ML20091A535

Baltimore Gas & Electric Co Annual Rept 1991

ML20091A535
Person / Time
Site:	Calvert Cliffs
Issue date:	12/31/1991
From:	Mcgowan G BALTIMORE GAS & ELECTRIC CO.
To:	NRC OFFICE OF INFORMATION RESOURCES MANAGEMENT (IRM)
References
NUDOCS 9203270261
Download: ML20091A535 (56)

Text

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1 4 N ow are n'e diferent? '}l A W lIi began I991 by asking ouncins that <jucstion. Our scarchJbr an answer became afbnnalprogram of qrporate self;anessment. Thivugh thispivgram we began to explore our hiswrical values, lico stood out: our dedication to pivride outstand-ing customer senice Eid,vur contmitment to provide leadenhip in our industry and our commlinity. llor note than ] 75 yean, those ralnes have shaped our vision of thr[uturf. l + Ourfbranost colpontic goalis co'ntinuous impturement. In order to setTe l the btSt interests ofourshareholden, cusion,ters. employces, and communq we want to pofbrm and be recogni:cd as a wor ld-class energT company. The best mty we can achier: that goalis to rea)) inn our t ommitment to customer sarda and leadenhip. That real)irmation is theJbwidation o[ourplanning. 1 In theJbliowing pages we'llshare withyou our vision ofthe '90s-the strategies we beliere willcontinue to set us apart. II c're prepalingjbr the decade to come by building on ourpivudpast. 4 1 e i 9 On the cover.. On the evening of June 11,1816, Rembrandt Peale astonished a crowd gathered in his Batt;more museum by illuminating a rdorn with burnirig gas described as a " ring beset with gems of light." Gas has p,ocloimed the fuel of the future. Less than a year later, Peale went on"to use his stunning gas lamps to light the streets of Baltimore. He began with one larup on a dark corner at Market and Lemmon Streets (now Baltim6re and Holliday), Today, Baltiinore's gems of light are electric and spill into every corner of the city. But a's we look forward to the 21st century, natural gas remains as much a ^, fuel of the future as manufactured gas was in Peale's day. The gas and electric technology we develop today will make our lives more efficient, converient, and + environmentally sound in the future. I h: qw r o. n wwq a ruy ol i i 4., m. <r. I

Highlights O (in md!wns rucpt;><r stair ar sunnu) Percent 1991 1990 Change Common Stock Data Earnings per Share Uuhty operations. S 2.40 S 1.92t 25.0 % { Disersified Activities. .1 l ' .18 (38.9)% Total. $ 2.51 5 2.10 19.5 % Divalends Declared per Share.. S 2.10 S 2.10 Average Shares Outstanding.. 84.1 H2.4 2.1 % licturn on Ascrage Conunun Equity. 9.9 % 8.4% llook \\'alue per Share-Year End.. 525.50 S24.87 - 2.5 % .\\tarlet Pricc per Share-Year End Close.. 344 28 22.3 % i Financial Data llevenues Electric.. 51,994 S1.713 16.5 % Gas. 358 373 (4.1T% Diversified Activities. _ _10 _7._ -.. _~ _102_ 5.0 % Total. S2,459 S2,188 12.4 % Net Inenme. $ 253 $ 213 18.9 % Earnings Applicable to Common Stock.. S 211 $ 173 21.8 % Assets Utility. $6,078 S5,669 7.2 % Diversified. _ l,001_ _ _ l,041 (3.ST<u Total. S7,079 S6.710 5.5 % Utility Construction Espenditures.. S 456 S 535 (14.8)% IIG& E investment in Constellation Companies,. S 280 $ 253 10.9 % Utility Sales Data Electric Sales-megau atthours.. 26.7 25.5 4.8 % Gas Saleswlekatherms.. 101,5 101.1 0.4 % l

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xs& Chairman's Letter to ne incteen ninety-o tep clearly represented a s in the right direction for Despite the our utihty usiness.ur territory,our b deep recession in o ved fmancial performance improhelp of higher 7 over 1990 with therates and record sum mer service lidated earnings w cather. Conso SA1 were 52.51 per share, a ility opera-increase from 1990.Ut 5A8 contributed 52 AO, a i6ed a GeorgeV.McGom over 1900. Divers tions Chairman f the Boa ) 51I a business activities added.line from last year. and Chief Executive O increase o fficer d ined share,a $.07 ec Thehoardof directorsmaintamon tock dhidends at Cliffs r share.This The NRC removed Calv s hiswas the com watchlist.While ti was no annual rate of 52.10 pecutive year of fromits had marks the 82nd consedhiden$ on Cliffsis running well Weomplishments animportant event, trela work at uninterrupted cash several significant accived improvedCalvert Cliffs,as throughou nal to mon shares. ent As grat:fying as the imprmem at the plant:We receassessments from the IIG&E,is geared toent.We our com t want to in the bottomline is,the moslie behind the 6 er Opera-performance Institute f Nuclear Pol ar Regulatory tinuousimprovem w rhow keep gettingbetter,no mat important storiesachieved two maior o i o b ec-tors and the Nuc emission (NRC) goodwe are at <my give ime. dtwo utes.We ChffsNuclear Cliffsway rivesin 1991: Calvett role as Ae Com Calvert for The f act that f 1991 allow Power Plant resume.i. itsof on generation sy outages. Wesafety andhoursident. All successfully planneset plant records operating or much o

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worked i lly our us to reduce substant a lectricity; fuel-backbone producing 32% of our edon Shorts deferred fuelbalance. radiation without alost-time accreRect the and we placedllransenicein Atay. These reco nts case for the esult t Unit 2 into d avoid reliability of these achieveme Cliffsis simple fact that ,nent energy costs as a Calvert two p ants helpe Cliffs l ht problems through a very o way.Since there i doingits job.In February of this year, we Cahert

future, mer.Looking to the ited recog-still underlimit on the t go d o

received some long-awa I'm con 6 dent that we are inmeet the capacity needs nition of the plant's sum

vement, statutory impro shape to of our territory.For the first time in several Calvert years,I can tellyou that N

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l l lll l l l9 0l$flC 6e that pro lll CllClg y p y g ]'JJf j I""u ceeding, y e 4, g hi terms ofother m ju hen it uill be resolwd y(jyand,cn,;f,5UUU,ig U n purchase paas greater opponunides m 1991 earnings reflect electric ra ' ""' "" * er, Over the long mereaws P'9R as u llas the jneffecth e in December e \\ "" don wiH be options that'I"" "d non utility "P"d"Inoiect in 11ar6 e ou ated "ith fir , unless a third party better ed ew e"niplement our being placed 6andon Shom ('s, ""kuMomers' need D19L lt also r flectswhg "e" generating plamconstruction of" " "

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ant to add a w onj ogg t hoice; they don't e us greater e "Ip"w our pun hw 1991, from penn dver, beginning in ogg "I '" dependent pow e, hough, about the relation "Iresixinsihihty, shift the burden Light Company s g sgg% 3 utihties. Through our Ca s ania p s ng back on 199j from a p r projects and o nudear plam. o g g p rspectiv,it w Energy Group, w nadladm 'he kind ofycar i e i ubhc Sen ice 0,gg per dem pow e sen% n asin most import nt projects W"lg M, Maryland authori/ed a M mUh nanonaj lerd. In % er pndum m& ine'ea of w in our ga nerby field as the prim m g streandine and im C Comined m October 199[. Tjus rratn y; ConsteHation's nu e ary fom g pnwe I,"lImerease in annual as res pleawd as I am to we th pay I"E on We strengthened our g eprewnts a o m knt pmver e grow th of hhough the perfm our ou g earm decade, Centr,d Marylard the middle of hi enues' p '"v" yaw m,nket,I'm ""' Constellation su1nidiaries m g-t adhnonalgenerati"E c the responsihiht3 :are that the utihtv bea ppointing, their and uiu as a need qu esti"" "f how to sumk dEapacirv. The

1. h " hy w" provide rdiaWe rs siunarVeconomy Tli i" P""d with th cration has become a f caunously u hen talU e proceed eces_

p ls certain financialinvem Un s particu-c"'"ples issue than it u u% nent pnnluters. Mn n%g, >ecauw " e have m wd m h prewnted b factor into m9 g " F"od for y a non-utility pm, ,severdy depressed stments and the our integrated r n the IMtimore-Washinreal estate plan. On the demand sig our for proiects that mecustomers. We log esource on' unportant in term gton nprov terms area. at conwn ation can plements in technology of timing Imget our needs in' U"" s "Itimate directi s of Conud. mean "U Energy Gro p continued gg Wnbpart) produc on,the uketing c""'e"ation eg role, We are committ d b San ay a ennv u meet those needs, then u ' a.Although its p>91 resda to expand e intn ested. That u AES Corporation. Weas the case with . "" hadhoped e re whdy and to u quimm this w and the orking with "e as caus d ware a e ay in the recoenition e a Ierdop. construct andcontract with them torecendy Iop a comnmniwm e "" " Main projects th em prehenshe u "ppe"as 199A rath re tion trategy. On th ' **eFaw tt coal.fwedpiam in ge at a operate a s er than a as both a utility andan i' neome. Fn le, the opening of he p e sup_ It > still our job as a mihni pan ofour territory, pou" producer, the ndependent t crion business t ower-e 9% sdect the most cost r and variety ofplayers m has -etyectiv a bright future. energ'v business plant ourselv"""""*""s WewiUb e option he current economic slowd j es,as ue uild a are doing with "' means that it will take ow n' o envision. Uarring a repreahu the grow we eat oflast

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Chairman's Letter to Shareholders @ ~ ineteen ninety-one clearly represemed a step in the right direction for our utility business.1)espite the i deep ict ession in our territory, our I f nancial performance impn n ed over 1990 with the help of higher service rates and record sununer w eather. Consolidated earnings 1 N u ere 52.51 per share, a S A1 l increase from IWO. Utility opera-l tions contributed $2 AO, a SA8 ~ increase over two. I)iversiRed l husiness activities added S.!I a share, a S.07 decline from last year. f. . \\ The board of directors maintained the common stock dividends at the I annual rate of $2.10 per share. This George V. McGowan marks th 82nd consecutive y ear of Chairman of the Board and Chie/ Executive Officer uninterrupted cash dividends on our common shares. As gratifying as the improvement Cliffs is running u ell. We had The NRC removed Calvert Cliffs in the bottom line is, the most ses cral signiReant accomplishments from its watch list. While this was important stories lie behind the 6g-at the plant: We received impioved an important event,it was not a sig-ures. We achieved two maior objec-performance assessments from the nal to relax our effm ts. Our work at th es in 1991: Calvert Cliffs Nuclear institute of Nuclear Power Opera-Calvert Cliffs, as throughout Power Plant resumed its role as the tors and the Nuclear Regulatory BG& E, is geared to one goah con-backbone of our generation system, Conunission (NRC). We had two tinuous improvement. We want to producing 32% of our electricity; successfully planned and executed keep getting better, no matter how and we placed Brandon Shores outages. We set plant records for good we are at any given time, Unit 2 i.wo service in Alay. These radiation safety and hours worked The fact that Calvert Cliffs was two plants helped m oid reliability without a lost-time accident. All operating for much of 1991 allowed problems through a s cry hot of these achievements reflect the us to reduce substantially our i sununer. Looking to the future, simple fact that Calvert ChtTs is deferred-fuel balance. The fuel-rate I'm confident that w e are in good doing its job. case for the recovery of replace-shape to meet the capacity needs In Febru,ry of this year, we ment energy costs as a result of the of our territory, received some long-awaited recog-Calvert Cliffs outages of1989 90is 1 1 For the first time in several nition of the plant's improvement. still under way. Since there is no years, I can tell you that Calvert statutory limit on the time allowed t b b tv,,, -. 4--.-.,----..,-4-.---v,-. .,-v--,. ...-_,.r,,-mm_m._.

i "Our strategy is to ensure steady long-term growth by providing consumers with new choices in energyproducts and services. " for that pniceeding, we do not means greater opportunities to our Perryman project in Ilarford know w ben it will be resnived. purchase power. Over the long County, unless a third party better in terms of other rate issues, term, conservation and non-utility meets our astomers' needs. These 1991 carnings reflect electric rate generation will be options that increased options give us greater increases effectis e in December complement our construction of choice; they don't shift the burden - 1990, as w ell as the increase associ-new generating plants. of responsibility, ated with Ilrandon Shores Unit 2 I want to add a word of caution Looking back on 1991 from a being placed in senice in \\tay here, though, about the relationship - corporate perspective, it was, in most 1991. It also reflects our purchase ofindependent power projects and ways, the kind of year i enjoy report-of pow er, beginning in October utilities. Through our Constellat: ion ing We completed a munber of 1991, from Pennsylvania Power & Energy Group, we serve as an inde-important projects, We continued to - I.ight Company's Susquehanna pendent power producer on the streamline and improve our organi-nuclear plant. On the gas side, the national level. In fact, we see the zation. We strengthened our earn-Public Senice Commission of energy field as the primary focus for- -ings. Although the performance of Alaryland authorized a 54 million Constellation's future growth, As - our Constellation subsidiaries as a increase in our gas rates, beginning pleased as I am to see the growth of whole was disappointing, their October 1991. This represents a the independent power market, Pm results do correspond with the reces-1% increase in annual gas revenues. also very aware that the utility bears sionary economy. This is particu-Toward the middle of this the responsibility to provide reliable larly in line with a downturn in decade, Central Maryland will need s: nice. That is why we proceed certain financial investments and the additional generating capacity. The cautiously when talking to indepen-severely depressed real estate market question of how to supply that gen-dent producers. Not every proposal in the llaltimore-Washington area. eration has become a far more presented by a non-utility generator. Alore important in tenus of Constel-l complex issue than it used to be, is good for our customers. We kmk lation's ultimate direction, the -

because we have more options to for projects that meet our needs in -

Energy Group continued to expand, factor into our integrated resource terms of timing, hication, reliability Although its 1991 results were lower plan. On the demand side, and cost. If a third-party producer than we had hoped, this was caused improvements in technology mean can meet those needs, then we're in part by a delay in the recognition that conservation can play a grow-interested. That was the case with -- fincome on certain projects that - o ing role. We are committed to the AES Corporation.We recently will appear as 1992, rather than marketing conservation equipment signed a contract with them to 1991, income. From our perspecth e aggressively and to working with develop, construct, and operate a as both a utility and an independent the state and the community to 300-megawatt coal-fired plant in the power producer, the energy business develop a comprehensive _ northern part of our territory. - has a bright future, conservation strategy. On the sup-It's still our job as a utility to _ The current economic slowdown, ply side, the opening of the power-select the most cost-effective option however, means that it will take - production business to a greater for our customers. We will build a longer for us to realize the growt' number and variety of players plant ourselves, as we are doing with we emision. Ilarring a repeat oflast

i i i l i ~ from the left: "~ ~' Bruce M. Ambler President and Chief Executive Officer, Constellation Holdings, Inc. Christian H. Poindexter, Vice Chairman of the Board . r Edward A. Crc,oke, t President-Utility Operations i 1 much of the worki around us face severe economic problems. In good 4 ti'aes, I ve stressed that we are an important part of our community, .g { and that is do.;bly so in hard times. As a home-grawn company, we fcel a responsibility, not only to provide senice, but to continue the leader-l ~ ' ship and support Alaryland has come to expect from us. summer's record-breaking heat, increased quality of senices and For the near term, our primary i 1902 electric sales uill be fairly flat. customized solutions to special challenge is managing this business [ We are responding to the changing needs. Our marketing division is through a troubled economy. For economy in two ways. On the cost-already identifying new trends, and our managers, that requires making contml side, early last year w e we are developing technologies to hard choices and learning to do began a corporate self-assessment. meet those needs. Our gas business better with less. For all our people, This process refocuses our corpo-will play a big part in our future. it requires an extra measure of ded-rate energies on continuous The Clean Air Act has sparked con-ication, flexibility, and commitment imprm ement in safety and quality sumer interest in natural gas as an to customer senice. I know I of operations and senice-in short, alternative to electricity and as a have the support of everycne at in everything we do. This includes vehicular fuel We are aggressively BG&E as we work through these holding the line against budget promoting our gas business and will difticult economic times to the increases and streamlining our introduce market-based pricing growth we foresce. workforte through attrition and w herever appropriate. Our strategy early retirements. In my mind, is to ensure steady long-term f rp .( f'YN6 continuous improvement is the growth by providing consumers 4' / best way for us to contain costs. with new choices in energy / M$^E .// The other side of cost control is products and senices. // / a search for expanded revenues. We BG& E is a strong, sound com-George V. AlcGowan i see a wide variety of opportunities pany. The conununities we serve, Chainnan oftbe Boant ahead as customers demand the country we live in, and, in fact, and Chic [Evea< rice Of]ker February 18,1992

i Q Cmporate Profile ) altimore Gas and Electric Company is an investor-owned company that combines its core OD. utility business with diversified non-utility operations. As the first gas utility and one of-I the first electric utilities in the United States, we have a long tradition of superior 3enice and reliability Our utility strategy for the future focuses on maintaining both that tradition and our position as one of the lowest-cost producers in the mid-Atlantic region. Our diversified activities, uncler the direction of Constellation Holdmgs, are nesigned to provide meaningful carnings support to the Company while allowing us to take advantage of new business opportunities that use our expertise and experience. Constellation Holdings holds the stock of three companies that are involved in four lines of business: power generation projects, real estate development, senior living and health care, and investments and financial senices. IlNG, Inc., another wholly owned subsidiary of the Company, invests in natural gas reserves and obtains gas from nontraditional sources. The Company and its wholly owned subsidiaries have more than 9,000 employees. -h 1 The BG&E utility service f g area includes Baltimore county <,r City and all or part of MM nine Central Maryland counties. The area served = W@g with ei7c!rkity - .m Terrtto erved with electricity approxi-4e s mates 2,300 square miles i g jm, with 2,528,000 restdents, I~ . 2;3nt with gas while the area served 3 i with gas includes 616 square miles with a 3 population ci 1,910,000. cMty - A Penmylvma ffg -d-/ 2, a t-Virgma Unt. Y

O FinancialReview

• Farning5 Dirmi#cd Business Ariritiss OnJanuary 17,1992,the The Company's earnings per share Earnings fnnu diversi6ed business Company's lloard of Directors for 1991 were S2.51, a sal increase activities, which primarily represent authorized a three-for-tuo emumon over the 1990 level of 52.10. Earn-the operations of Constellation stock split subject to shareholdcr ings are summarized as follou s:

1loidings, Inc. and its subsidiaries approval of an increase in the (collectively, the Constellation authorized number of common 1991 1990 Companies), decreased during shares from 100 million shares to - Utility Operations.., S2 A0 $1.92 1991. This was due to lower earn-175 million shares. If approved at Diversi6ed ings from the financialinvestment the annual meeting of sharehohlers Business Activities... ,11 .18 portfolio and the continued soft-on April 15,1992, shareholders of S2.51 S2.10 ness in the real estate market. In record on April 23,1992, will 1991, the Constellation Companies receive one additional share of recorded a write-dou n of certain common stock for each two shares Di/ity Anancial investments and real estate owned.The stock split is desi ned F Utility earnmgs increased during properties, which resulted in a net to adjust the price of a share of 1991 as a result ofincreased sales loss from current-year operations. BG& E common stock to a level during the 1991 smumer, due to This loss was offset by the effect of that makes it more attractive to a u armer weather as compared to the change in the method of hmad base ofinvestors. 1990, and higher revenues from the accounting for income taxes electric base-rate increases autho-described on page 9. (See page 27 rized by the Public Senice Commis-for more details concerning Con.

• Rate Matters sion of Alaryland (Ataryland stellation Companies earnings.)

In addition to an immediate electric Commission)in December 1990. base-rate increase of $77 million in Wanner weather during the summer annual electric revenues, the Alary-results in more demand for electric- . Common Stock Dividends land Commission, in its order dated ity to power cooling systems. These During 1991, common stock December 17,1990, also authorized factors were partially otiset by dividends were declared at the a base-rate increase wlnn the 640-higher operations and maintenance quarterly rate of $.525 per share, - megawatt tirandon Shores Unit 2 expenses, higher financing costs, and equivalent to the annual rate of was placed into commercial senice. warmer w eather during the $2.10 per share. IlG& E has paid On Alay 28, the Company imple-heating season. a cash dividend in each year mented a 5124 million annual elec-since 1910. tric base-rate increase that provided for a cash return on the investment l l [

O l l l l Utihty Operations IMtimorr Gar and E/crtric Compan,y Interconnection that affords us Central Alaryland enjoys a divent l economy that provides a broad base s access to pooled capacity on favorable terms. s l for our business. To serve its elec-We meet virtually all our cus-a' tric needs, llG& E operates 10 elec-tomers' gas requirements through tric generating plants in Central purchases from pipeline suppliers Mary land, including the Cah ert and natural gas producers. As a sup-Cliffs Nuclear Power Plant, which plement to this supply of natural produces the low est-cost electricity Gas E/crtric Fas, we maintain facilities at three l generated by llG& E. We aho plants in Central Maryland for the maintain shared ownership of three a producer of hydroelectric power. production and storage ofliquified generating facilities in Pennsylva-In addition, we belong to the natural gas and propane. nia: two minemouth plants and Safe Pennsylvania-NewJersey-Maryland Other business includes the sale Ilarbor Water Pou er Corporation, of gas and electric appliances. I l Diversified Activities Conttr//stwn INJings l strength and stability to d The operating compa-y the senior-living and nies in the Constella- - g health-care market. tion group focus on g Teamed with a nation-four maior business ally known provider of lines. Through our health-care services, we j pg,.... ownership position in own five nursing homes j 23 power generation and two retirement projects and involve-Energy and Real Frtate Inrestment, communities, j ment in 20 contracts Environmental Our positions in for operations and investments and finan-maintenance senices, this segment shopping centers to land assemblages cial senices let us blend current of our business is not only produe-will provide a blend of ongoing income with the long-term, ing current income; we are also rentalincome as well as potential capital-appreciation-type projects in gaining valuable experience in the gains on future sales. Our Real our other business lines to produce wholesale power generation mar ket. Estate Group is a so involved in pro-the desired total corporate result. l Our 34 real estate projects are jects associated specifically with the The broadly diversified investment heavily concentrated within the rapidly growing over-65 segment of portfolio is designed to provide mid-Atlantic region. This diversi-our population. Through joint ven-year-to-year core income for all fied portfolio ranging from tures, we have brought our financial Constellation activities. l completed office buildings and l l

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i O Utility Operations and ConsteHation Companies Review

• Utility the Cah ert Cliffs Nuclear Plant, and incentis es in demand-side Ekctriddcs which operated at full power management programs, regulatory I

Although electric sales to customers most of the summer, and the new policy, and program design, moni-I in 1991 rose by 4.7%, this increase Brandon Shores Unit 2.This toring, and evaluation. We have t l represents a surge in usage during 640-megawatt coal-fired unit developed consenation programs last sununer's record-breaking heat. entered senice in Alay on schedule for all customer classes and fded Residential sales rose H.8%, and and within budget. Calvert Cliffs them with the Commission in - commercial and industrial sales performed reliably and safely: Our December for implementation in rose 2.1% OnJuly 23, we set six people there exceeded 5 million 1992. These and future programs new hourly peaks for electricity work-hours without a lont-time will blend with our menu of consumption, finally reaching accident and set a plant record for demand-side options offered under 5,910 megawatts at 6:00 p.m. This radiation safety. Conserve 2000. By the end of the figure surpassed not only ourJuly During the period in 1989-90 year 2000, we expect conservation 1990 peak, but also the peak set when Calvert Cliffs was out of ser-to reduce our summer peak load by four days earlier. vice, we relied heavily on fossi! units more than 750 megawatts. Adjusted for the u cather,1991 built in the early 1940s and '50s. electric sales reveal the effect of the We are now in the process of Gas recession on our business. Overall retiring the oldest of these units, Total gas sales increased less than l sales grew by less than 1% Resi-because it is not cost effective to 1% from 1990, reflecting both the dential sales crew by only 2.2% continue their long-term operation, prevailing economy and mild win-Commercial and industrial sales We retired Riverside Unit 1, ter weather early in 1991. Residen-increased marginally by 0.2% Bar-approximately 60 megaw atts, in tial sales increased 43%, while - ring another summer of record-October 1991. Riverside Units 2,3, commercial and industrial sales breaking weather, we expect only a and 5 (about 200 megawatts total) decreased 1.7% over the short smallincrease in 1992 sales. We will be retired by the end of 1993 as term,'Fas sales wik mirror eco-l are responding to the economic will Units 3 and 4 at Westport. nomic cond;tions, but as the decade i downturn by concentrating on progresses and we pursue new l improving productivity, quality, Consmation markets for gas, we expect and cost control. In April 1991, BG&E signed an revenues will increase, agreement with the Public Senice On the nationalievel, the natu-urneration Commission of Alaryland, Office of ral gas industry is in a period of Our generating and transmission the People's Counsel, and customer ' transition. The Federal Energy systems allowed us to meet last and emironmental groups, estab-Regidatory Commission (FERC) summer's demand comfortably, lishing a collaborative process to has issued a notice of proposed without using our Energy Alanager promote energy conservation. The rtdemaking on gas-industry senice l Program. The two key factors collaborative is addressing a range obligations that we see as adversely j behind that comfort margin were ofissues, including cost recovery affecting the dependability of gas

-l 0 .~ in the plant and the recovery of (FASil 96)," Accounting for The utility's 1992 construction - current annual operating expenses. Income Taxes." This requires a expenditures are currently _ l At the same time, a $58 million change in the method of account-estimated at $525 million,includ-decrease in annrel electric fuel rate ing for income taxes, As a result of ing $25 million in AFC. resenues became effective, reflect-adopting FAS13 96, net income of The m6st significant project in ing estimated fuel savings from the the Constellation Companies the construction program is the - plant's operation. increased by $20 million, or $.23 planned capacity additions at the The Alaryland Commission also per common share. This increase Perryman site. Other electrie. - I authorized a surcharge to electric reflects the reversal of that part of construction projects include the lial ility for future income taxes improvements to llG&E's existing ) base rates beginning on October 1, f 1991, to provide for the recovery of that had been recorded in prior generating plants and to its trans- $51 million of purchased capacity - years at higher tax rates. Changes mission and distribu' ion facilities. costs that began at that time. in the utility's liability for future On September 18, the Alaryland income taxes, as a resuh of this Commission issued an order adopt-change in accounting, did not affect- -

• Financing Matters i

ing a settlement agreement that utility earnings. For a more detailed Utility financing activities during 1 had been fonuulated betueen discussion of FAS!! 96, see Note 1 - 1991 consisted ofissuing $241 mil- - !!G& E and intervening parties, in the notes to consolidated finan- . lion oflong-term debt, $35 million This concluded ilG&E's gas base- . cial statements on page 40.- of redeemable preference stock, rate case filed on April 2,1991. and $32 million of common stockJ Under this agreement, liG&E was During the year, retirements of allowed to increase gas base rates to a utility long-tenn debt totalled $316 mil- - produce an additional $4 million in - Construction Expenditures lion, and $23 million'of pieference annual gas revenues, effective with ' During 1991, the utility's construc-stock us redeemedi service rendered beginning Octo-tion expenditures r.n ounted to - - Dunng 1991, Constellation.- her 1,1991. This represented a 1% $456 million,' including $37 million Iloidings, Inc. privately placed $95 increase in annual gas rev nues. in Allowance for Funds Used _- million of debt with maturities of I-During Construction (AFC). four to six years, and $167 million Construction expenditures for oflong; term debt was repaid. [

• Change in Accounting -

electric facilities were $406 million,1 Financing matters are discussed in During 1991, the Company -and $50 million was spent on. more detail on page 29. adopted Statement of Financial gas facilities. Accounting Standards No. 96 -- 1 I-a.

O l ~ .l Offsettinr these reductions, how-ever, the Company has adopted the ~ ,d ~. Financial Accounting Standards lloard's Statement of Financial ~.;. Accounting No. 96, Accounting for x" income Tates. This nde requires l the reflection of deferred taxes at ~ current tax rates. i @g,. Although 1991 results are .4 a 9.. .c disappointing, they do not affect Constellation s staying power or e a

c long-term potential. Operationally, our businesses performed well, controlling costs and focusing on Constellation's 96 megawatt ACE growth opportunities. We've co-generation project in California clearly identi6ed power production has completed its first year of repatd h.mbudon emupany, as C,onneDan.on s pmuay Mnew commercial operation. Using a cir-culating fluidized-hed boiler to we oppose any regidations that The Energy Group is establishing burn coal, the plant met all of its impede our obligation to serve itself as a nationalleader in that reliability and environmental our customers.

deld. It is continuing a strategy of targets for the year and proved to be a successful investment for

• • "E "*dT "* E Constellation as well as an effi.
• Constellation Companics ment to the development, manage-cient generator of electricity.

From a financial perspective,1991 ment, and operation ofindepen-As a general partner in the ACE was a difficult and disappointing ' year dent power-producing facilities, i l project, Constellation is a partial nue non. epma ng n re cuate, we intend m imM owner of the plant and also j operates ACE through a joint economy has stalled segments of our on to our properties until we can venture with Pyropowei, real estate business, causing us to obtain values that make overal! cro-write down certain real estate pro-nomic sen;e. Ultimately, we plan to service and, therefore, the develop-jects. We have also written down reduce the percentage of our assets ment of the industry. We are certain fmancialinvestments to their in the real estate business. Without concerned that FERC has not current market value. Delays in the question, results reflect the down-j sufficiently considered whether recognition ofincome o i certain turn in the real estate market. its proposal promotes adequate energy projects resulted in a shift of Constellation was designed as a - and reliable gas senice w hile mcome from 1991 m 1992. Taken long-term husiness, however, and l maintaining juo and reasonable together. these factors were the prin. it is prepared to withstand these rates to customers. As a state-cipal reason for the drop in earnings, difficult times.

O Our Visionfor the '90s-Buildingfor the Future he utility industry traces technology revolves around elec-planning Central Alaryland's future f its origins to the tricity generated in large power power supply. Within that context, ,Q 14 h-century desire to plants and natural gas. Tomorrow, we see non-utility generation as a t improve the quality and productiv-it may include dispersed genera-positive tiend. We stand ready to ity oflife. Fulfdiment of that desire tion, solar, fuel cells, photovoltaics, build or buy pouer, based on the is still the role of energy today and and energy management senices. Sest interests of our customers and for the future. Our business plan Our strategy is fundamentah We our Company. Our generation for the '90s is to give our customers are staying ahead of the technologi-planning has always been customer choices to help improve the quabty cal curve and Lecping a careful eye oriented:If a decision makes eco-of life and work. on the marketplace so we can con-nomic sense for our customers, it ilGk E is tndy an energy com-tinue to offer our customers the will make sense for the Company pany. As a combination electric ..d choices they want among the prod-and its shareholders as well. gas utility with broad technological ucts and senices they need. Through our Constellation sub-expertise, we can reach a broad sidiary, we function as an indepen-market with a variety of alterna-

• The Electric Ilusiness dent power producer, building and '

tives. Today, commercial energy A Changing Indusny operating a variety of plants across The electric pou er generation the country. As a utility, we have business is in transition. Two long bought energy and capacity closely related questions highlight when the right opportunities occur. dL the ongoing changes: il'ho willbuild During 1991, w e signed a contract _ \\ power plants in thefuture? and Irbo with AES Corporation, a major \\ can use utility trannnissionfeilitics? independent producer, to build a ju Underlying both these questions is plant for senice later in this M a deeper issue: li krillbear rbe decade. At the same time, we are responsibility for :nsuring a reliable proceeding with plans to build a [ pwer suprir, a responsibility tradition-440-megasatt combined-cycle V albelonging to utilitics? The plant at our Perryman site in the answers to all three questions will northeastern part of our territory. - compact determine the form and function of where load growth has been strong. fluorescent bulbs our industry in the years to come. Ahhough this plant has been chal-like the one above emit the lenged by a co-generator, we are equivalent light of standard incan-descent bulbs but use 75% less & a Genaatar convinced that Perryman presents energy. They also last an average Utilities were once the unques-the most economical option for of 10 times longer than incandes-tioned builders of power plants. our customers. cent bulbs. Over its lifetime, one of Today,imlependent power produc-Utility-Inilt generation offers these new bulbs will save its user about $48 and eliminate the need crs and co-generators are seeking customers the flexibility of tailoring to burn approsmately 500 pounds to supplant our role. BG& E's posi-capacity additions to meet load of coal. tion is clear: We are responsible for requirements. When the _____m___.m.

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Gtg MO-megawatt coal-fired llrandon economical sen ice to our cus- / -f44. g)4 p >e m n Shores lfnit 2 began senice in tomers. Congress is considering h? ~ spring 1991, it gas e our customers lep. lation that would open trans- - B; .g s cost-effective power exactly when mission access to non-utility gener-d

ein, they needed it. To accomplish that ators. As both a utility and an We sell s

goal, u e adjusted the plant's sched-independent producer, u e believe electric P ule m er a period of nearly tu o mientary access is the best u ay to ity used N _,a" i decades, ultimately completine the expand the market without sacrific. during off peak y gg hours--evenings and weeker ds-project within huJget. Independent ing either the reliability of the at a reduced rate to our time-of-use producers, on the other hand, often nation's cleeuical system or the customers because off-peak usage expect to deliver a completed plant best interests of our customers. helps with load management, w hether or not load growth contin. Smart House technology will make e it easy to get the most out of time-ues to warrant the addntnanal (.,onwrnstion-ll. Arc Doing at Right of-use rates. But customers don,t power. That is part of the reason Advances in energy-efficient tech-need futuristic home automation w hy w e resen e the right to build nology male it possible for us to to save money on electricity. When new capacity and u hy, u hen we expand our snecessful demand-side a customer signs up fc.r time of use lates, we instali a computenzed seek to purchase generation, w e management programs mto a com-meter to measure hc,w much choose partners w ho share our : prehensive conservation effort electricity is used and when. e tomer orientation. Our flexible called Conserve 2000. The Mary-power-purchase contract with land Puh ? Senice Commission, Pennsylvania Power & l.ight Com-responding to widespread public expect it to reduce our peak pany epitomires our commitment and govermnental commitment to demand grow th by about 35% to providing ratepa,s ers the low est-conservation, is working with us over the next 15 years. cost source of electricity u hile to compensate BG& E for loss in ensuring reliability. revenues, lly tinding a new solution AirQualin -lii' rein GoodShape to providing a return on invest-Our projection of BG&E's fuel mix ili Faror l'o/untary ment, enlightened repdation will during the '90s calls for 50% coal Transmission Aucss allow us to achieve the promise we We've worked hard in the past to The des elopment of the indepen-see in conservation, meet stringent air quality regtda-dent power market depends on the We are participating in a collah-tions, and, as a result, we are in a answ er to the question of u ho can oration of regidators, environmen-good position to comply with the use utility transmission facilities. tal groups, and customers, working initial requirements of the Clean \\" have auctioned our excess to identify and implement the most Air Act of 1990. Over the long transmission capability in the past. effective conservation programs for ter m, though, we will face addi-We are eager to offer transmission cur ternmry. Although Conserve tienal costs to reduce ;ulfur dioxide service in the future, but only when 2000 is only a part of the total pic-and nitrogen oxide emissions to the it does not interfere with our pri-ture, it will play a vital role in our levels mandated by later stages of mary responsibility to prmide long-term resource planning. We the Clean Air Act. 1 l

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• The Gas Business gas fuel pumps in government fleet increase generation costs, the Clean For many reasons, the time is right yants. Within.hree to four years, Air Act has stimulated growth in for growth in the natural gas busi-we hope to have 20 filling stations out gas business and may also pro-ness. Gas is competitively priced, in service.

y vide marketing opportunities for domestically available, clean burn-The Clean Air Act also makes k our electric business in the f,nn of iog, and efficient. Technological natural gas an attractive fuel for alternatively fueled vehicles. improvements make it safer, easier, electric generation. Our Perryman Through the Electric Power and less expensive to install. And project is designed to burn gas. ily Research Institute, w e are partici-many businesses are converting to the end of this decade we may be pating in research on electric cars. gas equipment to help them satisfy using small, on-site gas-fueled elec-We will ne prepared to offer our environmental regulations. tric generation units to supply indi-r astomers that option should the Since natural gas vehicles emit vidual commercial or industrial automotive industry make electric fewer pollutants than their users or to relieve reliability prob-vehicles available. gasoline-powered counterparts, lems. Last fall, we began testing a they can help fleet owners comply unit in a hotel complex in suburban Nudcar Forcr-It'c're with provisions of the Clean Air llaltimore. The bottom line for gas Connnually Improcing Act of 1990. We expect to build a in the '90s is this: It vastly increases Over the past several years, we have natural gas fueling station in lW2. our options and thosa of our cus-been engaged in a thorough mud-In addition plans call for similar tomers; therefore, w e are actively ernization of our Calvert Cliffs stations in future years. We also expanding our gas business. Nuclear Plant.This assures that base made arrangements with the For the past several year >, w e Calvert Cliffs will remain our core State of Alaryland to place natural have been investing in our infra-producer M electricity well into the structure to make gas a realistic next century. Despite the demands choice for more people. Over the of its physical and organizational next five years we proicct a total overhaul, Calvert Cliffs continue < to sw-home market share oi 20%. p5 be an enormous asset for our cus-WWW By making gas widely available and tomers, saving $5 billion in fuel k marketing it aggressive'y, we expect costs since it began ser ice in the hjfU gas technologies to provi le a mean-k- ingful source of new revenue for mid '70s. j' s the future. This brochure, available to all dar cu.ttomers, O + The Chancing it.arketplace describes the programs ir>cluded in Conserve a T*' As technological advances present 2000, our comprehensive plan to help customers save energy and money and also help protect new and better ways to use energy, the environment. Conserve 2000 is for everyone our business is becoming increas- -individuals, businesses, schools, and institutions' ingy competitive. To grow in such We can all contribute, and we can au save. Rg h

~ ' ,y e ..1. = ~ The growth of the naturaj - .g gas iridustry ptoVides new < ornmen lal opporturyties I - for ugtonvernence and 'v.. s3venth for our < ustomers 4g - and (lear advantages.for e dhe enveronment it(an f uel a power plant. a .V- .s., s [: .r$fj. small M1 gener ation urut Rw ShDdd a VehH le. or an air ( ondl 7 % 'q Ch yf f ( fiQper Under out ( on ,gh . s U-Sh, -Q serve 2000 program. we s ti ~ f k },. J;c ( are working with the 3 Yup %..' ' ny;e.1,..'g &uC state of Maryland in a L-l;n NM d b ,g. mpy pilot p m to evaluate d[ Ii the pet ortnant e of vans M

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+ ,e a Recordheat cornbined { g-with several severe - storms $ 'the sum-' st _._..m 7' mer of 1991 a continu-M ous challenge for our ~~ Distributy Division. In August. just as we fan e '. _. ished restoring servke after storms in our own ~ i ]gj{g~4 = territory, we received ari emergency call from the ~ ~ ~ -A . Edeson institute's Mutual u; Assistance Group. Hurri-geny cane Bob had left 70% &== 1 ?;g 1 3 of the Cape Cod penin- [ ?" " * # l: A th d sula without electrkity. More than 100 SG&E ' voluntech and 50 vehi-cles, including our new 2 mobile command center (below), went to tylp. in. p addfteon to reemburse-ment for our costs from ~ the New England efectrk i companses, we received i valuable expenence 's working in extreme coin-5 F* ' ditions (right) as well as nt. an outpouring of gratF [ g l / tude from the people we C"ll. 9 helped While Hyecane Fi f 1 Bob ms en extraordi. nary event, the perfor-mance of our people was not. We are commit- ~~ ted to supenor customer f ~ wrvke en everything we - . i. do It's our job to listen . g '#; " f58@ [-j c T, to our customers, investi- -w 4? ~ gate their concerns, and resolve them quickly. u; 'k ~ ,:2 , J :, O+' 3 . + y a w 'a f,. s a - U -p. 7 h. .j ^ 9 NA.

O a marketplace, we have to compete mentally sound, our territory is share an obligation to leave the aggresshely for customers by feeling the effects of overnment Company and our community bet-F developing new markets, new prod-budget shortfalls and the economy, ter than they found it. Our employ-ucts, and new services. To focus further accentuating the need for _ ees are active in economic our efforts in that direction, we strict cost controls and greater pro-development efforts, chic organiza-restructured our organization to ductivity in all our activities. tions, the arts, and a wide range of create a marketing division. To ensure that our organization non-pront groups With corporate Conserve 2000 represents the is functioning as effectively as pos-support and enthusiasm behind Orst phase of our long-range mar-sible, we have undertaken a broad-them, our employees are among the keting strategy, For the near term,. based corporate self-assessment community's most active volun-we are promoting energy conserva-effort. Our overall goal is to per-teert. Mar 3 and is our home. Other i tion technology, emphasizing the form and be recognized as a world-businesses may come and go, but buihling shell as well as the appli-class energy company. To reach BG& E is here to stay. ances and equipment. Our promo-that goal we have embarked on a Ser ice and leadership-they're tions offer rebates and incentives process ofincorporating continu. at the heart of our past and central for the design and application of . ous improvement in everything we to our building for the future, energy-efficient technology. By the do. We are examining our mission, mid '90s we will begin to focus on our values, our management sys-markets for new technology, ' tems, and our strategic goals, and including gas-fired heat pumps, we are absolutely clear about our - residential gas air-conditioning corporate priorities. We ask systems, and innovative gas and ourselves these questions:dre we electrical processes, meeting the expcaations ofour As in all our planning, our pri-eustomers-intmialand extemalldir j e mary marketing goal is to anticipate repnmd oftbejs we'rv doing? Can LAt BG&E - jg -- and respond to the needs of our ce think ofa ray to do thejob better? - every employee is customers. Our role is basically the Far more than the answers them. responsible for identifying and resp nding to custome needs-same as it has always been: to offer selves, these questions hold the key and our people are old hands at-new solutions to our customers' to our competitive future. it. Service pins like the one problems.- This process will undoubtedly _ above are prized symbols of = result in new directions' for us. For comrnitment to the Company and its values. a The Corporation instance, we are pfanning more The challenge of planning growth - results-oriented nianagement sys-in a changing industry is only part tems..The quest for improvement is of our story As with every Ameri-a BG&E tradition, as much a part - ~ l. can corporation, we are managing a ' of our value system as our commit-l . business in a recession while plan- _ ment to outstanding customer ser-l ning for the future. While fimda-vice and leadership. Our employees I (.. lo

@ Cmparate and Utility OJJicers n.awnore cas ans nutric on.,pany ana siasisi.uss George V. AkGowan Chainnan of the Board and ChiefErcentive Olliar [ Christian II. Poindester l' ice Chainnan ofthe &>ard Eduard A. Crooke Mr.McGowan President - L'tility Operations P """Tij Thomas F. lirady Y k h, I

• ice Prcsident, Customer Service andcluonnting N

AlichaelJ. Chesser l'ia President, Marketing IIerbert D. Coss,Jr. a m Mr. Poindenter Mr. Cruou Mr. Brady I

• ice President, Electric interevnnection and Transmission George C. Creel l' ice President, Nudcar Energ 9

a George D. England I *ia President, Distribution Jon A1. Files Mr. Chesser Mr. Coss Mr. Creel l' ice Prcrident, Alanagt7nent Serrius G. Dow ell Schwanz,Jr. @? - I *ia President, GeneralSmixs ~ >f ) Charles W. Shivery f I 'ia President, Corponite Finana, Treasurer, and Secretary Joseph A.Tiernan Mr. England Mr. Files Mr. Schwartz i' ice President, Corprate clj/.'iin J. Thomas Wellener ' 'h ? -: y I *ia President, Fossil Energ D Jeffrey L. Davis i \\i ilssistant Secretary Thomas E. Ruszin,Jr. Mr. Shivery Mr. Tiernan Mr. Wellener elsvistant Treasurer 1

@ Constellation Subsidiaries luninse cas aa Iwana:wnpan, aa suwiano z Officers George V. AlcGowan Chairinan of the llaani, Constellation lloidings, Inc. l Ilruce A1. Ambler President and Chieffirecutive Of]L er, Constellation ItolJings, Inc. Mr. McGowan liruce A1. Ambler G~~R .4cting President, ConstclL: tion b.d Estate Givup, Inc. p ~ J. Richard O'Connell i President, The DIS Group, Inc. .a I Terry L. Ogletree President, Cimstellation Enery, Inc. Mr. Ambler Mr. O'Connell Mr. Ogletree p, .L. s President, ConstcIlation l'ealth Sen ices, Inc. r-4 f'. : Steven D. Kesler President, ConstcIlarion inrcstments, Inc. Robert E. Windham i President, Cbwrb Street Station, Inc. Mr. Jeffcoat Mr. Kesler Mr. Windham Constellation Holdings Constellation Real Estate Group Constellation Iloidings provides direction to all ofits This is the parent company of several businesses-operating subsidiaries and furnishes thern with legal, including Church Street Station in Orlando, FloriJa-financial, tax, accounting, and personnel senices. In that operate projects in several real estate categories, addition, decisions on all new investments are The KAf S Group performs development, construction, controlled from Constellation Hohlings. and operational activities, and Constellation IIealth Services, through joint ventures, owns senior-living Constellation Energy and retirement communities, as well as nursing This is the senior member of our Energy and facilities for the elderly. Environmental Group. Under the auspices of Constelletion Energy, the company participates in Constellation investments a number of alternative energy and co-generation Constellation Investments serves as the primary projects producing electricity for sale to other utilities. provider of current income from its investments in The "nergy company is actively involved with developing, various securities, investment partnerships, and arrang ig financing, building, and operating a number of financial-service companies. w holesale power projects throughout the country.

Italtimore Go and IJurru comtwny and salvidiarin llon!Yl Of 5)I1TCtorS 0 e George V. AlcGowan Jerome W. Geckle Chairman of the Board and ChiefErcartire Oficer Chainnan of the Baird (Ret.), PillI Corporation (rchicle, relocation, andfacilities management savias), Baltimore Chn.suan 11. I,om. dexter i 7a Chainnan ofthe Board Paul G. Aliller I1. Furlong Italdwin Ch"I"""" *['h' US"'d* S"P""""P"* SY'7""#' I"#' (d"I "' K Chainnan ofthe Board and ChiefRucutive Opiar,

• """lI'"""'"K, andsala ofnipoannputax), Baltinunr Mercantile Banbhara Corporation (Fank holdinK George G. Radcliffe company), Baltimore Fonidr Cl,ainnan ofd>e Board and ChiefIkecutive Officer, J. Owen Cole The Baltimore lap insurana Company (insurana), Baltimore Chainnan of the Erecutive Commista, First Maryl.md George L. Russell,Jr., l..sq.

Bancorp (bank holding company), Baltimore p,, _ p, ,p g,p,, y,g, Dan A. Colussy

• \\lichael D. Sullivan Chainnan of1he BoarJ,14rsident, and ChicfErecutive Oficer, P"" '"' ""

^ l" "U" SI" " ' ~ UNC incorporated ( ariation sarias), /Innapalh, Md. Entaprhes, Inc. (specialty ortailing),Joppa, Ald. Fdward A. Crooke flernard C. Trueschler President - Utility Operations Chainnan ofthe Eveactive Committer Leslie 11. Disharoon Fonner Chainnan ofthe Board and President, ILarry N. Wells A lonumental Corporation (insurana), Baltimore Chainnan ofthe Board (Retired), AlcConnick l~ Comp.my, Inc. (thiproasring, spices, etc.), Baltimore Sister Nathleen Feeley, S.S.N.D. 14rsident, College ofNotre Dame ofAlaryland (cJacation), Baltimore Comrnittees of the Board Changes in Directors Audit Conunittee Committee on Alanagement During the year, Willard Ilackerman reached norma' Alr. Radcliffe, Chainnan Alr. Geckle, Chairman retirement age and did not stand for reelection at the Alr. Bakhtin Alr. Cole Annual Shareholders Alecting on April 19,1991. Alr. Cole Alr. Disharoon l Alr. Russell Alr. Sullivan EfTectiveJwuary 1,1992; Dan A. Colussy, Chainnan of the Board, President Executive Committee Committee on Nuclear and Chief Executive Officer of UNC, Inc., was elected Alr. Trueschler, Chainnan Power to the Board of Directors of the Baltimore Gas and Alr. Crooke Alr. Wells, Chainnan Electric Company. Alr. Disharoon .Vr. Colussy Alichael D. Sullivan, President and Chief Executive l Sister Feeley Sister Feeley Officer of Alerry-Go-Round Enterprises,Inc., was Alr. AlcGowan Alr. Aliller elected to the Board of Directors of the Baltimore Gas Alt. Poindexter ' Air. Poindexter and Electr c Company. i Alr. Radcliffe i l e

natim,ae na, ara acara a,mpn, and swaaria Constellation Subsidiaries 0 Board of Directors George V. AhGowan Jerome W. Geckle Chainnan of the Board, Constellariun Itoldings, Inc.; Chairman of the Board (Ret.), PillI Corpration Chairman ofthe Boardand ChiefErecutive Of]iirr, gg,,73 g, g,y Baltimore Gac and Ein ~ic Company Former Co-Chainnan and ChiefOperating Of]icer, Bruce 31. Ambler E'nst & Young President and Chi <fIkecutive Oficer, g>aul G. Miller Connellatwn IlotJings, Inc. Chainnan of the Board, Supercomputer Systems, Inc. II, l'urlong 11aldwin Christian 11. l'oinderter Chairman ofthe Boardand ChiefIkecutive Of]icer, l' ice Chainnan ofthe Board, Mercantile Banhbares Corporation Baltimore Gas and Electric Company Leslie H. Dishamon Ilernard C. Trueschler Fonner Chainnan of the Board and Ihrsident, Chairman ofthe Executive Committee, Monumental Corpration Baltimore Gas and E%vic Company Committees of the Board Change in Director Audit Committee Committee on Management During the 3 var, Willard IIackerman reached normal Mr. Kay, Chainnan Mr. Geckle, Chainnan retirement age and did not stand for reelecuan on April 19,1991, Mr. Baldwin Mr. Dishanon Mr. Miller

Q Selected Financial Data sanimm aana narru cannva s a a uria 1991 1990 1989 1988 1987 Okilar.Anuninu m 'I housan6.1%ept Per Wre Anumnto Summary of Operations Total Reunues.. 52,459,493 $2,187,562 - $2,032,009 S1,921,241 51,878,970 Expenses Other Than Interest and income Tnes.. 1,958,038 1,854,181 1,555,424 1,424,291 1,356,848 Imome 12 rom Operatiom. 501,455 333,379 476,585 496,950 522,122 other income Allowance for equit, funds used during construct on.. 23,596 27,086 18,564 16,056 16,870 ()ther mcome. 3,031 9,589 12,364 7,498 7,276 Total other mcome. 26,627 36,675 30,928 23,554 24,146 Income liefore !ater est and Income Taws.. 528,082 370.054 507,513 520,504 546,268 Interest Expense Imerest char ges.. 221,098 200,922 164,369 136,071 129,87) Albu ance for borrowed funds used during tonstruction.. (13,870) (26,266) (14,776) (12,075) (14,069) Ncr intere,t expense.. 207,228 174.656 149,593 123,996 115,802 income ikfore Ircome Taxes.. 320,854 195,398 357.020 396,508 430,466 income Tues. 87.173 19,952 81.629 93 09a 130,368 Income liefore Cumulatise Effect of Changes in Accountmg.\\lethods., 233,681 175,446 276,291 303,412 300,098 Cumulative Effect of Change in the Alethod of Accountmg for Income Taxes.. 19,745 Cumulatise Effect of Change in the Alethod of A counting for Unbilled Rcrenues, Net of Taxes.. 37,754 Net income.. 253,426 213,200 276,291 303.412 300,098 Preferred and Preference Stock Dividends.. 42,746 40,261 32,381 29,475 26,406 Eacmnp Apphcable to Common Stmk.. $ 210,680 $ 172,939 $ 243,910 $ 274.037 $ 273.692 Eartunp Per Share of Common Smck llefore Cumubtis e Effect of Changes in Accounting Alethods., $2,28 51.64 $ 3.05 $)A7 $1.47 Cumularise Effect of Change m the Alethou of Accounting for Income Taws. .23 Cumulante Effect of Change in the Alethod of Accounting for Unbilled Revenues.. .4 Total Earning Per Share of Common Stock $2,51 52,o $ 3.05 $3A7 $3A7 Divide. ids Declared Per Sharu of Common Stock.. $L10 $2.10 $2.075 $1.975 $1.875 Ratio of Earninp to Fiwd Charges. 2A3 1.96 3.12 3 83 4.22 Ratio of Earninp to Fiwd Charges and Preferred and Preference Stocl. Dividends Combined.. 1,93 1.61 2.50 - 3.01 3.29 Financial Statistics at Year End Total Assets. $7,078,847 $6,710,375 55,985,679 $ 5,126.362 $4,780.167 Capitaliation Long-term debt.. $2,390,115 $2,191,844 $2,076,620 $1,769,066 51,707,407 Preferred stock... 59,185 r).l R 5 59,185 59,185 59,185 Redeemable preference stock. 398,500 365,000 322,800 229,600 186M00 Preference m>ck ut subject to mandatory redemption.. I10,000 110,000 110,000 110,000 110,000 Common shareholders' equity. 2,153,306 2,073,158 2,001,188 1,885.245 1,755,368 Total capitaliation..- $5,111,les s4.80i i87 s4.569.793 s4.Os3.006 $3.8ia.360 11ook Value Per Share of Common Snich. $25,50 524.87 524.91 $23.77 S22.24 Number of Common Sharehoklers,. 67,303 68,689 70,393

3,786 75,682 Cenam prkr-yar amounts h,tre been vr?tated tu anjbrm unb thaurrent par's prewntarem

Mantigernent's Disciassion anil Analysis of n.aw~r mi va umn. a,.,p,v,a wa~ Financial Yondition itnd Resnits of Opciatioris 0 i 'I he 6 nano.d u n;hnon and rnula of operanons of Itainmore Gas I'mancial Data, anJ Utihiv oper iting Statnten suunns of this Tnd I lP4 tr al ( iHnp.un' (h( d 11) illhl huhs hluf trs (t ollreint Iy, die Mntial Nep ut. l' actors sihnifn aftt}y illfnting f esults of tepCraa Congaay) are wt hirt's m the Conv.hdats d I m mdal Statemenn. tions, htlunhty amt opital enourre., are dncounl behm. Notn to Consohdad I manual Stau ments (Notto. $det tnl ] .................................................................................................................................a. Results of Operations l'arnings offset b higher opeiatiom and mamtenance npenso and higher 'Ibe Com;unybomohdated a inp pn share for IWI wcre 3 %231, w he h reprnents an mortaw of 5.41 from the 1990lnd of fmanang to to The deataw in utility carnmp during 1990 a pri. %2.10. lhe canunp pu share are sununanred av follows. marily atinhutable to hightr operatmm and maintenance openws. g993 iwo 1989 particularly at the Cahert Chih Nudear Power Plant, higher he IWO w mter ih.e to 6n.mcing cous, and 'ower sal

• ir 3 car. Watmer u cathu wannu wcather as corupgrco,n e +ing t Unhtv bemnew t-4 Curient gar operanom 52.40 $1Jl 52.HI t

Pon nu.n for pmdde dunny the winter touh6 m im deni ud for dntody and yas to thvilow ante of replattment fud heating sy uum. In adihtion, the deucase in 1990 reHerts entrev tostqwc Note 1 O. t?h) int"4""I"^h fh'm the pun base of addnional gennannpapadty Cumuhore effect of (hange m and Imni low er saln of high udtage tramnuwinn ca uhty. the methen! of,u u,unnny Larninp from utihty opnanons are affeued by t ie regulation for unhdiniinenon (see Note h.. .46 "f IK40 rd!" by the Maryland Commiwinn and le the ofen on sain of economic and wather tomhtiom. During 1Wl, deteriorat- .I oial utihn husmnt. 2.40 1.92 241-i ninomic onhirn in the Companyi servit e terntory ham Dn cru6< d buunn, actmon ro!utal the grow th in win, and operanom and maintenance Cmrent-ar operanom.. (.12) .lk 24 npenwu h;n e (ominued to inucaw alue In ch provided for in the Cumulatne oftect of(h ngt in Dct embu lWO base rete innease. licurrer : cronomic comhtiom the mohod of atn.unnny for in the Companyi senice terntory routinue, dectric and gas salo m.ome t.nn (see Nuc 1). .23 grow th will aho lie veduced in IW2. The poor eninomic chnute Total dn ersi6ni bounni, artwinn.. .I1 .lH .24 Ondudmg m+nue.h 4rtfalk at the state and local leveh) couhl inWt die Csunpany s aMy to obtain timely rate rehef and cuy ~Iotal" $2.51 %2.10 $ to, ~ cauw 1994 earnings to dedin7 from 1WI In eh. In nahtion, thue Ut hty carmn ""' C""*""T '""*I I"'D'.oe casn pendmg hefore the Maryland l highn rnenun (p mocased donng 1991 primanh as a roult of n.m the electnc haw ate mercas authonied hv Conunswinn. au cunnt ui Notn I and 11. w hich could img.act the Pubhc sen at Commisuon of Maryland (Maryland Commh.' f"'"P F'^" Cd"""P' Lan- ,m dn en-y hounew aonnus uhkh pnmady uun)in Dnember IWO,md l" creased salo during the Phl ununer due to uanner ucather as compared tu the pr: a srar. '"{""' ?"""'" b,"nuellauon llohhnp,lne and its

1. "." 'I ' d"' b.""" O """ I ' ""Pd

• N'"**d F

Warmer siather dunny the sanunct rnuln t i more dem.'md for d""9" ' " reasons for & deneawun bn u6nt 'I dectnory to fuel o ohng syuctm. Thew in rasn wcre paroally boune a on earninp are disemsed on page 27 IlG&I:. Utility Itn enun and Sales I:!ccine revenon mcreasnt durin~ IWI and IWO as a rnuh of the gnm th in t he number of ruuomen in each dass. Thew increasn folhm ing f x ton: were partially offset by decreawd usage of dectricity due to less gy9: pm favorable economic conditions. In addition, sales to large commer-On wn.u cial and indmtrial emtomen during IW1 redect lower sa es vol-l Changn in sale

• u..umn to castomers..

S 59.0 5 (5.0) umn to the CompanyilarFest cuura er,liethlehem Sted, due to increa cJ baw ratn. 176.4 3 u, a lengthy planned outage to improvo perations at its hot strip miH. Inneasnl fud ratn.. 3 H.S ~ 1333 Sain to residential customers in 1990 re0cct the negative effects of Sain to customers., 273.9 3527 - w anna w inter u cather as compared to 1989, partial!y offset br cmtomen tede t growth m the number of custome gmwe in e numbu quuoma,. Saln uninan unnmacia Changn in other rnenun.. H.2 3.2 Total increasn H rn enun. 52H2.1 $16 U dene,ne in sain to large conuncrei.,1 and industrial customers in 1WO re0ccts inn er sted production by llethlehem Sted, w hich 1 he thangn i elxtric ule, w'.umes to cmtomers w ere as f<dhms completnl a planned maintenance outage at its I lllast furnace 1991 IWo during 1990.

b. aw rate revenues increawd in IW1 as a result It 38( ~

d.A5 Reudential., """"'" ion's Decemba Nue ordn w his h authorned an Nmall commeraal-4.4 4.1 munediate cieune baw nte inneaw of S;a, nullion, a S124 million Latte cmnmercial aint mdastnal.. 1.7 (23) Tot'aL 4.7 (lJ) bC "i""#d? to provide rate re.ognition for ilG&L s invest. rnent and operatmg expensn at Ilrandon Shores Unit 2 effecure i l'he mereasn in ules during IW1 redeet the positive effects of .ith that Unit's initial conunercial operation in May 1991, and a w anner weather dunng the 1991 sununer as comparnt to PM) and S53 milhon surcharge to base ratn effective in October 1991 to l l v--v,r-c m e<1y-,+y +m-t e--+-=---m-=- =-e -r --+c '-+m+-- is-.-t- -*e- --r-a-r --se-e-et--w-- --pv-r-t ee-.+,= - - *, = * +, - s-v '=*v-, v-

0 Mnmor G ts,nd fir tnc Cmp 9 send kkharun 4 tronit u rtam puuhased iaiutn, tharyn. Iwirawd I.aw rate The i hangn in gas saln subunn t ere as followe eninun lo. IVv.enctt the A1artland Commbsion's llecember gygg~ ~ - - - j vg, 1989 n.te order, w hit h authoritni a U13 nulhon elednr base tate Rnidential_ - '4 A 0 2M, me n$st, arul a $10 nulhon sun harp, clin m e June PrAl thrEugh '""dII C""""C'"dk - - 0.2 00M Alar 1991, to uoni r a ponmn of purt hued upauty charfcv .I;d'FC (""""C"idI dnd industrial. I (1.N) (6A) l'leitnc baw tate e.,enun are npected to mutaw m IW na "* dk-OA (R7) rnuh of the tomaming effects of the electric hsw rate inuenes wl., h became < tiertne m IWI. .lhe inacawd sain to resiilential and small conuneniat on-The inneaws m futi rate rettnan for both penuls inuhul '""'C" w at aurdentable to coldn w rather during the 1991 winter fmm the opaanon of the eletuit fuel rate 6,nnula. (See Notn 1 and i1 ) Inocawd fuel tate stunun m IW1 rnuhul fnim higher as coniluted to IVR Colder wegther during the winter rnuhs in uln schonn, turtiall) of fut h) a reduction in the fuel eate unleted more deniand for gas to fuel beaung synons. lhe decreaw in saln in the Alaryland Conunis,n in Alay 1991 to rt0crt $5H nuthon of '" layge conunuual and induunal moinen, w as sunbutahic pny ripene.1 annual futl unt uvmps rnulting from the ounmernal nunty to tow n mage per cmtomer due to len f.norable economic operat on of lirandon Shorn Umt 2. 't he inucase in fuel rate rev-comhtinnt in adotuin, a deocaw in the toluinn of ste;el procnwd enon m 19u0 ups due to a more costly twenty four month genera-by lietflehan Steel resulted from a pFannni outare to tmpn ve non mis reun-tnlin the fuel rate forn'mla as nonpared m the pnor opnauons at us hot strip mill during 1991. Saln to rnalenual and ""dU """'""dI C*'"'nen m 1990 dureawd as a rnuit of the year. lilectric futi rate en enon are npected to deneaw during IW2 as a rnuh of a continumg los omth generation mis due to "#F"*"'c efftau Iw annu unthu during the wjntu as coinpared the opnation of both umts at the Cahcri Chih Noticar Power to 19R ihe dntcase in uln tolarp n nunen,41 and mdunnal Plant, the eenuimng ifiuts of the Atav 1991 fuel rate reduction, mmun$ during IWO re0cds town stu leoduction by i and the npiratinu in (ictohn IW1 of's sunharge to the electric BetMeheni Med and denrased ut heation of dehvery service f uel rue by certain omtomen.. i llaw rate tn enon increawd in 1991 as a rnuh of a $4 million Gn in mun deneawd compared to the rnpeake prior years a a n,uh of the folhming faaort gas haw rate inunw suthonred by the Maryland Conumulon effenn e Odohn I, lW)Mhc denn.a d haw rate revenun in - 1991 1990 ~ dn wi.nb 1990 redeet the Maryland ConunissionN 1)ecember 1989 rate Chanen in saln volumn. $ 5.6 $(ILS) ordet uhkh lownnlluw rain by $1.5 nullion, The temaining Changn in base ratn._ 1J 0.1) eH et of the Octohn 1991 gas haw rate merene wdl act to increase 1)cueen in p cost adiusunento. (20.I) (21.6) I"s haw rate tevenues in 1992. (2.0). _ _ 0.2) The dn reasn in gas emt adjmtments in each year rnuhn) from 1)cueen m other revenun.. ( -. - - the opnaion of the purchasni go ad;munent dame (See Note 1). ,1,otal deu een in to enun. )(15.2) SO K4) In Whiom 6 dm.es Wh p racet a senlement of certam take-or pay iuon with IlG&E's principal gas pipchne supphers Tale or-pay owts refunded in llGA E are paswd on to emtomets through the purchawd gas adjustment clauw, llGA1: Utility Ogwrating 1%penses llectric fuel and purthned energ) npeme w n as followt lastal most of 19W. Calvert Chffs Unit 2 w ent out of senice on 1993 19w 1939 Manh 1H, IW9, remained out of senice throughout the remainder ~ listgei ~~ ~ of 1989 and all of 1990, and retumni to senice on May 4,1991. Anuahmto. _ $492.6 $6R2 $M6.1 Cah ert Chth Unit I went out of wn ke on May 6,1989, continued Net reemerudeferral) of cmn out of wnice for the remaindn of that vrar, and we in operation under eleoric fuel rate for omy 80 days in 1990. In that nuclear generation represents ths dauw (we Note 1).. 105.6 (107.N) (23 H.1) Isnt ont power generated by !!G&E, outagn at the Caher? Chih Total npenw. U55.2'~$5iTgj dant he a subuanM cRed on fuel rows 6n fme I h As dacussed in Note i1 during 1990 BG&la reem ded a provi-sion o inEon for $e powale dkallowance of cenain replace- 'the decicaw in actual electric fuel and purchawd energy emts _ during 1991 u n d'e pomanly to a los costly generation mk as a inent enngnous maated with the enendal outagn at the ' P'd"I' Cdk"u"rchawd pu expense was as followe rnuh ofincreawd output from the operation of the Calvert Chff I Nuctee Pou er Plant, the imtial conunerci:d opnation of ilrandon Shorn Unit 2, and the amonencement of the Pennsylvania Power _1991,_193L1989_ and 1.ight Energy and Capanty Purchaw Agreement. The increase tla %Ilaw in actual electric fuel md purchued energy onts in 1990 was due Actual costs...._..... -.. $1H5.1 $1Hl.1 $23L9 - primarily to a mme costly gennation mh and the purchase of addi. Net renwery (defural) of costs tional gent cating capaciw to rect ilGA E% requirementa under the under punhawd gas adjuoment Penmyleania-New.lerwi-Mayland Interconnection Agreement. dauw (see Note 1L ' O.6) 19.7 (10A) All of thne factors amw n a inuh of the extended maintenance Total apense. $1Hl.5 $200.H S!2L5 and repair outages at the Cah nt Cliffs Nudear Power Plant, w hh h e

Mtwwe Gumi!Joou Omyon ed hulm1 won 0 The mcreaw in attual punhawd p.o or.ts for IW1 refind higher in eh of dept eciable phnt in s nice, including 11randon mtreamt output Jue to the colder ucathe r dunny the 1991 winter $ horn Unit 2, w hk h bepn commercial operation in May 19V1. n compared to Uno, u hde the darcaw in 19W tc0c(ts lou er out-Deprniatum opeme for 1991 and 1990 sho reflects annual put due to the u anm r unther donng the 199n wmter ci tompared increasn of $12 milhon and $2.9 million in nuclear decommiu to I W 9 wonmg atoruah as authorind by the Mar 3 and Commiwion in in l Operatmm and inaintenam e ny nsn meteamt in both ean December 1990 and I)ecetnber 1989 rate orden, ropectively. 3 due pnmanl to higher tosts at the Cah4 rt Chffs Nuclear Power hn other than innnne taxn increawd in 1991 and 1990 - 3 Plant n a anult of ugnifwant openditures to uppade the plant due pnmarily to hlgher property, pubhe senice company franchke, eipnpment and pra eduru to the high standanh inputed at newer and payroll tato attributable to increasni property aswwments nutlear faohnn The "'9' incn-ase aho reDetts higher payroll and utihty revenues, and u agn,inpectively. fringe bendn untt 1 he Company antinp,tn that o;w+ations a.nl ltidation affects the Company thnmph increased operating n-m.nmenance t spemn wdl inel offin 1W1. Increawd emis awoci-twnws and higher replacement u. for utihty plant asset <,. Although ated wnh the commercial operation of lirandon Shurn (Jnit 2 and the effects ofinflation can be mitigated thrwgh timely rate retirf, the higher.aalth ute tmn are npnted to be offset by bror payroll regulatory pnitew imp nn a time lag during which increawd emts ontt The npceted decrene m p.tyroll cosa reOnts a Company-may not tw renweredflhh regulatory lag is attributable in part to rate wide objectn e to rntrain growth in operating expenses by means rdief being based on past onts rather than prokcted c sis. It has been of budget hmnations, attntion, and planned wartfor e reductions the Mar 3land Connms+ ion's practice to pennit rectnery of the ont of us a rewh of the implementauon of a Voluntary Special1:ady replacing plant awers, together with the opponunity to cam a faie Retirement Program (we Note 9). return thereon,leginning at the time of rep;acement. Deprtuation npenw increawd in both can as a rnuit of 3 Dhcruified lludnns Activitin I:amings Earnmp per s ase (nm, dn eniDed bminni, acinitin were as follow s-tially all of which sulnequently were sold. Thh write-down was 1991 Iwo 1989 based on the Comtellanon Campaniev evaluation that the marLet Dimyfied budnns actmties value of these secuntin fpredominantly financial senices compa. Pow er generanon syvemu $ 05 $.10 $.06 nics) w ouhi not recover to their emt in ek in the near tenu. Invest. l'inancial im nunentu .01 .12 .16 ment earninp also w cre lower in 1991 due to a $1.1 million charp Real estate and senmr on twu financial hmited partnerships (banking and financial senicn) 4 ining facihtin.. (.16) (01) .03 that u ere adimted to refleet market value w ben the partnenhips Odwr. (.02) (.01) _ (.033 u cre reclassified fnun lonF-term to shon tenn invntments in antic. ipauon of np anon of their tenm during the next twehe months. Current a car operatiom. (,12) .lN 24 Cumulatke effect of ch mge in Ingunent eanunp uere funher reduced due to the realhication of the im estnytnt portfidio to em{ie s ic of the un;nunent pon hasite more hqmd but lower ,ld-the method of amn.nting for e ing secunun and a dnime in t olio mmme taxn(see Note 1)- .23 following the sale of selcaed assets to pmvide hymdity for ongoing Total dn enired bminns activities- $ 11 $.18 $.24 acthities of the C<mstellation Compamn. These decreaso vrre off-set somew hat by improved perfonnance in cenain financial limited Earninp per share from the Coristellanon Companin decre sed partnenhips 'lk perfonnance of the Constellation Companiev during IW1 dm 4 abwnee of tax credits fram new powe r Fener. portfolio of financial im esunents was advencly affected in 1990 by ation projects, lower earnmp fmm the financial investment portfohn, the troubled banking and tinancial senices industries, offset some-and the mntinued sottnns m the real estate market, as discuised in what by the perfonnance in other parts of the diversified portf<dio. detail below. The Comtellation Companier real estate deuhipment businns - The Comtellation Companin' pim er generation systems bminns includes land under developmeet, office buikhnp, retail pmjecac includes the doclopment, ownership, management, and operation of commercial proiccts, an entertainment, dining end setail complex in whoinale gxmcr generating proicctsin uhich the Constellation _ Orlando, I'lorida, and a mixed-me planned unit development in Companies hohl ownenhip interests, as well as providing servicn to A me Anmdel County, Maryland. The maiority of these projects are power generation projects under operation and maintenance con. in _the llaltimore-Washington corridor and have been adversely tracts. Earninp froin the Comtellation Companiet power genera. affected by the depte sed real estate and camomic matten, resuh-non bminess decreased during 1991, reflecting the absence of tax - ing in reduced demand for the purchue or lease of avaibbh land,- c cdrts from new power peneration projects, partially offwt by ot'tice, and retail space, as w ell as the inabihty to complete antici. income from energy pnyects in which the Constellation Companies pated sales and leases of real ntate projects. Due to these conditiom, have an equity internt, income fmm operatine energy proiect on a in 1991 th-Comtellaion Cmnpanin recorded write dowm aggre. contractual basis, and the sale of a hmited partnenhip interest in one pting $10.0 million on certain real neate projects and a $1,6 niillion pr+ct. Eaminp inacased in 1990 as a roult of the utilization of resen e for loan; where the value of the collateral was detennined to enury a ciedits when certain proinn began senice. be less than the outstanding loan balanen. Additionally, the Con-1:aminp from the Comtellation Companiev portfolio of fmancial ' - $tellation Companiet real estate panfolio hn experienced continu. investments include capital gainund lossn, dnidends inmme from ing carrpng cmts and depreciation, and during 1991, the Comtella-financiallimited partnerships, and. income fron financial guaranty _ tion Companies legan expeming rather than capitalizing interest on msurance companies. Imestment earninp wcre lower in 1991 due to certain undeveloped land where development activines are at mini. a $10.5 mdlion w rite-down to reflect the market value of certain of mal leveh. All of these factors have neptively impacted 1991 carn-the Comtellation Companiet marketable equity securides, substan-inp and are expected to continue to do so until the current market conditions improve. Cash flow from real ntate operations has been

Ik murc Ga> andIkuu Compaan and %Jwm I msutnuuit to uner the dt ht un u t tupa nn nis of certam of thnt growth and untd euew inu ntotr in the market in the Italtmeire-pion tt. I'nuhmp c.o.h shonfalls h.o e hun sansfint through eqmty hiungan uirndor is reduced lreal estate ulun are not antici-mfuunns ain! loam trom ( knut !! anon lloLhnp, Inu u hu h obtamed patul to unprne. If the Cimstdlation Comparun u ere to si11 real ti e furnh through, tombinatnin of iash thw p nt ratul by other ntatt proinis m the current depreued market, town in amounts Cornu llatoin Companin and its uirpirate botto9 mpt As long as the difficult to detennine wouhl occur. Dcpendmg upin tnatlet condi-It al ntitle f u.Brket and local (Uinomk U otbtHim remJm soft, canunp (Him, future saln also couhl rnuh in hmti If tim real estate entn'ltin die t $lit' cit d na reinain deprewed. iii additnin, w t re tht Oiintellatnin Ceiinparun to thangt their TLt Conuellanon (:ompamn plan io hohl real nt.nr proin ts mtuit aluaut an> pronet ftom an intent to hok! unut matLet omdi. unni the matLet n w dhng to 19 a renonable ulue. lius condmon a tiom imptm e to an intent to sdl, apphcahit acmunung ruin u ouhl a funcimn of mailet dunand, mternt natn onht aunabihtp and aqmte a w nte-dow n of the proirct to inarl,et ulue at the tune of the stangth of the nonomy in geneid The Comiellanon Compa. un h t hange m intent if mat Let ulue h below luiol ulue, nu,.' Nianayement behevn that unni the economy shon smtamed ()ther Income and 13penses I he allow ance for funds mnl during (omtrucuan (Al Chin reasnl due to lower earninp trom merchandning operations and increased in Uni due to the iompletmn and mmmernal operation oflirandon m 1990 as a inuh of gaim on the sale of ecrtain utihty property. Shorn Urnt 2 Thn deucase w as p.n nally of fwt tiy the me of a pre-The mettasn m internt chargn for both years prunanly reflect in Al C rate of 0.94% effectneJanuary L 1991 in mnnecuon wah increned In t h of debt outstandmg, partially offset by lower intereu the adopoon of the habihty method of accounung for hc< .. ;nn ratn m 1991. The mcreasnl debi Inch are attnbutable to conunu-under Statement ofI manaal Anounung Standards L % 1Iow-mg constna tion npenshturn denng both years and mcreawd ner, net income a not affected b thh dunge m reconhng Al C. deferred dutric fud msts during 1990. Internt charpn are npected 3 Under Statement h 96, mcome tan reprewnted by the ihtferen e to increaw in 1992 due to increased Inch of debt aworiated with the twtween a pre-tn and net.ofi n Al C rate are rewrdal as a compo-Company's capital requirenn nts and the diwontmuation of mterest t m nt of mcome in upenw rather than as a rnlucunn of Al C. t apaahiation on certain of the Con >tellauon Companies' real ntate Al C inc reawd m 1990 due to the construenon of Ilrandon proiccts. Shorn Umt 2 and other u.aior dntnc proiccto The innease in income tas npeme increawd dunng 1991 n a rnuit of higher Al C for 1990 aho n thcts the Maryland Commnsion's Decendier pre-tu carnings and the implementanon of the habihty method of 1989 raic order w hk h incrennl the m t-obin Al C rate to 00% accounnng for income inn. Under the liabihty method, deferred and remstated m the Al C haw certain npenditurn related to mcome taes prenomlv recorded a. a rnluction of Al'C are recorded liran ion Shorn Umt 1 Al'C will decreaw m 1992 due to the as a component ofincome in npeme, income ta expense dccreased remammg effect of the cessanon of Al C accruah on lirandon $ horn during 1990 due to hnur pre tn earnings. Unn L preferrni and preference son L dniderah morenniin both years Net other mmme and doluctiom doreawd in 1991 prunanly as a rnuh of peater amounts of preferenn so ck outstand ng. Liquidity and Capital Resources The Compann capaal rnimrements rtilect the upital-intenske through 1991, along with ntimated amounti for 1992 through nature of the unhty bminew Actual capual nqmrunems for 1989 1994, are shown below, ju89 1990 1991 1992 1991 1994 On Wbno Utddy lhninew Construction opend turn (ndudmg Al'C) I let tne. $307 $362 $ 328 5391 5 437 S458 Gau 27 39 43 46 48 50 Common 80 81 45 63 70 82 Total comtruction expenihturn. 414 482 419 500 555 590 Al C 33 53 37 25 35 34 Deferred nuclear npenthturn.. 10 28 23 27 13 10 Nudear fuel (uranium purchnes and irocewing charges) 17 21 2 21 45 44 t Retirement oflong-term debt and redempoon of preference stmL-53 60 339 75 291 124 Total utibtv husmew. 527 644 820 648 939 802 Dnersified llusmew Acticities Retirement oflong term debt. 89 N 167 220 87 3 im estment requirements. I13 122_ _ 109_ll_42_ 44 Total dnersified busmns actnines. 202 130 276 291 129 47 'Iotai-5724 5774 51,096 5939 51,068 5449

l IMtuwe Gaum)Lh,tr demany enJ %Jarin 0 IlG&l' Utility Capitalitequirements 11GAi 's wmtructmn pogram n sulyect to tononoom reuew and expenihturn and low er net income.1)unng the three-year perical mah6 union, and actual npen hturn may vary from the estimatn l'n2 through PN4, approdmately 5% of the funds required for on page 2R The mcreaw n estmuted mmtruction expenditurn as t,onstruction, nuticar fuel, anil deferred nutlear npemhturn art - compared to prior ntmutn is attributable to the npandon and npected to be pmvided through utihty operations. upgrashng of !!G& IT trammimon and thsuibution faihtin and Unhty capital requirements not met through the intenul gener-mahfunons to emtmg generaung faabnn. ation of(ash are met thmugh the iwuance of debt and equity securi. Tbc most ugm6 cant project in the t omtruction pmgram is the tin 1)uting the three-year period ended 1)ecember 31,1991, tuo phased-combined c3 e umts at the Perr3 man ute. Euhahng IKi& E's hsuamn oflong-term debt, preferred and preference d Ain construction opendituin for Perryman totaled 514 nulhon stm L, and common stm L w cre 5866 milhon,5200 million, and $152 mt'r the 19ms. Phi perunt and such npenihturn are expected to mdhon, resjectn ely. During the same three-) ear perimt, IK;&l?s total apptmimately 5175 milbon m er the IW2-1994 penal. Other retirements oflong-tenn debt and redemptions of prt ferrni and tiertne o,nstruction open htuin are primardy attributable to prefereme suick were $416 million and $4 million, resperthely, unpunements to IRiM A emnne generating plants and to its In January 19u2, liG& E sohl $125 million of 7M% Serin due itansmiwion and dntribution faulmnflhe Company currently January 15,2007 l'irst llefunding Alortgage lionds. Also inJanuary niunatn that cipenditmo for comphante with the Clean Air Act 1992, lKi A E fded with the Securitin and lichange Comnuwion of 1990 wdl total approximately 540 mdhon through 1995, a registtation statement for the issuance of up to five million shatn Dunny IVil.1999, and 1W9. the internal generation of cah of additional common sowk and shelf registrations for $250 million from utihty operations provided 74% 14%, and 8%, respectivelv of additional Eirst Refundmp Alortgage bonds, $200 nulhon of of the funds reymtrd fot comtruction, nuclear fuel, and defened, a&htional Alnhum/l erm Notn, and 900,000 sharn of additional nuticar expen.hturet ~lhe ugni6 cant increa e in the 1991 lo el is Preference Sim k ($100 par value). IlGN E hn $16N million of due to 2 redacuon m defened electric luel unts, lower construction Aledmm-Tenn Noin unilable under an esisting shelf registration. expenihturn. and hyher net mcoincJlhe low leuh in 1990 and The amount and timing of the sales of these securitin will depend PNi rHect increawd deferred electric fml costs and comtruction primarily upon market conditions and IKih E's needt i l>hersi6ed llusinew Actisities - 1.iquidity And Capitalllequirements IMr indebtednns to achieve longer matutities Cl11 aho int:nds to pa) I)oring 1991, the aggtegate amount asailable under Constellation down outstanding debt ihmugh internally generated cash which Ilohhngs,Inc/s (Cl11) bank debt fatihtin wat reduced fnun includn cash that may be generated from operations, nuturing of $115 milhon to $261 milhon, and the amount outstandmg w as 6nancial limited partnershp saln from the securities portfolio, the reduce,1 an ordingly. The nutunty dates o' thne farihties v cre aho sale of other aucts, and cash generated by tas bene 6ts earned by niended to Alay 1,1991 An adibuonal $41 million was paid down Cl11 and its subsidiarin. In the event that the real estate nurlet on die banL facditio debt, and,in addition, M5 nullion of C111 pri- - seboun h and Cl11 can obtain ecamnable salue for the propertin, vately pixed debt was redeemed pursuant to repdar sinking fund additional cash nuy become available thmugh the sale of pmjects payments and inatuntin. Alm, during 1991,527 million in debt of (for adthrional infornution, see the disetmion of the real estate busi-subadiarin of Cl11 that is weured by project assets ("pndect debt") new and nurlet on page 27 under the headmg *Diversi6ed Ilusinew w as repaid, and the nuturity datn of $94 milhon in pmiect debt Actoities Earnings"). The ability of Cl11 to sell or liquidate the w cre ntended to ine years 1994 through 1996. During 1991, an assets dncribed above will depend on market conditions, and no additional S95 million m Cl11 prh ately placed debt with nuturities awuranen can be given that such salo or liquidatiam can be made. olu vears was iwurd to imurance companiet The proceeds fmm Cl11 and its subsidiaries are negotiating the re6naneing of all iwuing'this debt w cre used to reduce existing debt n thsetmed above. indebtedans as it matures in order to satisfy ongoing capital Cl!! achieved rate advamages during past yars by utilir.ing debt requiremento No assuranen cam be provide' d that Cl11 and its sub-with short-tenn maturitiet Uncertainties m the banking envimn. sidiaries will be successfulin extending the exi-ring credit facilitin ment and tighter lendm; requirementuoupled with higher debt and obtaining additional borrowing from institutional lenders. Inek and the dechne in operating income at the Constellation Compamn, resuhed in dif6cidry m obtaining imm banks either new lurmment Repirrments commitments or comminnents to estend the matunty datn of the The investment requirements shown on page 28 include Clits por-debt on tenus aorptable to the Comtellation Companin. tion of equity fundmg to conunitted pmiects under development es During 1992, S273 milhon of debt is scheduled to mature. Of this u ell as net loans made to pmicct partnerships. The invntment amount, S220 million is CI11 bank debt, $53 million of which is clas-requirements for past penmh re6cet actual funding of pmiects, sified as i.hort-tenn debt; 530 milhon is Clll privately placed debt; whereas investment regt.irements for the years W92-1994 re6ect and 523 million is project debt Cl11is presently negotiating to the Cimstellation Companies' estinute of ftmding during such peri-extend the maturity date of the bank debt untillater scars but, due to uh for ongoing and anticipated projects the factors disemsed in the above paragraph,is unabfe to predict

Estiuutes of the Constellation Cmngunies'inttstment require-w hether it will be able to do so.

ments are subject to continuous rniew and mmh 6 cation. Actual During 1993, $R7 ndtlion of debt is se heduled to mature. Of this invntment requirements may vary signincantly from the amounts amount, S40 million is CHI pnvately placed debt and $47 million n on page 28 due to the type and number of project.s selected for project debt. During 1994,53 milhon of pmiect debt is schedukd to development, the impact of nurlet condition on those projects, the nuture. In 1995 and later years, $224 million of debt is scheduled to ability to obtain financing, and the availability ofinternally gener. nuture. Of this amount, $93 million is privately placed debt and ated cash.The Constellation Companies'imestment requirements S129 million is prtiert debt. have been met in the past through the intenul generation of cash ClIt will attempt to etmtinue, through pris ate placements and and through borrowings from institutional lenders further refmancing of maturing indebtedness, to restructure its ~

& NCfort ofb$nntif{CulCllt I:atumorr Gn aid Ih,tok Gmt.tm arnt $hluno Con;w rs A I hrand,indt pemlent nuators, att enyayid to Manan nn ni n inponsihli tot the mtornunon an i reprnt nta. 3 non, o,ntamnt m the Companyi fmm ul tan menn, I he finan. ault th( tinanual statements and upitw their opmion thuton. ual sutcmt nts are pu p.at d m nuord uut with genuaH atu pted 1 hur au&t k made in anordam e with yem rouy,uicptsd amat-3 au nonung punupin hasol upon tur a ntl in adable facts,md (it-ing standards wlot.h im.lude 6 retu w of intt rnal tuntioh. 3 nunsum n and Manapiment's ht st atmoto and nalynu ms of The Ault Omunittet of the lloaniof Diicctors, whhh um-L now n oinanons snts of four outside Directon, mects pernbeaHy with Manage. l he (IIllupan) Inamlann.o1 iu t ountWf s) stem and ttlattd y s-mt nt. IntM na! Dublots,iUK! $ $onpf fs N 1.ybranM! to rniew tbe ~ tun of mtunal venuoh w hu h att deugnol to pnn ale reasonable actnitin of t-at h in dhtbargiry theit rnponsihihnri. The intetual auurante that the fmano d reconh are.u curatc and that the ault Ataff ahd Cooptet, A 1 )htand fuvt hte atetw to the Auat Companyi assus atc pnocen d 'I he Compan3% staff ofinternal Conuiuttre, aultors, w ha h reports arn tly to the Chainnan of the lioard, iornha ts pennhc renew s to mamt.nn the effn tnt new of mtenul inntrol pon edur es Report ofInde;>cudent Auditors le the wrri+1,lm vf !!alumre the nl!:lwtoc Gutjn; We h.ne a' Sted the auompanpng consohdatni halame sheets In ont opinion, the fmancul statonents ttferred to alune and statements of (apitabiation of liahimore (ias and IElectric prnent fairly,it aH matenal rnpecti, the consolidaini 6nancul Company and Subsubann at 1)nember !!, IW1 and IWO, and position of llaltmune Gas and l'.Itctnc Company an I hubsiduries s the n lated consolulatnl statements of mcome, cash Gou s, nim-at 1)nenher 31. lWI and IWO, and the consolalatnlinuhs of .non shan hollen' opniy, and tasn for ex h of the threc y ean in thur operations and ihnr (ash Hows for exh of the three ytan in the penod endnl Dnenda r 31, IW1.The c nnancial statunents the period endnl1)nanher 31, IWI in umformit3 with gcneraH3 are the responubihty of the Companyi Management. Our actepent auuunting prinoples. inponubihty is to npins an opinion on thne financial statr-As discussniin Note 1i to the consolidated Gnancial state-ments based on our audas. ments, the Public Service Conuniwinn of Maryland is currently We conducini our aults in acconlance w nh generaHy iniewing the replatanent energy unts rnuhing from the accepted auanng standards. Tl ne standanh rnjuire thst we plan outages at the Company's nuclear ixm er plant, and the Company and perform the auat to oh*ain seasonable assuran e about ponided a rnene of $35 miUion in IWO lar the powale disal-w hether the 6nant ul statemenn are free of nutnial nuutriement. low ance of replat ement em rgy costs. The uhimate outcome of An ault imludn naminmg, on a tnt hash, evideme supporting the fuel rate pnneedmps, howner, cannot he determined but nuy the amounts and dnchisurn in the financial statetnents. An ault roult in a disallow ance in ncess of the resen e proviJed. aho inchales awessing the accumtmg pnnciple. used and signifi-A.s dncuwn!in Note i to the omsohdated financial statements, cant esunutn made by \\tanagement, as well as nahuting the the Company (hanged its method of accountmg for income tasn metall 6nancial statement prnentanon. We behne that our m IW1 and changed its metho I of accounting for unhdini au&ts pnnide a reasonable hasn for our opmuin. revenues in LWR ? U-l l)NL, Q - 4/ Coopers & l.ybrand llattimore, Maryland lanuary 16, lW2

Ihm n tu an.I ik m. I am..in ami uh uur n < Cull 50lltltifftl NittlClitellts Oflll(Utilf & W ai i n.h-d Dutmht r 31, 199l pnn twi a o,,1 a i my lu u-uo..+o Mt s t out s I hs in 53.494.525 I73E454 5l A47*IIE (,, 3 5 H,195 371,410 411,W I !)n ru,n, d & t a n a s 106.773 I UI 'N Ib"II leaJnunms. 2.459.49I 2.102 2 U I 2 """ I sju nsts ()thef Ibn Intt f ut and fluomt Tees I in un im l.m I pun hau J eno n 59H.20H "IN '"N"U4 pon mon bo po s,hh In.& m ant e of tcptu t na nt i nt tp t osa hre Nott-lli-UW ~ (, n pun h,m d n et n s.dt 183,455 2 W 62 223,462 ( q u i.n n.m.. (d 4,309 576.271 478,PM h aen mie 173,64 H IM,457 149,014 I h po,,an n 199.637 170M6 1$6346 ~l au s otIn r th.m nu orne tau * = 170.7H I I'6022 I SU'2U4 'I ot A rsp n,rs oths e tiun mu reu. uni un ome ineu 1,9 % H,03 H 1,f4,l M 1355,424 Int ome (t om ()per ations 501,455 303W G.W ()thi t Income \\lb m am t tot t quit) furnh un d thu mp uinstrut tron.. 23396 27We IM64 1 quas m urmnp nf Mic liabot Wattt Pou rt (:orputath,n. 4,3 HH 4poo L176 Lt oiht t nu omt aml.h da.to,ns.. (1.357) 4 hN" Icecmher 31, 1991 1990 iln lb.mndo liabilities and Capitalization Current I.ial ~ ' i s t short-tenn ti. ou mys. 5 212,170 s '27.700 Current iv noons of long-term debt and prderence st,n L.. 294,507 4 5.'. 12 \\u ounts papt lc.. I H5,782 202.28 Customo deposits 14,573 13.176 Au ruul tases.. 29,612 23,952 An rued intu est. 49,173 46,249 l b idends dn lared. 54,914 54,334 Au rued s., cation costs.. 30,142 27,050 Other. ,13,619 , _14,2 6.'_ Total entrent habihnes.. _ _HN2,492 _ _ _._.l.062.593 I)cfened Credits and Other I. labilities I)cferred inuime tases.. 879,417 647,912 l) eft rrol im estment tas credits. 174,442 180,591 other.. 31,390 1 H,092 Total &ferred ( redits and other habihties.... 1,085,249 846.595 Capitaliiation 1.one-term debt.. 2,390,115-2,193,844 Preferred siwk.. 59,165 59,185 lledeemable prefer ente st<n L.. " 398,500 365,000 Preterence son L not subiett to inandatory redemption..~.. I10,000 110,000 .............. ~.... 7 __ .. 2 ;.......;.'....... ; , 2,153,306 1 2,073,1 S N, Conunon shareholders' ninity. ............l 4 Total capitahianon.. ...;.? .;.j...... 5,111,106 4,R01.1 H7 ,1 y s

i

'[ Cominitments, Guarantecs, and Contingene.. i - See Note 11, .r \\ Total I iabilities and Capitalization. 57,078.847 $6,710,175 6,... sa Stu to Cennklaid I r,un.uk statemena s

,I

>. l! [ j

@ Consolidated Staternents of Cash Flows n.aw,nn w sia wru c~ntsn a a uuwin Year l'nded December 31, 1991 1990 19q9_ HnIhme.id Cash I' lows l~nnn Operating Arthities Net munne. 5 253.426 5 213,200 $ 276,291 AWusunents to reumule to net cash pnnidnl by operatmg actnities Cumulathe cifn t of(hange in the method of anounung for manne tan., (19,745) Cumulatn e offco of change in the metinal of acoiuntmp for uninlled revenues.. (37,754) De)anianon and amorutation. 242,390 179,793 170,706 Defetrol mcome tan,. 32,351 56,995 136,388 trnnonent in crnht a&mtments.. (6,225) (4,450) (1,478) Ihferred fuel (osts.. 102,754 (79,671) (248,472) Proviuon for posuble ihsallowance of replacement energy costs.. 35,000 Wnte.down of finantial ms esuutnts. 13,575 Wnte--dow n of rcal ntate protets. 9,98H \\llowante for equity fends used durmg consuuction.. (23,596) (27,086) (18,564) Etput) in earnmgs of affihates and joint venturn (net). H,70H 14,029 (6,449) Cknges m current awets and current liabihtin Auounts recen able. (36,410) 15,698 ($ 1,030) Tu rued unhilled revenun. (10,616) 9.580 Matenah, wpphn, and fuel stocks. (2,015) (41,228) (5,075) Income tan refundable.. 44,720 29,169 t73,144) Aca.unts payable (17,146) (53,844) 124,011 Au runi inn. 5,630 (709) (1,H24) ( hher current assets and current hatnhties.. 3.247 (12,H37) 17,969 ( hher.. (H,862) (10,376) 1,095 Net c.nh ponided by operatmg actinties.. 592,174 2H5,509 320,424 Cash I' low s l'ron.1 inancing Arth ities Procenh from issu.mee ni Short-tenn bornmings (r.iL. (15,530) 103,893 44,3H2 1 ong-tenn debt. 1,015,950 1,W7,426 1,296,310 l' reference stix L. 34,H01 64,342 98,860 8 Conunon stot k.. 32,263 b6,H81 32,445 Reacquisition of long-term debt.. (959,379) (1,595,461) (1,020,029) Redempoon of preference stock. (22,800) (6,N00) (6,800) Common stotL dniden,h paid.. (176,007) (t 71,6? 3) (163,534) Prcierred and preference stock daidends paid.. (42,743) (3H,490) (31,15l) Ot he r.. (442) (34) (94) Net cash (awd in> prov~ded iiy financing acihities.. (133,H87) 430,132 250,389 Cash ! lows From Investing Activities l'tihty construction expendmirn.. (456,244) (535,316) (447,3391 Allow ante for equity funik used during construction.. 23,596 27,086 18,564 Nuclear fuel expendnures - (1,954) (20,519) (17,431) Deferred nuclear npenditures.. (22,681) (27,755) (9,605) Nucle sr deconumssioning trust fund. (8,900) (8,108) (6,968) Fm.meial intntments.. 67,282 (9,907) (1,048) Real estate proiects.. (45,322) (49,745) (40,2 H2) Pow er generation systems.. (33,204) (62,494) (65,702) Senior living facibun. (737) (2,492) (4,390) Other.. (2,685) (5,412) (11,608) Net (ash used in im esting 4ctivitics. (480,749) (694,662) (585,809) Net (Decrease) Increase in Cash and Cash Equhalents.. (22,462) 20,979 (14,996) Cnh and Cash F41uivalents at lleginning of Year.. 39,H79 18,900 33,896 Cash and Cash Equivalents at Fnd of Year.. $ 17,417 S 39,879 $ 18.900 Other Cash I' low Infonnation Cash paid during the year for: Int: rest (net of amounts capitahted).. $ 199,911 5 166,723 $ 150,178 income tan. $ 16,07H S (56,937) $ 14,390 See Min so ConwhdatcJlinawu!Statemenit Cenarn prior year amunt: b.n-e hen renatcJ io wn)W:n with tiuuncntyre's presentatwr.

Consolidated Stateinents of lialtown (w m.Il.le,o o, Cevyson and %!w on Cornnion Shareholders' Equiiy Q h ars l'nded linemht r 31 IWI, IWO, and 1989 Net i neraluni Prenuum on laiss on Conunon WL Pre f erre d lietainni Mar Letable Total sharo -\\ mount WL i armnps _ Scennties Amount a.i i wa,m> llalat cc at theember 31,19hd. 9.294 5420,462 515' 51,062,421 5(6.795) 51,h84,24; Ltmiome 2 7t. 291 276,291 !)n uten is.la tared l'rdrrol an.1 preferem t $n n L (32,181) (32,181) (:oninion ne L ($2.07( pt r shate) ( 16fi,067) (166,067) ('ommon so t L nsunl undt r liniden.1 Rennesonent anil Sni. L Pun hase Plan.. 860 26,465 26,464 I mplo)"e $n t L ( lu nership Plan.. 190 3,9x0 5,980 (:osts assoruted uith nsuance ol redeemable prein ent e snu L.. (1,140) (1,140) Change in net unreahini loss on markt table seconnes. 6 795 e f,795 llalante at W ecmher 31, I )H9.. KO,44N 860,767 157 1,140,264 2,001,188 Net im ome. 213,200 213,200 1 >n sh nds dn l u e l Pretent.d and pnference -mx i. (40,261) (40,261) Conunon stod is2.10 per share)- (173,204) (173,2e4) (:nnunon sunk nsuni under Pubbt otter lng 2,nno 57,062 57.062 Dn uk n.1 Reimestment anil St. k Pun nase Plan.. H6 27,474 27,474 l'mplope Sacinn Plan.. 75 2,345 2,345 C sts ama i.ned u nh nsu uue of redeemable pr k ren(e stock.. (658) (658) Ch nye in net unrechiniloss on matterable sceunnes. (13,9s8) (13,9ss) lixiance at licecmter 31,1990.. 81,159 946,Wo 157 1,1 19,9W (13,988) 2,0:3,15 g Mt income. 253.426 233,426 P, 1)ivulcods da la red Prefen nl 1.nl preference sn x L. (42,74o) (42,746) (:onuni.n sowl ($2.10 per sh.ne). (176,554) (176,584) (:onunon st al asunl under Dnidend Pcimestment and S:otl Purc h.ise Plut 1,010 29J47 21,74-I'mployee S. sinp P1 m.. 91 2,516 2,516 (:osn aw.cuted u nh issuant e of redeceuble preferente sto(k.. (lW) gp)9) Change m n t unreabieJ loss on nuiketable sceurities. 13,ws 13,9ss Italance at December 31.1991.. 84,460 $979,054 5157 $ 1,174,095 S - $2,153,306 her %ta to Ca akkulIm.mculwemem m

@ Consoliciateil Staternents of Capitalization vatwm aa~,a nan. c-vant ara sa,uuna At 1)cecmber 31, 1991 1990---. itn n.m nao long-Tenn I)t bt i ust u fundme mone.ve b.,uk 4 c. Senes; due luly' 15, tw2.. $ 24,726 S 24,751 4% Senn, due ilan h 1,1993.. 24.061 24,070 4/. Su u s, dur Iuh-15. I W4....... 29,921 29,921 o ch Senes, duei)do1, t 15, IW5. 200,000 200,000 D,1 Sent s, dat Apn! ! $,1996.. 26,585 26,585 8so Sera s, dut June !(,1997 99,500 99.500 6'o $erm, due August 1,1997 24,937 24.958 M. Inuallment Ser.cs, due Aueust 15,1994.. 53,000 55,155 f 7", Series, due !)ct ember 15, i ns. 28,63 H 28,646 k 4 4 Senes, due Septend cr 15, low. 22,062 22.077 b.40 ~, Series, due October 15. Prn.. 100,00() 100.000 h A Sents, due September 15,200(). I l.338 11,33 H N S Suies, Joe Apul 15,20nt.. 59,919 59,919 M% Seiin, Joe August 15,2001, 125,000 i 7 A Senes, due Sel tember 1,2001.. 59,985 59,985 7 a Series, due January 1,2002, 49,999 49,999 7 Tx. Senes due J uh-1,'2002......... 49,985 49,985 S u, instalbuent Se'nes. due July 15,20n2. 12,500 12,500 ,, Senes, due Septend cr 15,2002. 49,990 49,990 h Om Serin, dut l'ebruary 1,2004. 74,983 74,983 6E0% Senes, due Septeridier 15,2004_ 20,000 20,000 ba, Series, due September 15,2006. 74,960 74,960 8,% Series, due September 15,2007 75,000 75,000 9 Om Senn, dneJuly 1,2008.. 29,995 43,894 6.00% installment Senes, due September 15,2009.. 55,000 55,000 9 6 Suies, due.\\lart h 1,2016. 48,000 98,000 Total tirst reiandmg mongace bonJs.. l <480,104 1,371,216 Other lone term debt 1.oans u'nder unsecured creiht facuitin.. 175,000 25,000 loans under resolvin crecht arrtements.. 175,000 Aledmm-tenn notes,. cries A..' 100,000 47,000 Aledium tenn notes. Series IL 63,100 9% Ltes, due.\\ lay 1, lW3......... 100,000 100,000 l'loating rate notes, due July 1,1995..._... 100,000 Floating rate notes, due October 15,1995 Series 11.. 100,000 100,000 Pollution control loan, due Jul 1,2011. 36,000 36,000 3 Port facihties loan, dueJune 1,2013..._...... 48,000 48,000 Adiastable rate polluuon control loan, due Jn't 1,2014,. 20,000 20,000 Fconomic development loan, due Detember 1,201H.. 35,000 35,000 Total other long-term debt.. 677,100 Long-tenn debt of Constellation Companies 686,000 .\\longage and constructmn loans and other udlateralized notes 8.N75 %, due June 30,1991. 21,250 10.50"i, due J une 30,1991. 53,300 \\*anable rates, due through 1996.. 181,532 98,278 10.31%, due Aucast 1,1997. 18,877 19,128 InJustrial park fac0ities lunth.. 750 1,450 1.oans under resoh-ine credit aercements.. 167,330 265,996 l'nsecureu notes 8.875%, due August 10,1991.. 15,000 H.30%, due Aptd 12,1993. 70,000 100,000 8.3 5%, dur Aupnt 28,1995.. 20,000 8.71 %, due August 28,1996.. 23,000 8.93 %, due August 28,1997 52,000 y Total long-term debt of Constellation Companies.. 533,489 574.402 Unamortued discount and pr emium.. (7,571) (7,662) Current portion oflong-term debt,. (293,007) (430,112) Total long-te,n debt.. 2,390,115 2,193,844 See %rn to CwklatdIhunaalStawww.

u,,,,,e c.ar a,a nean. con pn, a,a s+au,,<> Consolidated Statentents ofCapitalization G At Deconher 31, 1991 1990 (tn w.m mto Picferred Stock (.mnulatne, $100 par ulue, IM OMkkhares authorned Senes 11,4 M. 222,92I shares outstandmg, callable at $110 per share. $ 22,292 $ 22.292 Senes C. 49. 68,928 shares outstandmy, callable at $105 per share... 6,893 6.893 Senes D, 5.40%, 300M O shares outstanthng. callable at $101 per share. 30JKK) 30.000 'l otal preferred stoil. 59,185 59,185 Preferen(c Stoel Cumulath e, $100 par ulue,6JWXVK#hhares authorized RedeemJble prt terinCe stMk 12%,1981 Series A. 6kMk1 shares outi.tanding in 1990.. 6,800 12 %,1981 Ser,n li,160M K) shares uotstandmg in iV90................... 16,000 '.50%,19h6 Scrits,50(UHO shares outstanding, callable at $105 per share p,or to October 1,1996 and at lesser amounts thereafter.. 50,000 50M)0 6.75%,1987 Senes,500#)0 shares outstandmp, callable at $106 74 per share pnot to Apnl 1,1992 and at lesser amounts thernfter.. 50,000 50,000 6.95 %,1987 Series. 500J)00 shares outstandmg.................................. 50,000 50MK) 7 64 %,1958 Series, 500,000 shares outstanding, callable at $107.64 per share prior sojuiv 1,19H and at lesser amounts thereafter.. 50,000 50JKK) 7.80%,1959 Senes, 500jK10 shares outstanding.. 50,000 50,000 8.25%,1989 Senes, 500JK0 sharn outstandmg.. 50,000 50 # 0 8 62 5 %,1990 Series,650MK) shares outstanding.... 65,000 65,0(0 7.M %,1991 Senn. 3 50J)00 shares outs anihng in 1991.. Current porunn of redecinable preference stock...... 35,000 (1,500) (22,800) Total redeemable preferente st<d. 398,500 365J100 Preferente sud not suhicct to mandatory tedemption 7.88% 19'l Series,500J00 sharn outstanding, callable at $101 per share..... 50,000 50,000 7.75%,1972 Serin,400JK10 shares outstanding, callable at $101 per share. 40,000 40,000 7.78 %,1973 Series,2(KMXO shain outstanding, callable at $101 per share. 20J)00 20,000 Total preference sud not subject to mandatory redemption.., -110,000 _ 110,000_ Conunon Shareholders'l'.quity Conunon stock-without par i alue-100/00 000 shares authorized; 84,459,582 and s 83,159,464 shares hsued and outstandmg at December 31,1991 and 1990, respectively. (At December 31,1991,311,503 shares were resened for the i 11mployee Savings Plan and 2.242,731 sharn were reserved for the Diudend Reinvestment and Sud Purchase Plan.). 979,054 946,990 Prenuum on preferred sted.. J. 4 157. 157 Retamed eatnines.. ...... ~.... -.. i,.......:.. 1,139,999 Net unrealized loss on marketable securities.. 1,174,095 (1388f) Total common shareholders' equity. 2,153,306 2,073,158. i Total Capitalisation.. $5,111,104 - $4,801.187 r \\ k: y See Mus to CunwMarJ Fman,-i.d Staten,cnts. 1 'i ,"3.

e/

s c, y '(, j-N ,1 j\\ 4 4 I S g I g,,s y-i + + ~y- + e

@ Consolidateil Statements of 7 axes w,ar ao a J um u cnanr a a s+awm l a har 1.ndnl 1)nember 31, 1939 1991 1990_ 11x,na we in ih ou income Tnn Current Regular gn.. $ 46,844 $ (65,130) S (78,617) -\\hernatn e nununum tn. 14,203 31,792 , 25,136 ~1 otal cut tent inn.. 61,047 (33,138) (53,2H1) 1)eferrcJ Audcraint deprenanon.. 79,147 70,619 64,540 l)tferred fuct costs. (34,936) 27,08H 84,481 Pnnmon for possd,1c disallowante of replacunent energy n sts.. (11,900) Ahernatne nununum in. (14,203) (31,792) (25,336) Tn r ue ibilerenti.d attnhutable in tas nt t operating loss. (20,25 H) 5,744 15,325 Ta s credit carn fons ard offsct.. 1,522 i,410) H Unhilled revenues. 12.952 (9.420) 1)eferred nudear npendnures.. 6,984 9,117 3,259 Computer sof tw are do elopment costs. (1,045) 6,884 7,79J Contnbutions in aid of comtructmn.. (2,79H) (2,704) (2,785) Les craped leasn.. (1,041) (913) 4,877 Other_ _ (?66)_ ,513_.__ yd4',) Total doferred tun. _.12,606 _ 77,189 136,18H Imestment tu crnht adetments ($uf r0nt In credits defe! red-3,119 2,887 6,42 H , _ J,906) Amortiranon of dt fertal tn credits.. _ (9.344) _ _ _ 7,13 7) __ ( ( Imestment tn crnht adiustments.. (6,225) (4,450) (1,478) Total income tan.. 67,42 H 39,401 N 1,629 inconie inn indudnl in cumulatise effn t of(hange in method of atcounting for income tnes.. 19,745 Income tan induJed in cumulatne efin t of, haage in methat of auountmg for unbaled roenucs. (19,449) Income ines per Consohdated Statements of income.. 5 97,173 $ 19,952 5 81,629 Rec onciliation of income Tnes Computed at Statutory l'cderal Rate to Total Income Tues Income before income tnes (including cumulnis e effect ut accountmg changed.. $3ns,H54 5252,601 $357,920 Statutory federalincome in rate.. 34"6 34 % . _ 3 4'y income tan computed at statutory federal rate. 109,090 85,884 121,693 increases (dettenn)in income tan due to Depreciation differenen not normalized on repd.ited activitin H,0H2 4,301 4,610 Allowance for equity funds used durmg construction. (H,023) (18,140) (11,336) Amortiration of dderred investment in credits.. (9,344) (7,337) (7,906) Tn credits now ed through to income.. (1,335) (15.283) (10,219) Dnidends ieceivnl deduction.. (2,108) (4,352) (5,111) 1(quity in earnings nf Safe 1larinir Water Pow er Corporation. (1,192) (1,666) (1,760) 1,oss on thspositmn of assets. (3,295) (1,892) (2,230) Amortiration of deferred ta rate differential on regulated actnit'es. (5,024) (3,062) (2,673) Kn enal of deferred tan on nonregtdated acthities.. (19,745) Other.. 948 (3,439) 622 Total inu>me ines.. $ 67,42H $ 39.401 5 81.629 l{ffcetive federalinanne tn rate. 21.0 % 15.6 % 22.8% Tnes Other Than income Tues Real and personal property. $ 89,379 $ H5,372 5 82,959 Pubbe senice company franchise, 46,041 42,812 38,293 Social security. 33,121 30,344 27,843 Other. 9,026 6,770 7,094 Total taes other than income tnes.. 177,567 165,298 156,189 Amounts included above charged to accounts other than tnes.. _ (6,786) _ _ H,5 76) (5,985) ( Tnes other than inesune tues per Consobdated Statements ofIncome.. $170.781 5156.722 S150,204 Su ha to Co uddateJ l twual $tarrmct tt

ikinmor e Gas and iJarr oc Comj,rny and %I.udunn Notes to Consolidated Financial Statements O Note 1. Signifkant Accounting Polkies Nature of the ilusiness interconnection sercices to be repirted as dcctric revenun rather llaltunate Gas and Eleton Company WG A13 and Subsidiaries than as a reduction of electric fud and purchasnt energy expenw. notlectiu ly, the Compang h primarily an clutnc and gas unhty Prior-year amounts have been rntaint to conform with the wrung a terrnory which encompasso llaltimore City and all or current year's prnentation of thne revenues. I!nenun from part of nine Central Alaryland com .s. The Company is aho intenhange saln of electricity are included in the electric fuel rate engaged m dn'erufied businew acth. tin as funber dewribed in funnula as a reduction of eketric fuel and purchawd energy nats Note 3. and, actonhnply, do not contnbute to income from operations. Principles of Conudidation I uti and Purchased Energy Costs The conmbdated financial statements indude the acommis of Subject to the approval of the Alaryland Commission, die ont of IlG A E and all mbsidwrin in w ha h !!G A E owns d. reedy or inde fuel used in generating electricity and the co;t of gas sold may be rettly a majority of the votmg stock Intercompany balanen and reunered thniugh renebawd electric fuel rate (we Note 1i) and transattums hat e been diminated in consolidation. Cory> rate joint purchased gas adjusunent dau es. To the exterf actual fud costs ventures, partnerships, and affihated companin m u hich a 50% or differ from revenun unk the (lanses, I!G& E defers the fud less mting internt is held are accounted for under the equity or costs and accumulates them on the balance sheet to be reem cred co t methmh. I'nder this pohn, the accounts of Constdlation from or refunded to customers in future periods. Ilothngs, Inc. and its subsiiliarin (collectively, the Consteilation As implemented by the Alaryland Commhsion, the dectric Cmnpmin) and llNG, hic. are consolidated in the financial state. fuel rate fannula is based upon the latnt taenty four-month gen-ments, and Safe liarbor Water Power Corporation is reported cration mix and the latest three-month average fud (ost for each under the equity method. Intntments in peter generation systems generating unit. EffectiveJune 1,1990, the Alaryland Commie and certain financial intnanents represent ownership internts of sion modified the dutric fuel rate funnula and ordered ilG& E to 21% to 50% and are accounted for under the equity method. indude a minimum levd of nudear generation in iui tv enty-four. month generation mix. The fuel rate does not change unins the Regulation of t'tility Operations caletdated rate is more than 5% above or bdow the rate then in llG A E's utihty operations are subject to reguladon by the Public effect. In addition,11G& E recovered deferred dectric fuel costs of Senice Commhuon of Mary tmd (.\\taryland Commission). The $14,798.000, $17,179,000, and $17,301,000 in 1991,1990, and accounting for uniity operations is in accordance with the 1989, ropectis dy, through a surcharge to the electric fuel rate Unifonn System of Accounts prescribed by the Federai Energy w hich expired as scheduled in October 1991. Regulatory Commiwinn and adopted by the Alar 3 and Conunis. The purchased gas adjustment is bawd on recent annual vol-1 sion. The accounting polides and practices used in the detennina-umn of gas and the related current prices charged by llG AI"s pas tion of service ratn are aho generally used for financial reponing supphers. As authorized by the Alatyland Commission, any purp nes in acconlance with generally accepted accounting deferred underrecoveries or overrecoveries of purchawd gas costs principles for regulated industries. for the twehe months ended November 30 each year are charged or credited to customers over the ensuing calendar y ear. Utility He enun The underrecovered costs deferred under the fud dauses were Effecth eJanuary 1,1990, ilG& E changed its rn enue remgnition as follows: pokey to pnnide for the accrual ofinenue for service reniered but At December 31, unbilled as of the end of each month. Prior to 1990, revenues were 399: 1999 recognized at the time cusmmers' meters w cre read on a monthly y m,,,, cycle basis. The new pdicy was adopted in order to pmvide a Elearie better matching of rn enues and expenses and to confunn with the Costs deferred. $322,064 5428,632 predominant practice within the utility industry. Thh change in Reserve for possible policy resuhed in an increase in 1990 net income of $31,675,000, disallowance of replacement or 38e per common share. This increase consisted of an increase of energy costs (see Note i1)... (35,000) (35,000) $3 7,754,000, hr 46e per common share, attributable to the cumula. the etTect of the change atJanuary 1,1990, partially offset by a b[ "" -#' 'I"'" 207' # M'N 2 N3) O' decrease of $6,079,000, or 8e per common share, in the December 31,1990 accrual if the current policy had been in effect in 1989, Total... $287,021 $389,775 net income would have been increased by $6,046,000, or 8e per common share. At December 31,1991 and 1990, the amount of electric Effectn e January 1,1991,11G&E implemented an accounting deferred fuel costs induded in rate base by the Ataryland order of the rederal Energy Regulatory Commiwion whkh Conunission for ratemaling purposes was $72,795,000. requires revenue from interchange sales of electricity and l

I altimoc Gas and iJatru Coryay and kisi. harm I 4 l Income Tnn liga I"s uohty rnenue, culudmg reunne from inttrehange 1 Orctn t lamory 1, p"), the Compan) adoptnl staioncat of saln and intuconnection st n it es, is suhicct to the 31aryland I'manoal k n.untmp $.atdods No 06,' Au ounung 1 or Invime puhhc senic e company franthise tn in lieu of a state income tn. 'l an7 w hu h inputn the uw of the Lahibt) nu thod of uuumong The fr anthne in is imhaled in taes ether than income inn in for muma tan Undt t the lubibr> methud. dw deft rtnlin I ahib the Consohdatol Statements of income. ny n prnerm thi ta ettert of tengotary ibilerem n betwn n the Delened income tan han not becn pnnided on the (mam ial stateineni amlin hun of assen and habihtin and is men. 517,129,000 portion of IX a l"s miestment in Safe liarbor Water sured oung pn sently erun ted ta ratn. The (:ompany's tunporary l'ua er Cor]> oration repenentmp accutnulated undistnbuted earn-du rou n ommt pnmatdy of tunmg ddierenen hetwren revenon mgs. In the future, if the undntnbuted t u nings were remitted, und upenso for Snannal uatement ami mt ome tu purposn. the IKi&E wouhlincur inuime tne of $1,lP9Wh alhm am t for lumls med durmy a onstruenon. and dcferred imest-mrrit in medits. Changn m P( a l"s defened imome tan ansing im entory Valuation from th( uunal apphratmn of Statement No. 46 repinent income lini stm Ls and materiah and supplies are generally stated at nnn termnahie theough future ata and hae been recorded as a aserage unt. tyutaton asset on the balam e sheet Deferred income in npeme repinents the nei c hanpe in tht deferred tas habihty amt regulatory investments av. thamy the 3 car. As a rnuk of us effect on nonregulatnl attivi-Marketable equity secuntin are stated at the lower of aggregate on. the cum. dame a ff<ct of the t hange in neounting for income ont or market ulue, and other secunnes are tated at cost. Where tnes rnuhni m an mnent in net imome of $19,745,000, or appropriate, cost redet ts amortiration of premium and discount 2 tr per mmmon shan, due to the m ersal of deferred income computed on a straight-hne basit Gains and lossn on the sale of tan a uuni m poor gan at in ratn m euess of the prnently investment securities are included in revenues from disenified inactulin ran, activitio on the income statement and are recognital upon Poor tr 1091, delornl mtomt inn w ere generally pnnidnl on realitation on a specific idenotication bait all tinung,htferenu s heturen rnenun and npenses for finantial statement and mcome ta purposn ncept for tuninFddlerenen Utility Plant Depreciation, and Decommiwinning penammy to un einated depterianon on p"-1476 propeny Utihty plant in service is stated at onginal cost, w hich includn mhhnom. matenal, labor, construction m erhead costs, and, w here appt& 'I ht 109) current in npeme consiso of a tegular in and alter-ble, an alknvance for funds used during construction. Construc-natiu nonunnm ta usin The 1989 and 1090 cunent in refunds unn work in progress, plant held for future use, and nudear fuel t onmt of a regohn tax refund inluced by the AMT.These regular are stated at cost. in tefunds tepinem pnnopally the in benefit of net operating Additiom to utibry plant and replacements of unin of propenv lossn (N( H.o meurred m 1989 nul 1990 u hich ha e been carned are capitaliied to utdity plant accounts. The original cost of plant hu k to riuner taes prevmush paid in 1086 and 1987 at federalin teured is remin ed from utility plant, and such cost, plus removal rain of 46% und 40% respectncly. The AMT liabilines can be car-cost,less salvage value, is charged to the accumulated pnnision ned hirunni mdchonely n en crnhn to future gars in whith the for depreciation. Maintenante and repairs of property and ryuhu in habihty eureds the A\\lT habihty. As of Deceinher 31, replacements ofitems of property determined to be less than a 1991,ihn carryforu.ud totaled $72,304.000. At December 31,1991, unit of property are charged to muintenance apense, ihe (:ompany had a upnal loss carryforwatd of $4,087,000 for tn Depreciation is generally computed using composite straight-return purpmn u hu h npaes m the year 1006 and an additional hne rates, apphed to the average imounent in classes of deprecia-capaallos utryforuard for fmancial statement purposn ble property The composite depreciation rates by class of depre-of 5(071,00R ciable property are 2.80% for the Calvert ClitTs Nuclear Pow er The no ntmn.t in ctedit (lTC) associated wnh IIG&l"s regu-Plant,2J5% for the llrandon Shores Power Plant,3.26% for lated utihty opt ranom is deferred and amortited to income ratably other electric plant,3.12% for gas plant, and 4.02% for common over tin in n of the subiert property. ITC and other tu credits plant other than vehicles. Vehicles are depreciated based on their associated wnh nanregulated dnersitini bminess activitin other estimated useful hves. than incroped leasn ore flowed through to mcome, l'or federal mcome in purposes, at December 31,1991, the Company had in eredit carryforwards of $6S8H,000 which npire in the years 2005 and 20U6.

~ d. f 4 l l 3 h %, am. _ .m,-,_nm ni..a,~ _a ,m.me,n mau m,in-o, mu-in mpene.nhet thewgh a smtmg f und nu tho loh p. In us Daunht r 1990 tate than as a reduction of Al L The pte.tn Al C rate of 9.u1% n order. the Margaml (:omnusuon yt antt J IM a l~ ad40..nal upusalent to the H 69% aftu-ta AIL rate. Thus, the use of a rnt nac to pioude for an iaut ase m in um lear decomousuomng pre-tn Al C rare don not af feu net income. au tual m onk t to at como! ate a icw n e of $21 nuthon m tw9 The (:onsidia tin Compames catutahre interest on quahfymg dotiars by tbc t nd of( ah en Lhtts' w n u hfe. 'l he total deu>m-real estate dnt hipment pont ett Capitaheed internt totalnt nusuomng rew n t of $64.110,nm and M2.026.0m t Dn ember $16,41tum,526,90100, and 5942.0nn in 1991,19"O, and a t 1.1991 and IV"n,inpa tn dy,is mduded m accumulated depre-UN9, respain ely, and is mdudal as a reduonin of interest oatu,n in the Consohdated liatam e hhten. t haryes m the Consohdatal 5tatements ot' income. A signiiiumt IM A I n rapnted by regulatuins of the Nut h ar Regulator) portmn of the increase in tapaalrred mtrrest m IVW was the (:onumssmn (NRC) to ;mn ide f manual amurant e that da om-resuh of(onsohdatmg socral real ntate pro;ech whk h had prni-nusuonmg funds m an.unnunt at h-aa equal to an NRC ously bun ao ountul for under the equit3 method hee Nme 4). presenhed nurnmum in d u di be accunmlated m er the n maimng en n e hfe of the Cahert Chits plant. A ordmgly,!!GM ha Nudcar l'ucl ntabbshed a taequahtied deonno" ,nmg trust to u hu h a Nudear fuel npemhturn are capitahnd and anonirol as a com-ponmn of deuunmissionmg cosi scrued base lun contr:huted

uinent of actual fuel costs losed on the em rgy produced mer the hie of the furl. I'ces for the future dnposal of spent fuel are juid Allow ante for i unds Used During Comtnation quarterly to the Department of l'nerg) and are accrued based on and Capitalised Internt the kilow a't. hours of da tncity generated. Nudear fuel openes

'I he allow ante for funds used during construs tuin ( \\1 C)is an ubject to recoecry through the dectnc fod rate. a. an ountmg pnx edure u be rehy the cost of funds used to fuunte unkt3 uinstrucoon proin ts n capitahied as part of utiht3 plant on Deferred Nudear lipenditutes the balance sheet and ts t rnhied as a nuncash item on the mcome Deferred nudear npendnurn represent tht net un.unortized hab statemu3t. The (ost of borrowed and nputy funds is segree.ned ame of tertain operatiom and mamtenance costs whkh,in accor-A beineen mtant npense and other u.come, respennel.11GN1; dance w nh ordas of the Maryland Conumssion, b.ne been 3 icon ers the capitahrol Al'C.md a return thereon after the rdated & ft tred, mduded in rate base, and are bemg amornent m er the utihty plant n plat ed m senice and mduded in depredable assas renuoung hfe of the Cahert Chfh Nudcar Pow er Plant. These an.1 rate base. Al C don not represent tauhte income, and the npendnures omsist of costs incurred in.a.1979 through 1982 for depreciauon of capitalized Al C n not a taededuct ble nis nse. inspn ting and repatnng schmic pipe <.upports, npenditures Dunng the pt rialJanuary through December 15,1989,an incurred during 1%9 through 1991 associated u nh nonrecurring after-tn AFC raic of M.W, com;nunded annually, was apphed ph nes of certain nudcar operanons pmicots and npenditures to all maior dictnc protectt l' fin the December 15,1989,araic incurred during 19% for im estipt:ng leaks m the pressurizer order of the Maryland Connunsion resulted in the aher-tn Al C heater sleeees. rate bemg mcreasul to x bol, compounded annually, and 554.144,000 of oinstruenon npendnurn en lirandon shores I.ong-Tenn Debt Umt 2, whit h prniousl had b en temmed from the \\l'C base, The dncount or pranium and opense ofissuan e associned uith 3 being reuntated in the Al'C base. llfecthe Decouber 17,19W, a long term deh: are deferred and amortired mer the Inn of the rate order of the Man!and Commmion redutal the after-tn re pecth e debt issun. Gams and imses on the reauluisnion of Al'C rate to 5 6% tompounded annuall. debt 2re amortired mer the renuining originalInn of the 3 liffectisejanuan 1,1991, the Maryland Conunissnin autho-issuanen. riecd the Company to begm acenung Al'C at a pre-tn rate of 9.94%, m connection uith the ado;> tion of the habiluy ructhal of Cah llow s accounting for meorOc taes under Statement o l'Inancui l'or the purpose of reporting cash flou s, highly liquid im ntments Accounung Standards No. % Under Sutement No. 06, u hich purchased with a nuturity of three months or less are considered pnihibits neto f tn aconinting and reiwirting,inuinie t nn repre-tolw cash equhalena. sented by the atferoice between a pre-tn and net-of-tn Al C

%)trunr1 Gas and (1wn Cwitany and klssJwics Nott 2. Segment Information Year Endo! December 31, 1991 1990 1989 tin 'I binundo 1 lectric lin enun.. $1,994,525 51,712,453 $1,5 47,1 '7 income trom operano.m. 446,157 264,814 3 k8,071 imomt from operations net of mrome tain.. 352,3H5 233,863 307,300 Depr ecuoon.. 171,722 146,1 h8 135j $ Cumulathe effect of thange in the method of accounung foi unbilled rnenun.. 30,173 Construction opendeurn undudmg Al'C).. 406,008 482,529 406,410 identifiable assets at December 31. ' 966,639 4,796,542 4,279,399 Gas lin enues.. $ 358,195 5 373,419 5 411,801 Income from operatu,ns.. 35,607 35,919 55,230 Income from operat ons net ofint.ome tasn.. 30,944 30,654 42,343 Depreciation.. 18,896 17,243 16,169 Cumulathe clicct of thange in the methnd of accounting for unbilled rnenun.. 7,581 Construcuon expenditures.. 50,236 52,787 40,929 Identitiable av.ets at December 31. 457,003 447,292 433,248 Disenified Activities lie onues.. $ 106,773 5 101,690 $,. 041 income from operations.. 19,691 32/A6 33,284 income from operations net ofincome tases.. 30,953 48,910 4!.313 Deprecianon.. 9,019 7,155 4/d2 Cumulative effect of change in the me, hod of accounting for income tain.. 19,745 Identifiable aucts at December 31. 1,001,313 1,041,365 836,530 Total lin enun.. $2,459,493 $2,187,562 $2,032,009 locome from operat'ons.. 501,455 333,379 476,585 Income from operations net ofincome tasn.. 414,282 313,427 394,956 Depreciation.. 199,637 170,586 156,546 Cumulathe effect of change in the method of auuunting for income taxes.. 19,745 Cumulatis e effect of change in the methmi of accounting for unbilled revenues.. 37,754 Construction npenditures(includmg Al'C).. 456,244 535,316 447,339 Idenn6able assets at Decembcr 31. 6,424,955 6,285,199 5,549,177 Other awets at December 31. 653,892 425,176 436,502 Total assets at December 31.. 7,078,847 6,710,375 5,985,679 Cmam pnor.yar amou,:ts ha; e ben rc<weJ tumfn tenh ti e wrent par's preenwwn

I l ! Mumm G.n amillan, Gm;wn a.1 %k.h.nw h Note 3. Subsidiary Information 1)n tis;fied lHisint ss Jtinities (intisht Iri the i.ptrainins i f rnt tluid. 'I' ins im estriii,rit ropresents twio thirils of Safe liarb, A

1. 'J He.1L lla1U,f) I II,lditip. Inc. and its sulisaharies arid PN(i. Inc.

1,,tal cajiital st n L, intimhng one.lialfi fihe sitting st<>ck. anti a Cofntt llatHin Iloldl!IVs. Inc., J % boll) oM titd sulKtdlary, bo!b tu,qhttds inttrrst in M ttlained ea:ninpm all of the sto L of three other subsahanes Conuellanon Ptal 1: state The folhiwing a con &nsed t'aancial mformation for Constella-Groqt Inc.. (:onsttlianon l'nern, Im., and Constellation im est-non llokhnp, Inc. and its subwharies and Safe liarbor Water ments. Irt 'I kne (ompanin are engaged m real estate operatiom Pow er Corpiration. Sinnlar information is not prntnied for I;NG, aNI deselopnient afld ou nelship of senior hWK JedificM DOL!op-lnt.1s Ith f DJnciJl position (sharehobb:r's equity of Si 5 nothon) f Illent,l ullt rship, and t epel'atnin (d }Hi%e7 pener.lthln %s!CIIl% and jpd {pgy1tg (if Ope 7,ltyp{g, f(ontfjklutilin inf If }ler Unnlinin sllare l'ina ntial llis e st nlent s to tb'. Colnpatiy g 1991 cat tilnps) are intillaterial to the consoli. IING, Ino is a w nolly ow ned whsuhary w hith im ests m natural dated financial statement,. 'l he condensed fmantial information pas testrs es and tbtains pas froln na nntraditu stlal sinirtCs. fqir (lie Cginsidiati(en CtHilpanies does not redtet the (!nilifiltifin liG A 1"s mustnient in Sab 1larbor her Pourt Corporation. of intercompany balant es or transactiom w hich are thminated in a prodm er of hydrocinirk power,is reported unar the ciputy the Company's consobJated finantial statements. 1991 1990 ._1989_ _ _. (In l hote.nh. I u rtit l'rt ShaN Mmmnt$.) (Ionsttil.ntion Ilohling%, Inc. and huli.diat-ics Intf allte hiattinents lies t'llues Real ntate projects.. $ H5,H45 $ h 2,6H 7 5 53,831 Power generation sntems.. 17,732 3,328 101 l'inancia! m,estments.. H.059 ~ 20,160 23,6(5 l'otal rn enues. I11,636 106.175 77,7h7 l[spenses tiher thait interest and anciHiit tises.. 91,84 H 733U 44 M locome from operations.. 19,78H 42,618 32,521 %nority intercit.. 3,550 952 340 Interest opense. 43,578 37,345 28,709 income tas npense dierefitL _ (9,005) (l 7,N 59) (l4,678) ' Nuulatite dicct of thance iri the inethod of accountine for income taxes.. , _19,74 5___ _ - Nt i mcome. 5 H,510 S 14.104 5 19.110 ($0ntflhothin to the Colnpa'lyh L'al'11ings })er share of colntnon stiick. b .l0 .I 7 S 24 lidante Shats Current assets. 5 20,463 5 71,817 $ 6S,8 5 H Noncurrent assets.. 976,179 964,095 760.688 Tot.il assets.. $996/42 $1.015.93 2 $829,546 Current liabihnes.. $2HS 130 S 439,fM S 26,736 o Noncurrt nt habibtin. 431.370 341,602 551,442 fharehou 's eqmty. _280.142 _ _ _. 252,641 er Total hahihties and sharehokler's equit). $996.642 $1.03 5.93 2._ __25 U 28. $s29346 Mfe liarbor Water 1% er Coqmration g locome Statements Kreenun.. -.... $ 2H,059 S 28,793 $ 28,711 m thpenes other than interest and income tases.. _ 13,468 __ _ _ 11 161. __12,U 7_ 1 Income from operatiom.. 14,591 15,630 16.376 ( hhe r income-4?8 721 700 / Intt rest cynse. 4,695 4,702 4,700 income tases. 3,742 4.299 4,612 Net income. $ 6,$ H2 7.150 $ 7.764 ItGA Ei equity in earninp.. $ 4,388 5 4,9t d 5 5,176 Dividends paid to liG& P. by Safe ilarbor Water l'ow er Corporation.. $ 4.570 _S I1.084 5 5,142 Italance Sheets Current assets. $ 13,517 $ 10,803 S 15,464 Noncurrent assets.. 120,472__ _ _122M4_ __ 12 4,9M 'I ntal assett $133.989 $ 132,847 S140.h 6 Current liabihties.. S 3,409 5 3,798 5 3,501 Noncurrent habihties. 79,235 77,686 75,963 Sharehokleri equiry. 51,345 51,363 60.632 Total habihties and shareholders' equity. $133,9F9 S 132.847 $140.396 IlGN1:% investment.. 5 34,229 5 34.241 5 40.421

IMromare Gas arulIJorrk Compny ornd Auhulunes Note 4. Real htate Projects and Finanda);nvestments Real estate projects conusted of the followmg investumts held by l'mancial investrnents ainsistol of the following im estments hehl the Conuellanon Compames: by the Constellation Comptutt ?t December 31, At Decembcr 31, 1991 1990 1991 1990 (in boundo On b uundu Rental and operating propenin Markttable equity steunties (net of accumulated At c ost.... $ 38,817 $ 82,051 deprecianon). 1132,114 $219,778 Net unicallied loss. Properties under development. 2 0,H9 190,677 At lower of aggregate ont - ~ ~ ~ ~(13,98H) Other rtal estate s entures.. _ 3.t R _ _ 2,528, or market value.. 38,817 68,063 Total. $44R.661 $412,983 Other securities.. 16,767 17,659 l'mancial hnuted partnenhips.. 67,269 123,711 H5,307 72, % 3 In 1991, a subGary of Constella: ion llohhnp. Inc. I "'"' * " '"* P"" I"* ". M,9 40,M

• • • E' ruognised e Ims of $9,988,0nD to write-down the carrymg value Total

$24H 25N $322,532 of certain operaung properties and prepenies under development ..y.. to redect the depressed real estate and economic markett In July 1990, a subsidiary of Constellation ilokhnes Inc. In 1991, a subsidiary of Constellation I toldinp, Inc, recog-obtained nintrol of several real estate partaenlups wliich had pre, nited a loss of $10,503,000 to write-down the canying tatue of sioudy been t,ccounted for under the equity method financial investments to reflect previously unrealized loues on cer-Accordingly, the fmancial statements reflect assets totaling tain marketable equity securities. Substantially all of the securities $15 5,63 5,000, intludmg $154,182#0 of real estate propeny, w ritten-down w cre subsequently sdd. The Constellation Compa-and liabibties totahng $76,277,000, including $74,734,000 of nies also recognized a loss of $3,071.000 on two fmancial limited long-tenn debt, in place of the previous ' 79,358,000 equity partnerships (banking and financial senices) that were adjusted to im estment, reflect market value when the partnenhips were redassified as in August 1989, a subsidiary of Comtellation Iloklings, Inc. short-term investments. auluired substaritially all of the asw:s and hab;lities of a real estate As of December 31,1991, grow unrealired gains applicable to partnership in which it had previously hekt a 50% equity inttrest. marketable equity securities totaled $3,022,000. Net realired The assets acquired totaled $6n.934p>0, inciding $62,3 54.000 losses from financial investments included in net income totahsl of real estate property, aad the liabilities assuna d totaled $11,593,000 in 1991. Net realir.ed ains totaled $1,395,000, and F $50,30M00, includmg 543,060 000 oflong-tenu debt. The acqui. $5,966,000 in 1990 and 1989, respectively, ution was recorded using the purchase method of accounting. .z Note S. Jointly Owned Electric utility Plant ilG& E owm an undivided interest in the Keystone and The following data represent HG&E's sh'are of the jointly owned Conemaugh mine-mouth electric generating plants k,cated in propertiesint December 31J 991: western Pennsyhania, as w ell as in the transmiwinn ime v hlch m Traumission trang.stts the plants' output to the joint owners'senice territo- ~ . Keystone Conemaujth Line rics, I inancing.md accourting for these properties are the same as - quar Amounn in wmndo for w holly owned utility plant. BG& E's share of the direct Ownership interest..., 20.99 % ' l_0.56% 7.00 % 1 espenses and assets and liabihties of the inint property is included t m the corresponding sections of the Consolidated Statements of, g9, g g g $gg ; Income and Consohdated Balance Sheets. h umulated depreciation... 24,046-15,589 ,683 Construction work in progress.. -3,312 3,106 A (. v. .A

J l lo ro n I wa;>am and NJni.!nn en I:sfowa a, Note (n Short Terrn LWrow;nc.; infor mato,n u,iu o nw..r,meo. J, y a noin and hnn of compensating balances w ha h hn e no w tthdraw al restrictiont t mht n o t forth ht low. In support of ths ;mt t o t ved the llortoaings under the hues are st the hanks' prune rates, bne (:ompam pm. o mnutmu,t hn ami. in some cen, mamtaut ntertst rato, or at sanous runney marLet rates. 1991 1990 1989 Ilblu % mom nmunM llG A iL's Commercial Paper Notes lionow mgs outstamhng at 1)n ember 31. 5159.5(K) Si63,NH1 5117,W0 Reighted m rage interest rate of noin outstandmg at December 31. 4,75 % 7Mi% N.69% Unused hnn of uethe supportmp tununertial paper notes at December 31. 5303,000 $225#10 520NXO Alaimum honoa mys durmg the par.. 5336,200 $ 344.200 $212,350 h crage dady borrowmgs dunny the > car (a).. 5210,883 52:H,642 $ 87,025 Weighted nuage mternt rate for the year @). 6.ON% H.29% 9.26 % Comtellation Companies' l.ines of Ctedit !!orrowings outstandmg at December i1. $ 52,670 5 64,000 $ 6,507 Waghted nerage mterest rate of borrowmg=, <nmtandmg at December 31. 5.94 % M9% 10.65 % i nused knn of etnht at Da end,cr 31. $ H 000 $ 10#o S 7,493 A1nimum borrouings dunng the par.. 5 75,000 5 64,JM $ 7,130 M et age dail) bottow mgs durmg the > car (a).. $ 61,H60 $ 3H,932 $ 3,584 Waghted acrage mterest rate for the year (b).. 7.19 % HN PL i1.12 % ur) The stun ifJdlar J.y <fout<t.mdmg Fonv:ings divided Fr ti<r non tbn ofJap m the priad th Total mit r est a.awJ Junng the pml Jn idoi by average J,nly bannings. Note 7. Long Terrn Debt l'irst Refunding.\\lortgage llonds ofIlG& E payable each year are as follows: Substantially all of the prinapal propenin and franchises ou ned gmt, 9, un3 p, una n, by l!GN I', as w ell as the capital stot L of Comtellation Iloldmgs, m, m gne 3,m inc, Safe Ilado Water Pow er Corporanon, and IING. Inc., are d"."."* subicer to the hen of the mortgage under which IIG&E's out-l W2 - $ 3M standmg I'irst Refunthng Alortgage lionds have been issued. On lugust I of cat h year,11G& E is required to pay to the I"3 " 3M S 420 I I" 3M 4D mortgage trustte an annual sinline fund p n ment etpul to 1 % of the largest principal amount of.\\1brtgage lionds outstandine IWL 3M 605 under the mortgage during the preenhng twehe months Such IW6 and 1997.. 4,000 605 IW" 33 M 690 funds are to be used, as provided in the mortgage, for the purchase 1 99.. 690 and retirement by the trustee of.\\lortgage lionds of any series other than the Installment Series of 199s,2002, and 2009, the

• • *"d 2M "

W 94% Series of 1993, the 8.40% Series of 19W, the in% Ser es of 2002_ 6,725 2001, and the 6.80% Series of 2004. Purchases may be made by 2M through 2W. $3,2m 2#" 42 M the trustee in the open m.utet andhir through responses to imita-tions for scaled proposals if purchases are possible at or below the appheable redemption price, or directly through the r -. stion Other long-Term Debt of BG&E prousions to w hich the Alortgage Ilonds are subicet n ' unases The laans under the unsceured credit faalities nuture during IW2. at a more favorable price are not possible. IIGN E may purchase %ese loans have been classified as h>ng-tenn since I!G& E is able to outstandmg Alortgage lionds from time to ume and may submit refmance da hum on a long-tenn basis with the $175 million of its scaled proposal for the sale of such.\\1ortgage lionds to the unused capacity under the revohinF credit agreements discuwd below. trustee for the sinking fund. IIGN E maintams revohing credit agreements providmg for bor-The principal amounts ofInstallmem Sc:ies Alortgage ihnds rowings of up to a total of $175 million. These agreements expire at $ arious times during 1993 through 1995, l.inder the terms of the agreements, IIG& E may, at its option, obtain loans at various inter-est rates. A commitment fee is paid on the daily average of the

l Julwerr (,,o amJ lJ,am Cmpm al %Im,1wou mhonowed portuin of the mmnntment. At l>n embt r 31.1991, '!he 570 mdhon of 8 30% umecuted notn are subin t to a lu all hid no hornm mg* under thne remh mg t ruht greements ruandatory sinking huid umler w hith $13 mdhon of the punupal and had audable $17 4 nulhon of unmni upatits under ihne amount u dl he redeemed at par m 1992, with the remairung $10 agreemenit mdhon being redeemed at pn in 1994, I he Alcibum term Ltn Stnts A matore at sanous dain from January UN2 through libruary 194 The ucighted cerage mter. Weighted Average Intettst Rates for Variable Itate 1)cht nt r.uc for notn outstanding at Iketmber 31,1991 h 7 77% The weightnl average mttrnt rain for unable rate debt during $he binbunPterm bin henn II matute at unom datn from 1991 and !U9b Were n folbmt July l'rM through Septunber 2006. I he weighted aurage internt 1991 1990 rate for notn outstandmg at Darmhei 31,1991 h K86% li(ml: Internt ratn on the 51f o nulhon of I'loating Rate Notn g,oan,. under umecuted etnht (atihnn - HSt% K81% Senn 11 due 1999 are detennined quanerly based on the 91 day l>oam under remlving etnht agreemento 6.93 K44 Trenry ihil auenon rate (nprnsed on a bond-equn alent baw I loating rate noin., H.00 0.D4 phn 1.124% The internt rate b subject to a minimum and nuu-n,ating rate notn herin 11. 7.92 K99 munmf 7.9% and 11.9%, vnpet thcly. per annum-P4umin conttol loan. 4.42 444 Port facihtin loan... 4A3 5.91 long-Tenn I)ebt of Comtelia' ion Compani" Mmtable rate polluuon control loan,. $AH (ol $ The mortgrge and mnstrut non loam and other collaterabred } conomic denlopment loan _ 4.69 6M notn have varying termt Of the 5181.532Mo of vanable rate Comtellation Companin - notn. 5144/>98,On0 requitn monthly internt only payments with Alortgage and comtruction loans uriom matuntin from Apiil 199' thraughJanuary )V96, and and other collateralind t.otn e H.93 9SV $16,8 44po teqmtes monthly payinents of prine: pal and internt 1.oans under credit uprectnents.. 7.6 % K56 with unom nutunties from Apnl luY1 through April 1996. The $18,877,000.10.31% mortgage note requirn monthly principal Aggregate %laturitio6 and interest payments through Nyrember 1997. The combined ayytegate matuntin and sinkins fond trymrements The industrial Park l'acihte don k require a fmal principal hit all of the Company's long-tenn bornmings for ruh of the not payment of $750,000 in 1992. Interest is payable setni-annually fh e yean cre n follouk at a w eightnl aurage rate of lit 2 N h Comtchation Ilohlings Inc. (ClIb r.intaim revoking ere ht Requiremeno agreements that expire in Alag 1992 and pernait loam at wrium 4.g;g mierest ratn Comminnes.t fees are paid on the d.nly incrape of 1992-5293.00' the unbornmed portion of the conurut.:tenti At 1)c'ecmber 31, IW3" - 3NM 1991, Cl11 had borrowed $167 nuthon under these inohing ernht I"94-I I38'N agreements, and 513 million of unmed caluenv m available under N -- MC these agreements. 1996-I 16,W ~. bote 8. Redeemable Preference Stock The 6.95 %,1087 Series and the 7.80%,1989 series are subiert to The combined opgregate redempnon tequirements for all mandatory redemption in their entirety at par on atober 1,1995 senn of redeemrMe preferenu stock for each of the nnt five andJuly 1,1997, respectively. years are us folkmx The folkming series are sub ect to an annual nt ndatory Year i redemption of the number of shares shown bebw at par begin- _ Requin nients onTh nu ning in the year shown below. At ilG Ala option, an athhtional

993

$ gg number of shares, not to exa ed the same number n are manda-g993" 3'999 tory, may be redeemed at par in ar.y year, conuneneing in the pg" 33 ggg same year in w hich the mandatory redemption bepm. The 73'[ggg j993" K25%,1989 Series, the K625%, P/90 Senes, and the 7.85%,

9y "

• 36 000 1991 Senes lhted below are not edeemable except through operation of a sinking fund.

g.% dm ' m f dividends or onets available in the ."" " E event of hquidation, jueferred stock tanks prior to preference and nunmon stock; all hsues Ol' preference stnck, whether subiert to 7.50 %,1986 Series.. 15,000 1992 mandatory redemption or not, tank equally; and all pielerence ,.75%,1987 Senn.. 15,000 199,4 suick unks prior m common stock 7.64 %,1988 Series.. 100,000 1994 8.25%,1989 Senn.. 100,000 1995 8.625% 1WO Serien .130,000 1996 7.85%, lW1 Series._, 70 000 1997 .. _ _ _ _ _ - _ _ - _ - - - - _ = _ _ _ - _ _ _ _ _ - _ _

1 l I;alww r Gas and flo rm Com;arg,or,1 MlaJuno Note 9. Pension and Other Postretirement Benefits I he (,ompany *ponson waral nonvintnbutory definett benefit On Deconber 20,1991,liG AEilloard of threctors appnited pt tmon plant tht hityest of u hk h (the Ptraton Plan) unels a Voluntary Spial l'.arly Routement Program (the Program) for Atantodh all IM l' employ ces and I t nam employ ees of the those employen u ho retire during the penul i ebruary 1,1992 Con (tellanon Compatuen The othtr plans. u huh are not material through Apnl 1,1992. To be chgible, an emphnee must be at m amount, proude supplement.d bentha to tottain Ley emphy least age 55 and have at least 20 ears of service as of Apnl 1, 3 ett l't nefin under the plato are pentrally based on age,) cars of 1992, jn accordante with Statement ofl'mancial AUounting Stan-sen u e, hini ( ornpensition levch. dards No. 88,"Einployers' Accounting for Settlements and Cut-Pf uo a rvu e unt awx natnl wnh retroa in e plan a'aendments tailments of Defined llenefa Ptnsion Plans and for Tennination n, anuitti7ed on a straight hne bnis mcr the aurage retnaming lienefit%* the one-time cost of terinination benefits awociated wrva e petnid of at tne unploytes, u ith the Program uilt be recognized in 1992. The (;ompanyi funding pohry n to contribu*e annu.dly the 'lhe following tables set forth the tambined funded status of (ost of the I4 nsion Phm as detertnmed urulce the aggtegate cost the plans and the Com[xnition of total net pension cost. The furthod Plan awets at Detember t1, lo"i consisted prinurdy of amounts shown below ate not affected by the Progtant discuwed tnatletahle fm o inuque and nputy secuuhes, gtoup annuity above. t ontha t% rind short-terin iraestmern At Decemher 31, !991 1990 tiblur Anmna m Themna) At tuanal present value of Vested benefit obhpation. $(418,170) $(377,818) Nom ested benefit obhpation.. (11,372) (11,2H3) b umulated benefit obligation. (429,542) (389,101) Protected banefns related to increase in future conipensathn lewis.. _ 94,176 [ (83,bO3) ( Piotreted henefit obhpation.. (523,71H) (472,904) Plan nwets at ait value 516,967 474/iHH f Phin awets lew pt gcted benefit obhganon.. (fi,iSI) i,54~ ~ Umecogmied pnor seruce cost.. 19,112 10,597 l'nrecogm7ni net pam... Unamortired nt t uwet from adoption of l'AS11 Statement No. 87............ -. (l2 015) (l8,H60) (2,265) (2,492) Accrued pemion cmt. f(IW95 Fiddh Awumptiom I hstount iatem .... ~ 9.0 % 9.25 % b etage m(rease m f uture compensation les els. 4.5% 4.5 % lipetted long.tenn rate of return on assets.. 9.5% 9.5 % Year Ended December 31, -1991 1990 1989 ~0riTh,wnJn Components of net pension cost $ctrice cost - benefits earned during the perim!.. $11,729 $ 11,257 $ 10,893 Interest cost on proiected benefit ohhgation.. 43,143 40,455 1H,042 Actual return on plan awets...... (56,737) (lH,HHl) (64,593) Net amortization and deferral.. 12,810 (24,066) '24,507 Total net pension cost.. 10,945 9,765 8,H49 Amount capitah7ed as construction cost.. (1,500) (1,377) (1,237) Amount chargni to expeme. S 9.445 5 8.388 $ 7,612 in addition to providing pemian benefits certain health care Statement No.106 is adopted (traminon obligation) may be and hfe insurance benefits are pnnided for retired llGN E recognised inunediately or on a delayed basis mer the average employees and certain retited employee < of the Constellation remaining senice period of active plan participants. In that the Companies. The cost of these benefits is generally recogniicd as tran ition obligation is expected tn exceed $300 million, the Com-the benefits are paid and totaled $14,054,000 for 1991 and pany expects to elect delayed recognition of the transition obliga- $11,464,000 for 1990. The cmt of providmg these benefits for tion. The Company also plans to request the Maryland Commis-years prior to 1900 is not separable from the cost of pnniding sion to prmide current rate recovery for any increased emts as a similar benefits for active employees. result of adopting Statement No.106 and to authorire deferral of Statement of Financial Accounting Standards No.106, u hith any increased costs for u hich senice rates are not provided cur-must be adopted by 1993, requires a change in the method of rently under the prmisions of Statement No. 7I for regulated accounting for postretirement benefits other than pensions from enterprises. Therefore, the adoption of Statement No.106 is not the present pay-as-you-go method to an accrual metluxl. The expected to have a significant impact on the Companyi financial accumulated postretirement benefit obligation existing at the time statements.

ll.t!!smur r GJ3 ninll]tilrI,' Cumj',sny sir >J hotlwitoo ars Note 10. Leases I~he ( junpm) as Irssu, cono atis foi u rtam la< duit, onJ upup-( ( ttain of the (:onsti Hauon Com;utues, as lesmr, has e ment una r it..sr ayru rnems a nh unous tyntaoun d,'tts iuul tnier ni mio operanog Icen for otthe an I retail s;utc. These rt neu al opto,ns ('...metent with the reguLtory teratmt nt. ltet tren t4ute mt r pt noth ranymg from 1 to 2 4 3 rm, with options papntnts for narrating und t apitalItasn loi unht) opt t.,tioM are to tenew. 'l he net book s alue of proputy uruler operatmg leases t harged to opt nse m the ConsohdattJ wtcments of im ome. w e $191.962,000 and $187,449h00 at 1)ttember 11,1991 and 1.cer npem.t un e follon for the thru s cars t mit d 1970. inpettn cly, The futurt minimum rentah to be reaised IM emho i1 under optrating Iren :n ettett at 1)ecunber 31,1991 are " I"II""' 1991 1999 Unv Yelt + n,m, m ( Speraung Icem.. 512,36% 514,240 5 i(,0 t I d " "'"" #E (:apral Itases.. 274 440 IM iUVJ $9M 'l'otal ltast esprnst. hl2,6 W blhCO I' l $, I Uf 6 p>94., N,s9; .I he future nununum itase paytnet.ts at 1)n unho 31,1941 i o l993" ',4 h4 long-tenn non(anulabic leen are e foi,n n 1906" 5,974 I'b 0 r bl$ t l' t.. 3.'. L 'ptr ating ( U pl.id Yea r i e en I easn Total nunirnuni tentah. 57H.4 56 unummL 1992 5 3,709 $ lrJ4 1991.. 1,098 af pi9 L 2.198 h6 199;.. 2,1 V' b4 p >96.. 1,999 64 Therra!'t c r.. 4.261 4hl Total mimmum lease payments.. 5.16 A04 51,021 Inu rest portion.. H M. ) I'r'% Cat s Jlut of nt t lillninlun) icasc pa3 ments, s u1 Note 11 Commitments, Guarantees, anci Contingencies Commitmenc Yeai liG A1 has nude sabstantial t onunitments m connection with its ~ tin wnuna (111htrolInin pfligraill filt 1992 and sulhetjutnl)l'arb in addition, gggy g ggg7 l',(m E has entend inni tuo l<itig tcrin contractu 6>r tiie parthase 1903 6R789 of electnc generanny capacity and energy.The capanty runtracts

994 39,9c,n npire in 2001 anti 2013. Total payments under these contracts p,y g 7 g,793 were $21,716.000, $17,Us?Jxuh and $12,922,000 durmg 1941, 39ng 74,3;9 19% and 1959, respecn oly..\\t 1)ccember 31,1991, the nti-Thereafter..

76L212 mated future payments for capaaty and encrp that liG,N1,s i oliligated to hoy under these contracts are e fidlowe Total payinents-M,ll Q

Ha!wur Ga. adi!.m %;an, ad Wiuno ( oum of the (. rn hac,n Comprues ha.c tomnutted to wn. dean-up msn f or rhm snes could be ugnifuan, IK, A l behtus trdupt addinondr i t.d atal to ulak e a.!dI! binal hum to 1 t,n.Hn thJt the h so!unlin of tbar indut h u d! not bne a matoN! d!cct on athhates,p.mt w m mi pnmcrsh,ps m u bd they hne an as founoal posmon or umults of operatioot uncrest \\s of l)n cod t r il Pol, the tool amount of un tument N,udear imur.mce iemurum ms t omnonul to % the ( _uno !Luon (:omlunies n ' slo: mdhon \\n accidem or an ntemled outact at enht r mut of the (. lvert thfh .a N P Plant couhi hasc a subuannal whose Wco on (.uarantees lit ;N 11'the primary omtmycnon resu'tmg f om an mci knt at the lu. AI has aerced to purantre two-think of tenain in.h biednew Cahtrt (:hifs plant u onld mwhe the phym al d unage to tht ;lant, mcurrot by Mfc I brl o ma r Pourt (:mporation. The amount of the tetourahihiy of tepbttment power msa, and itG&IT habihiy set h indchu dness totah 540 nulhon. of u hitb $ MJ milhon repic-to thini partws for po.perty damage and boJJy miury, Althtnigh sints BGN1 N shue of the guarantre. IMiN E asscoes that the nsk of 14;& E mamtams tht s anous imurance pohnes currently nadable materul low on the loans yturantu d a nunonal to proude unerage for portions of these cont.ngonoes,14 ;&l does As of I b emiwt 31, lWI, the toul outsundmg loans gunamcol not wnsaler the audabic msurance to be adu;uate to on er the by the (:onstellanon (:ompanies nne 546 indhon. Aho, the Comtel-costs that muld result fn m a maior nodent or ao niendnl outape lanon Comp mics har acreed to guat.mtee (trtain bornnungs of at enher of the Cahut Chifs umts-unous pow er prneranon and real esote projet ts. The Constellanon in ad;hoon,in the event of an inadent at any unnie d notlear (:omparut s assess that the trL of m nena! h ss on the loam guaran. pow er phmt in the muntry, liGN E could be assewt d for portion tred n mmimal. of any thitd party riainn asniated unh the modent. Under the puniuom of the Prh e Anderum Act,if third patry daims relatmp l'mironmental Alatten to sut h an incident cu eed $200 million (the amount of pumary The Cican Air ki of two (the Aco omtam, pun nions thsigned to imuram e), ItG&l; muhl he awessed up to $132 milhon per ino-rnlut c sulfur thoude aml tunopen mide vnusuons f rom tietu k gen-dent, payable at a rate of S20 rmlhon pei gar, for third party thina. cruing stanom m tuo sepaute phases. Under Phne 1 of the ht, IIG& l and other operatois of commercial nuclear im er pbuts u hn h must be nupicmemed by IW3, UG&l nptcts to mcur npoo in the United Ntatn are required to pun base imun.nte to mser ditures of apprmimately MO nuihon, most of u huh is atueu'abl. to daims of certain nudear workert Other non gm ernmental com-ts pornon of the wst of mstalhng a flue gas doulfuriranon system at mercial nudcar iaohun may also pun hase suc h insurance. Cover-the Conemaugh imnc-moeth generating station, in whkh liGAl' age of up to $400 nulhon h prmided for claims against ilG A 1. or owm a 10 5m, mternt. IX ;6 E cannot presemly deternune w hat others insured by thne p hcies for rathation imuriet lf certain at nons will be toportd in order to wmply with Phase 11 of the Act, danns w cre made under these policies,llG& E and all pohc3 olders h wluch mme be implemented by 200t liown cr, IM;& E antiapatn could he assessed, with IlG& Ei share being up to 563 milhon in that wmpliance wdi be attained by some mmbitution of fuci suin.h. any one par. ing. Due gn deudfuneation, unit renrements, or allow ante trWmp For ph,nical damage to Cah crt Cliffs, llG& E has $2.515 bdhon At thn time, pbm for wmplpng with mtrogen midt (NO,) con-of propertyinsurance, mdudmg 51.M bdlion fmm an ir.dustry ttol rnpurements under the k t are lew (cruin because implement-mutual insurance com;un3 Jf an actijent at any insured pbnt mg repubnons hne not t been fmaheed by the gm ernment it is unses a shortfall of funds at the industry mutuah UG&E and all npet ted that by the par 2000 these regubnons u di reqmrc a hh-poht) holders muld be assessc& with llGN E's share bemg up to nonal NO, controh for and rain abatement at liG&E's generating $U million. pbms and mone nonattainmem at all llG& E facibors, ~1 he mnttok if an outage at Calvert Chifs is onm d by an imured physical u di result in additional npenditurn that are ibif cuh to predict pnor damage loss and bsts more than 21 w etis llGN E has up to 53M to the iwnance of su(h regidnions Based on proposed and rain reg-milhon per unit ofinsurance, pnnided by a different industry ulanons, llGNE currently estinutes that the acid rain comphance mutual imurance company for replacunent p<mer costs. If an non No, wntnds w di cost apprmimately $ 40 nullion. As no proposed age at any imured pbut causes a shortfall of funik at the industry mone nonatt.unment repubtions hne been hsunl, llGN E n cut-mutual, llG A E and all poticy holden couhl be assesse,1, wah rently unable m predict the cmt of wmplbnce with the a&btional DG& E's share being up to $10 milhon per year. icquirements at other BG&E facihtin. BG& E hn been nonfied by the Ennronmemalliotection llenn crability of Electric I uel Costs Agency (EPA) and seural state agencies that it h being considered a lly statute, actual electric fuel costs are recourable so long as the potentially res;mnuble party with respect to the dean-up of certain Alaybnd Commioion finds tlut ilG& E demonstrates that, among emironmentally wntaminated sites owm d and operated by third other things,it has nuintained the productive capacity ofits gener-parties. A&huonaUy, certain llG& E properties cc aten substanen aung pbnts at a reasonable level. The Atar>bnd Comnussion and Jt signated by the i PA as huardous to human health. Ahhouch the Alan bnd's hiehest appellate coun have interpreted this as penuit-

I:ahrn e G.o and Durrn Cmpny and MivJww tmg a su% ine o aluanon of t,u h unplanned outage at 11G Al A amount of pmer a ul eu cedni the (it'PP standard. llasul genuaun t plams to Au nnme w he:ht r or not IX a l; had im;de-on ihn it cord, the ( blet concluded there w as mtficient ceuse to mente I ul reasonalk and tost i ticon e numtenante and operating euw e any au.nlable faihirn to maintain preslmtne upanty at control pro (nimn appropnate tot prnennng the outage, Elfectne higher len h. January 1,19C, the \\1arvimd Conumssm authorucd the estahhsh-ihu mg 19M4, 1990, and 1991, IM i A l' opnictu ed ntended ment of (.enermng l' rut PcGirnunce Progt am (G1TP) to mea - outagn at ito"ahcrt Chih Nudear Powt r Plant, In the Spring of sur e, annualh, ut.h9 toinphant e w nh mamtammg the produttne 19x9, a leal was disun cred atound the I'mt 2 prewuriter heatt'r capauty of generatmg plants at.t awnable lot h by estahinhmg a sk cvn durmg n 0:fuchng outage.1;G A E shut down Unit I as a sniem-w nk generanng pu tonnatu e targt t and mdnidual petfor-pret autionary menme on Alay 6,1989 to inspett for similar leals inana targets for eat h base 1,,aj guaranng umt. In future tuel sate and none u ne found Ilowner,l' nit I w as out of service for the heanngs at tual generatmg perfonnam e ala t.dusunent for plannul renuinder of 1989 and 285 days of 1990 to utulergo mamtenance outagn w di be comp ned to the syston-usde taipt and, if met, and swahfication w otl to enhance the tchabihty of various ufety shoull sigmty th.it IX ; A 1: has nimphed w nh the rnpurements of sy.tems, to repair equipment, and to perform ruluned perio4hc \\ tag land law I adure to meet the system-wide target will rnult m sunedlance into l'mt 2, which returned to seruce on Alay 4, reuew of rat h unit's adiusied actu.d p ntranng performance sersus lWl, remamed not of service for the ternainder of 1989,19Mi, as performam e target in detenummg (otnpliante with the law end and the first part of 1991 to repn the prewuriter, perform inain-the basis for possddy unpming a ptnalty on IKi A E. Part n to fuel tenance ami nnhfication wotL. and complete the refuehng. The tate hearings may s.dl quesnon the pr nkm e of IlGAl?> actionuir replac ement energy cost asmeiated with these utetuint outages mactions w uh rtspict,o.n> ghen generanng plant outage, whwh for both umti at Calvert Chffs,condmhng with the return to wr-toubl rnuit m the daallou ame of replacement energy uiso by the sit e of Umt 2, n estimatul to be $UH mdhon. Alatyland Conumssion-In a December 1990 order iwurd by the Ataryland Canunis-smee the two umts at 11GAI"s Calvert Chih Nmlear Power sum in a IK;& E base rate pnx cedmg the AtarylanJ Conuniwion Pl.mt pnaluce the low e.t n,st pmer generucd by !MiA1; nlace-found that certam operanons and maintename npenws incurred ment energy wsts awinaini w nh outagn at these uma can t, w-at Cahert Chfh during the test year shouhl not be recovered from mfwant. IXi& E t annot esnmate the amount of rep'.at ement eneigy ratepayers.The Alaryland Connniwinn found that this uorL, costs that couhl be thadenged or ihsalhiwed in fuuue fuel rate pro-u hich was perfonned dm ing the 1989-1990 Unit i outage and fell tenhngs but sv.h amounts couhl be notenal within the test y ear, was avoidable and caused by liGN E sctions in t ktober IW, lx, A P tilal us tint fuel rate appheanon for a w hich were deficient. t hange m ts clerin< fuel rate under the (;l'PP program The rnal The Commission noted in the order that its review and find-tant use before the \\laryland Conunission cmcrs 1Ri A E's operat-ings on these swues pertain to the reamnableness of !!G A E's tnt mg pertonname in calendar 3 ear 19C, and IL&l?s tihng Jemon-3 ear operanons and inaintenance expenses for purposn of setting strated that it met the system uiJe and indindual nudear plant per-base rates and not w the rnponsihihty for replacement power fonnance tatgen for 190. In Nm ember 1989, tnrimony w as fded costs associated with the outages at Cahert Chth.The Alaryland on behalf of Alaryland l'cople's Counsd alleging that inen outagn Conuniwion stated that its decision in the base rate case wdl have at the Cahert Chih plant m IOC w cre due to management impru. no resjuduara (binding) ellett in the fuel rate procenhng eumin-dence and that the replacement energy co,ts aw.ciau d uith those mg the 19891991 outages. The w ork tharac terierd as avoidable outagn shouhl be dnallow ed by the Conmnssion. Total replacement significantly increased the duration of the Unit I outage. Despite energy msts assocuted unh the IOC outages were appnwimately the Alaryland Commiuionhtatement tegarding no bindmg 5U milhon. effect, ilGN E recognizes that the ueu s aprewed by the Atary-In Alay l989,liGAi tiled its fuel rate case in which 1988 land Comminion make the full remvery of all of the replacement performance was cununed llG& E met the system wide and nudear energy costs associated with the Unit I outage doubtful, plant perfonnance targets in 19M People's Counsel alleged that liased upon a review of all of the work perfonned during the PGNE nuprudently managed several outagn at Cahert Chffs, and 1989-1991 outages at both units at Calvert Chfh by l!GN E per-l!G& E ntnnate that the tout replacement energy costs associated sonnd as w ell as independent consultants, ilG& l'. recorded a pro-wah these 1988 outagn u etc appnnimately 52 milhon. On Nmem-vision of $U million egainst the imible dnallowame of replace-ber 14,1991, a !!canng 13aminer at the Ataryland Conumssmn ment eneigy costs incu red during these outages, w hich reuucnl issued a proposed Order, w hkh became linal on Dn errder l',1991 1990 carnings by 2He per conunon share. IlG&E cannot deter-and omduded that no thsahowance was u arrantal The iIcaring mine w hether replacemem energy (mts may be dnallowed in the Lunaner found that ilG& E mamtained the pnnluctis e capaeny of present fuel rate pnweedings in ocess of the prm hion, but such the PLmt at a teamnah!c level, noong that it pn luted a near record amounts couhl be nuteriah r

Ilahunare Gau ind iJo rrei Gmf ar:y and S Jus.hano h Note 12. Quarterly rinancial Data (Unaudited) 'I he follow mg data are unatulard hut. in the opnuon of Manage-twti(ab generally acurring during the summer and u mter thrnt, In(httk all.hljustt1HMits nn ( ssaly ber il fatt prestolJtiun, nU5nths k'doTdingly, Olmpar%ons Anbing tjuartCt3 fif A )Taf IM als unhty I u aness v. wasonal m nature uith the lwal sales inay not lie inthotive of os crall trends and thanFr$ in "lwrations. Vam t 1.mH _._ _ br 1 " led \\tah 11_ .,lunt in _ jegembo j0,_ Drundwr H Dnendier il tin TMounds, I o es l'rt Wre %%nto 199l l<ru nues. $ 594.fi64 $567,189 5702,048 $595,392 $1,459,493 Inu rme from opuations. NN.623 118,789 225,320 6H.72 3 501,455 income lwlore cumulatise effect of change in auounting ns. hod.. 41,110 59,192 116,671 16,708 2 3 3.6Ni Cumulato e dfet t of thang m the method of accounting for int omt tawn 19,745

• 19,744 a

Not income.. 60,H 55 50,192 116,671 16,70H 253,426 1:atninp apphrahle to totnmon i.tm k. 50,285 48,164 106 S97 6,134 210,6b0 1 arninp per share of common stml Ikfore cumulatise effect of thange in unounting m(tlant.. 0.36 0 57 1.26 0.07 2.28 Cumulatne effett of thange in accounting for moome tavs.. 0.24 0.23 Total earninp per share of onnmon md 0.60 037 1.26 0.07 2.51 1990 1:eunues. $ 550,921 $491,265 5619,657 $525,719 $2,187,562 incoine ft<nn operations. 77,279 74.773 174,007 7,320 333,379 Income before cumulatnr effect of chang in accounting methat.... 36,775 38.N 59 100,320 (408) 175,446 Cumulatise effect of thange in the method of ascounting for uninlled rnenues, net of tases.. 37,754 37,754 Nct mcome.. ,4,529 38.859 100,320 (508) 213,200 rarninp applicable to annmon f.tock. 65,156 29,112 89,749 (11,078) 172,939 Earninp per share of comnum stal before annulatis e eticct of change in accounting method.. 0.34 0.35 1.08 (. I 3) 1.64 Cumulatne tITett of change in the method of aroumting for unhilled rnenues. 0.47 0.46 Total earninp per share of cominon sto( k. 0.H 1 0.35 1.08 (.13) 2.10 b fluanerh amounts 11+ 1VVI hai1 hern rrrestrJ ra trfkt a chrrge in th ruthwl of aavun>mgJbr in vmc tarn y be b u as made m Ihamber ivvl ctl rat:e]nu.ny I, iHI per in.wne 'lears seawn <rj kre I). (Juarter ty enuur:tsfsr i991 and ivv0 h.rtr Icen oenateJ to trfist a ch.nge ir; the vrprin:g ofienuur fuom mirnbange sales if ekawary and mtenoan.twn smus vre l'td tv Ennururaum ofMic !). Rcalnfir th storJ and luune parters af I v41 retira sk write-Ja:n of the Connellation Con:pames' mcenments in artainfinan:,alinrutmenn anJ ural ertare pryas. repasuly (<rr % g n Q Remits lhe theJburth tjuancr ofIHn oriha the povvwn for a paudit Juallwan r ef ret a.rment er.crgy wn per Niar i1). l 1k rum oI the p.orteth rasmmgr per sher amaur:tr m.r> not equalth total)hr t e y.:r Jn to J,mgn in sbr armage anale ofnarrs " L, h curitanJmg tbnwglwut th vrar. s E .{ w. i . f. r <i .) N y k g -id! 4 -~

& Utility Operating Statistics tutw.~,, us, an.1I h.m < ma,o su,1 wa-o 1991 19 % 1"W l"W 19C Electrit Operating Statistks Rt u nues iln 'I houvruhi Re al,ntul. $ HN2,591 $ ~1MH2 $ M@l 4 620,650 5 594,28% Nn Al( o noicroal. 146,669 2 20f,C 194.4 ~ 1 178,727 175,322 i ar pt ('onum u ul,unt Industml. '" 6,244 712,s t' 6r,6,04 2 626, u n 615,723 Nah s to ( Lustonu ts. 1,945,493 1,671,4(6 1,(09,4us 1,4 9,r,x 7 1,lss,12g Intt r(lu'tyr Nah s. 2I,845 26,629 17,NO2 43,919 ,12,46N ( W r. 2 5,l H 7 14,268 l i, '. ~ 22,4 2 w 18,264 Iml $1,994,925 51,712.451 $ 1,44 7,167 51,492,134 51,414,960 Naln fin 'llo uanih> - w u th a nual 10.097 9,281 9,4 ( l 9,196 H,4 21 sm di ( Wuninen ul 2,674 2,561 2,461 2,291 2,139 1,n gt Conunnual and in.lustrul. 12,742 12,514 12 C9 12,491 11,914 sales t i Customen. 25,512 24,3 7 N 24,791 23.9 41 22,575 Imen h mec Nales. 1,166 1,0H N 595 2,042 1,266 Iotal. 26,67 H 24,466 2 3, t h6 26,012 21,841 Cocopen lbalennal. 939,734 930$ko 913,910 S95,8s t N76,$26 $ null ( onunen uL 9 4,H0H 92,102 90,647 N7,049 N 1,247 1.ar pt Conunen ul ansl lndustrol. H,030 7,991 7,587 H,17 5 H,195 'l oul. 1,041,572 1,010,973 _ _l,012,144 091,10s 96W,46H truye ou pt r Knalentul Customer - uut. 10,799 10,064 10.438 10,162 9,847 h t't age Rate pt t 1,M H (t u hkling intert hange ules) - c.. 7,63 6.86 6 09 4.95 6.14 Peak I.oa l (one-hour)- m. 5,910 5,477 5,101 5,3 x l 5,190 Capah!hty at Sunnnet Peak ~ W. 6,608 6,159 6,164 4,930 5,K8d Gas Operating Statistics Res enut s (In 'l bousanda 1:csulentut.. $ 220,653 5 21M,967 $ 242,189 $ 225,035 $ 242,240 snull Conuncrcul 3 3,5 3H 34,622 40,01] 36,194 38,538 1.atge Ilonituenial and halustnal 1%luihny t hhscry Senite. 77,506 87,389 wLu8i 92,647 104,765 I)cIn t ry Sen ue. 17,119 21,l t t, 27,069 19,164 23,492 ( tho. 9, l '9 11_,28s 11,149 H,lon 7,421 Toul. $ 35N,195 173,419 $ 411,801 $ 381,536 5 41<,456 Sales (in ThousanJa - u ni Reshlential.. 36,519 15.026 39,806 40,140 38,142 $ null ( onunen uk 6,154 6,144 6,889 6,792 6,336 1.aige Conuncrcul and Industnal f actushng thh, cry Senu c.. l H,l tH 14,124 18,772 21,770 1 N,14 4 I)eln ery 5cn iv 40,673 40,593 45,230 40.W2 7 40,l l h Total. 101,484 101.047_ _ 110/,97 109,t '9 102,941 Custemen NCshk utkal.. 4H2,085 4 M 2,650 4N2,53N 482,011 432,(123 %iull Conuuertial 32,336 31,981 31,b81 31,582 31,108 1.arge ( :nnurercul and industnal, 5.610 5,373 5,107 _ ( 160, 5,001 'lotal, _ 520,031 _. i20.034 519,726 318,753 _ _. 518,132 perage use per Rnidential Cusunner - 'thernw 757,1 726.4 825.s 812.8 791.2 m crage Rate per Thenn (cwludmg dcIn en serva c) - 5 .55 .56 ,;7 .52 .61 Peak i)ay Sendout - u ni.. 610,200 6 s i,9(H) 661,200 669,400 636p00 Peak lhy Capahihty - ulu. H17,000 85 3,1N K) 761 S40 701,000 7 3 l,000 Cmsm pur w amsunts h.e Frcn rutstd ta am!nm teth the.unrnt osr's p cmaatu.m

uima naura nara a mwin<a s+uwin Shareholder Information Demm vo(L Dwemn.md Pme Onm 1991 IWO Dicidend .. Price. 1)h idend _ Price. _ Declared liigh low Dettired lliph low lirst tjuaiter. S.525 5294 $25% 5.525 514h $29% stumd (Juarter.. .525 291 284 J25 304 27X Third (Jue rt t r.. .529 32 294 J25 294 24" i om th (Juarter.. .525 34% 31% .525 29X 2W ~Ioral 5 2.10 5 2.10 Omdend Poncv Annual Meetmg The common stm L is entitlui to dhidends wuen and as declared The annual meeting of shareholders uid' be hehl at 10 00 a.m. by the lioard of threctors. There are no hmhations m any inden-on Apr;l l5,1992,in the Ilunt Vality Ballt mm of Marriott's ture or other agreements on payment of divi & nds however, llunt Valley Inn. 245 Shaun P,J (I-83 at Sh4wan Road), holders of preferred stm L (6rso and hoh%rs of preference stock Ilunt Valley, Alaryland. (neso are enutled to rective, v hen and as declared, from the wrplus or net profas cmaulative yeady dhidends at the lhed Iorm 10 K preferential rate specified for each series and no more, payahle Upim u ritten request, the Company will funiish, without quarterly, and to recche when due the applicable preference riurge, a copy ofits l'onn 10-K annual reimrt, includmg fman-

amL rehmpthn payments, before any dhidend on the common cial statements, after it is filed with the Securities and Exchange stock shall be pil or set apart. (hvidends has e been paid on the Commission in March 1992, Requests shouhl be addressed to common stml continuou dy since 1910. l'uture dhidends depend Charles W. Shivery, Viec President, Secretary, and Treasurer, upon future carnings, the financial condition of the Company, P.O. Ilus 1475, llaltimore, Alar >iand 21203 1475, and other factors. (Juarterly dhidends w cre declared on the am-mon stock during IW1 and 19w in the amounts set forth abme.

Auditors Coopers & l.ybrand Common Stock DiWdenrJ Data Record dates are nortaally on the 10th of MarchJune, Septem-Executwe of fires her, and De(ember. Quarteily dnidends are customarily mailed Gas and Electric Buihling to each shareholder on or about the 1st of AprilJuly, October, Charles Center and.lanuary. IIaltimore, Alaryland 21201 Alaib P.O. Ilox 1475 Dnodend Remvestment and Stock Purchase Plan .D,e f...ompany s Dhidend Reimestment and S,tock Purchase llaltimore, Alar)?and 21203-1475 Plan pro ides an opportunity for holdets of the Company's comrnon stock to acquire additional shares of such stock in a Shareholders' Inquiries and Assistance convenient and economical m.mner. Participants m the Plan Sharehoklers desiring assistance with lost or stolen stock certifi-may reim est cash thv.dends on all or a portion of their shares cates or dn,.dend chn.,s, name changes, address changes, stock i transf.ers, or other natters should call the Shareholder S.ervices of common simk and/or make opuonal cash payments. Representativ :s on oue toll-free telephone numbers. The following toll-free t,dephme numbers are availabic swo _t radmg .The Compm>'s common stock, which is traded unar the during our businew hours,8:00 a.m. to 4:45 p.m. ticker symbol llGE,is hsted on the New York, Alidw est, and hitimoreldetropohtan Area 783-5920 ~ Pacific stock exchanges, and has unlisted tradmg prh deges Within Maryland 1-800-492-2861 on the llw. ton, Cincinnati, and Phiiadelphia exchanges. Outside of Alaryland 1-800-258-0499 As of December 31, lWI, there were 67,303 Common Written communkation should be addressed tm Shareholders of record. Balumore Gas and Ele tvic Company Shat cholder Servios Transfer Agent and Registrar P.O. lim 1642 Maryland Nathmal llank, Ilattimore Bahimore, Maryland 21203-1642 l 1

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