ML20151M869
| ML20151M869 | |
| Person / Time | |
|---|---|
| Site: | Calvert Cliffs  |
| Issue date: | 07/27/1988 |
| From: | Brady T BALTIMORE GAS & ELECTRIC CO. |
| To: | Dinitz I Office of Nuclear Reactor Regulation |
| References | |
| NUDOCS 8808080026 | |
| Download: ML20151M869 (10) | |
Text
. - _ _. -
A BALTIMORE GAS AND ELECTRIC CHARLES CENTER P.O. BOX 1475 BALTIMORE, MARYLAND 21203 July 27, 1988-THOM AS F. 8RADY Vict PatsiotNT Mr. Ira Dinitz Senior Insurance Indemnity Analyst Office of Nuclear Reactor Regulation Policy Development and Technical Support Branch M/S 130 United States Nuclear Regulatory Commission Washington, DC 20555 Subj ect:
Calvert Cliffs Nuclear Power Plant Units Nos. 1 and 2 Docket Nos. 50-317 and 50 318 Guarantee of Retrospective Premium
)
Dear Mr. Dinitz:
In accordance with our letter of June 30, 1977, our annual submittal date for the Cuarantee is August 1. Accordingly, we are enclosing herewith:
Exhibit I A copy of the 1987 Annual Report to Stockholders of Baltimore Gas and Electric Company containing certified financial statements.
Exhibit II A copy of quarterly financial statements as of June 30, 1988.
Exhibit III A copy of Projected Cash Flow for the twelve months ended July 31, 1989.
Exhibit IV Narrative statement on curtailment / deferment of capital expenditures (if any) to ensura that retrospective premiums up to $10 million applicable to each of the two units would be available for payment.
Sincerely,
$$00f{,
PNU Enclosures i
h
\\ \\
\\
)
e Exhibit III Page 1 of 2 e
l Internal Cash Flow Projection l
For Calvert Cliffs Nuclear Power Plant l
Percentage Ownership in all Operating Calvert Cliffs Unit No. 1 100.00%
Nuclear Units-Calvert Cliffs Unit No. 2 100.00%
Maximum Total Contingent Liability ($000)
$20,000 Twelve Months Twelve Months Ended 6/30/88 Ended 7/31/89 Non-Cash Expenses ($000)
Depreciation and Amortization
$- 186,666
$ 196,470 Deferred Income Taxes and Investment Tax Credits 20,302 544 Total
$ 206,968
$ 197,014 Percentage of Total to Maximum Total Contingent Liability 1,034.8%
985.1%
Retained Earnings ($000)
Net Income After Taxes 299,779 Less Allowance for Funds Used During Construction 29,950 Less Dividends Paid 174,720 Total 95,109 Total Internal Cash Flow 302,077 Percentage of Total Internal Cash Flow to Maximum Total Contingent Liability 1,510.4%
State of Maryland)
) SS:
City of Baltirore)
Mr.
T.
F.
Brsdy makes oath-and says that he is Vice President of Baltimore Gas and Electric Company; that the above projected cash flow was prepared under his direction and in good faith j
in accordance with the stated underlying assumptions; that he has examined the above projection, and to the best of his knowledge it is a fair representation of cash flow for the twelve months ended July
/
31, 1989.
V Subscribed and sworn to before me, a Notar Pyblic, in n fortheStateandCityabovenamed,thisppf/;dayof 4/
1988.
MyCommissionexpires7f/(J.
S//N ht b_ 7Y sa)
/
vu 1
1-l Exhibit III' Page 2 _ of 2 Baltimore Gas and Electric Company Underlying Assumptions for Pro _1ected Cash Flow (1) Projected cash flow does not include an estimate of retained earnings.
- However, internally generated funds without retained earnings are well in excess of the maximum possible retrospective prer.iums.
.The Company is expected to realize retained earnings net of Allowance-for Funds Used During Construction during the projected period.
(2) Depreciation accruals based on composite straight line rates of 3.26% for electric property other the.n nuclear and Bratidon Shores Power Plant, 2.80% for nuclear property, 2.75% for Brandon Shores, 3.12% for gas, and 4.02% for common utility property.
(3) Estimates of Federal income taxes and other tax expense are based upon existing tax laws and any known changes thereto.
(4) Accounting policies consistent with those in effect June 30, 1988.
I 4
I
+
t*
Exhibit IV Baltimore Gas and Electric Company Curtailment of Capital Expenditures Estimated construction expenditures including nuclear fuel al."
Allowance. for Funds 1 Used During Construction for the twelve arrJ.Sr ended July. 31, 1989 are $400 million. To insure that retrospe
-b e premiums under the Price Anderson Act would be available duririg the aforementioned twelve month period without additicnal fund; from external
- sources, construction curtailments would' affect all-construction expenditures rather than impacting a specific project.
Exhibit II 9
Quarterly em, -e GAS AND ELECMIC Financial Summary June 1988 l
I B
Inquiries concerning this summary snould be directed to:
Thomas F. Brady Baltimore Gas and Electric Company i
l Vice President Gas and Electric Building Telephone 301234 5502 Charles Center P.O. Box 1475 Baltimore, Maryland 21203 Charles W. Shivery Treasurer & Secretary Telephone 301234 5511
O i
Baltimore Gas and Electric Company Statements of Income (Unaudited)
Three Months Ended Six Months Ended Twelve Months Ended June 30, June 30, June 30, 1988 1987 1988 1987 1988 1987 (an Thousands, Except Per Share Amounts)
Operating Revenues Electric
$302,214
$310,226
$638,785
$642,256
$1,388,264
$1,384,119 Gas,,
76,886 81,373 235,065 271,887 378,634 436.074 Total Operating Revenues.
379,100 391,699 871,850 914,143 1,766,898 1,820,193 Operating Expenses Purchased Fuel and Energy.
104,795 110,571 272,888 311,353 431,883 567,389 Operations 101,042 96,678 197,975 188,949 386,078 382,215 Maintenance,
35,318 32,940 64,839 67,042 122,135 138,617 Depreciation.
36,040 33,227 70,772 66,391 136,713 130,019 income Taxes Current 7,826 3,876 32,068 35,682 106,579 102,827 Deferred 4,906 18,899 12,458 24,116 29,689 39,390 investment Tax Credit Adjustments.
(1,687)
(1,303)
(3,838)
(3,773)
(8,143)
(4,463)
Other Taxes 30,312 28,482 67,830 66.234 136,877 131,785 Total Operating Expenses 318,552 323,370 714,992 755,994 1,401,811 1,487,779 Operating income.
_ 60,548 68.229 156,858 158,149 365,087 332,414 Other income Allowance for Other Funds Used During Construction 3,796 3,808 8,831 8,932 16,770 17,472 Equity in Net income of Unconsolidated Subsidiaries 4,282 5,507 9,542 10,192 19,352 30,510 Net Other income ar.d Deductions.
609 126 1,166 319 2,197 (474)
Total Other income,
8,687 9,441 19.539 19,443
_ 38,319 47,508 inccme Befor)Inierest Charges,
69,235 77,670 176,397 177,592 403,406 379,922 Net Interest Charges interest Charges,
28,659 30,008 57,712 59,477 116,807 118,138 Allowance for Borrowed Funds I
Used During Construction (2,759)
(3,995)
(6,234)
(7,122)
(13,180)
(13,998)
Net Interest Charges 25,900 26,013 51,478 52,355 103,627 104,140 I
Net income.
43,335 51,657 124,919 125,237 299,779 275,782 Preferred and Preference Stock Dividends.
7,414 4,655, 14,234 9,931 30,708 23,437 Earnings Applicable to Common Stock.
$ 35 921
$ 47,002
$110,685
$115,306
$ 269,071
$ 252,345 Average Comma Shares Outstanding..
78,920 78,912 78,916 78,810 78,914 78,722 Earnings Per Share of Common Stock.
$.46
$ 60
$1.40
$1.46
$3.41
$3.21 Constellation Companies Revenues.
$ 11,401
$ 11,077
$ 22,413
$ 15.331
$ 37,486
$ 28,430 Net in:ome.
2.874 3,8r)0 6,371 6,716 13,324 23,425 Earnings Per BG&E Common Share.
.04
.05
.08
.08
.17
.30 Total Assets-End of Period 540,048 399,718 540,048 399,718 540,048 399,718 BG&E's investment-End of Period 210,551 194,952 210,551 104,952 210,551 194,952 The mtenm htormaron contamed herein rehects apportaments and esumates of some trems subtect to hnal adjuttment at the calendar year.end. Results i
for Mienm penods, which Can be large!yinfluenced by weather Cordtsons, are not necessaril)f bd stw of result! >:M expected for the year.
I h
Baltimore Gas and Electric Company Balance Sheets (unaudited)
June 30, 1988 1987 (In Thousands)
Assets Utility Plani.
55,115,281
$4,858,277 Accumulated Depreciation.
(1,369,560)
(1,250,377)
Net Utility Plant.
3,745,721 3,607,900 Other Property and Investments investment in Subsidiaries.
258,349 233,356 Other 5,987 3,888 Total Other Property and investments.
264,336 237,244 Current Assets Cash and Cash items.
12,787 26,016 Accounts Receivable.
189,616 192,326 Materiab and Supplies.
142,203 144,920 Prepayments and Other.
17,343 9,658 Total Current Assets.
361,949 372,920 Deferred Charges Deferred Fuel Costs.
81,965 66,171 Other 43,912 48,075 Total Deferred Charges 125,877 114,246 Total Assets.
54,497,883
$4,332,310 Capitalization and Liabilities Common Stockholders' Equity Common Stock.
$ 817,759
$ 817,988 Premium on Preferred Stock 157 157 Retained Earnings.
978,264 861,043 Valuation Allowance-Investment Securities of Subsidiary (7,728)
(2,704_)
Total Common Stockholders' Equity 1,788,452 1,676.484 Preferred Stock 59,185 59,185 Preference Stock Not Subject to Mandatory Redemption.
110,000 110,000 Redeemble Preference Stock 243,200 100,000 Current Portion of Redeemable Preference Stock.
(6,800)
Net Redeemable Preference Stock.
236,400 100,000 Long-Term Debt Mortgage Bonds and Debentures 1,184,035 1,232,773 Other Long-Term Debt.
354,150 355,938 Unamortized Discount and Premium.
(6,869)
(7,685)
{
Current Portion of Long-Term Debt (11,970) j46,193)
Total Long-Term Debt.
1,519,346 1,534,833 Current Liabilities Short Term Borrowings 58,050 Current Portion of Long Term Debt and Redeemable Preference Stock 18,770 46,193 Accounts Payable.
80,867 79,806 Taxes Accrued 1,890 4,321 Interest Accrued and Dividends Declared.
81,027 78,834 Other 33.388 33,925 Tota 1 Current Liabilities 215,942 301,129 Defen ed Credits and Other Liabilities Deferred Investment Tax Credits.
189,562 197,922 Deferred Income Taxes 35,2,329 323,667 Other 26,667 29.090 Total Deferred Credits and Other Liabilities.
568,558 550.679 Total Capitalization and Liabilities.
54,497,883
$4,332,310 Certam pnor year amounts have been restated to conform wan the current year presentaton.
Baltimore Gas and Electric Company Supplemental Financial Statistics Twelve Months Ended June 30, 1988 1987 Capitalization Common Equity 47.5%
46.8 %
Preferred and Preference Stock.
11.1 %
7.5%
)
Long Term Debt 41.0 %
44.1 %
Short Term Debt.
1.6%
Return on Average Common Equity.
15.4 %
155%
Ratio of Earnings (SEC Method)
-to Fixed Charges.
4.04 4.07
-to Fixed Charges and Preferred and Preference Dividends Combined.
3.09 3.23 Expenditures for Construction (including AFC) and Nuclear Fuel (Thousands of Dollars).
$333,958
$300,114 Inter.. ally Generated Funds as a % of Construction Expenditures (excluding AFC) and Nuclear Fuel.
81.7 %
83.1 %
AFC as a % of Common Stock Earnings.
11.1 %
12.5 %
Effectivs Tax Rate 30.0 %
33.3 %
Common Stock Data Three Months Ended Twelve Months Ended June 30, June 30, 1988 1987 1988 1087 Omnmon Stock Dividends
-Declared.
S.50 S.475
$1.925
$1.825
-Paid.
$.475 S.45
$1.90
$1.80 i
Market Value Per Share
-High.
33 %
32 %
34 39 %
-Low.
30 26 %
19 26 %
-Close.
31 %
31 %
31 %
31 %
Shares Outstanding-End of Period (in Thousands) 78.927 78,912 78,927 78.912 Book Value per Share-End of Period.
$22.66 521.24
$22.66
$21.24 1
$'804
Baltimore Gas and Electric Company Statements of Changes in Financial Position (unaudited)
Six Months Ended Twelve Months Ended June 30, June 30, 1988 1987 1988 1987 (In Thousands) l OPERATING ACTIVITIES l
Net income.
$124,919
$125,237
$294,779
$275,782 Noncash items included in income Depreciation and Amortization.
91,525 83,441 186,666 177,699 Investment Tax Credit Adjustments.
(3,838)
(3,773)
(8,360)
(5,539)
Deferred income Taxes 10.831 22,678 28,662 38,607 Allowance for Other Funds Used During Construction.
(8.831)
(8,932)
(16,770)
(17.472)
Equity in Net income of Unconsolidated Subsidiaries (9,542)
(10,192)
(19,352)
(30,510)
Amortization of Losses from the Reacquisition
}
of Debt.
909 741 1,826 1,397 f
Other.
3,213 2.928 6,833 4,989 l
Changes in Working Capital Components Materials, Supplies and Fuel Stocks 13,651 6,877 2,717 (2,266) l Accounts Receivable.
6,508 10,711 2,710 19,022 l
Prepayments 44,572 56,015 (6,710)
(2,382)
Other Current Assets.
(1,102) 262 (975) 64 l
FederalIncome Taxes Payable (23,528)
(14,775)
(1,615)
(15,651)
Other Current Liabilities.
(45,892)
(78,935) 2,089 11,344 l
Deferred Fuel Costs.
(18,072)
(28,765)
(15,794)
(24,133)
Other Cash Operating Sources and (Uses),
16,763 14.985 1,285 (4.203)
Net Cash Flow from Operating Activities.
202.086 178,503 462,991 426,748 FINANCINO ACTIVITIES Common Stock Dividends.
(76,947)
(72,929)
(151,914)
(143,702)
Preferred and Preference Stock Dividends.
(14,234)
(9,931)
(30,708)
(23,437) l Proceeds from issuance of Long Term Debt.
102,492 (358) 110,602 Common Stock.
246 8,434 (229) 8,530 Preference Stock 50,000 50,000 100,000 100,000 Short Term Debt Net.
(45,000)
(61,950)
(58,050) 49,050 Redemptions and Repurchasea of Preference Stock.
(115,000) 43,200 (155,000)
Gain /(Loss) from Redemption of Preference Stocn.
(1,400)
(1,700)
Reacquisition of Long-Term Debt (985)
(5,625)
(50,588)
(58,826)
Gain /(Loss) from Reacquisition of Long-Term Debt 51 (313)
(1,267)
(2,715)
Net Cash Used by Financing Activities (86,869)
(106.222)
(149,914)
(117,196)
INVESTING ACTIVITIEG Construction Expenditures (136,326)
(108,837)
(282,020)
(255,540)
Allowance for Other Funds Used Dunng Construction.
8,831 8,932 16,770 17,47;'
Nuclear Fuel Expanditures (14,340)
(15.021)
(51,938)
(44,57:~
Investment in Subsidiaries.
2,640 (10,665)
(10, Q)
Other 868 710 1,547 1,471 Net Cash Used by investing Activities.
(138,327)
(114.21C)
(326,306)
J291,171)
Net increase (Decrease)in Cash.
$ (23,110)
$J41,935)
$ (13,229)
$ 18,379
Baltimore Gas and Ekctric Company Operating Statistics Three Months Ended Six Months Ended Twelve Months Ended Ju,1e 30, June 30, June 30, 1988 1987 1988 1987 1988 1987 J
ELECTRIC f;',.. g Revenues (In Thousands)
Residential-Househeating
$ 43,467
$ 40,123
$117,823 $105,555
$ 211,977
$ 187,879 1
-Other 80,297 86,137 166,172 176,011 384,735 392,930 7.',
-Total.
123,764 126,260 283,995 281,566 596,712 SAO,809 6
4
,5 Small Commercial.
62,354 64,995 126,184 130,814 270,959 279,543
^ '
Large Comr,ercial and Industrial 114.031 117,064 222,577 226,168 511,866 516,146 i(,'
Other 2,065 1,907 4,029 3.708 8,727 7,621
.,;y Total,
$302.214
$310.226
$636,785 Sales (Thousands of MWH)
~ $642,256
$1,388,264
$1,384,119 4 '*.s UN,'
Residential-Househoating 677 594 2,025 1,712 3,444 2,875 9' '
Q [-%
-Other 1,107 1,129 2,407 2.382 5,416 5,165 DI
-Total.
1,784 1,723 4,432 4,094 8,860 8,040 Small Commercial.
838 798 1,828 1,698 3,683 3,416 5 fi), /.
Large Commercial and Industrial 2.555 2,491 5,256 5.015 10,741 10,132 k,p', ;
Yj Total.
5,177 5.012 11,516 10,807 23,284 21,588 t Mct;'
GAS J.
Revenues (in Thousands) i Py:?.,1 Residential-Househeating
$ 36,779
$ 37,165
$118,516
$136,615
$ 184,783
$ 213,162 3
-Other 8,581 8,700 21,420 24.027 36,759 42,042
-Total.
45,360 45,865 139,945 160,642 221,542 255,204 M3'!.I D
'7 A,1.
j Small Commercial.
7,286 7,433 22,934 25,969 35,504 40,376 i f{[s..
Large Commercial and Industrial
-Excluding Delivery Service.
17,653 17,046 59,751 59,349 92,117 97,402
-Delivery Service,
4,609 9,460 8,269 22,657 21,154 37,820 y
N
-Total 22,262 26,506 68,020 82,006 113,271 135,222
(,:,
Other.
1,978 1,569 4,166 3,270 8,317 5.272 y' i :
Total.
S 76,886
$ 81373
$235,065 $271,887
$ 378,634
$ 436,074
' ~,1, Sales (Thousands of DTH)
[,*.f.,E Residential-Househeating 6,288 5,845 22,815 21,596 33,849 32,309
-Other 1,280 1,206 3,547 3,375 5.685 5,564
-Total.
7,568 7,051 26,362 24,971 39,534 37,873 Small Commercial.
1,290 1,201 4,479 4,152 6,662 6,211 Large Commercial and Industrial
-Excluding Delivery Service.
3,983 3,440 14,328 11,050 21,623 18,070
-Deiivery Service.
10,584 9.501 18,682 19,916 38,884 36.396
-Total 14,567
_ 12,941 33,010 30.966 60,507 54,466 Total.
23,425 21,193 63,851 60,089 106,703 _ 98,550 Electric Generation Statistics Twelve Months Ended June 30, Net Nuclear Coal Oil Other Interchange Total Generation by Fuel Type (%)
1988.
45.8 45.4 3.7 3.6 1.5 100.0 1987.
39.6 45.0 4.2 3.4 7.8 100.0 Thousands of MWH 1988.
11,453 11,363 919 903 394 25,032 1987.
9,200 10,444 S79 793 1,793 23,209 Average Cost of Fuel (t per Million Btu) 1988.
50.12 152.18 305.58 112.90 1987.
57.46 156.10 283.49 120.65
h b
( ; p 'E[.k
.,7 o
' [ g/
'. M 'g J.
f
- !,9
,.' l,
- 5e.
- sI
,'- * -. [
. h *f k V}'$ '.If % y ; Q.
' '.8% %.
.p,,
-l
'4 I
f,
e ki y
.L
- ;.g'('.l _ _ g'
- p ~ :'.- f ;, ;* 4,. f 1;
n e.:
J.%.
R n.
' +r :,
g-
. %.Qn
?
w~_&~u s> 4 -
wmg m:.:;u, g y V:. v. : n' y <,;.,.. :
s
.~ xa r,..,
- ep y.
,s.
. i v. :
- i.3'-
W J l }._ 0 - y yh[., {"{ _ sf
~
L'j '. L_ C
- f ?:'
'[
- .,f, ; __. ' Z- [. }
} }*
ca 7I J
, i, (,
- g ',.,,
- i : ~
- z., ;;r
. '. : 0Y*.. S'b '
.?' (..~) '.N'
- *,. Q
}l
., s ',l,,:.f
/* k
,' 'bN'* W.f.,
t
- v.s,. ' s'-
..,.c
,s,
%r
. t g.;. ), 7.
< 7 j. 4.o.
,..s r
4.
....,3
' s.[
f,. ;[ p 9 f 92-,; N, i ' : Q P ' f f, ".f
,.<y.
s-y
- S, 1 - ' , ' <. ',...l
~
' \\
- 4. ,
,, I-f, '.'. {.f,,,
u uc#
SC-
.-^M
'.f 1 +
) ' ".
E s. m..
p, n h - -
f.
~-
w.y
- u.,.[,
. w,: g, ~A. ;
2.su.-
m s, n.9.w.~.,[x_.m.wg h... -
m, 7
.. a
- n m ~
s ~e y
-+
y-c Me S#
.y Q,u'r..
.~
' w '4
?'
,\\'
.l, e.
,e f-Q; *u s
.y i &~
]
'_ } Q::tk, : h k-N Nhg_.
'.):h '.,;,},Y,. $,g,..
n
,; ' v..,
- .1 f,
3 f*
i e.y ;.: ;.p.g'
- 4
' - l i.
y-y g y""6t; p..o :, ",,
^
y 94 4 g
^
.n -.,'"s f:,'f., ;
M
s0*.
w 3
.z
'\\,
4 b,_
D,l* k. N l l ' *;,
k' L
- g. M:.3.L ;Mf.
'..: as
. ;. l. - - 93 IW' hv.
%9.M.
.e 2
N;d"N.
- q.
.N. v
... s -o c
./
Vy 'g u v..
. m~m
.c s.
..Q.}p ' O.? I-@ i
- c jVy
.9
.,~~ yn
. e s.y ;.,
~
.b@ pi f/)Q 7.X j t.,
g ? M. yi
! f ';. D. <. (
.; t.... y h%
, :3.,.
.* J s a.: ~ u.
- w..
.3
. v
,.-.a L
r
,'E-g z
^
- r,c, 3
-Q'
. 4
).n.w, veg'h.1.[ - @ *'.
g sy '..
L,,' '4. %'.. pg,9 ;
I.
- , p x
..s s
- / g f 3 : [ ~ p@:
,x L
6
-{-
R
-,~..- g ;j,.
w
,saw,&n a.n n,,,,
- * : -'.;..], mQ g.3 - }
[ -. w,q:
- ; y.
- q.
.y
~ ;_ c.,. ei 6
?"-
x,;.
h,d" n
u._
t.,
g h.
l?.L. _
,4
- f,4 - ^f' '!
c3. :s,.-.+. :
q
..p ' % ' *.
- e
...0
. w,,
W pN
.?:I;
. 1g*%
'.}
- ',l i,.,,
L
?+,g.q.s.n y.., x
. +oner,
.. +. h3 g
- f?
' ?-
r
...u i:-
4,. 1
< w~,n.
.L'.
g y e,-
g.7 "3
.w.h
... '"..f, l+..h.. y"
. A b A. ' Y h y
'I
N
?-
4..,T f.
?
^- %
. 7
?,.
.. l' j '.Y.
(..l
?; g.G ],',:{
- [
y i
-4
...-7
[; / :* A -g.
4;,,,,.
g.).}a*'?***.
.yy
, /n...
E
. - " 94n:n,.Q ;,,,,,,,,',.
.,4 I
L _ - * '
ls,.,
- > g v.-
-Q : s
.... - g *.%.]/p-w L
...x f '. ? [ f,:_, '., '.. (,
.i C
p+:4h g
7 s e r s ; ;.
7 4.
5. y; g-
..y.y m
&.s.:.:p... fp.u:p f; se f'
.a. O <4..
y.
. :. ;,... -p
.;..,f. +' :.
f.:. +;.
u.
- s.
.F N
.y.2..,
r
~
i ~._ 0 l........
^
- ?
> M
- y..:. 4 3,..7: : n,.,2,,s
%q.
4-w g
.v
, y q: '...
- 4. :.
-s a
n
. )
~
~
.[s;.'..,.ri h'
gz. -
..., ' y ', - (
t
.. q. 5...
c :.1.
.lV-
't.
- 3_..
- 4. s, ti T.e g ;.,, :
%. ; c;,.. * '. T.
. -y.:. :p
~,
, !;x,;,;.7.a.':J~1
=
- A
... ~
- r. ;- /.m.
.p-.'.
g 1 ". A f
- ,. _ A.. -
.. m.
,....; 4
- h, v_.. -;
p_
.q.6..
a.
s :.
y e
.: y,., 5.;. /' >..., x t,
n
.,;y
_-r 3
e
.p y g yJ.
- g. g -B e.". f Q
- r
..?. M
' &m y.:.
- 7.,,.3 - '
,t 1 c g.3:.,
4 g.
...s y ' ^. '
'n' 'Q.d
- ; '. f.. f e.. '..,.
,4 *. Q
.*,1y,f;-
g q ;,-*.'* l.'. ' f..
- d.
x,
~%
,,%/"4 ',, : -
we,.;.
'*] -
c.
4 f"'*[.
',y'g.y.
....n..k, N'.
k f'.
[ f. ~ [. [..~
i- [, *,*,' ( $.
?. ' ' '. O C;'.h,l,$q. o. g.\\..,,,'.[,:h ;.
J,
- s :,
j k
k l
If,{t l\\l
}l I s
1 I
HIGHl.lGH15 i
Perccnt 1987 1986 Change IL4LTIMORE GAS Earnings Per Share of Common Stock AND ELECTRIC l'tility Operations.
$3.30
$2.83 16.6 %
COMPANY Constellation Companies.
.17
.32 (46.9)%
Total..
$3.47
$3.15 10.2 %
j Dividends Declared Per Share of Common Stock..
$ 1.875
$1.775 5.6 %
Average Shares of Common Stock Outstanding.
78,861,000 78,627,000 0.3 %
Operating Revenues Electric.
$1,393,735,000
$1,388,251,000 0.4 %
Gas.
415,456,000 445.769,000 (6.8)%
Total.
$1,809,191,000
$ 1,834,020,000 (1.4)%
Net income.
$ 300,098,000
$ 274,619,000 9.3 %
Earnings Applicable to Comnion Stock.
$ 273,692,000
$ 247,743,000 10.5 %
Electric Sales-megawatt hours 22,575,000 21,236,000 6.3 %
Gas Sales-dekatherms 102,941,000 97.376,000 5.7 %
Total Assets.
$ 4,509,992,000
$4.370,428,000 3.2 %
Net L*tility Plant.
$ 3,691,691,000
$3,567,676,000 3.5 %
Construction Expenditures.
$ 254,530,000
$ 254,142.000 0.2 %
CONSTELLATION Revenues.
30,405,000
$ 24,876,000 22.2 %
COMPANIES Net tacome.
13,669,000
$ 24,825,000 (44.9)%
Total Assets.
$ 479,281,000
$ 409,888,000 16.9 %
BG&E's investment.
$ 205,080,000
$ 192,075,000 6.8 %
Dividends Paid on the Common Stock Continuously Since 1910- Always Earned-Never Reduced
)
I COVER CONTENT 3 letter to Shareholdrts.
2 Computer-generated graphics a treatmentfor the nuptoms Financial Review..
6 ofmolecules like toc one on the of the common cold.
tuter help scientists at the Nota K'ith locations in both the Our Senice Territory
.8 Characteristics of the Business...,
.... 8 Pharmaceutical Corporation HolabirdIndustrialnark and (g
'f,[
[ [ '[ ',
unratel complex structure-the Francis Scott Key Jiedical actitity relationships. The goal Center, Nota is typicalof the 511naging Change
.... 12 of their research is the dis-biotech industries that aw financial Contents
.25 cotery of nete drugs by using becoming a sigmficantfactor Constellation Subsidiaries.
.. 50 modern molecsdar technolo-in the Baltimore-Witshington otticers
,5l gies. One of tbrprojects under corridor and changing the Board of Directors and Committees...
.. 52 uwy at Notu nou is derstoping character ofour customer base.
Shareholder information...
.Inside Back Cover
i l
[
illIS REPOllT focuses on a view of BG&E that most people-even shareholders-rarely see. It will tell you how and why we made certain f
decisions in 1987. It will tell you about some of the things that happened-some planned and some unexpected.
1987 was a momentous year in the life of your Company-a year of transitions, l
innovations, successes, questions and problems. As a whole, it was a demanding year as j
well as a rewarding one.
l As eventful as it was, the real story of 1987-and of this report-is not the events j
themselves, but the ways in which they were managed: how we coped with an unexpected l
loss of transmission capacity during a period of peak demand; how our human resource I
planning process prepared us to make smooth transitions of leadership at several levels; how strategic planning identified emerging business opportunities; and how corporate planning helped sharpen our commitment to customer service. This is the story of an organization at work and working well. The following pages give you a look at management involved in the day-to-day job of managing in a changing environment.
gl h lt-%(g+-
1 r.#N i
1 Our roots are deep in the utility changes, so shall tre. But one business. They go back ot'er fact trill remain constant:
170 years to the tery beginnings BG&E trill rnanage change as of the utility industry in the it altrays bas-bead.on and Nete thrld. As our industry bands-on.
matured, so did tre; and as it i
I
(
Letter to reduction was primarily attributable Shar6h0k/erS to the pass-through of the tax savings TOf* # ##1Hber Of associated with the Tax Reform Act of yggrg yggt, bg/h fhg he pace of chs. age accelerated in 1986 and to the establishment of our TOCBSS O[Ch4Hg6 1987-in the economy, the industry rate of return at 9.78%-down from s
! nib 8NI!!If and the Company. I'm proud to report the 10.96% allowed previously.
that we responded well and that we For over a decade the Calvert Cliffs
/#dNSlff ##d/h6 l
are pcsitioned to grow with the Nuclear Plant has been the heart of d6h4/6066r/lS increasing changes to come.
our generating system. In 1987 gjpgcffgy gggg gggy The end of 1987 marked five years Calvert Cliffs stepped into the inter-of continuous recovery in the IJ.S.
national spotlight by becoming the
[NI808![J U8' I
economy, the longest period of first plant in the l'nited States to host peacetime expansion since World an Operational Safety Review Team forecast for 1989. Indications are that War 11. Central Staryland and BG&E (0SART)of the International Atomic demand for energy will continue to be have certainly benefitted: electric Energy Agency (IAEA). The finalIAEA strorig.
sales growth over the la.st fis e years report termed Calvert Cliffs a "well Brandon Shores l' nit No. 2 is cur-averaged oser 5 % ; gas,alec growth managed and operated plant," particu-rently scheduled for service in 1992 averaged less than 1 %. In 1987, tota!
larly impressive in the areas of mana-and will be a key element in meeting electric sales incressed ny more than gerial approach, personnel training this new demand growth. We have 6 % while gas sales rose over 5 %.
programs and emergency planning.
also reached an agreement with the Those figures are the result of favor-While the five year period of Pennsylvania Power & Light Company able weather combined with the economic expansion improved our to purchase a mix of energy and improvement in heavy manufacturing bottom line, its pace was not entirely capacity over an eleven year period locally, the continued growth in new expected. From 19831986, we experi-beginning in 1990. This agreement, homes using heat pumps, and in the enced substantic.1 growth in our peak which is discussed further in the case of gas, the continuing popularity load, averaging 180 megawatts each "Operations Review," will help l
of our Delivery Service tariff.
year, but in 1987 the peak grew by maintain adequate reserve margins l
The success of our utility opera-572 megawatts. There were several throughout the next decade. The I
tions last year brought total Company elements at work here: the price of agreement alsoincreases our flex-earnings in 1987 to a record high of our service has been declining over ibility in selecting future generation
$3.47 per share, a 10.2 % increase the past several years; this price technologies and scheduling power over 1986 carr.ings. The Board of trend, together with the consumer's plant additions for the latter half of j
Directors voted to increase quarterly continued confidence in the economy the nineties.
l common stock dividends to 47.5 cents and the pent-up consumer demand We have been equally aggressive l
a share effective with the dividend accumulated during a more challeng-over the past decade on behalf of our payableJuly 1,1987. This represents a ing economic period, have le i to less natural gas customers, working before 10-cents.per-share annual increase to constrained energy use. The new peak federal agencies and in the courts, 2
the new yearly rate of $1.90 per share.
demand-5,190 megawatts, achieved when necessary, and with suppliers I ast 5tay the Public Service Com-on July 21st-responded also to a and producers to keep gas a com-mission of Sist)tand ordered the weather pattern which normally petitive fuel. As part of that strategy, Compan, to lower its base rates to occurs only once in ten years. After we are building a 38-mile,20-inch produce a $78.3 million (4.4 %)
making adjustments for the unusual pipeline to connect our territory with decrease in annual revenue. The rate weathtr, the 1987 peak matched our the Consolidated Gas Transmission
l Corporation. This project is well under way. The fact that both we and Consolidated are determined to forge ahead has already overcome many
\\
4 potential regulatory obstacles.
1987 saw our non-utility sub-S a
sidiaries clearly establish their iden-titles, focusing on four distinct areas of business: real estate, senior living and health care, energy and environ-
- ' f g mental projects, and investments and financial services. The Constellation j
Companies'section in the following pages will explain their activities for you in more detail.
Constellation's earnings in 1987 decreased from 1986 to $14 million, been carefully groomed for their cur-in this area, but also urging that the contributing $.17 per share. The rent and future positions. Very few Commission exercise caution in re-i decrease stemmed primarily from companies are able to handle a turn-structuring the industry. As we relax realizeu losses from one sector in over of this magnitude internally. We regulations, it is imperative to keep our securities portfolio during last could because we regularly plan for our ultimate goal of economic effi-October's stock market decline. We succession at alllevels of the Com-ciency in mind and make certain that are also undergoing a planned transi-pany. Our management systems are all new policies contribute to, rather tion in the mix of our assets. Money centered around the idea that human than detract from, its achievement.
l has been moved from liquid short-resources are BG&E's most valuable Our overall strategy in the face of term yield-oriented investments to asset. The other components in change is, as always, to preserve as fund the development and construc-our success-economical facilities, much flexibility as possible for as tion of energy and real estate projects quality service, state-of the-art tech-long as possible. We are doing that by with significant longer-term yield nology, strategic planning-all stem exploring options, developing our and capital appreciation oppor-from our basic commitment to hiring workforce and remaining involved in tunities. Current income production and developing the right people.
the issues-in short, by planning.
from these funds has necessarily for a number of ears now, both With your support and the continued 3
been interrupted. On the whole, we the process of change in the utility dedication of our people, we are are satisfied with Constellation's pro-industry and the debate over its moving eagerly toward a new era in gress and confident about its future.
direction have been intensifying.
the utility world.
BG&E's new management team is At the heart of the discussion is the now entirely in place. Over the last issue of deregulation. last fall, the two years, due to normal retirements, Federal Energy Regulatory Commis-
/
[
3 we replaced nine of our eleven officers sion announced a new policy to pro- [
in a smooth and orderly transition, mote competition in the bulk-power None of our new ofncers is new to market. At that time, I wrote to George V. McGowan BG&E. All are products of our lluman Chairman Martha liesse indicating Chairman of the Board l
Resource Planning System, and have our support for increased competition February 1,1988
I l
l l
1 y
a e
7ewareq
]
I
'd 4, qa.
s a >
a U
4 t: -
\\\\,
L t - '
', i%
Christian 11. Poindexter Edward A. Crooke President and Chief Erecutive Officer-President and Chief Operating Officer-Constellation fluidings. Inc.
l'tility Operations Christian 11. Poindexter has been Edward A. Crooke became President and Chief Executive President and Chief Operating Officer of Constellation lloldings Officer of BG&E's Etility Opera-since 1985 and was elected a tions on January 1,1988, and was Director of BG&E's Board effectise also elected a Director of BG&E January 1,1988. Before joining effective that date. Mr. Crooke Constellation, Mr. Poindexter had previously served as Vice had served as Vice President of President of Finance and Engineering and Construction Accounting and Secretary 4
at BG&E since 19S0.
since 19'8.
-n y, m m 3,- m -
y
,g.gr
. w.f q.
j r
. c'.t
(
s i
r.
~
t' 1
k u.
e
,c c h. w f
i Bernard C. Trueschler I
- One of thejinest legactes left to me u ben I becaine Chairrnan tras a system of rnanagement this is superior to any!bing i b<ue seen elseubere 11 all cadminates in lluman Resource Planning.
Ilike to say that uben ur bire somebody, ur are notjust giting him or her ajob, ue are offering thatperson a career.
'Orer the f u! 20 years. u e knepractically rebuilt ourphysicalplant, and ur'se introduced l
outstanding technicalinnotations. All of this is eital, but none ofit uvrks uilhout goodpeople at allletek tre need residts-orientedpeople uitb a broad corporate tieur. The detelopment, training and selection ofpersonnelis the real secret to continued success.'
-Employees' Quarterly Communications Meeting, October 28,198
s e a When Bernard Trueschler joined had fallen into recession and the January I of this year Mr. Trueschler 5
BG&E in 1918, the Company and the utility industry had entered a difficult retired as BG&E's Chairman of the utility industry were well pesitioned period of transition. Mr. Trueschler's Board. We will miss his daily influ-i to enioy the long period of rapid decisise leadership during the ence, but since he will continue as a j
grow th and increasing efficiency that eighties strengthened our utility Director and Chairman of the Execu-lay ahead. By 1980, when he was business while guiding BG&E to a tise Committee, BG&E and its share-I elected Chairman of the Board and new era of disersified growth. On holders will be assured of his valued i
Chief Executive Officer, the economy counsel in the exciting years ahead.
1
FinancialReview nX in Brief Company's diversified subsidiary. Per Earnings PerSbare of Common share earnings from utility operations Stock-increased 10.2 %.
and Constellation were as follows:
. Quarterly Dividend Rate-increased 1987 1986
~
5.6 %.
1 tility operations s3,30 s2.83 s200-Constellation Companies
.t7 32 Construction Expenditures-89 %
Total 53A7 $L15 of funds internally generated.
s oo, Rate Adjustments-lower base rates The 1987 increase in utility earn-effective in May,1987.
iny was due primarily to a 6.3 %
3p4 si
- 8'[si) f/ncnc/ngs-cost of capital continues g,g 97g g;.
C*nsme>n M nc to be aggressively controlled.
ing the combm.ed effects of favorable weather, particu!arly the above Cortstruction Expenditures Oldlmns of Dollars) normal temper *ures in the summer siso months, and the continued growth in all classes of customers.
Construction Expenditures E.irnings from Constellation During 1987, the utility's con-
,y gg llo! dings, Inc. were down from 1986 struction expenditures amounted due to several factors. During 1987, to $255 million, including $31 million 230 Constellation's increased activity in Allowance for Funds t' sed During in project-oriented businesses, Construction (AFC). Electric facilities s2.00 principally in the real estate and alter-required expenditures of $230 million, native energy areas, required a shift while $25 million was expended for of capital from short-term invest-gas facilities. An additional $53 million ments to potentially higher-yielding was spent on nuclear fuel. Current assets which develop and mature estimates indicate that 1988 construc-over a longer period of time. Constel-tion expenditures will amount to si 00' lation's 1987 earnings also reflect 5325 million, including $35 million in reduced tax benefits as a result of the AFC. An additional $45 million is s 30-opi *i * *,
Tax Reform Act of 1986 and securities expected to be spent for nuclear fuel.
losses mcurred in one ofits profes-During 1987, approximately 89 %
N
,,.g sionally managed securities accounts of the funds required for construction Dends fami IEEl Earnings during the October stock market decline. and nuclear fuel expenditures were Earnings and Dhidends Declared provided by the internal generation of Per Share of Common Stock cash related to utility operations.
Quarterly Dividend Rate BG&E increased its quarterly dividend 6
Earnings rate on common stock from 45 cents Rate Adjtistments j
Earnings per share of common stock to 47 % cents per share effective On July 25,1986, the Public Service were $3.47 in 1987, a 10.2 % increase with the July 1,1987, payment. The Commission of Maryland instituted an j
over the $3.15 earned in 1986. This increased dividend is equivalent to an investigation into the reasonableness increase is attributable to the con-annual rate of s1.90 a share,10 cents of the Company's base rates. This tinued growth in utility earnings, higher than the previous annual rate.
investigation was undertaken in view pantally offset by lower income fro.m This marks the twelfth consecutive of the changes in the cost of capital Omstellation iloldings, Inc., the year that BG&E has raised its common subsequent to May 1984, w hen the stock dividend.
?
l 1987 Financing Transactions l
Am0unt Company's base rates were last set, further enhanced by NE as well as the anticipated savings establishing a $100 million rst Refunding Mortgage Bonds.
3100.0 from the Tax Reform Act of 1986.
Medium-Term Note Program 6.95 % Cumulatise Preference Stock.
50.0 On May 5,1987, the Maryland under which unsecured 635 % Cumulatise Prtference Stock.
50.0 Adjustable Rate PoHuuon Control loans 16 Commimon issued an order author-notes, ranging in maturity Common Stock issued under the Disidend izing lower base rates. The new rates from one to fifteen years, Reimestment and Stock Purchase Plan were designed to reduce annual can be sold as corporate and the Emptop Stock Ow nership Plan 8.9 I"
NI3A electric risenues by approximately requirements dictate BG&E's
$76.3 million and annual gas 1987 financing transactions REon!Prio:XRETILDIEN151tEPL'RCilASES revenues by $2.0 million and were are shown in the accom-li % % first Refunding Mortgage Bonds. 8 39.3
)
9% First Refundmg Mortgage Bonds.
12.1 effective on May 27,1987. The panying table-b % First Refunding Mortgage Bonds revenue decrease is attributable (Instanment Series) 1.4 ju ta e Ra e Polu o primarily to a decrease in the federal Tax Reforni n !Ioans income tax rate used in establishing Provisions of the Tax Reform 12 % Cumulative Preference Stock.
6.8 service rates from 46% to 36% and Act of 1986 (Act) included 9.35 % Cumulative Preference Stock.
35 0 8m Cumulauve Preference Stock.
30.0 to the reduction in the rate of return an overall reduction in cor-to 9.78% from the previously porate income tax rater, die authorized 10 96 %.
elimination of the invest-ment tax credit changes in depre-visions, thereby diminishing the Financings ciation rates a.d lives, and various Company's ability to defer the pay-Again in 1987, BG&E's financial other provisions which affect the ment of income taxes until later strength and flexibility allowed the Company. Although the Company is years. The effects of the Act on 1987 Company to aggressively control the paying income taxes at a lower rate, financial results are more fully cost of capital. This was done its ability to generate cash internally discussed on page 30 under the through the retirement of higher cost will be reduced primarily due to the heading "Taxes."
securities and the timely issuance of reduction in service rates reflecting fixed rate securities under existing tax reform, the loss of the investment shelf registrations. In addition, the tax credit and certain other tax pro-Company's financial flexibility was
'e
., i
~.
.. : i *
- i
,s3~-
- r. i
,,3
,s50
.rC~
!~
7 l
N Aserage Rate Per Kilowatthour of Eledricity l
Among the largest l' S. Cmes with imntor ow ned I'tihties All Cumncr Categories 12 Wnths Indmg November IW (Cents per Kilowatthour)
l Our Service Territory l
Ne i
t 3
l 4
ano g
1
}
%,0.ma y6]
py a j u nh eltanot) 8 l
.m-,,
4 Man h asis i
A'N
..,J%r 4(y}
- f..
x, I
i cahcri um)
\\
i Characteristics of the Business
\\
I altimore Gas and Electric Com-Calvert Cliffs Nuclear Power Plant natural gas producers. To supplement pany is an investor-owned utility which has consistently ranked as one this supply (,f natural gas, the Com-engaged primarily in the basiness of of the top-performing nuclear plants pany maintains facilities at three producing and selling electricity and in the country. The Company also plants in Central Staryland for the purchasing and selling natural gas.
maintains shared ownership of production and storage ofIfquefied l
The Company, w hich was the first gas generating facilities in Pennsylvania, natural gas, substitute natural gas l
utility and one of the first electric consisting of two mine-mouth plants and propane.
I utilities in the L'nited States, has and Safe liarbor Water Power Cor-In addition to its regulated utility 8,767 employees serving an area poration, a producer of hydroelectric business, the Company sells electric which includes Baltimore City and all power. In addition, the Company is a and gas appliances.
I or part of nine Central Staryland member of the Pennsylvania-New Constellation lloldings, Inc., a counties. The area served with elec.
Jersey-31aryland Interconnection wholly owned subsidiary, directs the g
tricity approximates 2,300 square which affords access to pooled capac.
Company's expanding diversification l
miles with 2,420,000 residents, while ity on favorable terms. Electric efforts. This corporation holds the the area served with gas includes generation by fuel type for 1987 was stock of five other companies engaged 600 square miles with a population 42 % nuclear,43% coal,4% oil, in such diversified activities as real of 1,861,000.
4 % hydro and 7 % net interchange.
estate development, senior living and To service this area, the Company The Company obtains substantially heahh care, energy and environmen-I operates ten electric generating plants all of the natural gas it sells through tal projects, and investments and l
in Central $laryland, including the purchases from pipeline suppliers and financial services.
)
i 1
l
i OperationsReview Electric and Gas Sales installed capacity requirements as a flexible and retain our ability to respond Electric member of the Pennsylvania New to fuel price fluctuations, we converted Total electric sales increased in 1987 Jersey-Maryland Interconnection. The Riverside Unit No. 4 to allow full-lo~ad by 6.3 % over 1986 sales. All cus-maximum installed espacity purchase firing of natural gas in addition to its tomer classes increased: residential will decrease to 400 megawatts from oil-firing capability.
sales rose by 9.3 %, smallcommercial June 1,1991, through September 30, The installation of a new replace-by 6.1% and large commercial and 1991, and to 275 megawatts from ment electrostatic precipitator on industrial by 4.1 %. The factors October 1,1991, through May 31,2001.
II. A. Wagner l' nit No. 3 was com-primarily responsible for these results Purchases ofinstalled capacity under pleted on schedule at a cost of were a summer that approached the the agreement may be adjusted on an
$20 million, allowingit to return to hottest on record, producing a new annual basis, thereby increasing the its full load capacity of 319 megawatts peak load of 5,190 megawatts on Company's flexibility to align future at an emissions level well belo 'he July 21,1987, and customer growth, capacity additions with system needs.
limits required by Maryland rel;ua-particularly in the number of new The second part of the agreement tions. The adjacent l' nit No. 2 at heat pump installations.
involves the purchase of the energy Wagner is currently being converted output and capacity associated with to coal under an innovative design 6as 125 megawatts of the Susquehanna that allows us to reuse some of the Total gas sales rose 5.7 % in 1987 Steam Electric Station from October 1, existing equipment, including the over 1986. Although 1987's milder 1991, through May 31, 2001. The low original Unit No 3 precipitator, and, winter weather produced a 1.3 %
fuel costs of this nuclear plant should consequently, to reduce the cost of decline in residential sales, this drop provide substactial fuel savings for the project substantially.
was more than offset by a 10.3 %
our customers.
increase in commercial and industrial This mix of energy and capacity Corporate Goals sales. This increase is directly attrib-permits us to meet expected future Our utility employees met six of eight utable to greater utilization of the demand in a cost-effective manner Corporate Performance Award Goals Company's Delivery Service tariff for and allows the Company to monitor for 1987, earning each individual an the transporting of customer owned industry experience with emerging award of 1 % % of his or her annual gas purchased directly at the wellhead.
technologies for several more years base salary in the form of Company before selecting suppliers for future stock. Their very gaod performance Power Purchase Agreement Company-owned generating facilities.
was marked by three special achieve-1 with Pennsylvania Power &
ments: a complement reduction of Light Company Construction 96 employees w hich surpassed our The Company recently entered into a Our fossil generating plants achieved goal and, in the process, produced two part agreement with the Penn-their highest level of readiness ever in significant savings: a favorable cus-sylvania Power & IJght Company to 1987, setting a record of 86% in tomer image as reported by 93 % of purchase a mix of energy and capacity November. To help insure continued our customers surveyed; and a 13 %
9 fromJune 1,1990, through May 31, reliability, we installed state-of the-decrease-far beyond our goal-2001. The first part of the agreement art digital control systems at several in restricted / lost-w ork accidents. The j
entitles the Company, at its sole steam plants in 1987 and are now significance of this latter achievement discretion, to contract for up to 600 expanding this controls upgrade pro-goes beyond the dollar savings it megawatts of installed capacity from gram to our C. P. Crane Power Plant in engendered: it means that more and June 1,1990, through May 31,1991.
1988. As part of our policy to keep more of our twople are working safely for purposes of satisfytag BG&E's our present fossil generating capacity and staying healthy.
The Constellation ing and significant percentage of East Coast are establishm.g Constella-Compam,es Bo&ts prona.
non's nationai rePuunon for quaniv Constellation's 1987 results reflect and integrity as both a joint venture r{1 several factors: First, our growth in partner and an independent devel-J. he past 18 months have been a project oriented businesses has oper. We are currently involved in period of growth and maturation for reallocated capital from short term 27 projects, representing over the Constellation family of companies.
investments to assets with potential
$275 million !n project costs.
We have concentrated upon pursuing for higher future yields requiring a These projects include land develop-four lines of business: Real Estate, longer period to develop and mature, ment, industrial and business parks, Senior Living and llealth Care, Energy Second, one of our professionally office buildings, residential com-and Environmental Projects, and managed securities accounts incurred munities, festival retali shopping Investments and Fintncial Services, significant realized losses during last centers and specialty retail centers.
We have been very successfulin October's stock market plunge-that in the fall of 1987, we broke ground recruiting quality people who have event alone produced a 3.08 per share for our Brown's Wharf project located the knowledge and experience we decline in earnings. Lastly, the Tax in Baltimore's historic Fells Point i
need for the future. With our talent Reform Act of 1986 made certain tax-waterfront district. This multi use assembled and our directions clearly advantaged investments either less development will feature shops, established, the future-both near attractive or nonexistent.
offices, restaurants and a full service and long-term-looks bright, marina. It retains the character of Although earnings declined in 1987, Real Estate a Federal era maritime village, l
Constellation iloldings contributed Constellation Properties has become including the restoration of four
$14 million or 5.17 per share to the one of the leaders in Baltimore's 19th-century brick warehouses.
corporate total for the year. Our goal regional real estate market. Our local Slated for a fall 1988 opening, continues to be to contribute a grow-projects and those elsewhere on the Brown's Wharfis a joint venture between Constellation and llistorical i l Developers of Pennsylvania, Inc.
1 s
Senior Living and llealth Care p
Constellation Properties has focused
..__~v on the senior citizen market as a N-source of high-profit, long-term TM
' 4=-r growth. Americans are turning 65 at dj, ]ge, the rate of near!y 150,000 persons a n
month, and the oser-75 year-old age
[
group is the fastest growing segment of our population. Many of these
'4 people seek residences that offer l0; both 24-hour-a day support service l!
and quality attendant care. BG&E's
/
corporate reputation earned by l
decades of "always being th:re" will
~
10 A Corutellation ouns 50% of toproduce energy Nearly Ormesa ll, a 20-megan atr 4 million pounds of bot trater~
geothermalpouerplant located at a temperature ateraging in East Afesa, CAfornia At 317* fahrenbeit-arepro-Ormesa, bot unter is pumped cessedper bour Ormesa 11is from urlis dug deep into the one of a bandful ofgeothermal earth, and the beat is e.ttracted er ergs plants in the country
i enable Constellation to be a trusted ten alternative energy plants, of current income and to be a source and dependable participant in this The first project undertaken by of the capital necessary to pursue the industry, in addition to the four Constellation Operating Services, in projects described in the preceding l
Staryland nur>ing homes which we partnership with Bechtel Eastern sections as well as opportunities in l
purchased jointly with hieridian Power Corporation and Pyropower, the financial services industry. In llealthcare in late 1986, together we Inc., is the operation and mainte-keeping with tb latter objective, are also developing two retirement nance of the 79-megawatt Gilberton we have restructured our investment centers, one in New Jersey and one Power Station in Pennsylvania. This portfolio, diverting $73 million of in Stontgomery County,51:ryland.
plant burns culm, anthracite coal investments in marketable securities waste, using state-of-the-art fluidized to investments in alternative energy Energy and Environmental bed combustion technology.
systems, limited partnerships, real Projects Constellation's involvement in estate and a reinsurance company l
Over the past year, Constellation alternative energy projects not only described below.
Development has significantly provides very attractive investment We are continuing to pursue a increased its activity in the alter-returns and serves to familiarize us strategy of acquiring minority native energy and environmental with a variety of alternative energy interests in other companies. Con-industries. The 16 projects of which technologies and plant sizes; in so stellation Investments recently pur-we are part owners or developers doing, it offers us a "window" into chased 21.6% of the stock of Capital include plants fueled by wood, the future of the electric power Re Corporation for $25 million. This coal, solar, geothermal, hydro and generation industry.
company, which has a AAA rating solid waste. Through Constellation from Standard & Poor's, will provide Operating Services, a subsidiary Financial Investments reinsurance capacity to primary formed in 1987, we gre also involved The goals of Constellation Invest-guarantors of municipal and in the operation and maintenance of mena are to provide a steady stream corporate obligations.
7-n --
.m-
.;;y-g--, y
, m y* *9 ;.
y E
~.?
g
, ~-..
a :. e L,
- c.,, w - ~..i.. t.
%,u a
+,,
... o s
3 g
.r 4 d *' I '
~
4
.N j,
p}
...-g
,k
- 75+
f' :
yQ '. q-i a
D' C.-
..) $
S j.
(
t a
'.?m 3
e h,.
9
) ~q
?~
.-f h
.l-n'
}.
V_,,,: n W3
- ;,...,g y n
~
e._
..n
<,. ~ -R
.g-n
'y.g T
,o ee
,L 4 4 t,; '
I
'.f, L
._ W
- l. rf(
F hl
? " Z. '
'(
33 i
A The side pancis abote are hits Ibint. Presertin? !be brick promenade. hke the one close ups of the 19tb-century area 's historical char. ster in the artist's rendering abutt, brickwik that tall be retained it bile Ojenty it to tw+rn utl! link Braun Wbarf ard all 1
as part of C<mstellation 's businest Mailc ut recx2-of fells (Ws: uautfrant l
Bovuis Wharfdettloprn*nt tsonalsa
'mfect 's 4th Ibe In';er Harbor l
project in Baltirru Ws historic primart a
i
.~. -.
Managing Change
'~
3 ONDAY,Jt1Y 20,1987-n stationary high. pressure system stalls over the upper mid-Atlantic l;
region, enveloping the area in heat s-and high humidity. For the next six
)
}
days, temperatures remain in the j
f 90s-occasionally even breaking into k,
the 100s.
9 Tl'ESDAY,JL1Y 21,1987-After
'\\
l repeatedly shattering previous peak i
[! I i.\\{(
usage records, the heavy demand for electricity culminates in a new all-time one-hour peak for BG&E of near-Q A"
.=
lv 5,200 megawatts. Customers con-tinue to soak up every available s
kilowatt of generation, straining kp k) h!h g
reser es across the entire electrical
)
p
( }-
4'
\\I pool of the Pennsylvania-NewJersey-H 1-Maryland Interconnection.
7 Till'RSMY,Jt1Y 23,1987-Both reactors at the Calvert Cliffs Nudear Plant-normally the source of more than half of BG&E's electricity-are operating at 100% power. At 3:25 p.m. a ground fault occurs and we lose one of the two 500 kV transmission lines that connect immediately shut down.
hours, the plant is reconnected to the Calvert Cliffs into BG&E's electric Supplied with power by Calvert Company's power system, allowing system. Circuit breakers open on both Cliffs' three emergeng diesel conditions to return to normal.
lines, isolating the plant from the generators, operators work quickly While operators at Calvert Cliffs
)
Company's system. Both reactors to stabili e the reactors, and within work to restore the plant, electric "This story had inany heroes. Quick thinking and coordinated action 12 A 1ransmission lines are the maintenance and alert opera-arteries of a utthly. taking tion, since damage to one energyfrom its source 10 the smallpart can quickly affect places ubere it5 needed. This large areas of the system.
ttlalsystem requires constant
system operators take emergency
- mg The process is formally known as measures to stabilize the bulk power
. - m.a-E Iluman Resource Planning. The heart system-the electrical "backbone" of D
of the system is a detailed profile the Company-to present an inter-rating form designed to evaluate a ruption of service to our customers.
/., '
Q person's managerial potential.
Operators at other BG&E generation fY
- 1 M Each June, all supervisors at BG&E m -a w m -a e plants increase electric power output
? ':'
?T
_ p -
file or update a confidential profile to emergency limits. These extraor-
}
on their managerial and professional dinary measures prevent cascading
. I. ).
( g' employees. These profiles give us the equipment loss throughout the power I
-(
)
data to nominate candidates for g
4 grid and eliminate the possibility of management replacement positions-e widespread blackouts.
historically, approximately the top On one of the bottest days of the 250 positions in the Company. Start-surnmer, uben BC6Elost orer /,600 ing in the early fall, department megau atts ofits generating capacity, to new ideas and alttined to the managers and their vice presidents not a single customer lost porcer.
needs of the people we serve. We identify candidates for the manage-cannot predict exactly when events ment positions in their departments.
like ground faults will occur, Lut we Each v!ce president then meets with
,[his story had many heroes. Quick can control our ability to cope with the Chairman and the President to thinking and coordinated action them if and when they do, finalize the candidates in the division.
across departmental lines prevented our people's response to this (risis Over the past two years, nine of damage. We did not expect to lose a reaffirmed our confidence in our our eleven officers have changed in major transmission line in the midst management values. BG&E is a a series of normal, planned retire-of a severe heat wave, but when we people oriented company-inside ments. Among them was Chairman did, BG&E was prtpared to act. All and out. To the customer and the Bernard C. Trueschler w ho retired in the training, testing and preparation shareholder, that orientation trans.
January. These retirements opened a we give our people and equipment lates into quality service-more number of positions on our manage-paid off.
and better service than you might ment team. Last year the I card of The unexpeud is a fact of life in expect. Inside the Company, it Directors elected George V McGowan business. Our approach is to prepare becomes a commitment to the Chairman of the Board and Chief for it-by recruiting and developing deselopment of our employees. Every Executive Officer. Edward A. Crooke top notch people, by setting strategic supersisor and manager at BG&E was elected to the Board of Directors goals, and by keep;ng ourselves open functions, in part, as a talent scout.
and elected Preddent and Chief across departmental lines prevented damage.
13 A.4t RG&E. the lluman jobs in thetr ditisions. Such Resource Planning Retieu is meetings occur annually in one of top managenwn!'s most each ditision prior to the importantfunctions. tyce Corporate Retiete beturen presidents meet uitb thetr each t'P, Ibe President and managers to discuss replace-the Chairman of the Board.
ment candidatesfor the key
i l
,3
.s YYa.
p.
l
' Y ' }.g.;
~
y, f
-y j-
^'
(
y
- jq - --,
.o 4.
~ *: Y
+ '
.t_,
} c. ^. ff k..- f2j.fp[L, E
D, h 7
, g f N,-
- 3.., e ; c,. ' _,
[
'i I
[-
n.. :
~q
?
v,.
o.. y.,74A y.a., A y,
p.
,4
?,
e1 y,.
e v 4-.
u1
. a.. a, s :
.- e
.)
j.
['
ih,
.. ?d l[
/ [trhp @k -" '6? O b.., q --
,k, 6 f; Q: 'l) Q O.
h. h, [ O,.
'T j
1,[4
} ' %; #,1ph.
., y - \\ ( ' (g.fj. 'f y,..
. -;.-4..
f.
'.,g
.,. r
~g..,
., 9 %. -
J y$,,.
, j f, (('.-
s p.
.,c9:
,y,
-,;},- -
,g-'
' g,.q
',, : l y g *, 3 * ' Q,p, ': A
.y,g
- .4
- 1. -, '
L.y... 7 f. C, *:. s ".
<?~
,,e -
- ^, e
,s.
-U c. * '
lN
<; y " yy q%.* ; i,,9. t, * '.g_,.,'s
'Q r. ; ;-,
, ~.
g y4
.f.,. rg. - %,
f g
- k..f sh.'f l
3
?.l ^.
.,a 4 ;. S.% q?'- v^. q:L v ' 4
- -!f' $ % $s - L.n z.,
7 i
"~
. M.i i J.
7.:.
.r i / s,i gM p f Q }p *q' m
\\.
- 3
+
1
~, g..
r
., s.:
- 5. f, i -
,}. ) ;(
n; ?
r?
L ' t:
... [
,. - 'M h
'((, f, [ L -' _. -
j.'.
U, 4
t
{
l. ;.
ki Y,
, ' f N ;
- h,Y?.~P
~
n h
_. f*}.$
-. ' J..Q
[k;)}... lI
$1 l hpl<
jsy y
y b, < $. 5.. p.w.. -.
as q~
.g r..,.w :e.-
,,V m*;
g,
' 6 L@
s %,..;.f,..;;.
y w.
. i lsi.
7, A:y
~-
g q, -..m q ^..
i a Q>
g g_
-.y.
p~n g. 31-
- q#q,j % %:.}7 p.+
c.
aJ A
. i
- ,9 tw
.,,.n-
. r
,g
,,.3;
.)L.9
. ; y, qw%
y A
..nt
. Qy
~ ; u,
,.r q
,s%.
u,. ;., r....
8
+.y.
.~.n 3n
.s " n, j.
g jh
, c
.~
- .
- .. ' g, n hi y
g 'g p.
9 b
)g
'y [
D' h*
, 'l.,
- t.{
-<, +
-t%
g..
..5
- - 5 j
j-
.o,
-. k :,.
(ygrN
.r. '
ao i
[.
0 Tg g
4,
(-
g 14.;
,. g,,,
.X t
f -e_
y,.
.. -.9 %..LL,A-
+.
e;,
i gav
.$o.',.?,;
'T) i c.
I R?
e
_\\
b
- y. } ( d > W.,' g<y. ; a v.
PJ f,. ':
.s.
R.
7f M. f_)-
pc
- .. M A; 4,,
."w 9aw
~. 7 c
. q3 "3 m.rJ(xr
[ d;'
a a
pe 6
M g2 3.
..., e, -
s
%r
.2.p.
0o.i s..
'(t y 3
,,.... g s,1
,4<
(, j 7,,g g<
..,, -;.: yg l'; q-
,. + p,;
. : N,!?%.
~ ~ Z,+
(
).
- 4
., ~,
- (3,
s}
5'
, 3 '.
. \\ [..
gg
. [d( ;~ ; +1 y,J.'<-
_g
['
, r
- 'e f,,{,
', g
..7
. ; J;.
~.. ~.:; sj., v. ':.
lW) 7 9
.4 g,. a a
1 4,.
j.
y 4s
.%.+5 7 t. -.
W c
x..
.+ 3
[.
I.
k
. n. { N % " h *O en g,T,
.g, k e.- 4,y ' "
E M * : T., 4
.,j %
, k j> '
- 1. y * ;, " r _.,
s
, ~.
. ;,. o
~.:t
- s.' s, %
.x.
- ",y' ' p,,. g,\\
{f. *
~
1 { t (,, ?: [
f; C ' ' (.p f - /J,.". '- y y {y >
A r,t,-
.s
.. +/
. g. 4 c..
. u.-. J;
- , g y
.x....
'3 3
y..
N, I-",
k. - Q ; / I, AMy '.,- 9.;
',,ay. C.y,,_,,'
49
' ~
]g" N '. 7. ' ' $, y;[,.. IN.N"s.
d0 e
A..
. vm. 9 7,.,, g.A,,
w.
.y o
s j
q.
4y t
,w g.
,~
~
.9.r ' -
,a. :-
t..
. 3 -.,.. -
y*.
+h.
1.
- A..i. - h * /p p.c75L h ' A ^ *,'. I
. " ia
%r. '. [.'
., ' ~
f I,',.k,f^.5/ Uf I\\. m[ 4 [b
.,4 ei "
- w.* 2 4 -
'^4
~.3.y,,
4, 3.,,
+
3,-
r f,g
,y e p g' %
m-N...,
~ -
3.;a.. -
gk. ",
(.., (
g...]^',.
p',
-- *,q
- g..
i 4
4 1.
l yk
- h).
.)
)
. k kd
.h_ g,. 3 y
Q - [f
(
3 g
1, y%
4, 9
5 n,
- g.s j g.,...-
4
- 4,
.. y,, e,. ~ r g... (
- ,.; 2
%[v[Kh, y' y. * *,'.. ;.
4,
,v g [-...
3'[ T Y4-%kh,(,h, - Q[F.[ hg' (J9... &},,I
,[
- h 7
./
4-Q u!Ny7-t, f.,
f f,,C. j 3*+4 j,. f
' t,-
- ($. 2
. '.. - n i,, -
.4
., 4
< <.,. r, f. +
s., 9
- %.h...e
+
......t
- Q s(4.
,.c.
5 y
- Q. i t....
,b.-+.x ;Y.,.7 ?a. n,,..,r, 4;,.% ?,h, jj: - l ' ~ ' -'..., M ". G.,?..
r.
u T.
W },*
,o Y,. L. ~. ". {Gj w w\\ h,, \\..,.l
~ T
- II
~'
~.E
,{ y
.. v.... Q:.';' ", i L;
'A v.
c, e.
~.:,, '~
?
b.,_
..y
- t.
- 9 -jd f.t
'.[.,,,
Q M
,i
,,.'y<,*,
_l _
"i ea
- $ ,..,.(4,"f
.- l, ?
r, [1.-
" (
, l o
f
^ Y'-@ y; D,. ];, ' d, *.f
?
- fy;-
l Operating Officer-l'tility Opera-tion is he,d, eC e and con-way we delivered benefits to our i
tions. In addition, Christian 11.
tributes t the plan.
employees was no longer as appro-l Poindexter, President and Chief Stratet>.i;-
y+ ' 4 essence, priate as it once was. Last fall we l
Executive Officer-Constellation a corporat
'a program-introduced a package of flexible lloldings, Inc., was elected to the keeping us sexible enough to adapt benefits designed to allow each of Baltimore Gas and Electric Company quickly to changing conditions. For our people to select the particular Board of Directors. The promotion of example, after monitoring changing varieties of coverage the employee these and other people created family patterns, the economy and and his or her family needed.
managerial and supervisory openings our own rising health care costs in On a larger scale, when we real-throughout our organization-the eighties, we recognized that the ized at the beginning of this decade openings that our iluman Resource mm--.mm
,7.g
.m.
y
- 17 jk.
<$l;
.W f 6 $ {j f[ g..
Planning process helped us to fill
{.,
y 4 promptly with capable, well trained
[ 2W A
_ j.
- @g.;.c., NP% K., W.f '.. e '.c
~ h. c'
- people, b
Wh+
4.%$, w 7 w$,;w. %%.k.' :,> u x.', - )
'. L. ~,....
e a a h,.
{-
y e.A'm %. 4 i:w.y y
-1 x&..,.'c.e ' A_r.,
. &.g g
'3
~...:
rporate strategic planning, like
.& 4., r J
1 g
.o;..
^
J-a.. -.
,c y
7,e -..
- -{'Et.
W M' Q m
. +..
4 b;.sfK..!:h [g.l' *$ t,D.*.I{.; y.4. $.3 ~
f M.[g.%
Iluman Resource Planning, is a M).
dynamic and ongoing formal process.
Throughout the year, planning
[ J % j
.i.
h]7.. [
p M b groups from all areas of the Company 1
i
... ;;g l
i
- M
~
G meet to consider specific problems, "t !1 sp e..
$n,; y y.1 5j h
"g fet (
i issues and needs. The results of their
~
3, p..(,:. g.{ ' A g deliberations become prime con-g'?.gffy; ' : - - t,.., *g
,s 3.. -
O siderations of our regular manage-k,c c:.. -
ment planning conferences where we
/
- l-
.E
.,s.-
I v
- p.' < m
,,.,,e s-set the goals and assign the support.
~ ;
- 3... ;
.y
,3 ing studies that are factored into our
/. L.
. b ' ', S. [ (.7 [.-
4 J
.m Corporate Plan. Each of our eight NN A
.?
C./s Y;[.e NC[f O' I '
dhisions then develops its own hhh N'i..
.. 5<
[
h.7. / 6-h.N[W,l'[' 3 ' M
. J.C
~
strategies to meet the plan'> goals, d b,/.k $ Q and each manager is responsible for W f 3. p jf. (M de==m8"'
,, J -f? j, y i
specific performance objectives.
4 d D~
~,..
d'.O C
F 41.
7
.e
', p~ ;
... i...
.f p ' 7 ' e-q...,lf f;g,w.( 9 (1timately, everyone in our organiza-
~
,l ' ;; ( -
4 b:s' -j,.'."t.,7 '
O ? ;. _ l'. " ', w' ' ' ". '1.Y.h.
g.,,:.,.,.
.-.e T
"Strategicplanning is, in essence, a corporate ' fitness'prograrn..."
1
)
15 4 Our people are our most detviopment. Our commitment A During 1987 the Constella-of the ciy's neurst ofice valuable asset, and ur intest to lluman Resource Planning tion Companies motedinto buildings, the gleaming touer i
considerable time, efort and forms thefoundationfor all their neu' beadquarters on the near the Inner Harbor protides resources in Ibeir training and our management sniems.
23rd and 24thfloors at commanding eieu's ofIkdti-250 Rst Pratt Street. One more's entire uaterfront.
l i
1 i
Point waterfront and number projected to reach almost
(..
owning a geothermal 40 million by the start of the next T*
electric power plant century, the demand for assisted-
, g in California's living care and nursing facilities is
- g[3 -
Imperial Valley.
rising rapidly. Constellation Properties Geothermal is just currently ow ns. as "joint ventures" j
- 'g one of several forms with established operators in the i
f' of alternative energy field, four nursing homes and two in which Constella-retirement centers and is actively tion is involved. This seeking additional insestments. The
{
3 ear Constellation senior market is especially well intensified its focus suited to us, prosiding both attractive i l on this area by form-returns and the potential for long-j
~
p j
ing a group of energy term growth, while allowing us to
]
and environmental do what we do best-deliver high-
! companies. Drawing quahty facilities and services to on BG&E's basic ex-people who need them.
pertise, these com-that the utility industry faced limited panies acquire, build, own and market growth, we sought to enhance operate, small private power, bG&E has always defined itself our corporate growth with a strategy cogeneration and wastewater treat-internally as a service company.
of diversification. The Constellation ment plants around the country. For Today, with the energy market Companies were founded as a part of BG&E, these activities provide both a becoming increasingly competitive, that strategy. Their charge is to high return on equity and an oppor-service has become an essential recognize and create financial oppor-tunity to help develop the technology business tool. Our challenge is to tunities for BG&E by responding to of the future.
improve on quality. Corporate l
changing market or human needs, Constellation's oldest firm, Con-planning helped to focus our efforts.
regulatory conditions or new stellation Properties, has focused on Management established a formal technologies. For example, Constella-the senior living industry as a major Customer Service Goal in 1987. Its tion subsidiaries are involved in grow th segment of the l'.S. economy.
function is to drise home the impor-building shopping centers, redevelop-With over 29 million Americans tance of customer service-and the l
ing haltimore City's historic Fclls already age M or older, and that responsibility for it-to all our i
l I
'BG&E has altrays de. fined itselfinternally as a service contpan.p" 16 A Constellationpurchased Ikalthcare. Inc. In additian to
> Construction is a eisible in the mid Atlantic area and the 1."-hed.ticridian Nursing nursing bomes. C<mstellation sign of Constellation's groutng along Ibe East Coast-projects Center in the llomeuwd \\ection and.tlendian are deteloping presence in the regional real that ha e rapidly made Con-
\\
ofILdtimore City along uttb a tariety of assisted-liting estate detelopment market.
stellation Properties a sought-l three other similarfaalities in arrangements geared to the Businessparks. office buildings after deteloper andjoint-Ikccmber 19M. as part of a rapidly groutng senior market.
and retad centers are some of trnture partner
)<nnt trnture tttib.tfendian our many construction projects
_,w-n,,m mw-_---,--,-
, -- - -a w
i j
D.+
6 '., y 3 j :,(.3 g,; p.,;. ( ":? g ::. M. W ' W lfi. f.'s 4 f
'l;.',.;:,. Mc "G." i,.~: K.,,.,
' 9 - *.a4 ;.3 r. L [ [.,b.; y.
. '. :,y y:f ?.1 nr%&.1'.. e&,h*N, 't
's l ls.jg.3.,?,$ ah % G }! - '!s.i.
. M % '( Q.h,Y H
-l k....,? J ',,
- n 1
,,,.e, w -
-u
'.. e E:.-R,,' A.c, l*
..<, ;M, '
% n f.r.
g,'
yp% [ \\.h.%. y,k. h...t,.'. $ N A C h ( Q ' j.' [, [ -f '
q?
--y v >+<
.. gh '
's
.e? W g
s
~-
<ra
~
l n
y[','I*?.i'lt.(.$T-t.+D'.
. p c
.A
> y * $ g, a
.. p
, a....,...
y m
. 4.
~
,. v.-
.s
, 44,.,1e$
\\'
i e.
. 4
- ~y, g.,, d,.5
.., c..
a 1
,y.
y, g.-
- r.,
.s
_. 7 b,. 8.a. -
v..,..
. _ ~
i. '.,,...
. a a..
L-
- ,[ %
- -
.t
.,,7, n.
..n
..i.- T
- l. : \\ - l...
s m '
o s-
- q '1 s T
,4
-3_
y, wg -
%'wg i.4
< "- % ? ',. *.,
%y,; y'..
h p t r
. :j~
. t j'
,., t.
2./
j
((
lff,,.". i: -, y.g _
i)= -
.,1 7 +.,' Q '.M s
j+.
,(,
y.,
,, s.g
,.1,.,,'<.g.w.
,, :.g j:..;
4
+
7 j..g. 4.-
, ~ ': k y. Q'll @ j '
?!" ~;.z:
/(
gi C
- ' 2. ;
+
f' Q. ] 2 'p%);
,. 8 /, 47 p:,.'.. :,.
~ '#:( i.ft
". ?.
q# y ; -
y 2
s c.a..,,.,. i.
, y.y..:s.,..y. y
. %,x <
m
-7 a.
<4
. -,.-y,,
t
,p* g '.
p.V. n :." ba
... -; 7.? [
3=
3' - '
Ae :,
. y ;-
u,. ': ;c:. ' -4,,
Ne, A
- :.a. 'b,1..
~
> +.g
^ %p
. s. u.. y 1
--w '
+
e n
-- - o : '
- i. E r
- y. "p 3.
' V: _ ~ $m$.
.fl.$..l? h
[.:,,, :'. :. <.! ' ;.
,' v : -
4, +.
+
m.
n.
~.
._ ; _ ' ! -.\\ ~
i-j% - J ((,
jy,"
ty
.r
.[
h I'( ' g ', y }, yN., Q,Li
- f.e4ykj. 3 ;
e >:eq ;
f f *t.
s.z t ;
-[;b
,(8 \\ -[,koh['7, "
5
,'ff
((. p j.
- s. -w."%
i 'l
.=
E'
.y,p% !.'es.
.~ n
. w + o m.s%'=: %m_,7 ', hy s ?
?.o4;s-a u
a c.w pr,t
. p ;;g; r~p.
,t
~-
w
~
,.. w, @
, i u_..
' W T3 d M;[k:
%. $ l "n
1
'R $..
~
a s
s "NeqM;,ps 7 %-
x
. /.
'.*k
' 1[ >.'s.
-
- wed'4 enia,geg(,, _,
f r
W"YWTQ$V QW h
h hk M%
gh A
>A~_.:g.n_w m._n, af g t pu...mv p
...a
..a
.y
.. g.
.w w.
.t4 8%'
s ?. ';& J % *,..3.-:.y,
)
.t
'f
.g
- u' p.
'[.
'~.
.j f
?
p'
's".
{ M,
.L.'-'
r.
,- V-8n
) -
= ~
..,v. a..c.
. ~ :..,-
s 4
v a..
v m ^ '.\\
L-f s.
A G ' ]'3.)
j
.;7.~t '...
N," 'jd.\\, gy '. -.
s - < - s -.,
. 'I j'. '
- z
?
a
people, from the line mechanic to solving customer problems. The pany's special assistance line.
the generating plant operator.
Distribution Division has initiated a Slost ireportant is the everyday The first year's results on this goal long range plan to improve customer willingness of our people to reach are impressive. Calls to the Com-service. The first step involves track-out to customers. We know they do it pany's "Good Neighbor Line'L-one of ing our outage patterns. Whenever because our customers thank us for several measurement indicators-Distribution finds a neighborhood having a serviceman, for instance, increased ten times over 1986.
that has had repeated outages, for who takes the time to explain a Employees are encouraged to use this whatever reasons, they work with serv:ce policy on a new appliance telephone l!ne to report customer Customer Relations to contact the to an elderly customer with poor problems they hear about in their residents, informing them that we vision, or a sales representative w ho private lives. When a call comes in, are aware of their problem and work-goes out of her way to schedule a a customer representative responds ing to correct it. Our. appliance stores kitchen inspection for a customer immediately, and reports back to the are responding to changing family who doesn't know which microwave employee when the situation has and work patterns by scheduling to buy, or distribution and construc-been resolved, often within 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br />.
Saturday and evening deliveries and tion people who work eight hours Other signs that our people have attempting to pinpoint the time of without stopping for lunch to restore risen to the service challenge abound arrisal on all deliveries.
power to a home after a tree knocked in the creativity of new programs to The pilot "Gatekeeper Program,"
down distribution wires. These are, anticipate customer needs and in the implemented in conjunction with indeed, special people, but they are enthusiasm our people display in the Maryland Office on Aging, has typical of BG&E employees. The pur-trained over 600 pose of the Customer Senice Goal is Meter Readers and to encourage all our people to take og.
. g.{,
Collection Field the time to meet a customer's needs.
Representatises to Marketing and Energy Services r
g look for warning Department representatives are work-4 signs indicating that ing closely with commercial and I'
b elderly customers industrial customers to bolster their
.3 N'
need some kind of economic health. For nearly 150 of k.
help. If they find our customers, our innovative Gas
~ '
anything amiss, Delivery Service Program has been N w, Gatekeeper par-an important cost-saver. Murrell ticipants report it Smith, Sr., Vice President of Chesa-g.
4 7
directly to the Com-peake Paperboard Company. a locally x
"..the everyday willingness of our people to reach out to custotuers."
1 18 k The Gatekeepe? Program f articipants are taught to look
> Sight impaimi customers abour to ubich ur added takes adtantage of the regular for signs that a person is ill. in hate special needs. BG&Cs Brailk characters Since the contacts meter readers and need offood or clothing or is Customer Sertice ikpartment prog ~am began in Norrmber other BG&E representatiees a tictim of abuse BG&E bas bas deteloped a program to 198.'. tre bate modified orer bate utth customers to belp trained nearly 650 emplovres mark and modify appliance 950 af,pliancesfree of charge assure Ibat the needs of the to be Gat &eper pat ticspants.
crmtrols Iske the thermostat for right impaired customers elderly are recogni:rd and met
___u
.a,-_w w--
w---
l
'~pT:::'
..a
y
- x
~.
s l
[
+
~
O.,.
}
..t ; ;
' )
p 70
~
. i C
-iHoneywed
(
.u E'pq s
e'
- d......, I
- 2?
//,,.
a i
'l l
ltl i
i w,-..
. g.........;
. +
4
. /..s, g, p.. n...u :y g p,g. f
.,.s ;;,f. v.y,.4
~
e,':l w, y.. < w N. p.3 commercial customers who rely on
,y. v t t
M.,
7!
%v..)-3..; g);g. [
computers for everything from chart-r m g ] ! -l p9p"i.,, 5. j 7
f.
j..l,p.i.y.
?.J ~k.?..[/., M,,lf...#M : pc.3
- *b:s L'.>.
ing project expenses m producing
..;;.. y
'i-
. k.'.
S. f-M....t3M.f.E-design drawings began to inquire
.Q...[N..,.'., %.
E
/ ~..
7..;.U{..j. 4.. p%<p.4 p.
y
.4 about frequent, unexplained shut-
. W.. : f.
a..
e w....
.7 p:,,...w
- 7 <...
.,y-a downs and data errors. In response,
,4 ) 4. 9:g. f p.4,... -.;"
r we developed Premium Electric g. 3.,/n...
S
, b.,
- 1. '
o
- t. p.},y;z'Le {: : c,rg. 7 I
. g.
- ).
..f '
f
&q.2;.h.
Service. Designed to analyze power i
I6 i ff ';'J
..* > 'f N. \\,
pi.[E, quality needs and then to provide a
,., u.
s.-.
%..$t#.4 y. @d i ] J..
S h.N.' ! g }..k package, this p ogram aliows a
- p ?
.).
customized conditioned power
C / ~
p;.l.:,77.q.if.O.j*t,g.Iy ;
G.>r."j W Yh.:.,} [ y b"{, ' p g,f...,J customer to realize his computer's f
i r.. c.,
u,
..s. :...
c.
%, fy,: f,,
- p. M J full potential-in the words of a new 4
e..
s y
L.
-4..
'u.
customer, Kidde Consultants' Execu-owned and operated manufacturer of Steels, a subsidiary of Armco Steel tive Vice Presiden'.. Bill Franswick:
paperboard products, cites BG&E's Corporation agrees: "When BG&E "Thanks to BG&E's Premium Electric gas transportation program as a major approached us about time-of-day and Service, we're experiencing 100 %
factor in keeping his firm "competi.
curtailable rates, we knew we up-time on our computer."
tive in the East Coast markets."
had a tool to help control costs."
ma e Like many manufacturers, Blue Several years ago, industrial and Circle Atlantic, Inc., the maker of an innovative concrete additive, and
' A[
.jf N
TMN[M"kq c
j.
g". ' ~ ^.g '
stainless steel plant is located in
' hk[4
. [-
i i h, k ~
Baltimore Specially Steels, whose c
e.y.,
l Bahimore, require enormous Y
u.
~h iL h I.,.
,4 Y amounts of electricity. Blue Circle's I,
- +
i.., 2 frM*y ^.h-
- 3..
X 4e acknowledges that "BG&i's lower
' Y.- 'O I ~.:. %* <f.m.h. ' D e,i.r.h:
bia.jy General Manager, Ronald Piniecki, 7
b'.
.p.
7 Jj.r n
.%v.
- )f. " h[b..,
3 off peak rates and curtailable service V
- h. *e d
- g- ~
a
?
.. p' }.
[
- i. m m
.~.pf W W [ w 7
- G N.
V -
W'
.f el.
credits have helped us offer an alter-
- l.,
9 f J ' t =3
\\ [,
g,n 1g
?;. f
- 0.
4 native product to the construction
{
by l 4m.' T
," h f industry at competitive prites." Ray jk9 flein, President of Baltimore Specialty g,. ' " ,1 t..e.
p
..,.p.l.,
.J
\\
g "The relationship of technology and service at BG&E...
20 A General.tfanager Bradford has been in brat':ess since 1910.
A Raymond E. Hein is Presi.
delittry sertice to contrci their Houck, Jr., left, and Vice Presi-j,roduces appm.rimately 220 dent of the &dtimore Specialty operating costs. Theprecision dent.tfurrellSmith, Sr., right, tons ofpaperboard ett ry Steels Corporation, a ubntly rotaryforge in the background of the Cbesapeake Paperboard 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> at its &dlimore City ouned subsidiary of Armco takes beated steel and shapes it Company, stand before the plant. The use ofBG&E's gas Inc. &dtimore Specialty Steels into either a round or square larger of the company's tw delittry sertice is a major makes effectit e use of time-of.
bar tcbich is Iben processed paperboard manufacturing pctor in keeping thefirm day and curtailable electric intofinished steel.
machines. The co..spany, schich competitice.
rates, along uith our gas l
l g
The relationship of technology and service at BG&E is best exemplified
\\
k by our Customer information System, V
f the project that won the Company s
the 1987 Institute of Industrial I~
~ >-
d x'
Engineers' Award for Excellence in 3
Productivity Improvement. Since the y
system's inception in 1976, our pro-1 j
ductivity in handling customer con-
"f m
'W
~
tacts has increased by over 55 %.
y i H.[ c.5,4
~
In short, it allows us to help more hq./u 3
- 1 people, more thoroughly, in less
'y; s
time. By controlling costs, our
~ !
q Customer Information System helps y
to keep our rates among the lowest on the East Coast.
From a management perspective, tiectric sETwork, serves hoih opera.
e a e improving service goes beyond tional and administrative corporate reaching out to customers. It means communications needs. Last year we As an energy company, and par.
Insunng that BG&E has the tech-also replaced a leased telephone ticularly as a nuclear utility, BG&E's nology to serve them better and system with a new Company-owned concept of "service" must also faster than ever before. In 1987, our digital telephone system which will include,mlitical :nvolvement. We are Telecommunications Department save considerable money. By routing active in the political arena locally, completed a sophisticated com-intra-company calls over GENET nationally and internationally.
munications network based on a rather than the local tclephone net-Through our Public Affairs Depart-62-mile fiber optic loop connecting work, we will save $250,000 a year.
ment, and its offices in Baltimore, the Company's major facilities. The A state-of the-art mobile communi-Annapolis and Washington, D.C., we new fiber optic system will be inter-cations radio system, now being contribute to the development of connected with an existing 250 mile installed, will provide improved com-policies and legislation that affect microwave system which presently is munications among dispatchers and BG&E, our shareholders, our industry integrated with a 100-mile telephone field personnel, increase productivity and our community.
cable system. The combined net-and allow them to respond more Nuclear safety is an industry goal work, called GENET, for Gas and quickly to emergencies.
we have long championed. To further helps to keep our rates among the lowest on the East Coast."
21 A Senior l' ice (Yesident Carl in the beart of theirfirm, the Canatella is a key element in its Canatella, lejl, and Evecutite computer room-a room that successftdfunctioning: a pouer tice President William people rarely enter. Ibe en-conditioner protided by fransuick, right, of Khide tironmentally controlled room BG&E's Premium Electnt Camsulta its, a IMtimore is designed tirtually to run Sertice program.
County consultingfinn, stand itself 10 the right ofMr
---,-----,.,w.n,
,,,-r-..-,--,
-w.
e fg i
pr e,.snp+,e:.,
a d
e: n
,.+r.
)
9 l _;
-pr
~*
" ; hjn: -
(
.l
- 1 f
i f
t A
J i'+
9 y
- if
^
~
s
/
w
O that cause, in 1986 we volunteered to e
be the first United States utility to host an Operational Safety Review i
Team of the International Atomic Energy Agency (IAEA). The team p
I s
arrived in August 1987 for a three-ONh
.~
week safety review of our Calvert bi [
e I
Cliffs Nuclear Power Plant. The
/
f@M O. -
~
k eleven-member team drew represen-tatives from France, Belgium, the Federal Republic of Germany, Switzerlaad, Finland, Canada, the g[
g
/
Philippines, Italy and Sweden, as
,v.
.g s well as observers from Czechoslovakia, malInternational Atomic Energy other American companies interested 13ulgaria, Ilungary and the Repub!!c Agency report offered several "final in participating, but the Soviet of South Korea. They studied eight touches" to improve plant efficiency Union, Czechoslovakia and flungary major areas of plant activity, in-in certain areas while citing as par-will host inspections in the near ciuding organization and manage-ticularly impressive the plant's future.
ment, training, operations, manageriai approach, personnel maintenance, radiation protection, training programs and emergency chemistry, emergency planning and planning. Overall the IAEA concluded U:timateir, the events of;uiy 23rd, technical support.
that "Calvert Cliffs is a good example the day we lost over 1,600 megawatts for all involved, the experience of what is expected from a well of our generating capacity, have was thought provoking and reward-managed and operated plant."
become reassuring. The ground fault ing. Plant personne! and team Our goal in volunteering for an was an accident. The outstanding members valued the opportunity to international review was twofold.
performance of our people was not.
exchange ideas and learn fresh Certainly we hoped to benefit from a We designed our organization to approaches to shared problems. In review by international experts to respond promptly and calmly to his closing remarks, Ferdinand enhance our own safety program-challenges, no matter what they are.
Franzen, Program Coordinator and that objective has clearly been ful-We know that the people in charge at team leader for this review, termed filled. We hoped as well, that other every level can do their jobs and that Calvert Cliffs "ouite impressive.
utilities, both here and abroad, would our procedures will operate as we certainly to be placed in the upper follow our le 4. That objective, too, intend them to. That's confidence.
range of good performance." The for-is being achieved-not only are That's quality. That's BG&E.
'We know that thepeople in charge at every level can do theirjobs..."
U 4 A nuclear operator closes A lbree members of the Inter-Most bad neter been to Mary-
> 1he BG&F teampetr Ibis the breakers on a diesel national Atomic Energy Agency's land before, and our Corporate balhxm to near tictory in last generator at the on site Gdtert operationalSafety and Retietr Communications sta)Jmade sumn:er's llare and flound Cliffs Contml Room Simulator.
Team uvrk uitb their Gdtert sure that they experienced some B.d/ con Race, one ofibe most Regidar training sessions on Chffs' counterpart during last of thepleasures ofitfe on the popular and exciting ettnis of the simulator belp to keep our August's safety retieu: Ibe Chesapeake Hay along nith the the 19M Mariland State Fair.
operators preparrd to act su1 ply team includedSpeen people intricacies of nuclear safety and calmir in emergencies.
from eletenforeign countries.
'\\
Is.
ja
- xMsA) ~
-[f s.s4 t
gw N
GfQI
- z '
a;M
- ry,pg E '
~
. g, r e-s j
-l f:Q~O i
w,,
gpg
< '! V 1
i 7
a
. Aj t.
It' E.
g' t.
J.tlf c -
gg 7
g-
'k~
c,5 J
'ap }-M w
)]{iy,f![
kn
%)-
h-.
~
gg
'hh. c.h A;l@k$U::i "gagh.
?
w%
+w
. mm v
MllIhIhY h' s n.tr;&
k$G m ?
7 :.
l
- mw-pp a
wygmM:: -7 9
%*%;;:a~pdf m
_m
. &x
~
~.
M2kW gu,_:v m
+g+i. _ '
g m,
.m3:;
~
3g? g.
a;; --
p
~
w 5
- r-gwys 1
- - ~
c.
h[kN,V
~
e m w~ ^-
-w.
- gl;;gh N h.k~
-n xggh;swLw:c y_sr Ja..,y ry;ag smy f.aggid,stf$$EZjp;;dhisydgpj{;m.ww w~#'
fEeni
_W.s.
- L\\D
, f '* 1 % :G S M T ::uuM r ~"
L_
d&.
gg-
, FINANCIAL CDNTENTS natimore an and nectric company J
Operating Statistics.
.26 Selected Financial Data.
.27 51anagement's Discussion and Anal) sis.
.28 Report of 51anagement.
32 Auditors' Report.
3.'
Statements of Income.
33 Statements of Retained Earnings 33 Balance Sheets 34 Statements of Changes in Financial Pesition.
36 Statemerts of Taxes.
37 Statements of Capitalization.
38 Consolidated Condensed Financial Statements-Gnnc'9rion iloidings, Inc. and Subsidiaries.
.40 Notes to Financial Statements
.41 Constellation Subsidiaries
.50 Officers.
.51 Board of Directors and Committees.
.52 Shareholder Information.
.Inside Back Cover 24 22 110 20 100 35,000 18 90 16-
~
80-34,o(y 14-70-12-(&
33,000 -
10-50-8-
40- -
32,ooo.
6-30-4-
20-31,000-2-
p 10 g
I 0
'8 0
. :s.
O "78< M EResidential E Residential E4 mall Gunmeraal Small Oxnmercial Elarge Commerdal Elarge Ownnerdal and Industrial and InduMrial Sales of Fjectricity Sales of Gas Total l'tility Plant (Mons of Kikmanhoun)
(%Uions of tklatlwrms)
(%Ilions of Dollars)
OPERATING STATISTICS Baltimore Gas and Electric Company,
1987 1986 1985 1984 1983 (Dollar Amounts in Thousands)
ELECTRIC Revenues OPERATING Residential..
594,283
$ 575,774 8
528,676 8 491,069 8
452,772 STATISTICS Small Commerdal.
275,589 279,874 265,338 261,815 242,790 Large Commerdal and Industrial.
515,456
-523,815 497,683 446,394 390,751 Other.
8,407 8,788 9,766 8,867 6.997 Total
$ 1,393,735 8 1,388,251 8 1,301,463 8 1,208,145 8 1,093,310 Sales-MWil Residential...
8,521,381 7,797,858 7,083,564 6,897,025 6,644,403 Small Commerdal.
3,553,779 3,349,871 3,157,806 3,263,555 3,166,055 Large Commercial and Industrial.
10,499,805 10,087,894 9,457,355 9,074,069 8,452,975 Total 22,574,965 21,235,623 19,698,725 19,234,649 18,263,433 Customers Residential.
876,826 853,976 831,423 811,771 793,899 Small Commercial.
88,312 85,623 82,737 80,089 78,92i Large Commercial and Industrial.
2,830 2,715 2,518 2,317 1,760 l
Total 968,463 942,314 916,678 894,177 874,580 f
1 Average use per Residential
)
Customer-KWii.
9,837 9,255 3,613 8,591 8,440 l
Average Rate per KWil- (
6.14 6.50 6.%
6.23 5.95 l
Peak lead (one-hour)-MT.
5,190 4,618 4,365 4,230 4,079 Capability at Summer Peak-MW,
5,719 5,656 5,586 5,498 5,019 j
I GAS Revenues J
OPERATING Residendal.
242,240
$ 258,975 8
256,499 8 293,158 8
263,693 1
STATISTICS Small Commerdal.
38,538 39,659 42,147 49,081 44,121 Large Commerdal and Industria;.
127,257 141,781 148,305 205,035 233,010 Other.
7,421 5,354 6,358 6,055 4,471 Total 415.456 5 445,769 8
453,309 8 553,329 8
545,295 Sales-DTil Residential.
38,142,183 38,629,757 36,381,366 39,906,189 37,258,732 Small Commerdal.
6,335,805 5,960,010 6,255,159 6,837,512 6,758,274 Large Commercial and indt.strial.
58,163,326 52,786,120 54,244,959 54,727,002 44,195,654 Total 102,941,315 97,375,887
%,881,484 101,473,703 87,712,660 Customers l
Residential, 482,023 482,394 481,188 480,613 479,147 l
Small Commerdal.
31,108 30,820 29,449 29,831 29,846 i
Large Commerdal and Industrial.
5,149 5,065 5,806 5,052 4,977 Total
$18,280 518,279 516,443 515,4 %
513,970 Average use per Residential l
Customer-DTil 79.1 80.2 75.7 83.2 77.8 26 Aserage Rate per DTil(excluding delivery service)-8.
5,93 6.29 6.47 6.76 6.50 Peak Day Sendout-DTil.
636,040 624,700 677,300 607,200 648,300 Peak Day Capability-DTil 731,000 748,000 827,000 827,000 827,000
1
, SELECTED FINANCIAL DATA saltimore cu and nectric compny 1987 1986 1985 1984 1983 (Dollar Amounts in Thousands, Except Per Share Amounts)
SUMMARY
Operating Revenues GF OPERATIONS Electric 31,393,735 81,388,251 81,301,463 81,208,145 81,093,310 Gas 415.456 445,769 453,309 553,329 545,295 Total operating revenues.
1,809,191 1,834,020 1,754,772 1,761,474 1,638,605 Operating Expenses Purchased fuel and energy..
530,348 598,700 570,453 630,269 654,386 Operations and maintenance.
501,388 487,985 455,150 141,579 390,153 Depreciation.
132,332 127,274 124,%I
!!3,643 97,090 income taxes Current.
110,194 147,059 70,597 106,545 28,137 Deferred.
41,346 5,050 69,322 29,328 66,773 Investment tax <;redit adjustments.
(8,078) 1,853 16,653 12,816 21,554 Other taxes.
135,282 131,536 123,394 116,526 108,309 Total operating expenses 1,442,812 1,499,457 1,430,530 1,450,706 1,366,402 Operating Income.
366,379 334,563 324,242 310,768 272,203 Income From Steam Operations, Net.
- 33 Other Income AUowance for other funds used during construction,
16,870 16,871 14,597 23,361 32,443 Equity in net income of unconsolidated subsidisries.
20,002 30,590 13,917 6,338 1,740 Net other income and deductions,
1,349 (910) 1,225 77 (1,152)
Total other income.
38,221 46,551 29,739 29,779 33,051 Income Before Interest Charges.
404,600 381,114 353,981 340,547 306,187 Net Interest Charges Interest chstges 118,571 120,077 118,431 115,441 115,688 Allowance for borrowed funds used during construction.
(14,069)
(13,582)
(11,750)
(18,809)
(25,954)
Net interest charges 104,502 106,495 106.681 96,632 89,734 Net income..
300,098 274,619 247,300 243,915 216,453 Preferred and Preference Stock Dividends.
26,406 26,876 27,370 27,580 27,580 Earnings Applicable to Common Stod.
273,692 247,743 219,930 216,335 188,873 Common Stock Dividends.
147,896 139,567 131,692 121,114 111,423 Earnings Reinvested in the Business.
$ 125,796 8 108,176 8 88,238 8 95,221 3 77,450 Average Shares of Common Stxk Outstanding (72vusands).
78,861 78,627 78,622 78,123 76,272 Earnings Per Share of Common Stock
$3,47 33.15 82.80 82.77
$2.48 Dividends Declared Per Share of Common Stock.
$ 1.875 31.775 81.675 81.55 81.46 Ratio of Earnings to ixed Charges.
4.22 4.19 4.14 4.23 3.81 r
Ratio of Earnings to Fixed Charges and Preferred and Preference Stock Dividends Corabined.
3.29 3.20 3.08 3.10 2.81 FINANCIAL Total Assets.
$ 4,509,992 84,370,428 84,183,408 34,010,431 83,809,71" 27 STATISTirs Capitalization:
AT YEAR END Common stockholders' equity
$ 1,75 5,368 31,629,795 31,521,960
$1,433,776 81,316,053 Preferred stock.
59,185 59,185 59,185 59,185 59,185 Preference stock not subject to mandatory redemption,
i10,000 110,000 175,000 175,000 175,000 Redeemable preference stock.
I86,400 50,000 80,000 90,000 100,000 Long term debt,
1,519,514 1,471,905 1,437,611 1,386,506 1,344,714 Total capitalization.
33,630,467 33,320,885 83,273,756 83,144,467 82,991.952 Book Value Per Share of Common Stock s22.24 820.72 819.36 818.24 817.04 Number of Common Stockholders.
75,682 76,972 79,474 81,601 85,372 comrnon stmk dats hate been restated to reflect the two fotone stock Spht in August 19M and certain other prior par amounts have been restated to conform with the current par's preentation.
e MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS saltimore cas and nectric company e (All Note references hereunder are references to the Notes to Finandal Statements.)
RESL'L13 0F EARNINGS Electric sales increased by 6.3 % in 1987 and 7.8% in GPERATIONS Earnings per share of common stock increased to 33.47 in 1986. The increases by class of customer from the prior 1987 from $3.15 in 1986 and $2.80 in 1985. The increase in year were as follows:
1987 compared to 1986 was attributable to growth in utility 1987 1986 earnings resulting from favorable weather and customer Residential.
9.3 %
10.1 %
growth, partiaHy offset by lower income from the Com-Small Commercial........
6.1 6.1 pany's diversified subsidiary operations.1he increase in large Commercial and Industrial..
4.1 6.7 1986 from 1985 was due to the combined effects of higher utility earnings and greater income from subsidiary operations.
The increases in sales in both 1987 and 1986 were attrib-The increases in earnings from utility operations in 1987 utable to favorable weather, especially during the summer and 1986 as compared to the preceding years were pri-cooling season, and to growth in the number of customers, marily due to the combir ed effects on electric sales of particularly those with heat pump instaHations. Heavy favorable weather in each year and continued growth in all demand during the 1987 summer season surpassed previous classes of customers. In 1987, the favorable weather, par-peak usage records, culminating in a new au-time peak of.
ticularly the above normal temperatures in the summer 5,190 megawatts. The number of residential heating months, contributed 25C to 30( per share to the Company's customers increased 14.3 % in 1987 and 15.4 % in 1986.
earnings, approximately double the effect of weather on Additionally, favorable economic conditions in the Com-1986 earnings. In May 1987, the Public Service Commis-pany's service territory enhanced commercial and industrial sion of Maryland (Maryland Commission) ordered a sales during both periods.
$78.3 milUon base rate decrease in recognition of the lower Future electric sales volumes will continue to be affected federal income tax rate and the decreased overall cost of primartiy by the economic situation in the Company's.
capital to the Company.
service territory, as well as by weather conditions and the Diversified subsidiary earnings from Constellation conservation efforts of customers.
lloldings, Inc. and its subsidiaries (Constel'ation) were 17C per share in 1987 compared with 32( in 1986 and 14C in GAS OPERATING REVENUES AND SALES (D1'H) 1935 (see Consolidated Condensed Financial Statements-Gas operating revenues decreased by 6.8% in 1987 and Constellation Holdings, Inc. and Subsidiaries on page 40).
1.7 % in 1986. The decreases were attributable to the The 1987 decrease in Constellation's earnings was due to following factors:
several factors. Earnings declined 8C per share as a result of Increase (Duresse)
Frorn Prior Year realized securities losses incurred during the market decline on October 19 in one of ConsteU2 tion's professionally 1987 1986 managed securities accounts. Earnings also declined due to (In m!! ions)
Constellation's increasing activity in project-oriented Sales..
$ 13.5 83.6 businesses, principally in the real estate and alternative Base Rate Adjustments.
(1.0) energy areas. Constellation's growth in these businesses has Gas Cost Adjustments...
(42.8)
(11.1) caused a shift of capital from short-term investments to Net Decreases
$(30.3) 8(7.5) gutentially higher yielding assets which develop and mature over a longer period. Developing and managing these new projects also has required a corresponding growth in Con.
The primary cause of the decline in gas operating -
stellation's human resources. Constellation's earnings also revenues was the lower cost of gas. These lower costs -
reflected reduced tax benefits as a result of the Tax Reform resulted from market conditions as well as the Company's continued efforts to reduce the cost of purchased gas sold Act of 1986.
to customers.
Earnings were reduced by 3C per share in 1986 and Increased by 8C per share in 1985 as a result of certain Changes in the sales volume component of operating char.ges in accounting estimates and other adjustments as resenues are affected by the delivery service schedule.
generaUy described in Notes 1,9, and 10.
Under this schedule, customers, principally industrial gas users with alternate fuel capability, are able to purchase gas ELECTRIC OPERATING REVENUES AND SALES (MWH) directly from gas producers and pipelines and transport it l
Electric operating revenues increased by 0.4 % in 1987 and to the Company's distribution system. The Company then 6.7% in 1986. These increases were attributable to the transports such gas through its service territory to the customers and receives a delivery service fee equivalent to foUowing factors:
increase (Decrease) the marg 4 ca gas it sells to similar customers.
28 From Frior Year 1987 1986 (In %1 bons)
Sales.
370.4
$64.7 Base Rate Adjustments (44.3)
Fuel Rate Adjustments.
(20.6) 22.1 Net increases.
$ 5.5
$86.8
Baltimore Gas and Electric Company Gas sales increased by 5.7 % during 1987 and 0.5 % in effects of increased fuel expenses resulting from higher 1986. The changes by class of customer from the prior year electric output and lower nuclear generation caused by were as follows:
outages at the Calvert Cliffs Nuclear Power Plant. The 1987 1986 increase in purchased fuel and energy expense during 1986 Residential.
(1.3)%
6.2 %
was due mainly to the collection of a portion of costs Small Commercial..
6.3 (4.7) previously deferred through the electric fuel rate clause, Large Commercial and Industrial.
10.8 (2.7) the write-off of disallowed deferred electric fuel costs (see Note 10), and an increase in electric output.
The decline in sales to residential customers in 1987 was Electric output increased 6.2 % and 7.5 % in 1987 and primarily the result of milder winter weather. Sales in the 1986, respectively. Gas output dedined in both yeart, par-small commercial category reflect the reclassification of cer-tially as a result ofincreased sales under the delivery tain customers from the large commercial and industrial service schedule. Gas transported under this schedule does schedules. The increase in sales to large comniercial and not involve the purchase and output o! gas br the Company industrial customers in 1987 reflects increased utilintion of and is not reflected in purchased fuel and energy expense.
delivery service Eas.
Prices for oil and coal consumed for electric generation Colder weather during the winter heating season were lower in both 1987 and 1986 as compared to the prior increased sales to residential customers during 1986. Sales years. Natural gas prices were also lower during 1987 and to small commercial customers reflected realignments to 1986, as the Company continued to secure gas directly from other schedules based on usage analysis. The decline in several gas producers and suppliers and receive previously sales to large commercial and industrial customers in 1986 negotiated savings with its principal gas supplier.
mainly reflected certain large manufacturers ceasing their Nudear generation is the Company's most economical operations in the Company's service territory (approxi-source of energy and has a significant effect on electric mately 1% of total gas sales) and some temporary purchased fuel and energy costs. Refueling operations have changeovers to alternate fuels.
occurred approximately every eighteen months at each of Future gas sales will continue to be affected by the price the Comoany's two nuclear generating units and result in and availability of gas and alternate fuels, weather condi-significant increases in electric fael costs during the related tions, conservation efforts by customers, the general outages. In 1987, the Company rcceived pernJssion from economic situation, and the regulatory climate in the the Nudear Regulatory Commission to extend the period natural gas indu>try. If gas prices were to rise in the future between the refueling outages for Unit No. 2 from eighteen in relation to alternate fueb. conversions from gas by to twenty-four months and intends to request a similar industrial customers would be antic' pated. The delivery extension for Unit No.1 in 1988. These changes could service schedule, in conjunction with flexible pricing provi-reduce purchased fuel and energy expense and the related sions, should enaNe gas to compete favortbly with oil as a revenue from customers, as refueling outages may be timed primary fuel source and moderate these conversions as long such that only one generating unit would be affected in a as natural gas prices remain competitive and interstate given year. Only one nuclear uidt underwent refueling in pipeline transportation is available.
both 1987 and 1986. Ilowever, the 1987 refueling outage was extended, and the other nuclear unit was also shut PURCilASED FUEL AND ENERGY EXPENSE down for two months during the year, in order to docu-Purchased fuel and energy expense decreased 11.4 % in ment compliance with environmental qualification and 1987 and increased 5.0% in 1986. These changes were mechanical fastener requirements of the Nudest Regulatory attributable to the following factors:
Commission, increase (Decrease) rrem Prior Year OPERATIONS AND MAINTENANCE EXPENSES 1987 1986 Operations and maintenance expenses increased 2.7 % in (in mons) 1987 and 7.2 % in 1986. Both increases were ettributable in Actual Electric Fuel Costs 3 69.2 3(59.8) part to higher payroll costs tempered by a reducJon in the Deferred Electric fuel Costs (100.0) 91.3 number of employees. Additionally, the 1987 inctwe Actual Purchased Gas Costs (47.7)
(23.0) reflects more storm related repairs to overhead lines and Deferred Purchased Gas Costs 10.1 19.7 transformer >. liigher insurance and routine maintenance Net Changes
$(68.4)
I 28.2 costs also contributed to the 1986 increase.
DEPRECIATION EXPENSE The decrease in purchased fuel and energy expense in 1987 was due primarily to the deferral of net unda-Depreciation expense increased in both years as a result of recovered fuel costs resulting from the Company's electt:c higher levels of depreciable plant in service. The increase in 29 fuel rate clause and to significant reductions in the cost of 1986 was moderated by the reduction in the depreciation gas from our suppliers. These factors more than offset the rate applicable to the Calvert Cliffs Nudear Power Plant, beginning in September 1985 (see Note 1).
i Baltimore Gas amiElectric Company,
TAXES As a result of the Act, the Company's ability to generate Income tax expense decres.ied in both 1987 :nd 1986.
cash internally is reduced. This is due primarily to the loss l
The 1987 decrease was due to the reduction of the maxi-of the investment tax credit and certain other provisions
(
mum corporate tax rate from 46% to 40% under the Tax diminishing the Company's ability to defer the payment of l
Reform Act of 1986, partially offset by the effects of a higher income taxes untillater years.
}
level of pre-tax income. The decrease in 1986 was attribut-See the Internal Generation of Cash section and Note I able :o a lower level of pre-tax income, after adjustment for for additional information.
l the already net of tax equity in net income of unconsoll-j dated subsidiaries. Other taxts increased in both years tiue SL'BSIDIARIES' EARNINGS to higher property, capital stock, and payroll taxes.
The decrease in Equity in Net income of l'nconsolidated The Tax Reform Act of 1986(the Act) significantly Subsidiaries in 1987 was due primarily to realized securities changed the federal income taxation of corporations. Its losses incurred during the market decline on October 19 provisions included an overall reduction in corporate and shifts in Constellation Holdings, Inc!s (Constellation) income tax rates, the elimination of the investment tax asset mix from short term investments to potentially higher credit, ch.mges in depreciat.on rates and lives, and various yielding assets w hich develop and mature over a longer other prosisions affecting the Company. Most provisions of period. Additionally, certain of Constellatior's investments the Act were phased in under various transition rules have provided significant tax benefits through the invest-beginr,ing on January 1,1987. The major exception to this ment and energy tax credits. These benefits have been phase in was the repeal of the investment tax credit which either eliminated or diminished under the Tax Reform Act of was generally effective retroactive to Janury 1,1986.
1986, furthec contributing to the decline in investment in-I'nder the transition rules of the Act, however, the Com-come. The 1986 !ncrease in subsidiaries' earnings reflected
)
pany will still receive the investment tax credit on Brandon the additional financial investments made by Constellation Shores l' nit Na 2 provided it is placed in service before during the year. Capital contributions to Constellation by April 1,1)92.
the Company have been deployed primarily as investments The repeal of the investrnent tax credit had an immaterial in preferred and common stocks, professionally managed effect on net income in 1987 and 1986 since the Company equity portfolios, real estate, leveraged lease transactions, defers such credits and amortizes them to income over the senior livirig and health care institutions, and alternative lives of the related assets. The effect of the repeal of the energy and emironmental systems. (See Consolidated Con-investment tax credit on future years wiu be to reduce the densed Fina.ncial Statements-Constellation Holdings, Inc.
level of deferred credits being amortized to Income.
and Subsidianes.)
The Company's income tax expense is expected to decrease again in 1988 as a result of the Act's further reduc-0FHER tion of the maximum corporate tax rate to 34%. In that The Allowance for Funds lised During Construction (AFC) the Company generally normalizes timing differences inueased in 1987 and 1986 due to continued construction between book and tax treatment for accounting purposes, of l't.it 2 of the Brandon Shores Power Plant and other elec-many of the Act's other provisions do not affect total tax tric projects. However, the 1987 increase was diminished by expense.
s decrease in the AFC rate, effective June 1,1987, in con-The Company has recorded acct.mulated deferred income junction with a rate order of the Public Service Commission taxes on certain timing differences which originated prior of Maryland (sce Note 1).
to 1987 based on the 46% tax rate then in effect. As a The early retirement of certain high cost debt caused a result of the reductions in corporate tax rates provided by sbght decrease in interest charges for 1987. The increase in the Act, future taxes will be paid at a lower rate. The Ft 198o was due to sales of additional securities, moderated by generally provides that in order to continue the use of lower interest rates and debt retirements.
accelerated depreciation for tax purposes, a public utility The decrease in Preferred and Preference Stock Dividends must reverse the excess deferred taxes over the lives of the in 1987 and 1986 reflects the redemption of tertain high I
related assets.
cost securities and the issuance of lower cost securities.
LIQl'IDITY OVERVIEW The Company anticipates that future capital require.
AND CAPITAL The Company's capital requirements are attributable ments, as shown below, will be met primarily through the resol'RCES principauy to its construction program and its expenditures internal generation of cash, supplemented by a mixture of l
30 for nuclear fuel. Other capital requirements involve funds debt and equity offerings. The timing and mixture of future I
for the maturity or retirement of outstanding debt and the debt and equity financings will be dictated by economic and redemption of preference stock.
financial market conditions and the needs of the Company.
i i
l
e Baltimore Gas and Electric Company e
CAPITAL REQUIREMENIS The $506 million of long-term debt incurred during the Actual capital requirements for 1985 through 1987, along period 1985 through 1987 consisted of the following items:
with estimated amounts for 1988 through 1990, are as (in mmons)
Floating Rate Notes.
8200
[p$n*f Pollution Control loan..
36 construccon Nuclear of Debt and Port Facilities loan.
48 Expenditures AFC Fuel Preference Stock Total Adjustable Rate Pouution Control Loan.
22 (In wmons)
First Refunding Mortgage Bonds.,
10 0 1985.
8200 826 $32 8212 8470 8506 1986.
224 30 59 153 466 1987.
224 31 53 127 435 1988..
290 35 45 19 389 During the three years ended 1987, the Company issued 1989.
305 41 60 108 514 a total of 110 million of common stock through the Divi-1990.
315 53 60 67 495 dend Reinvestment and Stock Purchase Plan and the Employee Stock Ownership Plan and a total of $150 million The Company's construction program is subject to con-of redeemable preference stock. During the same three tinuous review and modification. Actual construction and years, the Company repurchased a total of 895 million of nuclear fuel expenditures may vary from the estimates Preference stock and redeemed another 327 million of above because of a number of factors such as inflation, Preference stock through mandatory sinking fund economic conditions, regulation, legislation, load growth, Provi:fons.
environmental protection standards, and the cost and in October 1987, the Company established a $100 million availability of capital. The only major project in the Medium Term Note program. No securities were issued Company's construction program is Brandon Shores Unit under this program as of December 31,1987. The Medium-No. 2, which is scheduled to be placed in service prior to Term Notes, Series A, may range in maturity from one to April 1,1992.
fifteen years and can be sold on short notice as market con-Nuclear fuel expenditures include uranium purchases and ditions warrant or corporate requirements dictate. The net processing charges. In addition, in June 1985 the Company Proceeds from the sale of notes will be used to repay short.
made s one-time payment of approximately $72 million to term indebtedness mcurred to provide interim financing for the Department of Energy for the disposal of spent nuclear the construction program, for the refunding of long-term fuel which existed at April 7,1983, securities, and for other capital requirements relating to the Company's utihty business.
INVESTMENT IN SUBSIDIARIES Commercial paper notes are issued by the Company to Since 1981 the Company has invested 3205 million in Con.
satisfy interim financing requirements. The Company main-stellation iloidings, Inc., a subsidiary w hich is the holding tains credit facilities with various banks in order to provide company for the Company's diversified activities (see Con-additional Uquidity.
solidated Condensed Financial Statements-Constellation lloldings, !nc. and Subsidiaries and Notes 1 and 2).
CAPITAL STRUCTURE The Company's objecdve is to maintain a capital structure INTERNAL GENERATION OF CASil that preserves an appropriate balance between debt and The internal generation of cash related to utility activities equity. The Company's capital structure as of December 31 consists essentiaUy of net income adjusted for non-cash is presented below:
items, less dividends and capital contributions to the Com.
1987 1986 1985 pan > s subsidiaries. From 1985 through 1987, substantiauy Common Equity.
48.1 % 47.3 % 45.7 %
all of the funds required for the Company's construction Preferred and Preference Stock and nuclear fuel expenditures were provided from the not Subject to Mandatory internal generation of cash. The Company anticipates that Redemption.
4.6 5.9 7.0 approximately 70% of the funds required for these pur-Redeemable Preference Stock 5.3 3.8 2.7 poses during 1988 through 1990 will be provided from long Term Debt.
42.0 43.0 44.6 internal sources, after reflecting the impact of the Tax Total.
100 % 100 % 100 %
Reform Act of 1986.
EXTERNAL FINANCING 3 The investment in Constellation lloidings, Inc. is During the three > cars ended 1987, the Company incurred financed exclusively through retained earnings and 31 3506 miUion oflong-term debt and retired $371 million, represented 5.6% in 1987, 5.6% in 1986, and 3.2 % in resulting in net new long term debt of $135 million.
1985 of the Company's capital structure.
l
t REPORT 0F MANAGEMENT Baltimore Gas amiElectric Company,
Management is responsible for the information and Conpers & Lybrand, independent certified public account-representations contained in the Company's financial ants, are engaged to examine the financial statements and statements. The financial statements are prepared in accord-express their opinion thereon. Their examination is made ance with generally accepted accounting principles based in accordance with generally accepted auditing standards upon currently available facts and circumstances and which include a review of internal contre.t i
l Mang;ement's best estimates and ludgments of known The Audit Committee of the Board of Directors, which I
conditions.
consists of three outside Directors, meets periodically with The Company maintains an accounting system and Management, internal auditors, and Coopers & Li rand to -
b related system of internal controls which are designed to review the activities of each in discharging their responsi-provide reasonable assurance that the financial records are bilities. The internal audit staff and Coopers & L) brand have accurate and that the Company's assets are protected. The free access to the Audit Committee.
Company's staff ofinternal auditors, which reports directly to the Chairman of the Board, conducts periodic reviews to maintain the effectiveness of internal control procedures.
1 I
f' AUDITORS' REPORT To the Stockholders of Baltimore Gas and Electric Company We have examined the balance sheets and statements of In our opinion, the financial statements referred to above capitalization of Baltimore Gas and Electric Company at present fairly the financial position of Baltimore Gas and December 31,1987 and 1986 ud the related statements of Electric Company at December 31,1987 and 1986 and the l
inconze, retained earnings, changes in financial position, results of its operations and changes in its financial position j
and taxes for each of the three yeus in the period ended for each of the three years in the period ended December 31, 1
December 31.1987. Our examinations were made in accord-1987 in conformity with generally accepted accounting j
ance with generally accepted auditing standards and principles applied on a consntent basis.
accordingly, lacluded such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
1
+
Coopers & Lybrand l
Baltimore, Maryland
]
january 21,1988 j
1 1
i 32 l
1
, STATEMEN'IS OF INCOME Bammore cas and nectrk company Year Ended December 31, 1987 1986 1985 (In Thousands, Except Per Share Amounts)
OPERATING REVENUES Electric.
$ 1,393,735 31,388,251 81,301,463 Gas.
415,456 445,769 453,309 Total operating revenues..
1,809.191 1.834,020 1,754,772 OPERATING EXPENSES Purchased fuel and energy 530,348 598,700 570,453 Operations.
377,051 367,979 338,573 Maintenance 124,337 120,006 116,577 Depreciation.
132,332 127,274 124,%1 Income taxes..
143,462 153, % 2 156,572 Other taxes 135,282 131,536 123,394 Total operating expenses.
1,442,812 1,499,457 I,430,530 OPERATING INCOME.
366,379 334,563 324,242 OTilER INCOME Allowance for other funds used during construction 16,870 16,871 14,597 Equity in net income of uncoasolidated subsidiaries..
20,002 30,590 13,917 Net other income and deductions.
1,349 (910) 1,225 Total other income.
38,221 46,551 29,739 INCOME BEFORE INTEREST CilARGES.
404,600 381,114 353,981 NET INTEREST CilARGES Interest charges.
I18,571 120,077 118,431 Allowance for borrowed funds used during construction.
(14,069)
(13,582)
(11,750)
Net interest charges.
104,502 106,495 106.681 NET INCOME.
300,098 274 619 247,300 PREFERRED AND PREFERENCE STOCK DIVIDENDS 26,406 26,876 27,370 EARNINGS APPLICABLE TO COMMON STOCK.
$ 273,692 8 247.743 8 219,930 AVERAGE SilARES OF COMMON STOCK OLTSTANDING 78,861 78,627 78,622 EARNINGS PER SilARE OF COMMON STOCK 83.47 83.15 82.80 STATEMEN'13 0F RFTAINED EARNINGS Year Ended December 31, 1987 1986 1985 (In Thousands)
BALANCE AT BEGINNING OF YEAR 8 820,156 8712,280 8624,042 ADD: Net income.
300,098 274,619 247,300 1.120,254 986.899 871,342 DEDL'CT:
Dividends declared Preferred stock 2,899 2,899 2,899 33 Preference stock.
23,507 23,977 24,471 Common stock (at annual amounts per > hare of $1.675,81.775, and 81.875 in 1985,1986, and 1987, respectively).
147,896 139,567 131,692 174,302 166,443 159,062 Premiums paid on retirement of preference stock.
1,426 300 BAIANCE AT END OF YEAR,
$_944,526 8820.156 8712,280 The accompan)ing notes are an integral part of the Gnancial statements.
.o l
BALANCE SKEE]$
Baltimore Gas and Electric Company At December 31, 1987 1986 (In Thousands)
ASSETS UTILITY PLANT Plant in service Electric...
$3,722,095 33,574,122 Gas..
421,989 407,002 Common...
235,401 207,320 f
Total plant in service.
4,379,485 4,188,444 l
' Accumulated provision for depreciation.
(1,307,619)
(1,197,378) f Net plant in service.
3,071,866 2,991,066 i
Plant held for future use..
12,822 13,756 Construction work in progress........
433,677 399,202 l
Nuclear fuel (net of amortization of 8509,950,000 and I467,004,000).
173,326 163.652 Net utility plant 3,691,691 3,567,676 OTilER PROPERTY AND INVESTMENTS Investment in subsidiaries..
252,347 225,795 Other 5,561 3.374 Total other property and investments..
257,908 229,169 4
CL'RRENT ASSETS Cash and cash equivalents.
34,605 63,619 Special deposits and working funds
'I,292 4,332 Accounts receivable Customers (net of allowance for uncollectibles of f 8,689,000 and 38,293,000).
193,007 199,193 Other 3,117 3,844 Fuel stocks.
59,337 57,760 Materials and st'pplies.
96,517 94,037 Prepayments.
60,299 65,031 Other 514 904 f
Total current assets,
448,688 488.720 1
DEFERRED CllA!'GES Deferred fuel costs..
63,893 37,406 Other 47,812 47,457 Total deferred charges.
Ii 1,705 84.863 l
l 1UTAL ASSE13..
$4.509,992 54,370.428 I
Certain prior year amounts hase been restated to conform with the current year's presentation.
The accompan31ng notes are sa integral part of the financial statetaents, i
1 1
'34 1
l r
1 i
I i
l
. BALANCESiiEETS Battinwre cas and Electric company At December 31, 1987 1986 (In Thousands)
CAPITALIZATION CAPITALIZATION AND LIABILITIES Common stockholders' equity.
31,755,368 31,629,795 Preferred stock.
59,185 59,185 Preference stock not subject to mandatory redemption.
I10,000 110,000 Redeemable preference sto:k.
186,400 50,000 Long term debt, 1,519,514 1,471.905 Total capitalization.
3,630,467 3,320,885 CL'RRENT LLABILITIES Short-term borrowings 45,000 120,000 Current portion of long-term debt and preference stock.
19,276 126,942 Accounts payable.
98,657 128,120 Taxes accrued.
43,581 35,483 Interest accrued.
34,200 36,573 Dividends declared.
43,247 42,208 Vacation costs accased.
22,842 22,103 Other 24,323 25.378 Total current liabilities.
331,124 536.807 DEFERRED CREDITS AND OTilER LIABILITIES Deferred investment tax credits 193,400 201,696 Deferred income taxes.
341,498 300,989 other 13,503 10.051 Total deferred credits and other liabihties 548,101 512,736 CO.41\\tlTMENTS AND CONTINGENCIES-see Note 12 RITAL CAPITAllZATION AND LitBILITIES.
$ 4,509,992 34,370,428 Certain phor year amounts base been restated to conform with the current year's presentauon.
The anompanying notes are an integral part of the financial statenwnts.
35
m STATEMENTS OF CHANGES IN FINANCIAL POSITION satrimore cas and nectric empany,
Year Ended December 31, 1987 1986 1985 (in Thousands)
OPERATING ACTIVITIES Nel locome.
5300,098
$274,619
$247,300 Noncash items included in income:
Depreciation and amortization.
178,583 195,050 180,467 Investment tax credit adjustments.
(8,296) 19 14,208 Deferred incorne taxes....
40,509 5,952 72,621 Allowance for other funds used during construction (16,870)
(16,871)
(14,597)
Equity in net income of unconsolidated subsidiaries.
(20,002)
(30,590)
(13,917)
Amortization of losses from the reacquisition of debt.
1,659 1,126 668 Other...
6,547 3,%2 3,070 Changes in working capital components:
Materials, supplies and fuel stocks.....
(4,057) 5,925 4,141 Accounts receivable..,
6,913 4,527 (26,770)
Prepayments 4,732 (1,577) 4,823 Other current assets 390 12,435 (6,488)
Federalincome taxes payable.
7,137 15,608 671 One time fee for nuclear fuel disposal costs.
(71,829)
Other current liabilities.
(30,953) 14,771 3,408 Deferred fuel costs.
(26,487)
Other cash operating sources and (uses)
(493) _
70,181 (47,681)
(4.189) 1,552 Net cash flow from operating activities 439,410 550.948 351,647 FLNANCING ACrlVITIES Common stock dividends.
(147,896)
(139,567)
(131,692)
Preferred ar.d preference stock dividends (26,406)
(26,876)
(27,370)
Proceeds from issuance of:
Long term Mt 102,134 Ii1,365 285,055 Common stock..
7,959 31 (419)
Preference stock.
100,000 50,000 Short term debt, net.
(75,000) 33,025 5,775 Redemptions and repurchases of preference stock.
(71,800)
(40,000)
(10,000)
Loss from redemption of preference stock.
(1,400)
(300)
Reacquisition of long term debt (55.228)
(112,953)
(202,460)
Loss from reacquisition of long-term debt.
(1,630L (2.395)
(927)
Net cash used by financing activities (169,267)
(127.670)
(82.038)
INVESTING ACTIVITIES Construction expenditures (254,530)
(254,142)
(225,771)-
Allowance for other funds used during construction.
16,870 16,871 14,597 Nuclear fuel expenditures.
(52,620)
(59,343)
(32,291)
Investment in subsidiaries.
(13,306)
(68,000)
(24,657)
Other 1,389 1,382 1,120 Net cash used by investing activities.
(302,197)
(363.232)
(267,002)
Net increase (decrease)in cash.
$ (32,054)
$ 60,046
$ 2.607 The accompan)ing notes are an integral part of the financial statements.
, STATEMENTS 0F TAXES Baltimore Giu and Electric Campany Year Ended December 31, 1987 1986 1985 On Thousands)
INCOME TAX EXPENSE Charged to operating expenses Current.
$ 110,194 3147,059 8 70,597 Deferred, consisting of the following tax effects of timing differences Accelerated depreciation.
44,394 44,755 50,684 Deferred fuel costs 9,938 (30,584) 22,054 Percentage repair allowance......
1,958 3,353 2,126 Contributions in aid of construction.
(4,820)
(4,879)
(1,246)
Capitalized Interest and overheads.
(1,682)
L'nbilled revenue.
(2,542)
Nuclear decommissioning costs (1,303)
(1,507)
(1,259)
Other.
(4,597)
(6.088)
(3,037)
Total deferred taxes 41,346 5,050 69,322 Investment tax credits Current tax credits Eligible property.
2,120 13,258 26,313 Employee stock ownership plan.
217 1,834 1,766 Amortization of tax credits...
(10,415)
(:3.239)
(11,426)
Investment tax credit sdjustments.
(8,078) 1,853 16,653 Total charged to operating expenses.
I43,462 153,962 156,572 Charged to other income Current 595 (663)
(2,091)
Deferred.
(837) 902 3,299 investment tax credit adjustments.
(II) 51 (667)
Total charged to other income.
(253) 290 541 10T.4L INCOME TAX EXPENSE.
$ 143,209
$154.252 3157,113 RECONCILIATION OF TUTAL INCOME TAX LXPENSE AND TAX COMPUTED AT STATUTORY RATE Tax computed at statutory federalincome tax rate (40% in 1987 and 46% in 1986 and 1985).
$ 177,323 3197,281
$186,030 Increases (decreases)in tax Depreciation differences not normalized.
5,352 5,218 4,673 A!!owance for funds used during construction (12,376)
(14,009)
(12,120)
Amortization of deferred investment tax credits.
(10,415)
(13,239)
(11,996)
Equity in net income of unconsohdated subsidiaries.
(8,001)
(14,071)
(6,402)
Loss on retirement of property.
(2,754)
(3,211)
Deferred tax rate differential (1,772)
Other.
(4,148)
(3,717)
(3.072)
Totalincome tax expcnse.
$ 143,209 8154.252 3157,113 Effective federal income tax rate 32.3 %
36.0 %
38.8 %
OTiiER TAXES Property.
$ 31,250 3 29,755 5 29,059 37 Capital stock.
41,788 39,804 35,589 Maryland gross receipts.
35,915 36,455 34.878 Maryland electric environmental surcharge.
2,319 2,562 2,623 Social security 24,073 24.056 22,845 Miscellaneous.
4,927 3.952 3.491 140,272 136,584 128,485 Amounts included above chcrged to accounts other than taxes.
(4,990)
(5.048)
(5.091)
TUTAL OTHER TAX EXPENSE
$ 135,282 8131,536
':13.394 The accompanpng notes are an integral part of the fmancial staternents-
O 4
STATEMEN13 0F CAPITALIZATION saltimore cas and riectric compcy o At December 31, 1987 1986 (In Thousands)
COMMON SMCK110LDERS' EQl'ITY Common stock-without par value-100,000,000 shares authorized: 78.912,450 and 78,640,475 shares issued and outstanding at December 31,1987 and 1986, respectively. (At December 31,1987,899,694 shares were reserved for the Employee Stock Ownership Plan, and 5,433,708 shares were reserved for the Dividend Reinvestment and Stock Purchase Plan.)...
5 817,513 3 809,554 Premium on preferred stock 157 157 Retained earnings.
944,526 820,156 Valustian allowance-investment securities of subsidiary (6.828)
(72)
Total corrmon stockholders' equity....
1,75!,368 1.629.795 PREFERRED SECK Cumulative, 8100 par value, 1,000,000 shares authorized Series B, 4 % %, 222,921 shares outstanding, callable at $110 per share.
22,292 22,292 Series C,4%,68,928 shares outstanding, callable at $105 per share.
6,893 6,893 Series D, 5.40%,300,000 shares outstanding, callable at $101 per share.
30,000 30.000 59,185 59.185 Total preferred stock PREFERENCE SMCK l
(
Cumulative, $100 par value, 6,000,000 shares authorized
[
l Preference stock not subject to mandatory redemption I
7.88 %, 1971 Series, 500,000 shares outstanding, callable at 3101 per share 50,000 50,000 7.75 %,1972 Series,400,000 shares outstanding, callable at $101 per share 40,000 40,000 7.78%,1973 Series, 200,000 shares outstanding, callable at $103 per share prior to December 1,1988 sad at $101 per share thereafter.
20,000 20,000 9.3W.1974 Series, 350,000 shares outstanding in 1986..
35,000 Irss preference stack called for redemption-see Note 3 (35.000)
Total preference stock not subject to mandatory redemption 110,000 110.000 Redeemable preference stock l
30,000 l
8.375 %,1979 Series, 300,000 shares outstanding in 1986 l
12 %, 1981 Series A, 272,000 and 340,000 shares, respectively, outstanding...
27,200 34,000 l
l 12 %, 1981 Sutes B, 160,000 shares outstanding.
1,6,000 16,000 l
7.50%,1986 Series, W,000 shares outstandiog, callable at $107.50 per shtre prior to October I,1991 and at lesser amounts thereafter 50,000 50,000 l
l 6.75 %,1987 Ser!cs, 500,000 sharts outstanding in 1987, ullable at $106.75 l
per share prior to April 1,1992 rad at lesser amounts thereafter.
50,000 6.95 %,1987 Series, 500,000 shares cutstanding in 1987, redeem 2bie in w hole at $100 per share on October 1,1995..
50,000 less current portion of redeemable preference stock-see Note 4.
(6,800)
(80,000)
Total redeemable preference stcek 186.400 50.000 Certain priot year amounts have been restated to conform with the current ) ear's present-tion.
The accompanying notes are an integral part of the Snancial statements.
38
e
,STATEMEXIS 0F CAPITALIZATION sa/timore cas and ructre company At Deccmber 31, 1987 1986 (In Thousads)
LONG-TERM DEBT First refunding mortgage bonds Series Z 3 %, due July 15, 1989 36,754 s 36,754 3 % % Series, due December 1,1900.
29,682 29,682 4X% Series, dueJuly 15, 1992.
25,000 25,000 14 % % Senes, due July 15, 1992.
39,258 4 % Series, due March 1,1993,
24,095 24,09; 4 % % Series, duc July 15,1994.
29,989 29,989 5% % Series, due April 15,1906.
26,680 26,680 8 % % Series, dueJune 15, 1997 6%% Series, due August 1,1997.
100,000 24,967 24,967 5%% Installrnent Series, due August 15, 1998.
60,775 62,140 7 % Series, due December 15,1998.
28,705 28,705 8% % Series, due September 15, 1999.
22,198 22,198 8%% Series, due September 15, 2000 11,429 11,431 7 % % Series, due April 15, 2001,
60,000 60,000 7%% Series, due September 1,2001 60,000 60,000 7%% Series, due January 1,2002.
50,000 50,000 7 % % Series, dueJuly 1,2002.
50,000 50,000 5 % % Installment Series, dueJuly 15,2002.
12,500 12,500 7 % % Series, due September 15,2002.
50,000 50,000 8%% Series, due February 1,2004.
74,986 74,986 6 80% Stries, due September 15,2004.
20,000 20,000 9%% Series, due August I,2005 3,555 15,638 8%% Series, due September 15,2006.
75,000 75,000 8 % % Serics, due September 15,2007.
75,000 75,000 9%% Series, dueJuly 1,2008.
62,560 62,560 6.90 % Instal 5ent Series, due September 15,2009 55,000 55,000 9% % Series, due March 1, 2016.
100,000 100,000 Total first refunding mortgage bonds,
1,168,875 1,121,593 Other long-term debt (unsecured) 4%% S!nking fund debentures, due August I,1990 16,145 16,805 Loar.s under revolving credit agreements.
50,000 50,000 Floating rate notes, due July 1,1995.
100,000 100.000 Floating rate notes, due October 15,1995 Series 11 100,000 100,000 Pollution controlloan, dueJuly 1,20!!
36,000 36,000 Port facilities loan, due June 1, 2013.
48,000 48,000 Adjustable rate pollution control loan, due July 1, 2014.
20,150 17,368 Total other long term debt.
370,295 368,173 l'namortized (discount) and premium.
(7,182)
(5,919)
Less current portion of long-term debt.
(12,474)
(11,942)
Totallong term debt 1,519,514 1,471,905 IUTAL CAPITAllZATION.
$ 3,630,467
$3.320,885 Certain prst ) car amounts have been restatnf to conform with the current ) car's presentation.
The accompan)ing notes are an integral part of the financial statements 39 f
l l
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-rnmnsolidated oiterst/ted substd/ary o/
i l
CONSTELLATION Il0LDINGS, INC. AND SUBSIDIARIES saltimort cas and Electric compa.y j
e Year Ended December 31, j
i CONSOLIDATFD CONDEN5ED STATD!ENTS OF INCOME 1987 1986 1985
)
(In Thousands. Except Per Share Amounts)
Revenues
$ 30,405 124,876 313,545 l
Operating expenses.
17,497 5,912 2.651 l
Operating incorne..
12,908 18,964 10,894 Interest expense.
11,300 6.376 3.502 Net income before income taxes.
1,608 12,588 7,392 l
Income tax expense (benefit)..
(12.061)
(12,237)
(3.860)
Net income...
$ 13,669 324.825
$11,252
{
Contribution to BG&E's earnings per share of common stock...
$.17 8.32 8.14 l
l I
CONSOLIDATED CONDENSED IML4NCE SilEETS At Dacember 31, At December 31, 1987 1986 1987 1986 (in Thousands)
(In Thousands)
ASSETS LIABI!-l TIES A%D STOCKHOLDER'S EQUITY CURRENT ASSETS CURRENT LIABILillES Cash and cash equivalents
$ 4,944 8 10,095 Short. term debt.
$ 25,497 8 10,289 Other current assets.
28,496 10.654 Othtr current liabilities.
6,306 2.724 Total current assets.
33,440 20.749 Total current liabilities 31,803 13,013 NONClRRENT ASSETS NONCERRENT LIABILITIES i
investment securities, net.
I15,931 189,282 Long-term debt.
I87,838 135,578 investment in alternative energy systems.
32,902 17,601 Deferred income taxes 50,097 40,949 investment in leveraged leases.
39,291 43,232 Other noncurrent liabilities 4,463 28.273 Investment in limited partnerships 72,608 40,941 Total noncurrent liabilities.
242,398 204.800 I
investment in insurance company.
29,261 27,645 l
Real estate and property STOCKIIOLDER'S EQUITY and equipment, net.
63,759 34,395 Common stock (no par vclue, 100,000 Senior living and healih care shares authorized,10,000 sh:res l
institutions, net.
24,745 25,368 issued and outstanding).
159,703 152,403 Deposits in escrow 32,112 Retained earnings.
52,205 39,744 Real estate loans.
28,982 9,931 Valuation allowance-investment I
Other noncurrent assets.
6.250 741 securities.
(6,828)
(72) l Total noncurrent assets.
445,841 389.139 Total stockholder's equity.
205.080 192,075 l
i
(
1UfAL LIABILITIES RTfAL ASSETS
$ 479,281 8409.888 AND STOCK 110lDER'S EQUITY,
$ 479,281 3409,888 l
40 The atxne financial triformauon is presented in support of the Company's imestment in Constellation iloidings, Inc. and subsidiaries a hlch is accounted for under the equity l
method See Note 2 to Finarxial Statements
e NOTES TO FINANCIAL STATEMEN15 Baltimore cas amt nectric company NOTE 1.
SYSTDI 0F ACCOUN13 accelerated depreciation on pre-1976 property additions. The SIGNIFICANT The Company's accounting records are rna ntained in accore-cumula ive net amount of such timing differences for w hich ACCOUNTING ance with the Uniform System of Accounts prescribed by the deferred income taxes have not been provided approximated POLICIES Federal Energy Regulatory Commission and adopted by the
$253 million and 8266 million as of Dwember 31,1987 and Public Service Commission of Maryland (Maryland 1986, respectively.
Commission).
Investment tax credits are deferred and allocated to income ratably over the lives of the subject property.
REVENTES Revenues are generally recognized at the time customers' UTiljTY ltGT AND DEPRECIATION meters are read on a monthly cycle basis.
Utility plant in service is stated at original cost, which includes material, labor, construction overhead costs, and, where FUEL ANL PURCilASED GAS COS13 applicable, an allowance for funds used during construction.
The Company may recover, suyect to the approval of the Mary-Construction work in progress, plant held for future use, and land Commission, the cost of fuel used in generating electricity nuclear fuel are stated at cost.
and the cost of gas sold through zero-based electric fuel rate Additions to utility plant and replacements of units of prop-and purchased gas adjustment clauses (see Note 12). To the erty are capitalized to utility plant accounts. The original cost extent revenues from customers under the clauses r.xceed or of plant retired is removed from utility plant, and such cost, are less than actual fuel costs, the Company records deferred plus removal cost, less salvage, is charged to the accumulated fuel expenses uhich are accumulated and refunded to or provision for depreciation. Maintenance and repairs of property recovered from customers in future periods.
and replacements of items of property determined to be less As implemented by the Maryland Commission, the electric thari a unit of property are charged to maintenance expense.
fuel rate formula is based upon the latest twenty-four month Depreciation is generally computed using composite straight-generation mix and the latest three-month average fuel cost for line rates, applied to the average investment in classes of each generating unit. The fuel rate does not change unless the depreciable property. Nuclear decommissioning costs are calculated rate is more than 5 % above or below the rate then recovered separately through an internal sinking fund designed in effect. During 1987, the Maryland Commission authorized to accumulate a decommissioning reserve of $333,407,000. The the Company to recover 830 million of under recovered electric composite depreciation rates by class of depreciable property fuel costs via an electric fuel rate surcharge over a period of for the years 1985 through 1987 were as follows:
24 months beginning with April 1987. Through December 31, Prior to Effeuhe 1987, Ill.7 million of these costs had been recovered through Sept.1.1985 Sept.1,1985 the surcharge.
Electric The purchased gas adjustment is based on recent annual Nuclear.
3.40 %
2.80 %
volumes of gas and the related current prices charged by the brandon shores.
2.75 %
2J5%
Company's gas suppl ers. Any deferred undtr-or over-Other.
3.26 %
3.26 %
recoveries of purchased gas costs for the twelve months ended Gas 3.12 %
3.12 %
November 30 each year are charged or cralited to customers Common (a),
4.02 %
4.02 %
e under r sts eferred under the fuel clauses were as follows:
The September I,1985 revision in the nuclear depreciation Al December 31, rate increased 1985 earnings, net of related tax effects, by 1987 1986 31,425,000, or 2f per common share. This revision was the on nmne result of the Nuclear Regulatory Comraission's action extending Flectric.
574,199 331,931 the facility operaung licenses for the Calvert Cliffs Nuclear Gas (10,306) 5,475 Power Plant consistert with the Company's earlier applicstion.
Total.
863,893 537,406 The amendments to the operating licenses changed the expira-tion date for Unit l's license from July 7,2009 to July 31, 2014 INCOME TAXES and for Unit 2's license from July 7,2009 to August 13, 2016.
The Company and its u holly owned subsidiaries file a con-In the rate proceeding concluded during 1987, the Maryland solidated federalincome tax return. Income taxes are allocated Commission determined that the Company had a $32,373,000 to the individual companies based upon their respedhe tatable excess balance in accumulated nuclear depreciation at incomes and tax credits.
December 31,1985 caused by the extension of the Calvert Cliffs Certain revenue and expense items are recorded for financial perating licenses. Effective June 1,1987, the Maryland Com-reporting purposes in a ) tar different from the year in w hich mission instructed the Company to extinguish this excess by they are recognized for income tax purposes. Deferred income transferMg U,W,000 to the nuclear de(ommissioning tates are provided on certain timing differences, primarily reserve and amortizing the $24,813,000 balance over the 43 those attnbutable to accelerated depreciation on post.1975 remaining oKahert Cliffs as a credit to depreciation property additions, deferred fuel costs, the percentage repair e% Pense. Based on the current estimate of decommissioning allowance, contnbutions in aid of construction, capitalized c sts and the internal sinking fund approach, no further interest and overheads, unbilled revenues, and nuclear decom-customer contributions are presently being made to the missioning costs. Deferred income taxes are not proside J on nuclear decommissioning reserve.
certain other timing differences, primarily those pertaining to
9 I
Baltimore Gas and Electric Company O
t I
ALLOWANCE FOR FUNDS LSED DL' RING CONSTRUCTION being amortized over the remaining life of the plant. The l
The allowante for fur.ds used during constrection (AFC)is an balances deferred as of December 31,1987 and 1986 were j
accounting procedure whereby the after. tax cost of borrowed 57,30000 and $7,568 000, respectively. These balances are and other funds used to finance construaion projects is included in Other Deferred Charges.
capitalized as part of utihty plant un the babnce sheet arid is credited as a non-cash item on the income statement. The cost LONG-TERM DEBT of borrowed and other funds is segregated between net interest The discount, premium, or expense ofissuance associated with l
charges and other income, respectively. The Company may long-term debt is deferred and amortized over the lises of the l
recover, subject to the approval of the Maryland Commission, respective debt issues. Gains and losses on the reacquisition of 1
the capitalized AFC and a return thereon after the related utility debt are amortized over the remaining original lives of the issues.
plant is placed in service and induded in depreciable assets and rate base. AFC is not tauble income and the depreciation of ACCOUNTING STANDARDS 1551 ED capitalized AFC is not a tar deductible expense.
During 1987, the Financial Accounting Standards Board issued As prescribed by a rate order of the Maryland Commission, three Statements of Financial Accounting Standards (SFAS) an after-tax AFC rate of 9.08%, compounded annually, had which prescribe financial accounting and reporting polides been applied to all major electric projects from 1984 through different from those presently und by the Company under May 1987. The May 1987 rate decision reduced the AFC rate existing generally accepted accounting principles. SFAS No. 91, to 8.55 % beginning in June 1987, "Consolid-tion of All Majority-Owned Subsidiaries," requires the consolidation in the Company's financial statements of all INVESTMENT IN Sl'BSIDIARIES majority-owned subsidiaries (see Note 2); SFAS No. 95, "State-The investmen'in subsidiaries is accou1ted for and reported ment of Cash Flows," mandates the presentation of Statements under the equity method.
of Cash Flows in place of the Statements of Changes in Finan-cial Position; and SFAS No. 96 "Accounting for Income Taxes,"
INVENTORY VAllATION adopts the liability method of accounting for deferred income Fuel stocks and materials and supplies are generally stated at taxes. SFAS Nos. 94 and 95 will be adopted in 1988 and are not f
average cost.
expected to have a significant impact on the Compat y's finan-cial position or results of operations other than the presenta-DEFERRED NUCLEAR MAINTENANCE EXPENDITCRES tion of consolidated financial statements. Changes in accumu-The Cotapany has incurred a total of $10,653,000 in main-lated deferred income taxes arising from the in!tial rpplication tenance expenditures for inspecting and repairing seismic pipe of SFAS No. % in 1%9 generally will be deferred and recovered supports to meet Nuclear Rquistory Commission requirements from or refunded to ratepa)ers in future years in accordance at the Calvert Cliffs Nuclear Power Plant, As approved by the with the normalization requirements of the federalincome tax Maryland Commission, such costs base been deferred and are laws and the regulatory pranices of the Maryland Commission.
NOTE 2.
Investments in subsidiary companies were as follows:
The Consolidated Condensed Financial Statements of Constel-INVESTMENT At December 31, lation lloldings, Inc. and Subsidiaries are presented on page 40.
IN SUBSIDI ARIFS 1987 1986 The following is condensed financial information for Safe liarbor Water power Corporation. Similar info mation is not Po Thouun6) presented for BNG, Inc. as its financial position and results of
[f fe r w er Corporation.
2 BNE inc.
7,216 Safe Harter sater
$252,347 3225,795 Pouer Corporation 1997 1986 1985 As of December 31,1987, ConstellKon lloldings, Inc., a RESULTS OF OPERATIONS w holly owned subsidiary, holds all of the stock of five other subsidiaries, Constellation imestments, Inc., Constellation operating nvenues.
534,665 $35,010 $ 19,178
(
Properties, Inc., Constellation Development, Inc., Constellation Opendng expenses,
19,312 19,%
12,834 Operating Services, be., and Constellation Water Sptems, Inc.
Income from utility operations. 15,353 15,045 6,344 l
These companies are engaged in disersified anisities including Net other income 63 185 1,431 l
financial imestments, real estate development, ou nership and Net interest expense.
5,483 6,582 3,777 l
management of senior living and health care institutions, and Net income
$ 9,933 5 8.M8 5 3,998 i
developing, ouning and operating 1:ternatise energy and d
emironmcntal projects BG&E's equity in carnings.
$ 6,622 5 5,765 8 2.665 The investment in Safe liarbor Water Power Corporation, a producer of hydroelearic power, represents wo-thirds of Safe At December 31, liarbor's total capital stock, induding one half of the voting 1987 1986 stock, and a two thirds interest in the subsidiar)'s retained on muunai earnings FINANCIAL CONDITION I
BNG, Inc., formerly Constellation Biogas. Inc., is a w holl)
Current assets S 3,705 5 5,756 l
owned subsidiary which imests in natural gas reserses and Noncurrent assets 130,851 133,568 obtains gas from non-traditional sourns lhe stock of this sub-Total Assets.
$ 13 4,5 56 5139,324 sidiary was transferred from Constellation lloWngs, Inc. to the Company on March 31,19C.
Current liabihties.
$ 2,901
$ 3,048 The capital stods of Constellation iloidmgs, Safe liarbor, Noncurrent liabihties.
71.142 85,696 and BNG are subien to a lien under the mortgage under w hi(h Stodholders' equity 60,513 50,5S0 the Company's Mortgage Bonds are issunt Total uabihties and Stockholders' Equity.
5134,556
$139.324 l
1
J 1
IMtimore Gas and Hectric Company NOTE 3, Cum'!! alive Cil ANGES IN Common Stock Preference Stock M MON Shares Amount Shares Amount SIAN AhD (Dollar Amounts in Thousand.O PREFERENCE S f0CK NOT Balance at December 31,1984.
78.621,798
$809,942 1,750,000 s175,000 St BJECT TO Costs associated with stock split (419)
MANDATORY Balar.ce at December 31,1985.
78,621,798 809,523 1,750,000 175.000 REDEMPTION Redemption of 8.75% Cumulative Preferenct Stock, 1970 Series.
{300,000)
(30,000)
Common Stock issued under Dividend Reinvestment and Stock Purchase Plan 18,677 650 Costs associated with issuance of 7.50% Redeemable Preference Stock,1986 Series.
(619)
Ins 9.35 %,1974 Series Cumulative Preference Stock called ior redemption effective April 1,1987 (350.000)
(35,000)
Balance at December 31,1986.
78,640,475 809,554 1,100,000 110,000 Common Stock issued under:
Disidend Reingestment and Stock Purchase Plan.
154,481 4,770 Emplo)ee Stock ownership Plan.
117,494 4,197 Costs associated with issuance of Redeemable Preference Stock (see Note 4).
(1,008)
Balance at December 31,1987.
78,912 A 50 3817,513 1.100,000
$ I 10.000 A two-for-one stock split was effected by the distribution of one been restated to give retroactive effect to the stock split.
I additional share for each share of stock already issued to stock.
Effectise April 1,1987, the Company redeemed all out-holders of record on August 22,1985. All per share amounts standing shares of the 9.35% 1974 Series Cumulative and numbers of common shares presented in this report have Preference Stock at 5104 per share plus accrued dividends.
NOTE 4.
Ic January 1987, the Company issued 501000 shares of 6.75 %
the Tax Reform Act of 1986, the Corapany elected to repurchr,e REDEEM (BIE Cumulative Preference Stock,1987 Se:ks ($100 par value). This all of such shares. The owners of the 12 % Series shares PRH ERENCE series is subject to an annual sinking fund requiring the disputed the right of the Company to rcpurchase the shares and STofK redemption of 15,000 shares at par value, beginning in 1993 contested the repurchase. In July 1987, the t'nited States At the Company's option, in any ) err, commencing in 1993, an District Court for the Southern District of New York found in additional number of shares, not to exo ed 15,000 shares, may favor of the plaintiffs and ordered that the terms of the be redeemed for the sinking fur.d at par value.
Preference Stock Purchase Agreemeat remain in full force and in August 1987, the Company issued 500,000 shares of effect. The Company has reinstated on its books the 12 %
6 95 % Cumulatise Preference Stock,1987 Series ($100 par Cumulative Preference Stock,1981 Series A and B, alihough an value). The 6.95 % Stock will be redeemed in whole.t 1100 appeal of the court decision has been Gled.
per share on October 1,1995 and is not otherwise rcdeemable.
The 12 %,1981 Series A and B issues consist of 272,000 and 1he Company tendered pay ment to repurchase, effective 163,000 shares ($100 par salue), respectively. Series A will be January 1,1987, all outstanding shares of the 8 375 %,1979 redeemed at par at the rate of 68,000 shares in each of the Series and the 12 %, 1981 Series A and B Cumulatise Preference 3 ears 1988 through 1991, w hile Series B will be redeemed in its Stock issues at par value plus accrued dividends plus the entirety at par on July 1,1991. Pursnnt to the requirements of Indemmty payment described below. The Purchase Agreements Series A. 68,000 shares were redcemed at par in 1987.
under u hl h the shares were issued permit the Company to With regard to payment of dividends or assets available in repurchase such sha.es if the Company makes a good faith the esent of liquidation, Preferred Stock ranks prior to dettrmination that there is a substantial risk that indemnit)
Preference Stock; allissues of Preferena Stock, w hether sub-payments would hase to be made to the ow ners because of the lect to mandatory redemption or not, rank equally; and all loss of any part of the dnidends receised deduction. As a result Preferred and Preferenct Stock rank prior to Common Stock.
of the reduction in the disidends receised deduction pursuant to C
I
]
e Baltimore Gas and Electric Company
)
.%0TE 5.
Nortgage Lien ment, to be made on or before July 31 of each year through LONG-TER M Substantially all of the principal properties and franchises 1989, requires an annt,11 payment of $600,000 in cash, in prin-DEBT owned by the Company are subject to a lien under the mort-cipal amount of the debentures, or in a combination thereof, in gage under which the Company's First Refunding Mortgage any year, at the Company's elecdon, an additions! sinking fund Bonds are issued.
payment of up to 8600,000 (noncumulative) may be made under the indenture.
Mortgage Bond Sinking FemdIU)ments On August 1 of each year, the Company is required to pay to The Company maintains a revolving credit agreement pro-the Mortgage Trustee an annual sinking fund payment equal to viding for borrowings of up to 850 minion. Thh agreement e1P res in December 1989. L'nder the terms of the agreement, i
1% of the largest amount of Mortgage Bonds outstanding under the mortgage during the preceding twelve months. Such funds the Company, at its option, may obtain loans at various interest are to be used, as provided in the mortgage, for the purchase rates. The Company pays a commitment fee on the daily l
and retirement by the Trustee of Mortgage.londs of any series average of the unborrowed portion of the commitments. At other than the lastallment Series Mortgage Bonds of 1998, December 31,1987, the Company had borrowed all of the 2002, and 2009, and the 6.80% Series Mortgage Bonds of
$50 miluon avadable under the revolving credit agreement.
2004. Purchases may be made by the Trustee in the open in Decernber 1984, Anne Arundel County, Maryland issued market and/or through responses to invitations for scaled
$22 million of its Adjustable Rate Pouution Control Revenue tender offers if purchases are possible at or below the appu.
Bonds (Baltimore Gas and Electric Company Project) 1984 cable redemption price, or directly through the redemption Series dueJuly 1,2014. The net proceeds of the issue were provisions to which the Mortgage Bonds are subject if pur, deposited with a trustee to be loaned to the Company as chases at a more fawrable price are not possible. The Company needed to finance the Company's acquisition and construction may purchase outstanding Mortgage Bonds from Ume to time of certain air poUution control facilities at the Herbert A. Wagner and may submit its sealed proposal for the sale of such Mort.
Power Plant l' nit No. 3. On July 1,1987,81.85 million remaln-gage Bonds to the Trustee for the sinking fund ing in the construction fund was used to reduce the arcount of f
The Installment Series Mortgage Bonds, due August 15,1998 outstanding County l'onds. At December 31,1987, the Company are payable as to prindpal on the fifteenth day of August in the had borrowed the remaining 320.15 miUion.
years and the amounts as follows:
In July 1985, the Company issued $100 million of Floating Rate Notes Due 19')5. Interest rates on the Notes are determined Principal Amount Years Each Year quarterly based on the 91-day Treasury Blu suction rate (expressed on a bond-equivalent basis) plus 1.1%. The interest 0" **
rate mar vary frorn 8 % to 12 % per annum.
1988 through 1990 8 2,000 in Nosemb;r 1985, the Company issued $100 milhon of 8991 through 1995 3,000 Hoating Rate Notes Due ' 995 series 11. Interest rates on the 1996 and 1997 4 000 Notes are determined quarterly based on the 91-day Treasury 1998 33,000 Biu auction nte (expressed on a bond-equh21ent basis) plus 1.125 %. The interest rate may vary from 7.9% to 11.9% per The Installment Series Mortgage Bonds, due July 15,2002 annum.
are payable as to prindpal on the fifteenth day of July in the in December 1985, Baltimore County, Maryland issued years and the amounts as follows:
336 milhon of Pouution Con'rol Revenue Bonds (Baltimore Gas Prindpal Amount and Electric Company Project) Series 1985 due July 1,2011. The Yean Each Year proceeds of the sale were loaned to the Company and subse-ga %%
quently made available to the Trustee to redeem Baltimore j
County's Pollution Control hevecue Notes (Baltimora Gas and i
1993 8 420 Electric Company Project) Commercial Paper Series. The pro-l 1994 430 1995 through 1997 605 ceeds of the Notes onanced the Company's polluuon control facilities c nstructed in c nnecti n with the conversion to coal 1998 and 1999 690 f two existing steam electric generator units at the Company's 2000 and 2001 865 Charles R Qane Power Mam.
l 2 W*
6'725 Alsoin December 1985, Anne ArundelCounty, Maryland 1
issued 848 m i n of Port Facilides Revenue Bonds (Baltimore l
The Instaument series Mortgage Bonds, due September 15, Gas and Electric Company Project) Series 1985 due June 1, 2009 are papble as to prindpal on the fifteenth day of 2013. The proceeds of the sale were loaned to the Company -
September in the years and the amounts as foUows:
and subsequently made available to the Trustee to redeem Anne l
Prindpal Amount Arundel County's Port Facilities Revenue Notes (Baltimore Gas i
Years Each Year and Electric Company Project) Commercial Paper Series. The 44 on rimne proceeds of the Notes originauy financed the Company's 2005 through 2008 8 3,250 acquisition of certain coal handling port facilities at the 2009 42,000 Brandon Shores Power Plant.
l In October 1987, the Company established a 3100 million Other long-Term ikbt Medium-Term Note program under which notes having The Company is required to make an annual sinking fund pay-maturities ranging from one to fifteen years may be issued. As ment (in cash andtr Sinking Fund Debentures) to the Trustee of December 31,1987, no Notes had been sold under this l
under the 4N% Sinking Fund Debenture Indenture. The pay-l progran l
lu
e.
]
w Baltimore Gas and Electric Company The weighted average interest rates for Other Long-Term Debt
.fagrrgate Naturities during 1987 and 1986 were as foUows:
The combined aggregate amounts of maturities and sinking 1987 1986 fund requirements for all long-term borrowings for each of the loans under Revolving Credit Agreements.
7.01 % 7.26 %
next five years are as follows:
Floating Rate Notes, due July 1,1995.
8.00 8.09 Year Requirements Floating Rate Notes, due October 15,1995 (In Thousands)
Series II.
7.99 8.10 PoUution Control loan, due July 1,.'011.
4.56 4.78 1988 8 12,000 Port Facilities loan, due June 1, 2013 4.47 4.93 1989 101,000 Adjustable Rate PoUution Control loan, due 1990 60,000 July 1,2014.
4.63 4.88 NOTE 6.
The Company contracts for certain facilities and equipment The future minimum lease payments as of December 31, LEA $fS under lease agreements with various expiration dates and 1987 for leases reported as capita! leases and noncanceliable renewal options. Consistent with the regulatory treatment, operating leases are as fouows:
lease payments for capital and operating leases are charged to Capital Operating operating expenses in the Statements of Income. Such costs are teases trases summarizcd as follows for the three years ended December 31:
(In Thousands) 1986.
81,466 8 6,335 1987 1986 1985 1989.
654 5,193 da T1=*a*)
1990.
486 5,122 Capital Itases.
8 1,484 8 3,092 8 2,548 1991 586 3,H 5 Operating Itases.
11.101 10.146 10,130 1992 285 3,763 Total Itase Expense.
$ 12,585 813.238
$12.678 Thereafter.
860 3.184 Total minimum lease payments.
84,137 827,542 Capital leases included in the financial statements but not less interest portion.
1,108 disclosed separately r present assets and obligations of 83,029,000 at December 31,1987 and $3,996,000 at Present value of net minimum December 31,1986.
lease paiments.
83,029 NOTE 7 The Company maintains bank lines of credit to provide backup which have no withdrawal restrictions. 3ctromings under the 5110RT-TTRM financing capacity for commercial paper notes issued to satisfy lines are at the banks' prime rate, base interest rates, or at BORROBINGS Interim financing raluirements and to permit short term various money market rates. Information concerning short.
AND LISTS borrowing flexibility, in support of such lines, the Company term borrowings and Unes of credit is set forth below:
OF CREDIT pays commitment fees and maintains compensating ba'ances 1987 1986 1985 (Dollar Amounts in Thousands)
At December 31 Short term borrowings outstanding Commercial paper notes.
8 45,000 8120,000 8 86,975 Weighted average interest rate.
7.74 %
6.61 %
7.80 A l'nused lines of credit.
8150,200 8150,200
$150,200 Compensating balances.
8 790 790 8
790 During the Year Ended December 31 Matimum short term borrowings.
$ 184,500 8167,275 8189,500 Average daily short-term borrowings (a).
8 73,006 8 51,634 8 82,708 45 Weighted as erage interest rate (b).
6.67 %
7.13 %
8.21 %
(a) The surn of dollar dap of outstanding borromings daided by actual dap in the perud (b) Atual sarved interest during the period dnided by average daily terromings.
[
l
\\
r Baltimore Gas and Ekctric Gmpany l
l O.
l i
NOTE 8.
Pursuant to a contract with the Department of Energy (DOE) included in other deferred charges and are being amortized as SPENT NL' CLEAR for the disposal of spent nudear fuel under the provisions of recovered through base rates.
i FLEL DISPOSAL the Nuclear Taste Policy Act of 1982, the Company, in June The contract with the DOE also provides for the disposal of C0sn 1985, paid the DOE 871,829,000 for the disposal of spent spent nuclear fuel generated after April 7,1983 at a fee of one l
nuclear fuel which existed at April 7,1083. As of December 31, mill per kilowatthour of nuclear generation. This fee, which is 1987 and 1986, the Company had collected $71,236,000 and payable quarterly, is a component of fuel cost subject to l
568,152,000 e' that amount, respectively, through base rates.
recovery through the electric fuel rate.
The remaining balances of $593,000, and 83,677,000 are f
I NOTE 9.
The Company sponsors several noncontributory defined benefit 15,249,000, 85,188,000, and 3 5,848,000, respectively, was l
PENSION pension plans, the largest of w hict' (the Pension Plan) covers charged to expense. The remainders were capitalized as con-
)
l AND OTHER substantially all of the employees of the Company and its struction costs. During 1985, changes were made in certain ac-POSTRETIREMENT whouy owned subsidiaries. The other plans, which are not tuarial assumptions which resulted in lower pension expense BENEFIB material, provide supplemental benefits to certain key and increased 1985 earnings by $3,803,000, equivalent to employees. Benefits under the plans are generally based on age, St per common share.
The Company's pohcy is to fund annually the cost of the years of service, and compensation levelt During 1987, the Company adopted Statement of Financial Pension Plan as determined under the aggregate cost method.
Accounting Standards (SFAS) No. 87, "Employers' Accounting This policy is not affected by SFAS No. 87. Plan assets at j
for Pensions," for all ofits pension plans. 'the effect of adopt-December 31,1987 consisted primarily of marketable securities, j
ing SFAS No. 87 was not material to the Company's results of group annuity contracts, and short. term investments.
1 operations. Total net pension cost for the Company and its The following tables set forth the combined financial status wholly owned sabsidiaries for 1987,1986, and 1985 was of the plen and the composition of total net pension cost for 86,301,000, s6.212,000, and 87,101,000, respectively, of which 1987:
At December 31, At January 1, 1987 1987 (Ik,Ilar Amounts in Thousands)
Accumulated benefit obligation:
Vested.
$293,476 8309,629 Nonvested.
18.272 19,225 Total 5311,748
$328,854 Plan assets at fair salue
' $417,538
$ 407,647 Less: Projected benefit oblifation,
385,762 404.249 Plan assets in excess of prt,jected bene 6t obligation,
31,776 3,398 less: l'nrwognized net gain.
30,659 L'namortized net asset from adoption of SFAS No. 87 3,171 3,398 Accrued pension cost 5 (2.054)
Assumptions:
Discount rate.
9.25 %
8.5 %
Aserage increase in future compensation levels.
4.5 %
4.5 %
Expected long-term rate of return on assets.
9.5 %
9.5 %
Year Ended December 31,1987 On Thousands)
Total net pension cost:
Senice cest.
SI1,106 Interest cost 33,393 Actual return on assets.
(29,227)
Net amortization and deferral (8.976)
I 46 Total s 6,301 In addition to providing pension benefits, the Company pro-active employees is generally recognized as the benefits are vides certain health care and life insurance benefits for retired paid. The total cost of the benefits and the number of active and emplo)ees. The cost of these benefits and similar benefits for retired emplo)ees covered by these benefit plans were as folloss:
I I
1987 1986 (DoUat Amounts la nousands) l Cos:
$ 2 5,839 824,090 l
Active emplo)ees.
8,767 8,833 Retired emplo)ees.
2,889 2,773
P s
~ &sliimore Gas aord Electric Comfuny NOTE 10, in December 1986, the Public Service Commission of Mary-1986. The after tax effect of this write-off was a reduction in DISALLO% ED land issued a decision den}ing recovery of certain replacement earnings of 3C per o.mmon share. The Commission's decision DEFERRED energy costs because an employee error caused the extension of was affirmed by the Circuit Court of Calvert County, and the FLEL COSn a 1985 planned outage at the Calvert Cliffs Nuclear Power Plant Company has appealed the Circuit Court's decision to the (see Note 12). The Company charged 83.9 million of previously Maryland Court of Special Appeals.
deferred fuel costs to Purchased Fuel and Energy Expense in 50TE 11.
The Company owns an undivided interest in the Keystone and The following data represent the Comps t @.2 of the jolNTLY Conemaugh mine mouth electric generating plants located in Jointly owned properties as of December 31 m7:
OWNED western Pennsylvania, as well as in the transmission iine which Transmission ELECTRIC transports the plants' output to tht joint owners' service terri-Kmtone Conemauah IJne LTILITY tories Financing and accounting for these properties are the (Docar Amountsin Thousands)
~ PLOT same as for w holly owned utility plant. The Company's share ow nership Interest.
20.90 %
10.% %
7.00 %
of the direct expenses of the joint property is induded in the l'ulay Plant in Service.
864,500 $37,926 81,486 corresponding operating expenses in the Statements of Income.
Accumulated Provision for Deprectauon.
19,433 12,390 555 Conserntiw York in Prog *ess.
4,551 912 NOTE 12.
Q>mmitments and Guarantees COMMITM END The Company has made substandal commitments in connecdon reactor limit in any one calendar year for muldple incidents.
.BD with its construction program for 1988 and subsequent ycars.
The Company's contingent liability in the event of a nuclear CONTISGENCIES The Company has agreed to guarantee 20.99 % of borrowings incident at any licensed nuclear power plant le the country is of up to 824.2 million by Keptone Coal Mining Corporation, an amount up to $10 million per nuclear inddent (85 million the major coal supplier for the Keptone Plant (see Note 11).
for each reactor at Calvert diffs), with a maximum contingent As of December 31,1987, the total outstanding loans were liability of $20 million per year in the event of more than one 314.2 million, of which 33.0 million was guaranteed by the nudear incident in a particular year.
Company. Additionally, the Company has agreed to guarantee EffectiveJanuary 1,1988 the policies of nudear liability two thirds of up to $125 milhon of indebtedness incurred by insurance at Calvert Cliffs have been amended to exclude radia.
Safe liarbor Water Power Corporation (see Note 2)in connec-tion injury dalms presented by certain auclear scrkers. New tbn with the expansion of les hydroeledric generating facil-policies provided through the nuclear insurance pools have ides. As of December 31,1987, the outstandirig debt totaled been issued to cover such dalms, up to a limit of $160 millicn
$50 million, of which 333 million represents the Cornpany's per incident. Claims are funded by an after loss assessment of tsu-thirds share. The Comparg assesses minimal risk of default each member insured equal to 95 % of the dalms less accum-on the loans it has guaranteed.
ulated reserves and earnings. The cocungent liabihty to the Company in any one } ear would be 85 million. It is the opinion Sudear Contingencies of the Company that Secondary Finandal Protection, as The tuu units at the Company's Calvert Cliffs Nuclear Power described in the preceding paragraph, could be effective after Plant are its principal generating facihties and produce the two full limits in losses b@ca paid.
lowest cost power available to the Company. An incident at this The Company's insurance for phpical damage to its nudear plant could hate a substantial adverse effect upon the Com-power plant is structured to provide a level of Primary pany. The primary condngendes resuldng from an incident at insurance and a level of Excess insurance. Tne Primary the Cahert Oiffs Plant would invobe the Company's liabihty to insurance, provided through nuclear insurance pools, covers third parties for property damage and boddy injury, the up to $500 million of phpical damage, includmg contamina-physical danage to the plant, and the cost of replacement tion, to thr plant. The Excess insurance currently provides pow er.
coverage for an additional $1.025 billion (or a total of 81.525 The Price-Andersen Act (Act) currently limits the liabibty to billion) of phpical damage to the plant, inciuding contamina-ti e public of an osner of a nudear power plant for property tion. Any damage to the plant in excess of 81.525 billion would damage of and boddy injury to third parties to $720 million for be the financial responsibihty of the Company. The Excess a single nudcar inddem, as defined in the Act. The Company insurance protection is provided through a combination of is protected against this potentialliability by a cambination of nuclear insurance pools and an industry-os ned mutual commercialinsurance (currendy $160 million through the insurance company. The m }or portion of any daim paid b,
nudear in>urance pools) and Secondary Financial Protection through the Excess insurance coverage for damage to any currently amounting to a maximum of $560 million. L'nder nudear power plant operated by a mem!" of the industry-regulttdons issued pursuart to the Act, the $560 million of owned mutual insurance company wot funded brough Secondary Financial Protection for public hability resulting insurance company reserves and an aft (
s assessmtnt of from a nudear inddent would be presided through an after-each toember. The contingent liability to the Company for such loss assessment of each nudear. powered utility in the country after-loss assessments currently is $8.4 million in any one at a rate of up to 35 million per <eador, with a $10 million per policy lear.
i Baltimore Gas and Thctric Company would obtain replacement power from other sources. Due to _
the Calvert Cliffs units; however, the insurance devribed above in the event of an outage at Calvert Cliffs, the Company is the only insurance currently available to ver such public
- the relati ely low cost of the power generated at the Company's liability, property damage, and replacement energy costs.
- nuclear plant, replacement power would be more expensive. In As additional amounts ofInsurance become avaFable, the Com.
the event of an outage caused by physical damage to the pany will consider increasing its insurance limit after evaluating nuclear plar.t w hich is insured as discussed above, other the economic justification for such increase. The Company insurance provided through an industry-owned mutual in-would seek to have any unrecovered costs included in its surance company would provide coverage for a portion of the service rates, but the Compar.y cannot assure that the Public replacement power costs if the outage lasts more than 26 Service Commissiot. Maryland (Maryland Commission) would weeks. Currently this insurar,ce provides for a maximum week-alow such recovery, ly indemnity per unit of the lesser of 83.5 million, or 90% of the Company's calculated replacement powet cost for that unit.
Recorerability of Electrk fuel Costs This maximum weekly indemnity will bc available for up to a By statute, actual electri: fuel costs are rt.vverable so long as 52-week period, after uhich the maximum weekly indemnity is the Maryland Commissiou finds that the Company demonstrates reduced by 50% for the ensuing 52. week period. For one that, among other things, it has maintained the productive insured occurrence causing both Calvert Cliffs units to be capacity of its generating plants at a reasonable level. The shut down beyond 26 weeks, the weekly indemnity payments Maryland Commission and Maryland's highest appellate court would then begin for each unit at a rate of 80% of the fore-have interpreted 6his as permitting a subjective evaluation of going. This replacement power insurance nuld fund a claim each unplanned outage at the Company's generating plants to paid to any member of the industry owned mutualinsurance dettrmine whether or not the Company had implemented all company through insurance company reserves and an after-loss reasonable and cost effective maintenance and operating con-assessment of each member. The contingent liability to the trol procedures appropriate for preventing the outage. The Company for these after-loss assessments currently is $9.7 Company is periodically involved in fuel rate proceedings and million in any one policy year.
Issues concerning individual plant outages are usually raised in The Company does not consider the amounts of insurance those proceedings. The Company cannot estimate the amount discussed above to be adequate to cover the costs that could of replacement energy costs that could be denied in those pro-result from a major incident or an extended outage at either of ceedings, but such amounts could be material.
NOTE 13 1987 1986 1985 SEGblENT on Thonands)
ELECTRIC INF6RMAT10N operating Revenues.
$1,393.735 81,388,251 81,301,463 Operating Income before Income Taxes.
453,739 445,698 432,540 Operating income 326,658 305,011 291,849 Depreciation.
118,081 113,365 111,365 Constrw* ion Expenditures 230,067 230,513 204,180 ldentifiaine Assets at December 31.
3,498,032 3,371,785 3,264,559 GAS Operating Revenues.
$ 415,456 8 445,769 8 453,309 Operating income before income Taxes.
56,102 42,827 48,274 Operating Income 39,721 29,552 32,393 Depreciation.
14,251 13,509 13.5 %
Constructica Expenditures 24,463 23,629 21,590 Identifiable Assets at December 31, 346, 8 1 345,145 343,556 TOTAL Operating Revenues.
$1,809,191 81,834,020 81,754,772 Operating income before income Taxes.
509,841 488,525 480,814 operating income 366,379 334,563 324,242 Deprectition.
132,332 127,274 124,%I Construolon Expenditures.
254,510 254,142 225,771*
Identifiable Assets at December 31.
3,844,713 3,716,930 3,608,115 Other Assets.
66%,279 653,498 575,293 48 Total Assets 4,509,992 4,370,428 4,183,408
'Indudes steam
t e
Baltimore Ga.r and Ekctric Campany 4
l NOTE 14.
The following data are unaudited but, in the opinion of Manage-winter months. Accordingly, comparisons among quarters of QUARTERLY ment, include all adjustments necessary for a fair presentation.
a 3 ear may not be Indicative of overall trends and changes in i
l-FINANCIAL The business of the Company is seasonalin nature with the operations.
DATA peak sales periods generally occurring during the summer and (UNALDITED)
Operating Earnings income Applicable Earnings Per Operating Plus Net
., Common Share of Quarter Ended Revenues AFC' income Stock Common Stock (in Thousands, [xcept Per Share Amounts)
Maech 31,198 7.................
8 522,544 8 98,171 s 73,580
$ 68,304
$.87 June 30, 198 7..................
391,599 76,032 51,657 47,002
.60 September 30,1987..............
506,579 150,047 126,157 116,502 1.48 Decembee 31,1987..............
388,469 73,068 48.704 41,884
.53
$1,809,191 8397,318
$300,098 5273,692
$3.47 March 31,1986.
8 532,968 8 98,092 5 71,973 8 65,287 8.83 June 30,1986..
39),001 77,245 52,102 45,416
.58 September 30,1986.
488,018 125,605 102,551 95,866 1.22 December 31,1986.
418,033 64.074 47,993 41,174
.52 8 1.834,020 8 365,016 8 274,619
- 3 247.743 8315
- The Allomance for Funda Used During Construction (for Borrosed iunds and Other Funds)is added to Operating income in determining operating Jr.come for ratemaking purposes.
49 l
CONSTELLATION SUBSIDIAR1ES utimore cas amtIlectric compan/
1 A I Constellation iloidings, Inc.
L.- - 1l]
~-
Christian 11. Poindexter, President
....p ' L%,
s e
and ChiefEvectatite Officcr
\\f,_.;
301-783 2803
\\
- I1
%f 7
p
' f~#
Constellation Properties, Inc.
G. Wendel lleineman, President
=
e 301 783-2827 1
- S
(\\l Constellation Development, Inc.
y Constellation Operating Services, Inc.
T Constellation Vater Sptems, Inc.
Bruce M. Ambler, President 301 783 2805 left to rs'gbt. front rote: Christian it. Poindext'er, President and Chief Executive Officer-Constellation lloidings; E Becki Kurdle, Vice President, Constellation investments, Inc.
Constellation Properties.
Steven D. Kesler, President back rore: llenty A. Jurand, Vice President and Chief Financial 0fficer, 3014834831 Constellation iloidings; Stesen D. Kesler, President, Constellati a Investments; Paul 11. Steinbach (deceased), President, Constellation Operating Services; 250 West Pratt Street G. Wendel lleineman, President, Constellation Properties; Bruce M. Ambler, 13altimore, Maryland 212012423 President, Constellation Development.
Mr. Paul 11. Steinbach passed away suddenly on December 18,1987. lie joined Constellation Operating Services in April 1987 after 39 years with Baltimore Gas and Electric Company. llis contribution will be missed.
Constellation iloidings, the parent company of Qinstellation Properties, Constellation Deselopment, Constellation Operating Services, Constellation Water Sptems and Constellation lmestments, is a w holly ou ned subsidiary of Baltimore Gas and Electric Company.
O Constellation iloidings Constellation Deteloprnent This company provides dinttion to all of the operating sub-This is the senior member of our Energy and Environmental l
sidiaries and furnishes them with planning, legal, financing Group l'nder the auspices of Constellation Deselopment, we and accounting senices. In addition, the search and screening participate in a number of qualified alternative energy and co-for new imestment and acquisition opportunities is controlled generation projects producing electricity for sale to other utilities.
(
from Constellation flo! dings.
Constellation Operating Services is the group member w hith l
handles our plant operating and.naintenance actisities.
Rounding out the group is Constellation tratcr Systems from w hich we manage our artisities in water and wastewater projects.
50 Constellation Prvperties Constellallon Intestinents This member of the group is the focus of Constellation's actisity The largest single company at this time, Constellation imest-in the real estate marketplace. Current projects iaclude in-ments is the funding source for the other activities as well as a dustrial parks, office buildings, retail and residential develop-permanent prosider of current income from its assets in various ment. In addition, the cornpany has a significant investment in securities, imestment partnerships and operating financial i
the senior lising industry. Joint ventures with other regional senice companies.
and national deselopers are the dominant business structure.
l 1
- - -