various insurance policies for these contingencies.
BGE has complied with the requirements of Maryland law. Failure The 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
^
outage at either of the Calved ClitTs units could exceed the adjusted actual generating perfornmnce versus its performance coverage limits.
targer in determining compliance with the law and the basis for e
in addition in the event of an incident at any commercial possibly imposing a penalty on BGE. Parties to fuel rate hearings nuelcar power 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 disallowance 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 Calvert Cliffs Nuclear Power claims relating to such an incident exceed $200 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 pany claims could be up to $159 million per incident, that cannot estimate the amount of replacement energy costs that could I
would be payable at a rate of $20 million per year.
I Bahimore Gas and Datnc Compmv and SubuJiaries 55, i
L
be challenged or disallowed in future fuel rate proceedings, but remainder 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 returned to senice on May 4, resultant case before the PSC covers BGE's operating performance 1991, remained out of senice 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 November 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 Calvert Cliffs, concluding with the return to Calvert Cliffs plant in 1987 were due to management imprudence senice 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 should be disallowed by the Commission. Total rate proceeding, the PSC found that certain operations and mainte-replacement encr;'y cesociated with the 1987 outages were nance expenses incurred at Calvert ClitTs during the test year approximately $33 million.
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, which was performed during the 1989-1990 Unit 1 otaage 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 performance targets in 1988. People's Counsel alleges that actions which were deficient.
BGE imprudently managed several outages at Calven Cliffs, and The Commission noted in the order that its review and findings BGE estimates that the total replacement energy 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 expenses for purposes of setting base i
On November 14,1991, a Hearing Examiner at the PSC issued rates and not to the responsibility for replacement power costs a proposed Order, which became final on December 17.1991 and associated with the outages at Calvert ClitIs. The PSC stated that concluded that no disallowance was warranted. The Hearing its decision in the base rate case will have no res judicata (binding)
Examiner found that BGE maintained the productive capacity of etTect 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 power 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 suflicient cause to statement regarding no binding etTect, BGE recognizes that the excuse any avoidable failures to maintain productive capacity at views expressed by the PSC make the full recovery of all of the higher levels, replacement energy costs associated with the Unit 1 outage -
During 1989,1990, and 1991, BGE experienced extended doubtful. Therefore, in December 1990, BGE recorded a provision outages at its Calvert ClitTs Nuclear Power Plant. In the Spring of of $35 million against the possible disallowance of such costs.
1989, a leak was discovered around the Unit 2 pressurizer heater BGE cannot detennine whether replacement energy costs may be sleeves during a refueling outage. BGE shut down Unit 1 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 fotmd. However, Unit I was out of senice for the Note 14. Fair Value of Financial Instruments The following table presents the carrying value and fair value of financial instruments included in the Consolidated Balance Sheets.
Ai December 3 /,
1994 1993 Carrying Fair Carrying Fair Amount Value Amount Value (in thousands}
Current assets 5 382,776
$ 382,776
$ 496,919 5 4 %,919 investments and other assets 138,978 137,782 125.046 129,752 Current liabilities 768,932 768,932 443,968 443,968 Capitahration 2,864,432 2,699,103 3,165.644 -
3,303.616 56, Bahimm Gas and Electric Compty and Subsidiaries
i 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, partnership invest-miscellaneous loans receivable of the Constellation Companies.
ments in solar powered energy production facilities, and invest-Financial instruments included in current liabilities represent total ments in stock trusts.
- current liabilities from the balance sheet excluding accrued Financial instruments included in capitalization are long-term vacation costs. The carrying amount of current assets and current debt and redeemable preference stock. The fair value of fixed-liabilities approximates fair value because of the short maturity rate long-term debt and redeemable preference stock is estimated of these instruments.
using quoted market prices w here available or by discounting s
' Investments and other assets include investments in common remaining cash flows at the current market rate. The carrying and preferred securities, which are classified as financial invest-amount of variable-rate long-term debt approximates fair value.
ment 3 in the balance sheet, and the nuclear decommissioning BGE and the Constellation Companies have loan guarantees trust fund. The fair vahie of investments and other assets is based.
totalling $23.3 million and $17.0 million, respectively, at i
on quoted market prices where available, Certain investments December 31,1994 and $26.7 and $36.0 million, respectiwly, at
. with a carrying amount of $70 million at December 31,1994 and December 31,1993 for which it is not practicable to deterraine 1993 are excluded from the amounts shown in investments and fair value. It is not anticipated that these loan guarantees will other assets because it was not practicable to determine their fair need to be funded.
Noto 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, except per share anwants) j Revenues
$767.686
$651,152
$753,878
$610,269
$2.782,985 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 stock 72.114 56,687 116,714 38,180 283,695 J
Earnings per share of common stock 0.49 0.39 0.79 0.26 1.93 1993 Revenues
$701,785
$583,812
$793,968
$661,820
$2,741,385 Income from operations 135,429 106,890 287,519 86,554 616,392 Net income 65,7 %
55,876 157,058 31,136 309,866 Earnings applicable to common stock 55,276 45,300 146.511 20,940 268,027 Earnings per share of common stock 0.38 0.31 1.01 0.14 1.85 Resultsfor thefirst quarter of 1994 reflect a $10.0 million one-time bonus paid to employees in lieu of a generalincrease.
Resultsfor the thini quarter of 1994 reflect the $13.7 million ($11.0 million after-tax) write-off of certain Perrymtm costs (see Note iJ Resultsfi>r the second quarter of 1993 reflect the reversal of the cost of the tennination benefits associated with the 1992 Wluntary Special Early Retirrment Pwgram (see Note 7).
Resultsfor the third qsuirter of 1993 reflect the eJJects of the Omnibus Budget Frconciliation Act of1993.
Resultsfor thefourth quarter of I993 reflect the cost of certain termination benefits (see Note 7).
- 7he sum of the quanerly earnings per share amounts may not equal the totalfor the year due to changes in the average number ofshares outstanding throughout the year Certain prior 9 ear amounts have been reclassified to conform to the current year's pursentation.
j i
l l
Baltimorr Gas and Electric Company and Subsidiaries 57, 7
l'
BGE Boards of Directors
=
Board of Directors J. Owen Cole,65.
Crooke has been a BGE director Eattimore Gas and Electric Company Chairman of the Boani, since 1988 and is a member of the Blue Cross and Blue executive committee.
Christian II, Poindexter, Shield o/Afagland. /nc.;
K
- 56. Chairnum of the g,
Chairman of the trust w.
1ames R. Curtiss, Esq.,
a.
..3 f9 4I, Partner. Binston &
Board and Chief committee, First Y
Etecutive OJ)icer; Afaryland Bancorp.
l 'm Strawn. %shington, D.C.
Baltimore Gas and and First National Bank Elect Cmnpmy
',f of Magland. Baltimore Mr. i.nndexter has sened Blue Cross and Blue Shield of Maryland is Winston & Strawn since as BGE's Chainnan. CEO and Chainnan a heakh insurance provider, and Mr. Cole 1993. A commissioner of of the Board of Constellation iloidings, a was elected as Chainnan in January 1995.
the Nuclear Regulatory Commission from BGE subsidiary, since 1993. Ile was Vice Mr. Cole also serves as chairman of the 1988 to 1993, he has been a BGE director Chairman of the floard from 1989 to 1993, trust committee of First Maryland Bancorp, s nee 1994 and serves on the committees on in 1994, he was elected a director of the a bank holding compmy, and First National nuclear power and workplace diversity.
~
(
newly fonned subsidiary, BGE Ilome Ilank of Maryland since 1994. From 1988 Products & Services. lie has been a BGE to 1994, he served as chairman of the exec-director since 1988 and is a member of the utive committees of the Ikard of Directors Jerome W. Geckle,65, executise committee.
of both companies. Mr. Cole has been a retirrd Chainnan of the ig{
BGE director since 1977 and serves as Board. Pl#I Corporation j'*
- 11. Furlong Italdwin,63, chairman of the audit committee and as a Baltimore V-j Chairman of the Baml member of the committee on management.
Mr. Geckle was and Chief Etecutive Chainnan of PHH Opccr. Meirantile Dan A, Colussy, 63, l
Bankshan s Corporation, Chairnum of the Boant compmy,'from 1979 to 1989. He also
k"'i"" ""J """"E'*'"' "i"'
Balrimore emd Chief L.tecuure At Mercantile Bankshares.
O[/icer. UNC
"'""E*Y to 1988. Now retired, he,s also a director i
a bank holding company, Mr. Baldw.m has Incorporated. Annapoh.s, n.
of BGE's Constellation Holdings been Chaimian since 1984 and C,EO since Magland subsidiary. Mr. Geckle has been a director 1976. lie has also served as Chainnan and CEO of Mercantile Safe Deposit and Tmst Mr. Colussy has served as of BGE since 1980, chairs the committee ident of UNC incorporated. an aviation on management, and serves on the long-Company since 1976. In adJition, he is a suces cangmy, hmn 1984 to 1994, was range strategy committee.
director of BGE's Constellation iloidings elected CEO in 1984, and became subsidiary. A BGE director since 1988, Chainnan in 1989. A BGE director since Martin L Grass,41, Mr. Baldwin is a trember of. he execuu.ve t
1992, Mr. Colussy is a member of the President and Chief comminee and chairs the long-range conunittee on management and cha. irs the Operating Ollieer; strategy committee.
committee on nuclear power.
Rite Aid Corporation.
3
,.p Camp Hill, Pennsylvania &
L.
A Beverly 11. Byron,62,
- "**r
)
Edward A.Crooke,56, Mr.Grassjoined Rite Aid former Congoesswoman.
Pinident and Chhf Corporation, the largest United States House of Operating Ot/icer; retail drug chain in the U.S., in 1978 and Reprnentatives.
B<dtimore Gas and was elected to its Board of Directors in f nenrL Manland f
1982. lie has served as that company's lacctric Compmy After serving seven President and COO since 1989. In addition, Mr. Cnxike has been successive terms as a he is Vice Chairman, Treasurer, and President of BGE..smee Congresswoman from 1978 to 1992, Mrs.
Director of Super Rite Foods, ine., a 1988 and COO since 1992. In addition, he Ilyron was elected to the BGE board m.
Harrisburg, Pennsylvann-based food was elected Chairman of the Board of 1993. A member of the audit committee w hoicsa:er and retailer. Mr. Grass was BGE Ilome Products & S,ervices, a new and the committee on nuclear pmer, she elected to BGE's board effective January 1, subsidiary created in 1994. He also is a also cha. irs the committee on workplace 1995, and is a member of the audit and disersity.
director of Constellation Holdings. Mr.
long-range strategy committees.
$8.
Baltimmr Gas and Electric Compcmy and Subsidiaries
BGE Boards of Directors Freeman A, p
George L Russell, Jr., p*~]
Audit Committee Hrabowski III,44, f
4 Esq.,65, Partnci; Piper [
Pre :ident, Uriversity of
& Marbury, Bahimore l
Comprised of outside directors, this 4
committee recommends an auditing firm, Afary/and. #cdt/more Mr. Russell has been a discusses the scope of the examination with CounO panner at the Baltimore that finn, and ieviews annual financial state-President oPhe law firm of Piper &
ments. Additionally, this committee meets University of Ma vland, Marbury since 1986. A with the manager of BGE's auditing Baltimore County, since 1993, Dr.
>1irector of BGE since 1988, he is a department to ensure adequate intemal lirabowski served as Interim President member of the audit and executive auditing. It invites comments and recom-from 1992 to 1993. Executive Vice
( ommittees.
mendations from the auditing firm President from 1990 to 1992, and Vice concerning the system of internal controls Provost from 1987 to 1990. A director of 3
and accounting procedures.
BGE smcc 1994, he is a member of the 5:, Chairman of
-q audit, executive, and workplace Committee on Nuclear Power 4
ths Boant, B.are diversity committees.
I oramries, Inc., and This committee monitors the performance faibanli Research and safety of the Calvert ClitTs Nuclear Nancy Immpton,52, Gn uf>. Joppa.
Power Plant. The committee confers with Chairinan and Chief ff Afa7Iand BGE management, senior plant manage-
- i E I"""# '
&ccutive Oficer; Mr. Sullivan became the Chainnan of
+
Amcrican 14fc and I
- Y""*
"E' lenhardi Research Group and Waye r
Accident Insurance Lahuories, hair pnulucts companies, in Company of KentucAy-1995 Fonnerly, he was CEO and
"" """ E'* #"
louisville, KentucAy Presinent of Meny-Go-Round Enterprises.
Ms. Lampton has been Chairman and Inc., a speciahy retailing company, from The duties of this committee include CEO of American Life and Accident 1982 to 1994. Mr. Sullivan has been a recommending nominees for directors and Insurance since 1972. She has sersed as a BGE cirector since 1992 and is a member officers. In addition, it makes recommenda-BGE director since 1994 and is on the of the committees on management and tions on renmnemtion arrangenwnts for long-range strategy committee and the long-range strategy.
directors and officers. Comprised of committee on workplace diversity.
directors from outside the company, this committee also considers shareholder i
Changs in Din >ctors recommendations for board nominees George V, McGowan, Effective January 1,1995, Martin L.
67,fonner Chairman of 3
the Bo<m/ and Chief Grass was elected to the Board of Committee on Workplace Diversity Directors, replacing Paul G. Miller, This committee prosides input to Decutive Ot/icer, o
who retired from the Board of Directors Bahimoir Gas and management in setting and achieving Electric Company effective December 31,1994.
employee diversity goals. It provides over-In addition to his sight of implementation of diversity position as BGE Chairman and CEO, Committers of the Board strategies and evaluates results.
from 1988 to 1992, Mr. McGowan ab.o Executive Committee sersed as Chairman of the Board of The executise committee exercises most Long Range Strategy Committee BGE's Constellation lloidings subsidiary.
of the powers of the board in managing This committee oversees development of the A director at BGE smee 1980, he chairs company business betweea meetings of company's long-range stnuegic goals. It the executive committee and is a member the full board. This commutee may not, reviews the appropriateness of these goals and of the committee on nuclear pimer.
however, declare dis idends, authorire appmves presentations to the board regarding stock issues, recommend to shareholders the implementation of significant strategic any action requiring shareholders' initiatives. This committee also review s major approval, amend by law s, or regulatory, environmental, and public policy approve mergers.
issues as well as technological advances that may afTect company operations.
Baltimore Gm and Electric Company and Sukisharies 59,
4
-BGE Boards of Directors.and Officers Corporate Orneers G. Dowell Schwartz, Jr.
Board of Directors mastensore een and Electric Cesapany Vice President, General Services Constelistion Holdings, Inc.
Age: 58 Years of service: 36 -
Christian 11. Poindexter Christian H. Poin. dexter Chairman of the Board and Chief Chainnan of the Board, Constellation Charles W. Shivery Execudve Omcer Vice President, Finance & Accounting lioldings; Chairman of the Board and
. 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 since 1985 President and Chief Operating Oflicer h Mh Age: 56 Years of service: 26 Bruce M. Ambler Vice President, Corporate Affairs Age: 56 Years of service: 26 President and Chief Executive Officer, George C. Creel Constellation 11oldings; member Senior Vice President, Generation "IUC' I989 ~
Stephen E Wood Age: 60 Years of service: 39 Vi hide h% & Sh Age: 42 Years of service: I8 l-l. Furlong Baldwin Thomas E.Brady Chairman of the Board and Chief Vice President, Customer Service Executive Officer, Mercantile Richard M. Bange, Jr.
& Distribution Controller and Assistant Secretary Bankshares Corporation (bank holding Age: 45 Years of service: 25 Age: 50 Years of service: 23 e mpany), Baltimore; member since 1987; serves on audit committee IIerbert D. Coss, Jr.
Lynne 11. Church Edward A.Crooke Treasurer and Assistant Secretary Age: 60 Tears of service: 38 Age: 51 Years of service: 10 President and Chief Operating Officer, Baltimore Gas and Electric Company; Robert E. Denton Thomas E. Ruszin, Jr.
member since 1993 Vice President, Nuclear E.nergy 7
Age: 51 Years of service: 24 Age: 40 Years of service 18 Roger W. Gale President, Washington International Carserlo Doyle Energy Group (energy consulting),
Vice President, Electric Interconnection Changes in Off.,scers Washington, D.C.; new member as of
& Transmission Stephen E Wood, former manager of 1995; serves on audit committee Age: 50 Years of service: 23 Special Customer Projects, was elected to the position of Vice Presiient, Jerome W. Geckle Jon M. Files Marketing & Sales, effective Retired Chairman of the Board PIIII Vice President. Management Services October 1,1994.
Corporation (vehicle, relocation, and Age: 59 Years of service: 37 management services), Baltimore; i
meinber since 1985; chairman of Ronald W. lawman committee on management Vice President, Fossil Energy Age: 50 Years of service: 26 60.
Bahimore Gas and Electric Commmy and Subsidiaries
r i
BGE' Boards of Directors and. Officers' Edgard W. Kay Officers Edward A.Crooke Retired Co-Chairman and Chief ConsteHetion Holdings, Inc.
Chairman of the Board, BGE Home Operating Officer, Ernst & Young Pnxtucts & Services; President and Chief Christian II. Poindexter (certified public accountants),
Operating Officer, Baltimore Chairman of the Board,
- Washington, D.C.; member since 1988; Gas and Electric Company Constellation iloidings, Inc.
clarman of audit committee Christian H. Poindexter Bruce M. Ambler George V. McGowan Chairman of the Board and Chief President and Chief Executive Officer,
- Former Chairman of the Board and Chief Executive Officer, Baltimore Gas and Constellation iloidings. Inc.
Executive Officer, Baltimore Gas and Electric Company Acting President, Constellation Electric Company; member since 1983 Energy, Inc.
William H. Munn Mayo A.Shattuck III President and Chief Executive Officer.
Steven D. Kesler
- President and Chief Operating Officer, BGE Home Products & Services President, Constellation Alex. Brown, Inc. (investment banking and securities brokerage), Baltimore; Changes in Directors member since 1994; serves on committee Randall M. Griffin Effective January 1,1995, William H.
" **""E* *# "'
President, Constellation Real Estate Munn was elected President and Group, Inc.
Chief Executive Officer of BGE Home Bernard C.Trueschler Products & Services. Mr. Munn was the Former Chairman of the Board and James W. Jeffcoat president and owner of Maryland Chief Executive Officer, Baltimore President, Constellation Health Environmental Systems, Inc., a Maryland-Gas and Electnc Company; member Services, Inc.
based company specialir.ing in the since 1983
- installation and service of commemial Robert E. Windham and residential heating, air conditioning, Changes in Directors President, Church Street Station, Inc.
plumbing, and electrical systems. BGE
' Effective January 1,1995, Roger W. Gale purchased MESIin December 1994, was elected to the Board of Directors of Constellation Holdings. Dr. Gale is the founder and Pn sident of the Washington Omcors q
Intemational Energy Group, which Board of Directors
' BGE Home Products & Services, Inc.
1 provides advice, analysis, and tracking to BGE Home Products & Services, k Edward A.'Crooke executives on utility issues.
BGE Home Products & Ser ices was '
Chairman of the Board cmated as a wholly owned subsidiary of Paul G. Miller retired from the Board of Baltimore Gas and Electric Company on W liiam 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.
Baltinwre Gas and Dectric Compmy and Subsidiaries 61,
y av 9 ;
W
?Five-Year: Statistical: Summary.
1994' 1993~
1992:
1991 1990~
/
Common Stock Data -
g" y p"
.. Quarterly Earnings Per Share -
First Quarter '.:
- $.49 '
$ :.38.
$.37
' $.40
$.54 ud L Second Quarter
~.39 -
.31
.20
.38 -
23 '
1s :
' Third Quarter
.79 1.01:
.84
.84
.72 05
. 09).
(
~ Fourth Quarter -
.26
.14 -
.22 ~
I $1.67
$1.40 :
Total '~
~ $1.93
$1.85 :
$1.63 -
' Dividends
' Dividends Declared Per Share -
$1.51
$1.47
$1.43
- $1.40 '
51.40..
. 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
$27H
$24%.
. $22% '
$23M' Low-20M 22X 19%
17X 16%-
Close 224 25%
- 23X-22%
18%
Capital Structure Consolidated..
Long-Term Debt 46.1 %
47.4 %
46.1 %
47.8% '
47.9 %
l Short-Term Debt 1.0 0.2 3.8 4.1 Preferred arid Preference Stock 8.9 9.2 9.8 10.1 10.2 Common Shareholders' Equity
'44.0 43.4
'43.9 38.3
' 37.8 -
l 1 Utility Only 1.ong-Term Debt
' 43.6%
44.5 %
42.9 %
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 earnings per share anunints inay not equal the totalfor the year due to changes in the average number ofshares outstanding thmughout i
she year t
t 3
)
J k
l r
' 6 2.
Baltimour Gas and Electric Company and Subsidiaries
- i 1
a
,en.
y S h areholde r. In form ation conunen Stock Dividends and Price Rangee 1994 1993 Dividend Price -
Dividend Price Declared fligh Low Declared High Low First Quarter
$.37
$ 25%
$ 22%
$.36
$ 26%
$ 22%
Second Quarter
.38 24 %
.20%
.37 26%
23 %
Third Quarter
.38 23 %
20%
.37 27 %
25%
Fourth Quarter
.38 23 %
21 %
.37 26%
23% '
Total
$ 1,51 5 1.47 Dividend Policy Annual Meeting The conunon stock is entitled to dividends when and as declared The annual 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 Harbor Hotel, ture or other agreements on payment of dividends. Holders of 101 West Fayette Street, Baltimore, Maryland.
preferred stock (first) and holders of preference stock (next),
however, are entitled to receive, when and as declared from the Form 1D.K surplus or net profits, cumulative yearly dividends at the fixed 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 are also entitled to receive, when due, the applic-financial statements, after it is filed with the Securities and able preference stock redemption payments before any dividend Exchange Commission in March 1995. Requests should be on the common stock shali be paid or set apart. Dividends have addressed to Charles W. Shivery, Chief Financial Officer been paid on the common >tock 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 stock during 1994 and 1993 in the amounts Auditors chown above.
Coopers & Lybrand L.L.P.
Conunen Stock Dividend Dates Executive Offices Record dates are normally on the 10th of March, June, September, Gas and Electric Building and December. Quarterly dividends are customarily mailed to Charles Center each shareholder on or about the 1st of April, July, October, Baltimore, Maryland 21201 and January.
Mail:
P.O. Box 1475 Baltimore, Maryland 21203-1475 4
Dividend Reinvestment and Stock Purchase Plan The company's Dividend Reinvestment and Stock Purchase. Plan Shareholders' inquiries and Assistance provides an opportunity for holders of the company's common Shareholders desiring assistance with lost or stolen stock stock to acquire additional 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 '
dividends on all or a portion of their shares of common stock services representatives on our toll-free telephone numbers.
and/or make optional cash payments.
The following toll-free telephone numbers are available during our business hours,8:(X) a.m. to 4:45 p.m.:
Stock Trading a mm etmp an Ama (410) 783-5920 The company's common stock, which is traded under the ticker Within Maryland 1 800-492-2861 symbol BGE, is listed on the New York, Chicago, and Pacific Outside of Maryland 1-800-258-(M99 stock exchanges, and has unlisted trading privileges on the Boston, TTY /TDD Hearing Impaired 1-800-492-5539 Cincinnati, and Philadelphia exchanges. As of December 31,1994, there were 81,505 common shareholders of record.
Letters should be addressed to:
Baltimore Gas and Electric Company Transfer Agent and Registrar Shareholder Services liarris Trust and Savings Bank P.O. Box IM2 Chicago, Illinois Baltimore, Maryland 21203-1642 63.
P. O. Box 1475 Baltimore, Maryland 212031475 I
l l
- ~..,
's"
.M
-E A 'A*d g -
0CNea 519ATED.ST' ATE 02tNf3 0F INc0ME (UNAUSITED)-
1hreeMonArEnded SkManAsEndat TnelveMonasEndd i-JuneN June N
' June x 1995 19N 1995 1994 1995'
)pp4,
- n Thousandr, EmeuptPar$Asce Aseemnto Rsvunvas
$ 5 % 627 $ 500,177
$ 1,012,451 _ $ 1,017,325 8 2,121,708
$ 2,184,301 67,968 67,885 220,753 273,071 368,931
~ 448,5'/4 Oes Diverst edbusinesses 69.905 83.091 127.102 128.443 233,814 '
5 24!,s01 Total 642,500 651,153 1.360.306 1.418.839 2,724,453 _ 1 874.627 Exrensus. PruustTH4M Deress7 AnoInca asTAsss
-"_ 1 ".
- and pavehased energy 133,128 120,960 280.582 247,513 575,382 538,094 Gasyes Assadforresale.
29,188 31.*82 110.991 158,507 177,074
, 251,733 Oposati me.
134,593 137,862 266,128 288.001 523.539 598,037 Mainte nace-51,362 43.544 88,243 88,991 164.144 169.644 Divaal klbusinessesaselling,
. 93,746 102,248 166,333 179,230 -
c gv6mi andada' istrative 52,638 68,759 m
Deptoc nicia6d ' mettiastion -_
75,337 67,934 152,015 137,713 310.252 268.358 a
Tesa q hw then Inastia tasan
. _ _45,334
_ 43,734
_ 99,459 96_.529 201664 196,121' e
Total eq penses other than laterest and locom ensN 521,580 514,375__
__1,091.164
_1,119.502 1 119,388 2.201.217 incomein m Operations 120,920
_136,778
_269,142 299,337 605.065-673,410 Orlant im nts -
Allown ce for equity thads used durin8 constr stion 4,832 5.542 10,201 10,616
'21,331
' 17,951 Equiry 1 i earnings of Sefe Erbor Weier Fowas Corporation..
1.108 1.088 2.215 2,178.
' 4,347 -
4,284 Net och rleeone and deductions
_ __ (3 328) _
(405)
(5.938) 302 129 (369)-
Totalol erincome
_ _2.612 6,225 6,478 IL996 25,847 21.866 Income De love Isecrest and Income Tames 123.532 143,003 275.620 312,333 630.912 695.276 lertsanstI onnsa laterest ibarges J
55.333 53.569
' 110.310 105,769 218,889 213,373 i
Cardtalj indInterest,...
(3,683)
(3.010)
(7,167)
(5,811)_ ~
(13,784)
(12,881)
Allowa pe for borrowed fhads used dering constr etio6 (1614)
_(1998)
(5,519)
(5.739) -
(11,545)
(9.697) 7 Net 15tt esteispense.
49,036 47,561 97,624 94,219__
193,560 190,795 -
IacomeBd breincomeTases 74,496 -
95,442 177,996 218.114 437.352 -
504.481 ItconatT4 cas Cuno~t.
7.946
-10.742 4.913 I 23,886 63,793 '
96,237 I
n
. Dcfcno I 17.689 20.033 55.395 49,456 85.218 79,468 Investa rat tas credit adjustments (2,028).
(2.041) _
(4,055) '
(4.081)
(8,166)
(8.271)
_ 23,607
_28,734 56.253 69.261 140.845 167.434 Totalia ometaxes Netlocomi.-
5 0,8159 66,708 121,743 148,853 296.507 337,047 l
Pitfetted bd Preference Stock Divideeds 9,952
_ __10,02_1
_ _ _ _19,904 JO,05.2
' 39,774 40,795 J
Earnia8s/ pplicabletoCoaumonStock 40.937 56.687
$ 101,839 8 128,801
$ 256.733 5 296.252 g
Averags E ares of Chamon stock Onassedina 147,527, 146,947
- 147,527 146,692 147,517 146,183..
EAnninos 'estSnantorconosors 5 tax Utilit ioperations
, $0.25 S0.38
$0.63
' $0.86
$1.58 -
$1.97 Dive bifiedbusinteses 0.03 0.01 0.06 0.02 0.16 0.06__
TT
' ;petshare ofcoannon stock 30.28
$0.39 30.69
$0.88
$1.74 82.03 CONSilLLAfl0N COMPANIES Rey _ _
$ 42.736
$64,282
$76,222
$92,070
$144,493
$167,213 Net tso ine _,,
4,478 1,099 9,322 2,283 20,803
. 8,216 -
Tota!.'
_ _ M of' Period 1.135.008 1,086,711 1,135,008 1,086,711 '
1,135,008 1,086,711 BGB's? ivustment--Ead of Period
' 331.474 307,051 331,474 307,082 331,474 307,082 -
1.,'; ^ '- for Ae ConsseDenien t';37* : door not rdlect consohidsting eliminationsjbr intercongpnogy balancer and svenssetient.
Theinserk Q '" comen$eedhereinrdlectsngpperaionmentsandassimeterofsorneitemssubjectto}lnnia4mseneetatheentenderyear end.
_ L.periode, masch con be large> L" M by wenAer condations, are not necesseri& indientiw ofreadts se be expoenedfor en Rennhs;*.
- "** M**
Ceresh p pr. year assenener new &sen reclanryisd to coqform ao the current year'spresentation.
salten. ore wasaaEtecersecon9mnynas.wd.arta, 1
1 s
O CONS:itlDATED BALANCE SHEETS (UNAUDITED)
June 30, 1995 ypy ASSETS Un Thousands)
Ct*Rarr m ets Cailu nd cash equiva!csts S 27.234
- s. 49,672 Accoi ps rectivable (net of allowance for unecilectibles) 330.587 427,585 Feela acks' 64,285 66,060
~.. ~.
Mater daand lies 150.321 144,855 2,798 2,706 Pnpai f tax'es thanincome taxes 72,930 31,365 Other
.~ ~
648.155 722,243 Total! ortcutarts ~
- ~.-
Im rrs Mtp Omta Assays 477,132 470,913 Real e este projects.
.. ~
329,331 298,006 Powes generationsystems,.
~
Fine [al inatments 206,186 224,771 77,510 62,806 Nuclei r isdoping trust fund
-..~
34.183 34,156 safe 3 ar. W:terPow,rCorporation
-. ~.
12,749 10,839 Sanicu IMagfacilltics Other 58,153 1,162'643 60
-~
Total. avestmmis and other assets.
1,195,244 134 UTTLrrY P mrt Utilitj Plant 7,859,732 7.531.026 Accus 41sted depreciation.
(2.405.132)
(2.212,205)
~-
_5,454,600 5,318.821 Net w ifty pint
~.~.
DETEAAD CHARGE.S 754,457 765,091 Regul tory assets
..=
91 129 70.612 Other 845,,$86 833,703 Total-Merred charges 58,143.585 58.0383i7[~
Total Ass <s.
=.. ~.. -
UAB!1I !ES ANDCAPITAUI.NIlON CLlRRDrr JABASEs Short-erm bonuwings 3 113.500 s 94,800 359,373 45.032 Cumi portions of long. terra debt and preference stock --
128,766 1 R347 Aocoi nts payable-
-.s.~..=
25,955 24,275 Custonar deposits Acen td tases 2,129 3,317
~... - ~ ~
Acen :d int'erest 61,797 61,397
-~
. -. ~.. ~
Divid ods declared 67,487 65,863 Accn td vacatien ecsts _
33.449 37,771 1_6,814 17,886 Other Tot 4 turrent Eabilities.
809,290 64,6os
~ ~.~ -
Dcmtan Cnzarm AND OrMIX DAa:1mES 1,218,083 1,118,778 Defez ed income taxes
-.....~.
~
Defe: ed investment tax cndits
.m 145.409 153,419
--.~
131.218 134,215 Pensi a and postemployment benefits -
. ~ _ _ ~..
~.. - ~.
Dcor sminioning of federal vranium enrichment facilities -..~ -~......
45,637 48,249 Other 52,095 52.464 Total 4ferred cre&ts and other liabilities 1.592,442 1.5W,125
~
CAnTAM AT10N
~
Imto.TE 4 Dest 1,744,385 1.763,599
' First i fundingmortgags bonds
. ~
544,550 544,550 Othe loeg. term debe teng dm debt of Constellation Companies.. ~
-~.
~.---~~~.
566,008 579,409 Unan ortizcd disecent and pierniu:n (16.540)
(18,698)
Curre it portion oflongJterm debt
'- ~ - -
(296,373)
(42,032) 2.542,030
_ _2,626&2E Total ong-tumdebt _
~
Pitfened Stock ' -
59,1R5 59,185 Redrerna bliPmference Stock M 1.000 344,000 Core tt portien 'of redeemable prefennce stock __
(63,000) 0,000)
.--.~
278,000 34 LOOL Totai edeernable prefetence stock Preferend iStockNotSubj'ecttoMandato Redemption.
150,000 150,000
- -.~.
Common 4tAssototav Ect'try -
Corm on stock 1,425,??O 1,414,426
--m Retai; edearnings 1J00,899 1,269,882 (16.521)
(22,093)
Pcuti nliabilityn,4ust:nent_.
. ~..
Not a realized ganglocs) on s'vailable fer. sale securities 2,800 (2.140) 2.712,638
__ 1 660,075 Total :cmmon $!sstenolders' cgalty.-_
Total "aphalization 5,741,853
_6,037 008
~
.. ~
Tota! Un 41; ties and Capkalization 38.143.585 58.6.
Baltimor1 Gas andElectne Company amf Sagianes
CON 81 LCiTE~) CTMECE%TO GF CASH FI.Gws (UNAUCITE3)
StrnfonthrEnded 2%ebeMondaEndaf
- kne3Q, June 30, 1995 1994 1995 199; gn &usands)
CAnn Fix WDton40rtaArmo Acuvmss Nat '-
$121,743
$148,853
$296,507 3331,047 A4un sets to recomes*le to set cash prcmded by operating actrvitics Dep eintionedamortizatice 180,168 161,641 369,591 328,770 Deft ud locome taxes -
$5,440 49,456 8$,262 79,468 tava menttaxcmditadjustinen**
(4,055)
(4,081)
(8,166)
(8,271)
Deft redfuelmsas 19,978 (2.972) 34,410 6,441 Aou ud pensmo and posteinployrpent tacfits.
(11,504)
(53.833) 1,203 (83.976) -
ado reaceformitityfundsshedduringconstmetion -
G0,201)
G0.616)
(21,331)
(17,951)
EqW y in earnings of affiliates and joint ventures (net)
(5,579)
G,697)
G4,500)
(11,652)
CM ps la carnat euests, other than sale of amount aceivable 23,776 36,880 (14,086)
(28,012)
Cfw psIncwnstliabihees,otherthan short. term t~m4-(80,720)
(80,522)
(23,806) 31,421 15 17,672
_ (10,490)_
_ 13,138 OGM Net ci ih psovided by operating activities -_
289,061 260,781 684,594 _
646.423 Cow Fu rsatost Fou,Ncmo Acnvrras Procw is bom issuance of Shos. term borrowings (net) 49.800 94,800 18,700 93,300
- - ~
' n
- . ilebt 10.694 203,018 14,845 706,574 (4) 89,126 Prpi rvace suck Com non stock 83 22,945 11,006 54.191 70,000 Procce a from en}e of ree' ivahtes e
Reacqq sition oflong term de G0,451)
(213.319)
(47,985)
(545,467)
(1,500)
(2.906)
(145,810)
Redera itide'ofprtfetvoce stock Comm n stock dMdinds paid (112.120)
(108.234)
(224.039)
(215,686)
Pnfen dandprefwencestockdividendspeld.
(19.908) 0 9.964)
(39,889)
(41,350)
.(810) 06)
(1.207)
. (6,869)
Other.
Net cal a n' sed in financfng acavities
_ (92,708) _
(22,290)
(201,479)
(11.991)
CAsu Fu wsatominytsTmo Actnmts (176,680)
(227,091)
(432,647)
(502.106) 11til!9 m Monexpenditurm
~. -. - -
Allow ace for equity funds used during construction 10.201 10.616 21,331 17,951 Nac!ci r fuelexpenditures (16,310)
(35,078)
(23,321)
(71.948)
. ~
Defert 4auclearexpenditures-(4,066)
(4,328)
(12,449) 7 Deferi 4 energy conservation capenditures.
(18,869)
(18,661)
(40.647)
(39,507) t Contri iudons to nuclear d~ammhg trust fund (4,890)
(4,890)
(9,780)
,(10,139)
Purch sesofmarketab!ccquitysecurities (6.759)
(31.(T/6)
G7,782)
(58,101)
Sales i f marketable equity securities.
32,169 20.146 52,608 33,122 Othet Lamadatinvestments.
3,869 (676)
(2.985) 27,231 Reala casepmjects (4,473) 25,090 (14,638) 9,012 Paw W. tion syswa-(16.458)
(5,066)
(12.508)
(13.169)
(9.509)
. (2.303)
_(10.856)_
7.3_92_ _
l Other Net en 6 needin investing activines (207,709)
(273,055).
(505,553)
(622,711)
.~
Net Inen se (Decrease),la Cash and Cnsh Equivalents (11,356)
(34,564)
G2,438) 11,721-Ossh and Cash Epivalentset Beginningof Period-38,590 84,236 49,672 '
37.951 Cash and esh Equivalents at End of Period
$ 27,234 5 49.672 3 27,234 8.49.672 OmatC ssFLowlmoaxAnow Cish nid during the year for-i 1st feet (net of amounts capitalized).- _
5 95,233 3 89,395
$190,278
$182,258 Ina metases 5 45,075 5 41,025
$116,973
$131,755 1
i l
Babor8 Gas andElectric Com;uny and Subsidiaries
e UTILITY OPERATINE STATISTICS gg ggg g,gg June 30, June 30, June 30, I17CEE!C 1995 1994 1993 1994 1995 1994 Esytmts ; k Thorzaands)
Raident J ewithhouseheating -
$ 79,760 5 82,340 5 199,37I
$ 225,5W 5 379,535
$ 421,823
<eer 1.22,060 v 27,568 236,481 247,279 515,251 552,364 er. !
201,820 209,508 435,858 472,783 894.786 974,187 Commes 4:1 208,957 213,509 395,583 403,442 845,130 881.026 51,020 54,169 95,355 97,406 203.561 205,229 IMastria 461,797 477,586 926,796 973,631 1,943,477 2,060,442 System a des Imerchai ge sales 37,114 18,607 76,280 33,594 160,713 105,133 Other_-
6,007 3.984 10,097 10,100 19,079
_18.727 Tota!
3 504,918
$ SM177 51.013.173 51,0173 25 52.123J69 52,184302 SAtzs On 1 housands)-.MWH Resideni n!-.mthhouscheating -.
923 935 2,572 2,902 t,,695 5,179 pther,.
u
__1,266 1.302 2,601 1692 5,553 5,869
--total _.
2,189 2,217 5,173 5.594 10.248 11,048 ctxrurm da!. --
2,943 2,991 5,998 6,106 12,244 12,494 IndustriJ ;
1,130 1.210 2.227 1176 4,483 4,096 Sysrern i ales.
6,262 4438 13.398 13,876 26,975 27,638 Interchz ige sales 1.952 803 3'i65 1,389
_8,060 4,575 Tota!.
8.214 7.241 17.163 15.265 35.035 32.213 OAS Rzvimes in 27unaands).
Resideo %-=ith hansehenting.
5 34,499
$ 38,156 5 119,156 5 147,645
$ 194,816 3 235.314
.-ether 6.598 8382 17,369 25,688 31,113 43,733
.-c, al -
41,097 46,538 136,525 173,333 225,929 279,047 (w
41
.--o ;1oding o.iim service 17,613 18,701 61,717 80.637 102,085 129,1%
-6 Livety service 961 139 1,856 776 3,365 1 041 Industri I
.--e2 : lading delivery servies._
1367 2,186 9,439 13,511 16.067 23,801 6 livery service.
4,588 (1,265) 8,364 1.638 16,362 8,099 1.342 1,586 2,852 3,176 5,123 6,340 Othes.
5 67,968 5 67.885 5 220,753 5 273.771 5 368.931 1 448.524 Total SAtts (in 'housznds)--DTM Resideti ial-with househeating -.
5,306 5.235 20,750 22,701 32,905 35,695
' other.
880 1,031 2,583 3,561 4,444 5,903 4atal-6,166 6,266 23,333 26.262 37,349 41,598 Comme clal clading delivery service 3,614 3,320 13.562 14.902 22,371 24,483
.-c
-d livery servke.
1,611 1.949 3.582 3,203 6,870 6,03 9 Industri 1
-c clading delivery service 527 404 2,374 A596 4,189 5,064
-d liveryservice. -
9,816 8,292 17360 14,350 36,847 30,626 Tgta!..
21,954 20,231 60.211 61313 107,626
__107,8_10 j
Utility op anting statistics do not r<ficct c^*Lw!@% eloninatiorts for intacornpany innnsactions.
Certainp Wr.ycar.enounts have been reclasstlied to cortfornt to the currentyear'spresentatfort H E A TIP G/ COOLING DEGREE DAY $ (Colendar.Menth Baals)
He 6g d gree days-- Actual 479 444 A719 3,1%
4,193 5,051 j
-Normal 558 558 3.090 3,090 4.901 4,901
]
Cooling e grec days-Amt 252 319 252.
320 882 972 i
~
~
-Normal 217 217 220 220 804 804 i
ELECTl IC EEMER Afl0N ST Aff sTICS y
Purchased Hydro PowrNetof Nuclear Coc!
Oil
& Gas interchangeSales Total Oy FuelType (%)
1991 44.0 57.1 1.2 2.8 (5.1) 1000 1%
40.7 573 3.7 3.0 (4.7) 100.0 Thousand i of MWH 199 11557 16.266 335 799 (1,459) 28,498 19%
11,945 16,789 1,096 885 (1.392) 29,323 Avenge < :ost of Fuel.
(Ccan erMhnBcs) 199l 4930 149.93 248.84 10732 114.96 1995 54.04 14931 247.87 Baltimon GasandElcetricCompsny,andSub.udiaries
SUPPLE $ ENTAL. FIN ANcI AL STAfisflCS MinMonthsEnded June 30,
?
Vality Conschdated 1995 1994 1995 g994 CDM50UDA1 JD CAMTAu2AT10N
. Img.wr ide9 '
43.2 %
43.6 %
45.1%
463 %
2.2%
1.8%
1.8%
13 %
Short4ss iterrowinp.
PrefeW andpeferencestock 10.5 %
10.5 %
8.9%
8.9%
44.1 %
44.1 %
43.6 %
43.1 %
c'-__._n-+py Rsturn os / verop Common Equity.
9.9%
12.4 %
9.5%
!!J%
RATioorE Afecs(SECMethod) 3.29 3.90 2.91 3.27 Tofixed h c To fixe'd rharges and preferred and primace dividends combined 2.47 2.87 2JO 233 AlCas a 9 of Earnings App'!icable to Common Stock 14.1 %
9.6%
12.8 %
9.3%
32J%
32.9 %
32.2 %
33.2 %
EHective T x Rate c0MMO I STOCK SATA 1hreeMonAtEnded kiveMondu Endai j
June 30, June 30, 1995 1994 1995 1994 i
Ono40N 5 6cxDMDmDS PER $ HARE
--Decla w3.
$.39
$ 38
$1.53 '.
$1.49
$.38 5 J7
$1.52 31.48 i
-PaM..
MAarst V as PrR SHAna I
~ High..
$261/2
$24-3/8
$26-1/2
$271/2
-4ew.
$231/8
$201/2
$20-3/4
$201/2 325
$211/4
$25
$211/4
--Close Shares Oui undmg--End of Period (/> Thousandt) 147.527 14995 147,527 146,995
- Book %!y per Sharo-End of Period
$18J9
$18.10
$18.39
$18.10 inquirits vncernbtg thLt swrursary shotdd be directed to:
CharlesM $Mvery KevinJ.MiRet Baltimore GasandElectric Conpsury WeProa gent, DL,ecwr, P,0.Bae1475 ChinfFim acialOBicer, FinancialPlanning Baltimore. Maryland 21203 andSecte vy (410) 234-5434 (410)234 V511 s.~,e ~ azu c cnn,. ass,w,,u,
1
"~ ~
~
~ ~ ' ~~
~ ]
~
']g T.
m.
Ih:
. Exhibit 3II' Page 1 o?2 -
Internal Cash Flow Projection For Calvert Cliffs Nuclear Power Plant
~ Percentage Ownership in all OperatingL Calvert Cliffs Unit No.1 100.00 %
Nuclear Units Calvert Cliffs Unit No. 2 100.00 % -
' Maximum Total Continger.t
- Liability (000) per NuclearIncident
$159,000 -
Payable at Per Year (000) -
$20,000 Twelve Months Twelve Months,
Ended 6/30/95 Ended 7/31/96 -
Non - Cash Exoenses ($000)
Depreciation and Amortization
$357,818
$387,763 Deferred Income Taxes and Investment Tax Credits 39.809 5.977-Total S397,627
$393,740 :
Percentage of Totr.1 to Maximum.
Total Coutingent Liability Payable Per Year -
1,988.1 %
1,968.7 %.
q
.(
Retained Earninas ($000) 3 Net Income After Taxes.
$296,507 Less Allowance for Funds l
Used During Construction 32,876 Less Dividends paid -
263.928-Total (297)
TotalInternal Cash Flow S397.330
- Percentage of TotalInternal
' Cash Flow Maximum j
Total Contingent Liability Payable Per Year -
1,986.7 %
b
=,
i h
i
..e t
f, j, R m.:
Exhibit III Page 2 of 2 I
h Baltimore Gas and Electric Company -
Underivine Assumptions for Projected Cash Flows (1)
Projected cash flow does not include an estimate of retained earnings. However internally s
generated funds without retained earnings are well in excess of the maximum possible retrospective premiums.
(2)
Depreciation accruals are based on composite straight line rates of 3.26% for electric property other than nuclear and Brandon Shores Power Plant,' 2.80% for nuclear property, 2.75% for Brandon Shores, 3.12% for gas, and 4.02% for common utility property, other than vehicles.
Vehicles are depreciated based on their estimated useful lives.
(3)
Estimates of Federal income taxes and other tax expense are based upon existing tax laws and any known changes thereto.
(4)
Accounting policies are consistent with those in effect June 30,1995.
j
. f J
t e
I i
i ai
n 4i O
Exhibit IV Baltimore Gas and Electric Company Curtailment of Capital Exoenditures Estimated construction expenditures including nuclear fuel, Allowance for Funds Used During Construction, and conservation expenditures for the twelve months ended July 31,1996 are $450 million.
To insure that retrospective premiums under the Price Anderson Act would be available during the aforementioned twelve month period without additional funds from external sources, construction curtailments would affect all construction expenditures rather than impacting a specific project.
)
i
- I