ML20237H912
| ML20237H912 | |
| Person / Time | |
|---|---|
| Site: | Calvert Cliffs  |
| Issue date: | 12/31/1985 |
| From: | Mcgowan G, Trueschler B BALTIMORE GAS & ELECTRIC CO. |
| To: | |
| Shared Package | |
| ML20237H898 | List: |
| References | |
| NUDOCS 8708170411 | |
| Download: ML20237H912 (53) | |
Text
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BALTIVORE 4
GAS AND ELECTRIC COVPANY 1
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ANNUAL REPORT 1985 i
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BALTIMORE GAS AND ELECTRIC COMPANY
' ANNUAL REPORT 1985 1
- f CONTENTS.
The Chairman's Letter to Our Shareholders -
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The President's Report on Operations 4
Financial Review 6
The Constellation' Companies 8
Our Diversity 9
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The City 10 -
t-The Metropolitan Area l3 The Countryside 16 -
The Chesapeake Bay Area 19-Characteristics of the Business
. 22 Financial Contents 23 ;
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'O Shareholder information 47
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Officers 48 Board of Directors inside Back Cover
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FINANCIAL HIGHLIGHTS
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1985 1984' Earnings Per Share of Common Stock
$2.80
$2.77 AveraEc Shares of Common Stock Outstanding 78,622,000 78,123,000
' Dividends Declared Per Share
$1.675
. $ 1.55 Revenues
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Electric
$ 1,301,463,000.
$1,208,145,000 2
Cas 453,309,000' 1553,329,000.
-Eamings Applicable to Common Stock S. 219,930,000
$ 216.335,000 Common Stock Dividends 131,692,000 121.114,000 1
Earnings Reinvested in the Business 88,238,000 95.221,000 Electric Sales-thousands of kilowatthours 19,699,000 19,235.000.
Gas Sales-dekatherms 96,881,000 101,471,000 Investment in Utility Plant
$4,379,593,000
' S4.203,208.000-Common stock data have been restated to reflect the two for.onc stock split in August 1985 Dividends Paid on the Common Stock Continuously Since 1910-Always Earned-Never Reduce'd j
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I in 1816, Rembrandt Peale ~
transformed the newly invented process of O ConstellationHoldings g s illumination into a business, giving Balti-more the first gas company in the New World.
BG6E is a' direct descendant of Peale's inno-
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vation. While.many people fear or resent i
change, others find and welcome challenges O Constallationinvestments and seek new opportunities-Mr. Peale's company remains in the latter category.;
For the past decade, the utility industry, 3
both gas and electric, has been undergoing i
some of the greatest changes in its history.
I Its traditional rnarkets are being m'odified by
.i a slowing rate of growth and new forms of l
competition.
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.j" seized on this transitional period as an
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opportunity to explore new ventures and create new businesses. For the past four years, we have been diversifying our enter-j prise, developing companies that wi!l not only q
ensure our ability to offer stockholders an
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attractive rate of return and. ratepayers a O ConstellationProperties reliable supply of energy, but will also con-tribute to the economic growth of our area.
On January 1,1986, these companies took on an identity of their own, formally signaling
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O ConstellationBiogas the beginning of a new era in the life of our Company. They became the Constellation companies.
Dictionaries say that constellation means a brilliant assemblage, collection or gathering of usually related persons, qualities or things.
The word suggests a commitment to high standards of performance and responsibility.
We can think of no better way to describe our goals and aspirations in creating these enter-prises. With this logo, we have created a new Constellation in Baltimore in the full expecta-tion that it will be worthy of both its name and your confidence.
THE CHAIRMAN'S LETTER TO OUR SHAREHOLDERS j1
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he economy in Central q 'Q,..
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Maryland remained strong throughout 1985.
While this was encouraging, a reduction in
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i ducing customers and milder than normal (4:[. c..* "f. E F 4
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>e weather conditions in both our winter heating M,,%$fh MQ<NkNN and summer cooling seasons acted to hold Qh9hwg;gMd pf
.J r'arnings from utility operations below what we
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recorded in 1984. The increase resulted from Total Company earnings in 1985 were 52.80
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a,q per share, an increase of only 1% over the $2.77
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earnings on additional investments in diversi-9*
fled activities made through our non-utility 4
subsidiaries. We continued our efforts to a'
control costs in 1985, working within strict
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operadng ano capital budgets, reducing the number of employees on roll and implement-ing several organizational changes designed to increase management efficiency. We achieved substantial interest savings once again by
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seeking out non-traditional ways to finance our needs at lower costs. On balance, despite only modest eamings performance in 1985, our "NinCICen figftly-fiVC was a good year for Company is. fundamentally sound, and we look to the future with confidence. This confidence was expressed Utility IHVC5for5. IIHPYOVCd indH5tYU (Unda-by our Board of Directcrs when they voted to increase HlCHidl5 dHd dC(llHing lHlCYCSI YalC5 (ON-qu rterly common stock dividends to 42WC per share effective with the July 1,1985 dividend. This represents i
biHCd lo SPHY Utility Sl0({l PYiCCS (O HCW a loc per share annual increcse to a new yearly rate of l
[li [IS l[lYOUf[10Hf if1C UCGY,"
St. O per share.
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Nineteen eighty-five was a good year for utility investors. Improved industry fundamentals and declin-Ing interest rates combined to spur utility stock prices to new highs throughout the year. The price of BGGE l
cornmon stock continued to advance in 1985, prompt-l ing our Board to approve a two-for-one stock split j
which became effective on August 22, 1985. We believe this action will encourage a broader investor base by making the stock a feasible investment for a greater number of investors.
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it was a good year for our customers as well. The i
retail price of gas declined and electricity prices j
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increased only mode ately, in keeping with cur pri-A matter of major importance to the utility industry mary corporate goal of limiting pnce increases to a is tax reform. We are pleased that the Reagan admin-level at or below that of general inflation trends.
istration and Congress are addressing this critical BG6E's customers continue to enjoy rates that are issue and we strongly support the President's efforts among the lowest in mabr cities in the United States.
to simplify and reform the tax code. Lower tax rates Our Calvert Cliffs Nuclear Power Plant is largely ultimately translate into savings for our customers, and responsible for this excellent position. For nearly that is of paramount importance to us. Since the bill eleven years, we have been making good on our orig-currently under consideration in Congress does con-I inal promise to the residents of Central Maryland that tain significantly lower tax rates, we support it.
nuclear power would be safe, clean, economical and although it fails to provide needed simplification for reliable. While some utilities across the nation are many individual taxpayers or adequate capital forma-l struggling with troubled nuclear projects Calvert Cliffs tion tools. We are hopeful, however, that it will serve was recently granted a license extension by the as a meaningful step toward ultimate reform.
l Nuclear Regulatory Commission (NRC), allowing us to offer our customers at least three more decades of l
nuclear dependability. We are also in the forefront of the nation's nuclear facilities by requesting the NRC Your Company has entered a new era. It is one we to reduce the Emergency Planning Zone around the have planned for carefully and prudently. We bring to Plant from ten to two miles.
our new enterprises the same commitment to service and quality that has brought us success in the past.
O With your support and :he continued loyalty of our employees, I am certain that our new era will fulfill the Looking at 1986 and beyond, we recognize that the promise we see before us.
l electric and gas utility industries can no longer expect the growth they experienced in past years. While they I
remain vital to the economy in general, to their cus-tomers and to their stockholders, they are mature industries. Utility operations will continue to be at j
the core of BG6E activities, but, as 1985's earnings demonstrated, we must look elsewhere for sufficient growth to meet the expectations of our stockholders.
Consequently, we have launched a group of sub-Bernard C. Trueschler sidiaries under the heading of the Constellation com-Chairman of the Board panies. These companies had been developing under different names over the past several years, staffed by February 14, 1986 a small number of qualified people. We have kept you apprised of the subsidiary companies' progress in i
these reports. During 1985, the activities of these sub-i sidiaries intensified to t'.ie point where they required full-time direction froni senior management of their own, as well as distinctive identities apart from BGGE.
i Therefore, on January 1,1986, Diversified Holdings,Inc.
l became Constellation Holdings, Inc. and assumed on a full-time basis the function of coordinating the planning and implementation of our diversification pro-gram which is now proceeding at a heightened pace.
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THE PRESIDENT'S REPORT ON OPERATIONS
,e ineteer, eighty-five was well prepared to meet the manageable peak-demand s
e a very special year for BG6E. In April, we celebrated and sales growth that we expect for the next ten years.
our Calvert Cliffs Nuclear Power Plant's tenth anniver-Although we anticipate no additional generating sary of outstanding operation. Over this period, the capacity requirements beyond Brandon Shores Unit Plant's two 825 MW units have generated approxi-No. 2 until the late 1990s, we are carefully monitoring mately 55% of our customers' electric needs. In so all relevant technological developments. This is a key l
doing Calvert Cliffs has saved our customers approxi-feature in our corporate strategy to maintain and -
mately $4 billion in energy costs-an average of strengthen the competitive advantage our Company
$400 million for each year of its life. The magnitude of now en}oys. Our next generation of power plants will these savings is largely attributable to one of the best probably consist of smaller, modular units, which pose operating and safety records of the nation's 90 nuclear less asset concentration risks. In preparing for this units. Those records are the products of hard work future, our goal is to select the technology which offers l
and close attention to detail for each day not only of the best combination of economics, reliability, operat-the last ten years, but also of the six years of design ing flexibility and financial risk.
and construction that led up to commercial operation on May 8,1975. The Nuclear Regulatory Commission (NRC) affirmed our devotion to detail during a 1984 inspection of Calvert Cliffs, citing vigorous manage-Natural gas sales decreased 4.5% this year com-ment involvement as the key factor in the Plant's envi-pared to 1984, again, primarily due to the weather. The able safety record. We plan to file a reload license decrease would have been greater without our Delivery submittal with the NRC to extend the period between Service program. which remains a very significant con-refueling outages from 18 to 24 months. This will tributor to our gas business. Revenues for our trans-further improve the plant's efficiency, productivity and port of gas for industrial end users increased by 33%
reliability. We expect Calvert Cliffs to be the first pres-in 1985.
l surized water reactor plant on a 24-month cycle.
For the past several years, tremendous changes have been taking place in the gas industry. Interstate h
pipelines no longer serve as the middlemen in all gas sales. The continuing process of wellhead price Although the economy in our area generally deregulation has brought escalating competition to remained strong, our electric sales were adversely the industry, and we have been very supportive of
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affected by a milder than normal winter and a moder-such competition from the start. We felt that competi-
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ately cool summer. Total electric sales were up 2.4%.
tion in the marketplace would result in lower prices Residential sales increased 2.7%. but more encour-for our customers, and this has proven to be the case, aging was a 16% increase in the number of electric as gas producers sell to local gas distributors and i
househeating customers. That increase will prove industrial end users on an ever-increasing scale.
l beneficial under more favorable weather conditions.
The sweeping new rules inaugurated by the The increase of 4.2% in the industrial sector, despite Federal Energy Regulatory Commission will pave the the problems in the steel industry, reflects the healthy way for even more competition. We have been among state of the local economy.
the leaders in fostering the competitive marketplace.
The 190 MW addition to the Safe Harbor Water in 1984, we established a connection with the Trans-Power Corporation's hydroelectric facility, of which continental Gas Pipeline Corporation, and this year we BG6E is two-thirds owner, is now nearly finished. The bought significant quantities of spot market gas. Not last of the five units will be in service by early April.
only did these purchases reduce gas costs to our cus-The 49 MW upgrading of Unit No. 3 at our H. A. Wagner tomers, but we believe they were instrumental in Power Plant will be completed by early 1987. Since the producing a very favorable settlement of past claims operational date for Unit No. 2 at Brandon Shores is against the Columbia Gas Transmission Corporation.
now 1992, the bulk of the work on that facility has been deferred. Should our load growth indicate a need for the plant prior to that time, however, we can reschedule the in-service date. These facilities, in Throughout the Company,1985 was a very success-addition to our load-management program, leave us ful year from the perspective of our cost control efforts.
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"We were able to Inect stnct budget largets in operating and inaintenance, as well as capital expenditures, and we were also a
able to reduce Ihe numberof entployees.
These were majorcorporate goals for the year, and we achieved them by doing our jobs more productively, prudently and efficiently."
We were able to meet strict budget targets in operat-future, are part of our comprehensive strategy to ing and maintenance, as well as capital expenditures, enhance the Company's competitive position in the and we were also able to reduce the number of energy marketplace.
employees. These were major corporate goals for the Diversification is vital to BGC,E's growth and finan-year, and we achieved them by doing our jobs more cial strength, but, even as we diversify, the core of our l
productively, prudently and efficiently. Perhaps our business will continue to be a sound utility operation.
most significant achievement in the area of cost con-Our industry today must confront a difficult problem; trol was the containment of our interest expense.
Its traditional markets are being affected by increased Through the use of innovative financing arrangements, competition. In the face of this challenge, we are more we were able to keep interest costs for the year well determined than ever to keep our utility business below the budgeted level.
vital and profitable by improving productivity, devel-l In the coming years, we expect additional improve-oping new services and finding better ways to meet i
ments in efficiency and productivity from the organiza-the needs of our customers. We are prepared for this tional changes now underway in the Company. Over challenge, and we are meeting it.
the last two years, nearly every one of our divisions has experienced significant adjustments. A major move formulated in 1985 was the creation of separate Nuclear and Fossil Energy divisions. The new structure f
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staff positions,it recognizes the role of nuclear power 6
,4 in our corporate development. We also made major
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changes in the Distribution Division to simplify its
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structure and better organize its functions. Our goal George V. McGowan here was to increase the efficiency and reliability of President our service. The reorganizations we have already accomplished, as well as the changes slated for the February 14, 1986 5
FINANCIAL REVIEW 838~
Earnings and Dividends
$2.80 in 1985 from $2.77 in 1984. This increase in earn-
$2 50-
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ings was attributable to the higher level of earnings j
from our non-utility subsidiaries.
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l The quarterly dividend rate on the Company's share effective with the July, I,1985 payment. The new q
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All per share amounts have been adjusted to reflect l
the Aur.ust 1985 two-for-one common stock split.
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6" 68 62 65 64 65 Construction Expenditures The Company's construction expenditures amounted to $226 million in 1985, including $26 million in Allow-EM Earnings M Dividends Declared ence for Funds Used During Construction (AFC).
Earnings and Dividends Declared Expenditures for electric facilities amounted to $204 Per Share of Common Stock million while $22 million was expended on gas facili-
"* an*me*"cuatch 'enemhe eree *n m ties. An additional $32 million was spent on nuclear fuel. The Company's 1986 construction expenditures are currently estimated to be $250 million, including
$30 million of AFC, and nuclear fuel expenditures are series of Floating Rate Notes with maturities in 1995 i
expected to tctal $60 millior.
were issued in the amount of $100,000,000 each.
The internal generation of cash related to utility A $48,000,000 Port Facilities Loan from Anne activities was sufficient to fund 1985 expenditures for Arundel County and a $30.000,000 Pollution Control l
construction and nuclear fuel and is expected to pro-Loan from Baltimore County were refinanced through j
vide substantially all of the funds required for these the issuance of long-term tax-exempt bonds by the I
expenditures in 1986.
respective counties. Because these new bonds bear interest at rates which will be reset periodically h
throughout their lives, they provide the advantages of long-term maturity at the lower rates generally appro-Security Transactions priate for short-term borrowings.
Providing and managing the Company's capital in a As another means of reducing interest costs the way that minimizes costs while maintaining a strong Company has satisfied some of its indebtedness in corporate financial position is a dynamic process.
high interest cost bonds prior to maturity One method During 1985, a variety of security transactions were used to accomplish this has been the purchase of our effected in order to achieve these goals.
bonds in the open market when conditions have made A two-for-one stock split was implemented making it economically advantageous to do so. During 1985, the our common stock a feasible investment for a greater Company purchased $5,580.000 principal amourt of the number of investors. Doubling the number of shares 14% Series due July 15,1992 First Refunding Mortgage outstanding also strengthened the market for our Bonds. The early satisfaction of indebtedness has also stock. As a result of the split, each holder of common been accomplished by early redemption of bonds, stock received one additional share for each share pre-when the provisions of a particular series have made viously owned.
that possible. Thu.s. in December, $49,025,000 of 12%
During 1985, the Company was instrumental in Series due September 15, 1990 Firs + Refunding Mort-developing a new form of floating rate note. These gage Bonds (the remaining outstanding balance) were notes are variable rate securities designed to provide redeemed.
the maturity advantages H ten-year bonds while having The retirements of certain securities during the year the potential for substaMally lower interest costs. Two were required by previous agreement. 400.000 shares 6
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Average Rate Per Kilowatthour of Electricity Among the Largest U S. Cities with investor-Owned Utilities j
All Customer Categories 12 Months Ending November 1985 I
i of the 8.375% Redeemable Preference Stock ($100 par previously been borrowed under one of several bank value) the first of five equal annual installments, were revolving credit agreements was repaid. Commercial retired in October. In addition, $13,855,000 principal paper was issued during the year et rates ranging from amount of bonds and debentures were mtired for sink-7.225% to 9.125%.
ing funds.
'I The success of the Company's efforts to contain h
interest costs was aided by generally lower interest rates during the year. For example, the interest rate on Dividend Reinvestment and Stock Purchase Plan l
the Adjustable Rate Pollution Control Revenue Loan, The Company's Dividend Re!nvestment and Stock which was 6% per annum until lune 30,1985, was reset Purchase Plan provides an opportunity for holders of for the subsequent 12-month period at 5% per annum.
the Company's common stock to acquire additional
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Lower interest costs also resulted from careful shares of common stock in a convenient and economi-management in the balancing of bank loans and com-cal manner. Participants in the Plan may reinvest cash mercial paper to provide working capital and to meet dividends on all or a portion of their shares of common interim financial needs. Thus, $50,000,000 which had stock and/or make optional cash payments not exceedirig $6,000 per quarter.
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Investors continued to show their confidence in the j
5200 r-strong financial condition of the Company and its sound approach to the future. The common stock traded at an all time high of 25W on December 20 and
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closed the year at 25, an increase of 23% over the 1984 closing price. Throughout 1985, the market price of the o
common stock consistently exceeded the book value, mumamM ee On December 31,1985, the ratio of market price to book naimates Construction tm3 AFC Value was 129%.
Expenditures misconstruction (Millions of Dollarsi g
7
THE CONSTELLATION COMPANIES e Constellation family ments and ventures.
of BGGE enterprises consists of four companies, Henry A. lurand, fo*merly Director of Corpo-each having its own board of directors and officers.
rate Planning for BCSE, became the first full-Formerly known by different names, these organ-time President of Constellation investments on -
Izations have been developing over the past October I,1985.
several years, staffed by a very small number of g
highly qualified people. During 1985, they reached levels of activity that required full-time Constellation Properties direction from their own senior management.
Formed in December,1981 as Resource &
Consolidated under the Constellation logo, these Property Management, this oldest subsidiary in operations are now slated for relatively rapid the group offers integrated real estate services to growth, which should offset the slower rate of business and industHal clients. These include growth of our utility operations. By the 1990's, the project financing, design and construction, as well Constellation companies together should rank as property and asset management. One of the among Maryland's top five corporations.
company's major projects is the creation of the g
Brandon Woods Energy Business Park, an indus -
trial and commercial park being developed in Individually, the companies are:
conjunction with the ash management program at BGGE's Brandon Shores Power Plant in north-Constellation Holdings ern Anne Arundel County. The company has Originally Diversified Holdings, this subsidiaiy also acquired additional properties adjacent to l
is char 6ed with providing direction and leader-Brandon Woods and k moving ahead to develop l
ship for the entire group. It will provide basic a larger integrated residential and business l
services to the other companies in addition to community. C. Wendel Heineman, a Baltimore seeking out new opportunities for investment or real estate development executive, has been acquisition. It will also coordinate the planning President of the company since 1982.
and financing of our diversification program.
g Yne President of Constellation Holdings is Chris H. Poindexter, former Vice President of Constellation Blogas Engineering and Construction in the Baltimore Created under the name of Baltimore Biogas, Gas and Electric Company. Mr. Poindexter was this subsidiary owns and operates a small l
appointed President of Constellation Holdings on methane gas production p; ant on the site of I
October 1,1985.
Baltimore City's Back River Waste Water Treat-g ment Plant. Pipeline quality gas, produced as a by-product of sewage sludge digestion, is Constellation Investments sold under contract to major industrial customers.
Formerly Baltimore Capital Resources, this Constellation Biogas is evaluating opportunities company has invested in a wide range of low-to enter other energy related endeavors.
risk, high-yield securities, leveraged leases and J. Thomas Wellener, Manager of BGSE's Gas similar ventures. Its primary objective is to maxi-Supply Department, serves as President of Con-mize the return on available funds earmarked stellation Biogas.
for potential diversification. The company is now g
widening its activities into new financial instru-t l
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L ffhPtOUR DIVERSITY s
l he economic diversity of categories. Over the past several years we have l
our territory provides a stable base for our utility been actively seeking to capitalize on this inher-business. This is especially important in a transi-ent strength in our community by identifying tional era. As the economic climate nationwide patterns of new economic activity. We support
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responds to competition from other energy that growth with our own economic development 4
sources, conservation, the influences of cogen-efforts and create selective marketing strategies eration, and the shift away from heavy manufac-designed to match our products and services with turing, the traditional utility market is becoming the needs of our customers. Selective marketing less favorable for growth. This makes the value of along with our load management efforts are l
diversity all the more important te our company, directed to growth opportunities which will not j
g require new generation facilities.
Geographically diverse as well as economi-The diversity of Central Maryland has tradi-cally diverse, our territory roughly divides into tionally provided a kind of insulation from the four areas: Baltimore City, the surrounding metro-severe economic shifts that have plagued other politan area, the countryside and the Chesapeake industrial areas. Four-fifths of our working popula-Bay area. Our presence in each is consistent-tion is divided among the trade, services, a commitment to respond to the concerns of all government, and manufacturing sectors. The our customers and a recognition that each area result is that national trends are generally is unique and accordingly demands its own reflected here, but often not as intensely as in particular focus.
areas where employment is concentrated in fewer
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THE CITY l
1 The dominant image of perform certain processes, such as melting metal, Baltimore over the last decade has become the at night in order to take advantage of off-peak inner Harbor, a spectacular array of downtown rates. The expanding retail trade industry, whose office buildings, shops, hotels, restaurants, and hours include nights and weekends, is also amusements surrounding a busy marina. It is this ideally suited to benefit from the use of off-peak idea of Baltimore as a glamoious, waterfront town energy.
that is helping to fuel the city's growth as a con-g vention center, Close to 7% of our commercial and industrial electric sales now come from the resur-Our strategies to make low-cost natural gas gent hotel and entertainment industries and, as available to our customers have also been highly Baltimore continues to gain popularity as a tourist significant in this industrial area. Delivery Service, attraction, that percentage is likely to increase.
the transporting of gas purchased by customers While a downtown recreational waterfront is a at the wellhead, and our independent contracts new image for the city, Baltimore's economy has with a variety of producers and suppliers of always been based on the water. Baltimore is first natural gas, have fortified this market We have and foremost an industrial port, handling the recouped most of the gas sales lost in 1982-83 to l
sixth largest dollar value of foreign commerce of lower cost alternative energy sources and the all ports in the United States, and, among East continued use of innovative programs should Coast ports, is second only to New York in total keep our gas business growing.
l containerized cargo. When the deepening of the g
l channel leading into Baltimore is completed, j
activity at the port should increase.
Many of our selective marketing strategies are l
g based on individualized educational services. We publish newsletters aimed at different groups of Despite a decline in its manufacturing base, Baltimore is still a heavily industrialized city. Over 25% of the rnanufacturing jobs in the state of Maryland are located within its limits, and Balti-more City alone accounts for over one-third of our industrial electric customers.
T6c new face of Baltirnore citu-i l
The expansion of our Time-of-Day rate sched-l
,!;'d, ules has been an important marketing tool as s d tti,g a tirnoris skuline, the M-story I
it offers customers new possibilities for energy Cabot. Cabot and Forbes Build-savings. Many major manufacturers have begun to ing provides 350.000 square feet of oflice space as well as a l
spectacular view of ti,e inner Harbor. The new structure is both heated and cooled by electricity
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.e customcs and conduct seminars on new prod-ucts and technologies that could be effective in our area. Wherever possible, we work with cus-torners on an individual basis, consulting with store owners, plant managers, architects, engineers, The traditionallacc olBaltimore inefficient gas or oil heating electrical contractors and plumbers to match our City-Brick rowhouses with systems converted to new, high-services with the customers' needs. The ability to
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once the city's trademark. These many areas, our meter readers tailor our services to changing customer require-durabic ho,1es reerrain perular irc>w carru,,ricrc'rrocessors on ments provides one of our most important busi-today as young families con-their morning rounds. These ness opportunities.
tinue to revitali:e older ethnic hand-held computers eliminate Q
neighlvrhoods. Even here, much the paperwork involved in meter is changing: many of these reading. improving both produc-homes have had their dated, tivity and accuracy.
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THE METROPOLITAN AREA l
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- ... m Baltimore City is the Baltimore metropolis flows almost imperceptibly heart of a muct larger metropolitan area. Approxi-into the greater Washington, D.C. area. BGGE's mately three qiiatters of a million people live in service territory reflects this easy blending, Baltimore, while an additional one-and-a-half including the town of Columbia in Howard million live within the remainder of our service County, and the towns of Bowie and Laurel, two l
area. Both geographically and demographically, the major Washington suburbs.
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The lohns Hopkins University development for governmental facilities that led us to create our is an intsgral part of urban space and defense projects. tt is Premium Electric Service pro-Baltimon and of Columbia as one of the many high-technology gram which prevides conditioned well.The lohns Hopkins Applied facilities located in the Baltimore /
or uninterrupted power to cus-Physics Laforatory near Colum-Washington metropolitan area.
tomers with sensitive electronic bia is a center of research and it was the special needs el such equipment.
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consumer market in the country. It is also the Facility in Anne Arundel County that will employ southern tip of what has become 'known as the 200 people. During the past two years, we have Northeast Corridor, a virtusily continuous strip of helped bring 2,000 new jobs into the metropolitan population running from Boston to Washington, area.
D.C. As part of that Corridor, Baltimore's suburbs in addition to a large pool of skilled labor, reflect the continued expansion into once rural
. easy access to the nation's capital has attracted communities. Mammoth shopping centers such many government operations as well'as private as the White Marsh Mall located off I-95 in north-business and research facilities. These installa-east Baltimore County become spurs to industrial tions are an important source of residential and and residential development.
commercial growth in the metropolitan area. Over g
200,000 people in the BGSE service territory work in government jobs at either the federal, state or our role here is not only to supply energy, but local level, and government facilities account for to spark complementary economic development.
over 15% cf our commercial and industrial electric l
Efforts to induce suppliers of major industrial cus-sales or 8.6% of total electric sales.
tomers like General Motors to locate in our terri-g tory are proving successful, as is the targeting of l
I A half-hour's ride from down-town Baltimore lies Sagamore Farms, one of the country's premier breeding horse farms.
Once entirely rural, the land around Sagamore Farms is slowly becoming suburbani:ed by the spread of residential and commercial developments. The 1695 beltway around Balti-l more cnce formea a dividingline i
between countr;t and suburbs.
Tcday, thet Ime is growing increasingly blurred, 15
THE COUNTRYSIDE g.
s commercial and Laser Applications, Inc., a company that uses industrial growth pushes farther into outlying lasers to cut stainless steel parts, and Marada areas, residential growth is following. The exten-Industries, Inc., a Canadian firm that produces sion of the Northwest Expressway north to parts for General Motors. Both are vital additions l
Owings Mills in Baltimore County and the even-to Carroll County's Airport Business Center, tual opening of a subway line to the northwestern g
j suburbs may mean that more and more people will be working in the city and living outside the Our Distribution Service Centers assist cus-city limits. Their presence, in turn, will stimulate tomers in the rural areas to insure that we meet even further commercial development.
our customers' energy needs. This means being This is clearly the pattern emerging in the prepared to meet diverse needs, from the I
rural areas of our service territory that extend increasing power requirements of modern farm-beyond the Baltimore Beitway west toward the ing operations to the sophisticated problems of Frederick County line, north to Pennsylvania and high-tech industries. Our policy of establishing south to portions of Montgomery and Prince service centers in the countryside meant, for George's Courities. The heart of this region is still example, that we were able to provide the 6,000 agriculture: it is horse country - known nationally feet of new gas mains required by Carroll County's l
for its breeding and training facilities. It is also two new firms quickly and economically. To BGGE, the center of Maryland's small but promising wine service means meeting our customers' needs,
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l The industries moving into the region reflect i
the trend toward high technology manufacturing.
Carroll County recently acquired two new firms:
Much of our territory remains in its rural state, but tven the rolling farmlands arid vineyards contain pockels of industrial growth. For example, the Air-port Business Center in rural Carroll County has been an economic boon to the northwest part of our service territory.
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Mstern and e{licient on Of inside, our westminstu store blends casily into the coa' ntry almosphere((westminster,Marir land. This small loa.n, with a populdlion ol 10.000, is 19 pig 3I (4therWalcommunitin SM
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f THE CHESAPEAKE BAY AREA l
l ust as Baltimore takes The Chesapeake Bay is now the target of a its character from the Port and the inner Harbor, massive preservation effort involving federal, state Maryland tends to define itself in relation to the and local officials. We are actively participating in Chesapeake Bay. As an electric utility, BGGE is that effort on many levels. Our former Director of especially dependent on the Bay-seven of our Environmental Programs, Gary Fuhrman, is on generating plants are located on the Bay or its loan to the state for a year under the Governor's tributaries: Crane on Seneca Creek, Brandon Executive Fellows Program to serve as the Direc-Shores, Wagner, Westport, Riverside and Gould tor of the Chesapeake Bay Trust, the organization Street on the Patapsco River and the Calvert Cliffs responsible for directing civic projects to aid the Nuclear Power Plant on the Bay itself. We rely on Bay. Mr. Fuhrman was the first Fellow to be the water for cooling purposes as well as for transportation of fuel and, because the water plays such a vital role in our operations, we are The Dundalk Marine Terminal world. We are working closely i
with the MarU and Port Author-l especially conscious of our responsibility to pro-is one of the main components of the Port of Baltimore. Here, ity to help develop and ewand tect and replenish the environments we share.
cranes load ar,d unload con-Baltuncres role as a major tainer ships from all over the international port.
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, gl Annarolts is home to the United Aberdern Provina Grounds. the States Naval Academy located National Securit[i Agency. Fort a workin;; farm. To protect the abundant wildlife at the junction el the Severn George G. Mcade and scrcral on our land, we are in the process of developing River and the Chesarcake Vctcrans' Administration Hospi-a wildlife management plan for Calvert Cliffs. Our Bay. the Acadcmp brings (cler, tals arc a few of the federal fatili-three-year-old Aquaculture or fish hatchery pro-
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nr i ylanders, the is turital el the many percrn.
Bay mcans recreatien. Sailing.
playing an important role in preserving the Bay,s ment installations in our ferntery f eating, fishing and trabbing all dwindling rockfish industry. State officials believe that hcfr te stabili:c cur cus-make thc Bag enc olthe nation's that hatchery fish may be the key to cabilizing temer basc. Thc Swial Secunty rrcmicr natural rcsources.
the rockfish populations until the Bay is suffi-AJnnnistration headquarters, the ciently revitalized to allow the fish to breed effec-tively and increase their numbers.
selected Our Director of Environmental Pro-In many ways, our corporate decision to grams. Dr. Elizabeth Bauereis, is chairing the diversify reflects the experience of our state.
Citizens Advisory Committee to the Chesapeake We see around us in Maryland the benefits of Executive Council w hich includes the governors of diversity - the opportunities for new growth, the Maryland, Pennsylvania and Virginia. the mayor freshness of new ideas and new ventures and the of Washington D C. and the Director of the determination that comes from meeting chal-Environmental Protection Agency.
lenges head-on. Like Maryland. Baltimore Gas g
and Electric is rich in tradition, but receptive to change.
In addition to providing expertise wherever we can, we are involved in projects designed to create a positive impact on the Bay. In Calvert 0"' ' #""" '"i"# C h"" "
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sencia crcck. a tnbutaru cI the (Ican term et the Plant stands cultural way of life on the Bay by maintaining chesarcake Bay. in Baltanore cut as it illumine'., itsell apain>t much of the acreage around our nuclear plant as ceunty cranc was smititally the night sky 20
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MAP OF OUR SERVICE TERRITORY l
Baltimore C,as and Electric Company
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CHARACTERISTICS OF THE BUSINESS Baltimore Gas and Electric Company is an investor-Interconnection which affords access to pooled capac-owned utiitty engaged primarily in the business of ity on favorable terms. Electric generation by fuel type
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producing and selling electricity and purchasing and for 1985 was 47% nuclear, 41% coal, 4% oil, 3% hydro, I
selling natural as. The Company, which was the first and 5% net interchange.
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l gas utility and one of the first electric utilities in the The Company obtains substantially all of the United States, has 9,000 employees serving an area natural gas it sells through purchases from pipeline which includes Baltimore City and all or part of nme suppliers and natural gas producers. To supplement Central Maryland count:es. The area served with elec-this supply of natural gas, the Company maintains tricity approximates 2,300 square miles with 2.370,000 facilities at three plants in Central Maryland for the residents while the area served with gas includes 600 productiorrand storage of liquefied natural gas, sub-l square miles with a population of 1,827,000.
stitute retural gas, and propane.
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.,To service this area, the Company operates ten in addition to its regulated utility ' business, electric generating plants in Central Maryland, includ-the Company sells electric and gas appliances.
ing the Calvert Cliffs Nuclear Power Plant which has Constellation Holdings, Inc., a wholifowned sub-consistently ranked as one of the top performing sidiary, directs the Company's expandi(Q diversiilca-nuclear plants in the country. The Company also main-tion efforts. This corporation holds the stock of three tains shared ou nership of generating facilities in other companies engaged in such diversified activities Pennsylvania consisting of two mine-mouth plants as financial investments, real estate development and i
and Safe Harbor Water Power Corporation, a producer management, and producini; pipeline-quality gas from of hydroelectric power. In addition, the Company is a waste by-product.
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',I FINANCIAL CONTENTS i a
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- Baltimore bks land Electric Comminy '
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s Operating Statist cs (
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' Selected Financial. Data.
1251 N
Managernent's Discussion anrf Analysis 26 ~
, Report of Management -
30
- Auditors Report '
30.
'. Statements of income
,31..
Statements of Retained Earnings 3!
3 Balance Sheets' s
32 Statements.of Changes in FinanciaI Position-34 I
'i Statements'of Taxes- /-
' 35 Statements of Capitalization 36"
-Notes to Financial Statements 38'
. 47 Shareholder Information ;
Officers 48
'nside Back'Coverc Board of Directors and Committees'.
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OPERATING STATISTICS EDitimore Gas and Electric Company g.
1985 1984 1983 1982 1981 (Dollar Amounts m Thousands)
ELECTRIC OPERATING STATISTICS Revenues Residential........................
S 528,676 S 491,069
$ 452,772 S 413,139 $
.366.903 Commercial 265,338 261,815 242,790 230,628 211.889 I nd u st ria l..........................
497,683 446,394 390,751 386.237' 350,553 O'.he r............
9,766 8.867 6.997 5.602 4,815
> Total.....
S 1,301.463 S 1.208,145
$ l.093.310 $ l.035,606 S 934,160 Sales-MWH Residential.................
7,083,564 6,897.025 6,644,403 6,101,831 6.006.255' Commercial.....
3,157,806 3.263.555 3.166,055
.3.012.927 3,005,048
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Industrial 9.457,355 9,074.069 8.452.975 8.177.421.
8.573.161 l
Total....................
19,698,725 19.234.649 l8.263.433 17.292.179 17.584.464 Customers Residential..
831,423
'811.771 793,899 780.119 770,281 Commercial.......
82,737 80,089 78.921 77.144 76.171, Industrial...
2,518 2,317 1,760 1,876 1,801 Total 916,678 894,177 874.580 859.139 848,253 Average use per Residential Customer-KWH..
8.613 8,591 8,440 7,872 7.848 l
Peak Load (one-hour)-MW.
4,365 4,230 4,079 3.924 3.871 Capability at Summer Peak-MW........
5,586 5.498 5.019 5.015 5,004 GAS OPERATING STATISTICS Revenues Residential.,........
S 257,199 S 291,958
$ 262.993 $
234,000 S 195.784 I
Commercial 42,147 49,081 44.121 39,561 31,946 Industrial.
148.305 205.035 233,010 262,636 235,594 O'her..
5,658 7.255 5.171 3,241 4.625 Total S 453,309 S 553.329 S 545.295 5 539,438 S 467.949 Sales-DTH Residential..
36,381,366 39.906.189 37.258.732 39.853.493 40,726,812 Commercial 4,255,159 6.837,512
'6.258,274 6,667,439 6.471,679 Industrial.
54,244.959 54,727.0 20 44.195,654 53.855.102 60,253,182 Total 96,881,484 101.470,703 87.712.660 100.376.034 107,451,673 Customers Residential.............
481,188 480.613 479.147 478.213 477,654 Commercial 29.449 29.831 29,846 29.928 29.972 industrial 5,806 5.052 4.977 4.865 4.763 Total 516.443 515.496 513.970 513.006 512,389 Average use per Residential Customer-DTH.
75.7 83.2-77.8 83.4 85.4 Peak Day Sendout-DTH...
677,300 607,200 648.300 690,800 585.300 Peak Day Capability-DTH.
8.'7,000 827,000 827,000 827.000 827,000 E
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~ SELECTED FINANCIAL DATA' 1
1 Baltimore Gas and Eledric Company i
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l 1985 1984 1983 1982 1981 l
SUMMARY
OF OPERATIONS Dollar Amountsin Thousands. Except Ib Share Amourds)
-l Operating Revenues
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Electric........
$1,301,463
$ l.208.145
$1,093.310
$1.035.606
$ 934,160 Gas........
453,309 553,329 545.295 539.438 467.949 i
Total operating revenues...................
1,754,772 1.761,474 1.638.605 1.575.044 1.402,109 a
Operating Expenses Purchased fuel and energy.......
-570,453 630,269 654,386 676.723 585.098 Operations and maintenance..
455,150 441.579 390.153 368.389 331.193 Depreciation....,.....
124,961 113.643 97,090 92.730 87,818 Income taxes Current.
70,597 106.545 28,137 44.742 55,021 l
Deferred....
69,322 29328 66.773 22,616 8,572 investment tax credit adjustments..........
16.653 12.816 21.554 28.122 22.488 Other taxes.............
123,394 116.526 108309 103.018 86.8P0 Total operating expenses....................
I,430,530 1 450.706 1.366.402 1336340 1,177.070 Operating income..
324,242 310.768 272.203 238.704 225,039 income From Steam Operations, Net.
933 1.264-1390 Other income Allowance for other funds used during construction......
14,597 23364
- 32.443 24,282 12,162 Equity in net income of unconsolidated i
subsidiaries...
13.917 6,338 1,740 I,117 7%
Net other income and deductions..
1,225 77 11,132) 1.107 2.128 Total other income 29,739 29,779 3LO51 26,506 15.046 income Before Interest Charges 353,981 34t.547 306,187 266.474 241.475 Net Interest Charges sterest charges.........
118.431 l l 5.441 115.688 111,028 106.162 Allowarre for borrowed funds used during construction......
(l1,750)
(18,809)
(25.954) i19359)
(14346)
Net interest charges..,......
106,681 96.632 89 734 91.669 91.816 Net income 247,300 243.915 216.453 174.805 149.659 Preferred and Preference Stock DMdends......
27,370 27.580 27.580 27.869 26.416 l
Earnings Applicable to Common Stock...
219.930 216335 188.873 146.936 123,243 Common Stock Dividends.......
131,692 121.114 111.423 101.507 88.499 Earnings Reinvested in the Bus! ness..
S 88,23.8
$ 95.221
$ 77,450 S 45,429 S 34.744 Average Shares of Common Stock j
Outstanding (Thousands!
73,622 78.123 76,272 72.180 66.706 I
l Eamings Per Share of Common Stock..
'2.80
$2.77
$2.48
$2.04
$ 1.85 Dividends Declared Per Share of Common Stock.
S'675 Sl.55
$1.46 S t.40
$1325 l
Ratio of Earnings to Fixed Charges..............
437 435 3.84 3.41 3.21 l
Ratio of Earnings to fixed Charges and Preferred I
and Preference Stock Dividends Combined..
3.19 3.16 2.82 2 47 231 i
FINANCIAL STATISTICS AT YEAR END Total Asse ts...................
$4,183,408
$4,010.796
$3.809,785
$3,566.839
$3310,477 l
Capitalization:
I Common stockholders' equity.......
91.521,960
$ 1,434.141
$1316,053
$ 1,204.008 S1.070.064 Preferred stock 59,185 59.185 59.185 59.185 59.185 Preference stock not subject to mandatory redemption..................
175,000 175,000 175.000 175 000 180.923 Redeemable preference stock 80,000 90,000 100,000 100.000 100.000 l
l.ong-term debt...
1.437,611 1386.506 1344.714 1,272.843 1.232,246
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Total capitalization S3.273,756 S3.144.832
$2.994,952
$2.811,036 S2.642.418 l
Book Value Per Share of Common Stock...
$ 19.36
$18.24
$17.04 Slex12
$15.81 l
Common Stockholders....................
79,474 81.601 85372 87,026 88,373 Common stock data haw been restated (cirellect the twe !or.one stock splH in August 1985.
25 l
l
MANAGEMENT'S DISCUSSIO'N AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Baltimore Gas and Elecfric Compant)
(All Nde references hereunder a*e references to the Notes to financial Statements. Nr share arnounts base been restated to reflect the two-for one stock split in At. gust 198s1 RESULTS OF OPERATIONS EARNINGS Electric sales increased by 2.4% in 1985 and 5.3% in Earnings per share of common stock increased to S2.80 in 1984. The changes by class of customer from the prior year 1985 from $2.77 in 1984 and $2.48 in 1983. The increase in were as follows:
1985 as compared to 1984 was attributable to higher earn-3985 1984 ings by Constellation Holdings. Inc., the Company's sub-Residential...............
2.7%
3.8% '
I sidiary which manages diversified activities, complemented Commercial.....
(3.2) 3.1 by utility camings which experienced a modest decline industrial..................
4.2 7.3 from the prior year's level. Earnings from diversified activi-ties during 1985 were 14c per common share, a 9c increase
- The increase in electric sales in 1985 reflected a 16.4%
over 1984. The 1984 earnings increase over 1983 reflected increase in the number of residential heating customers eiectric and gas sales enhanced by more favorable weather and the effects of continued favorable economic condi-conditions and h!g'rrer levels of economic activity, com-tions in the Company's service territory. The increase was bined with increases in base service rates.
tempered by warmer than normal weather during the Earnings from utility operations declined slightly in 1985 winter heating season and lower sales to Bethlehem Steel, from 1984 due to the effects of milder weather during the the Company's largest customer, as a result of greater self-i heating season. which affected both electric and gas sales.
uneration of electricity and reduced business activity.
Electric sales increased only 2 4% despite growth in the Additionally, industrial and commercial sales reflect a number of residential heating customers and continued calignment of certain customers from the commercial strength in the economy in the Company's service territory, class to the industrial class effective in October 1984 in while gas sales declined 4.5%. Eamings reflected the connection with the implementation of time-of-day rate impact of a S76.2 million base rate increase authorized by schedules. The increase in 1984 electric sales was attrib-the Public Service Commission of Maryland IMaryland utable to an improving economy. the colder than normal Commissioniin June 1984 which provided primarily for the winter weather. and growth in the number of residential rate recognition of the in-service operating expenses and heating customers.
capital carrying costs of the Brandon Shores Power Plant Future electric sales volumes will continue to be l
Ur it No.1.
affected by the overall economic situation and level of The earnings increase in 1984 frorn 1983 was the result of business activity in the Company's service territory, as well higher electric sales volumes of 5 3% and a 15.7% increase as by weather conditions, additional heating installations, in gas volumes. The introduction of a delivery service rider and customer conservation efforts.
to the gas tariff in July 1983 enabled tne Company to recap-l ture much of the industrial market which had previously' CAS OPERATING REVENUES AND SALES (DTH) converted from gas to attemate fuels. Additionally.the Gas operating revenues decreased by 18.1% in 1985 and June 1984 base rate increase along with a $74.5 million increased by 1.5% in 1984. These changes were attributa-
'oase rate increace granced by the Maryiand Commission in ble to the following factors:
July 1983 contributed to the improved camings.
g Earnings were increased by 8C per share in 1985 and Frorn Prior Year were reduced by a net 3c per share in 1984 as the result of 1985 1984 certain changes in accounting estimates and other adjust-un Mmione ments described in Notes I. 9, and 10.
Sales...
S.(9.5)
$ 12.8 ELECTRIC OPERATING REVENUES AND SALES iMWHI Base Rate Adjustments.
6.9 21.0 Electric operating revenues increased by 7.7% in 1985 Cas Cost Adjustments......
(97.4) 125.81 and 10.511n 1984. These increases were attributable to Net increase iDecreasei.....
$(100.01
$ 8.0 l
the following factors:
f inc. ease Changes in operating revenues attributable to sales I
frorn Prior Year volumes and gas cost adjustments are affected by the l
1985 1984 delivery service rider to the gas tariff and by the Company's v
on Mmione continued effort; to reduce the cost of purchased gas sold Sales...
S 30.0 S 35.9 to customers. Under the delivery service rider. customers.
Base Rate Adjustments.
22.6 66.1 principally industrial gas users with attemate fuel capability, Fuel Rate Adjustments 40.7 12.8 are able to contract directly with gas producers to purchase gas b Mr a hw of longem connact prodsions. %e Net increases S 93.3
$114.8 Company then transports such gas through its service terri-tory to the customers and receives a delivery service fee equivalent to the margin on gas it sells to similar customers.
_-.________a
Baltimore Gas and Cicctric Cornpany m
20 -
l' Gas sales decreased by 4.5% in 1985 and increased by 18 - -
15.7% in 1984. The changes by class-of customers from the r
ig _
prior year were as follows:
'd -
1985 1984 Residential..............
(8.8)%
7.1 %
12 -
Commercial.......
(8.5) 9.3 go _
industrial..........
(0.9) 23.8 8-
' The decline in sales to residential and commercial cus-6-
tomers during 1985 was due to milder weather conditions during the winter heating season. During 1985, sales to 4-industrial customers other than Bethlehem Steel increased 2-by 3.9% with the increased reliance on the delivery service rider. Sales to Bethlehem Steel, the Company's largest cus-0 tomer, were down due to reduced business activity. The
~ 78 79 'au o 82 6$ 84 os -
w73 7o 77 l
1984 increase in sales was a result of colder winter weather.
^
mindustrial Sales of Eltetricity
. mcommercial l
- an mproving economy, and greater sales under the delivery (Billions of Kilowatasi M Residential As a result of its efforts to reduce customers' natural gas prices during 1985. the Company continued securing gas from sources other than Columbia Gas Transmission Corpo-i ration, which was its sole suppNr of gas prior to 1984. These no--
measures, together with the impact of the delivery service 100 -
rider. enabled the Company to recapture and retain most of F.
9g _
the industrial market which had converted to alternate l
fuels.
80 -
l Also in 1985. the Federal Energy Regulatory Commission 79 _
iFERCl issued regulations designed to make transportation of gas through interstate pipelines available to all gas cus-60 -
tomers. This voluntary open-access transportation rule so -
permits the Company and its large industrial customers to 40 -
centinue to purchase gas directly from gas producers. The Company's gas supplier. Columbia Gas Transmission Corpo-30 -
ration, has indicated its intent to continue transporting 20 -
under the new open-access rules. However. many interstate pipelines have not elected the open-access transportation 10 -
provisions and, therefore, transportation bottlenecks could o
develop which would prevent industrial customers from 19n 7e 77 78 79 au di w at 64 as receiving the cheaper gas available directly from producers.
In such Instances. sales under the delivery service rider IFBIEindustrial could be curtalled.
Sales of Gas
. ecommercial Future gas sales will continue to be affected by the price (Millions of Dekatherms)
M Residential l
and availability of gas and attemate fuels, weather condi-tions, conservation efforts by customers, general economic conditions, and the regulatoryclimate in the natural gas
$5poo_
' industry. If gas prices generally were to rise in relation to alternate fuels in the future, conversions from gas by
$4 000-f
-industrial customers would be anticipated. The delivery service rider should enable gas to compete favorably with.
33ggg _
l oil as a primary fuel source and moderate conversions i
from gas so long as open-access transportation is available I
to move the gas from producers. To the extent transporta-
$2D00-tion is not available, some fuel switching could occur.
OPERATING EXPENSES l
Purchased fuel and energy expenses decreased 9.5% in 0
W 77 W 80 m 82 83 84 85 l
1985 and 3.7% in 1984. These decreases were the net result i
of several factors includin6 the price of fuel, the level of electric and gas output, the electric generation mix.
Total Utill' y Mant t
IMillions of Dollarsi l
'.27 L_- _ _
Baltiswre Gas and Electric Company
[
.. ~
increased reliance on gas delivery service, and the opera-Increased in both years due to higher property, capital tion of the Company's electric fuel rate and purchased stock, and payroll taxes.
gas adjustment clauses. Additionally, purchased fuel and energy expense for 1984 included the write-off of OTHER
$5.7 million of previously deferred fuel costs as described The decrease in the Allowance for Funds Used During i
in Note 10.
Construction in 1985 and 1984 resulted from Unit No. I of Prices for oil and coal consumed for electric generation the Brandon Shores Power Plant being placed in commer-were generally lower in 1985 and 1984. Natural gas prices cial service in May 1984. In its June 1984 rate order, the z
were lower during 1985 due mainly to the Company's Public Service Commission of Maryland authorized higher securing of contracts directly with gas producers and service rates to provide full rate recognition of the carrying suppliers and negotiated savings with Columbia Gas costs and operating expenses for Brandon Shores Unit No.1.
' Transmission Corporation.
The increase in Equity in Net income of. Unconsolidated Electric output increased in 1985 and 1984 Cas output Subsidiaries in 1985 and 1984 reflects the higher earnings declined in both years, partially as a result of increased of Constellation Holdings,Inc. (CHI) resulting from new 1
sales under the delivery service rider. Gas nies under the financial investments undertaken during those years by delivery service rider do not involve the puwnase and Constellation Investments. Inc. Capital contributions to CHI j
output of gas by the Company and are not reflected in by the Company have been deployed primarily as invest-j purchased fuel and energy expense.
ments in preferred and common stocks and as equity J
Nuclear generation is the Company's most economical investments in leveraged lease transactions.
1 source of energy and has a significant effect on electric Interest charges increased during 1985 due to sales of purchased fuel and energy costs. Ref: ' ling operations additional securities, the effects of which were moderated occur approximately every eighteen months at each of the by lower interest rates. @e decrease in interest charges Company's two nuclear generating units and result in during 1984 was due to the replacement of certain long-l significant increases in fuel costs during the associated term debt with less costly financing arrangements.
l l
outages. Both units underwent refueling outages in 1985 while only one unit was refueled in both 1984 and 1983.
The resultant decrease in nuclear generation in 1985 con _
LIQUIDITY AND CAPITAL RESOURCES tributed to higher electric fuel costs as compared with OVERVIEW 1984. The commencement of commercial operatloa of Unit The Company's capital requirements are attributable prin-No. I of the coal-fired Brandon Shores Power Plant in 1984 cipally to its construction program and to its expenditures and the conversion of the Charles P Crane Power Plant for nuclear fuel. Other capital requirements involve funds i
from oil to coal in 1983 contributed to a more economical for the maturity or retirement of outstanding debt and the i
fuel mix which lowered electric purchased fuel and energy redemption of redeemable preference stock.
costs in 1985 and 1984.
The resources available to meet these capital require-j The deferral of net under-recovered fuel costs resulting ments consist of Intemally generated funds and funds from from the operation of the Company's fuel clauses con.
external financing. The Company anticipates that for the tributed to the lower purchased fuel and energy expense foreseeable future its capital requirements will be met in 1985. The collection of a portion of previously deferred primarily through the internal generation of funds, sup-costs partially offset the decrease in purchased fuel and plemented by a mixture of debt and preference stock s
energy expense in 1984.
offerings. No common or preferred stock offerings are
'j Operations and maintenance expenses increased in presently anticipated. The mixture of future debt and both 1985 and 1984. Higher labor costs and the expenses preference stock financing will be dictated by the Com-associated with the commercial operation of Brandon pany's target cap tal structure and coverage ratios, and by Shores Unit No. I contributed to the increases in both financial market conditions.
years. The 1985 increase also reflected the additional costs associated with refueling and maintenance activities at CAPITAL REQUIREMENTS both nuclear generating units and the moderating effects Actual capital requirements for 1983 through 1985, along or lower pension expense accruals (see Note 11. In 1984, the with estimated amounts for 1986 through 1988, are set forth increase included higher uncollectible account write-offs below:
and greater maintenance expenditures at the Company's fossil power plants.
,$'"',"ndL, Depreciation expense increased in both 1985 and 1984 construction wude.,.
I et oebi principally as a result of placing Brandon Shores Unit No. I wnnure.
Arc ruei preference swk Total in commercial operation in May 1984. The increase in 1985
"" Moa5' was moderated by a reduction in the depreciation rate 1983....
S218
$58 S65 S 87
$428 applicable to the Calvert Cliffs Nuclear Power Plant 1984....
202 42 42 105 391 beginning in September 1985 (see Note 1).
1985...
200 26 32 212 470 Income tax expense increased in both 1985 and 1984 as 1986...
220 30 60 56 366 a result of higher levels of pre-tax income. Other taxes 1987 220 34 60 57 371 1988..
210 37 70 83 400 28
Baltimore las and Elutric Compan t
The Company's construction program is subject to con-The Company does not expect to issue common or pre-tinuous review and modification. Actual construction and ferred stock in the foreseeable future. Common shares nuclear fuel expenditures may vary from the estimates set required for the Company's Employee Savings Plan.
forth above because of a number of factors such as infla-Employee Stock Ownership Plan, and Dividend Reinvest-tion, economic conditions, regulation, legislation, load ment and Stock Purchase Plan are anticipated to continue growth, environmer:tal protection standards, and the cost to be purchased in the open market.
i and availability of capital. However. It is expected that the Additional preference stock may be issued by the Com-l construction program will require fewer capital resources pany as future circumstances dictate.
In the future as a result of a lower level of construction The $552 million of long-term debt incurred during the activity. The only major project in the Company's construc-period 1983 through 1985 consisted of the following items:
tion program is Brandon Shores Unit No. 2. which is sched-on Mmionsi uled for completion in 1992. However, the Company has First Refunding Mortgage Bonds........
$4 j
the flexibility to accelerate the completion of the project Bank Term Loan.................
50 should load grow more rapidly than presently projected.
Port Facilities Loan (1983)..
48 Nuclear fuel expenditures include uranium purchases Pollution Control Loan (1983).
36 and processing charges. In addition in June 1985 the Com-Revolving Credit Agreement Loans..
125-pany paid approximately S72 million to the Department of Floating Rate Notes......
200 Energy for the disposal of spent nuclear fuel which existed Pollution Control Loan (1985)...
36 at April 7.1983.
Port Facilities Loan (1985)....
48
" S'
- "~**
INVESTMENT IN SUBSIDIARIES
$552 t
The Company also anticipates making additional capital l
contributions to Constellation Holdings, Inc. (CHil. a sub-sidiary which holds the stock of three other companies
. The Company has on file with the Securities and l
engaged in diversified activities. Since 1981. the Company-Exchange Commission a shelf registration for $100 million has invested a total of $107 million in CHI and its of additional First Refunding Mortgage Bonds. The amount subsidiaries.
and timing of sales of these securities will depend pri-marily upon market conditions and the needs of the l
INTERNAL GENERATION OF CASH Company.
The intemal generation of cash related to utility activities The Company issues commercial paper notes to satisfy consists essentially of net income adjusted for non-cash interim financing requirements. To provide additional items, less dividends and capital contributions to the liquidity, the Company maintains credit facilities with Company's subsidiaries. During the years 1983 through various banks.
1985, the Company's intemal generation of cash approxi-mated 95% of expenditures for construction and nuclear CAPITAL STRUCTURE fuel. Assuming timely and adequate rate relief, the Com' The Company maintains a capital structure that balances pany anticipates that substantially all of the funds required the need for sufficient common stock equity against the for these purposes during 1986 through 1988 will be pro-higher cost of equity as compared to debt financing.
vided from intemal sources-The Company's capital structure as of December 31 is presented below:
EXTERNAL FINANCING 1985 1984 1983 During the three years ended 1985 the Company issued Common Equity.............. 45.7% 45.3% 43.5%
$58 million of common stock through the Dividend Rein-Preferred and Preference Stock vestment and Stock Purchase Plan and incurred $552 n lllion not Subject to Mandatory of long-term debt. No new common stock was issued in Redem ption.............
7.0 7.4 7.7 1985. Durfrt the same three year period $395 million of Redeemable Preference Stock....
2.7 3.1 3.3 long-term debt was retired through refinancing. redemp-Long-Term Debt..............
44.6 44.2 45.5 tions. and sinking fund operations, resulting in net new i
Total.................... 100%
100%
100%
long-term debt of $157 million. No preferred or preference stock was issued during this period.
7 The investment in Constellation Holdings. Inc. is j
financed exclusively through retained earnings and repre-i sented 3.2% in 1985 and 2.2% in 1984 of the Company's i
capital structure.
I INFLATION For information about the impact of inflation on the Company, see Note 15.
29
REPORT OF MANAGEMENT Baltimore Gas and Electric Company
.e Management is responsible for the information and Coopers 6 Lybrand, Independent certified public q
l representations contained in the Company's financial accountants, are engaged to examine the financial state-
{
statements. The financial statements are prepared 'in ments and express their opinion thereon. Their examina-I accordance with generally accepted accounting principles tion is made in accordance with generally accepted audit-
]
based upon currently available facts and circumstances ing standards which include a review of intemal controls.
and Management's best estimates and judgements of The Audit Comrnittee of the Board of Directors,which
,1 known conditions.
consists of three outside Directors, meets periodically with The Company maintains an accounting system and Management, internal auditors, and Coopers & Lybrand to -
related system of internal contrels which are designed to review the activitles of each in discharging their responsi-3 provide reasonable assurance that the financial records are bilities. The internal audit staff and Coopers & Lybrand
)
accurate and that the company's assets are protected. The have free access to the Audit Committee.
Company's staff of internal auditors. which reports directly to the Chairman of the Board, conducts periodic reviews to maintain the effectiveness of internal control procedures.
h 1
i AUDITORS' REPORT 1
l
.. a i
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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 capitalization of Baltimore Gas and Electric Company at above present fairly the financial position of Baltimore Gas December 31,1985 and 1984 and the related statements of and Electric Company at December 31,1985 and 1984 and income, retained earnings, changes in financial position, the results of its operations and changes in its financial and taxes for each of the three years in the period ended position for each of the three years in the period ended December 31,1985. Our examinations were made in December 31,1985 in conformity with generally accepted d
accordance with generally accepted auditing standards accounting principles applied on a consistent basis.
and. accordingly, included such tests of the accounting records and such other auditing procedures as we con-sidered necessary in the circumstances.
i 0
I Coopers & Lybrand Baltimore, Maryland January 16,1986
(
30
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STATEMENTS OF INCOME.
I
~ Baltimore Gas and Ekctric Company l
Year Ended December 31, l
1985 1984 1983 Hn Thousands. Except TVr Share Amounts) l OPERATING REVENUES.
Ele ct ric...................................................
$1,301,463
$ 1.208,145 _
$1,093.310
' Cas.......
453,309 553.329
.545.295
)
l Total operating revenues..........
1,754,772 1.761.474 1.638.605 OPERATING EXPENSES 630,269 654.386
.q Purchased fuel and energy............................
570.453 i
l Opera tions......................
338.573 325.668 292.251 i
Maintena nce.....................,
116,577 115,911 97.902 Depreciation...................
124,961 113.643 97,090 -
Income taxes...................
156,572 148.689 I16.464 Other taxes........
123,394 116.526 108.309 Total opera ting expenses..................................
l.430,530 1,450.706 '
l.366.402 4
OPERATING INCOME.....
324.242-310.768 272.203 -
INCOME FROM STEAM OPERATIONS, NET....................
.933 OTHER INCOME Allowance for other funds used during construction.
14,597 23,364 32.443 Equity in net income of unconsolidated subsidiaries 13.917 6.338 -
1.740.
Net other income and deductions......
1,225 77 (1.132)
Total other income.
29,739 29.779 33.051 INCOME BEFORE INTEREST CHARGES......
353,981 340.547 306.187 l
NET INTEREST CHARGES I
interest charges I18.431 115.441 115,688 Allowance for borrowed funds used during construction.
(I1,750)
(18,8091 (25.954)
Net interest charges.....
106,681 96.632
'89.734 NET INCOME.
247,300 243,915 216.453 PREFERRED AND PREFERENCE STOCK DIVIDENDS.....,........
27,370 27.580 ~
27.580 EARNINGS APPLICABLE TO COMMON STOCK.
S 219,930 S 216.335 ~
$ 188.873 i
AVERAGE SHARES OF COMMON STOCK OUTSTANDING...............
78,622 78.123 76.272 EARNINGS PER SH ARE OF COMMON STOCK.......................
$2.80
$2.77
$2.48 STATEMENTS OF RETAINED EARNINGS Year Ended December 31.
1985 1984 1983 iln Thousandsl BALANCE AT BEGINNING OF YEAR.
S624,042
$528.821 5451,473 ADD: Net income.
247,300 243.915 216.453 871,342 772.736 667,926 DEDUCT:
Dividends declared
?
Preferred stock..............
2,899 2,899 2.899 Prefe rence stock....................................
24.471 24.681 24.681 Common stock (at annual amounts per share of St.46. 51.55. and $1.615 i
in 1083,1984, and 1985. respectively).......
I31,692 121.114 I I 1.423 159,062 148.694 139.003 Stcck issuance expense....
102 BALANCE AT END OF YEAR...
$712.280
$624.042 5528.821 The accompanying notes are an integral part of the financial statements.
31
BALANCE SHEETS Baltimore Gas and Electric Compan!I At December 31.
j 1985.
1984 l
lin Thousands) l ASSETS l
UTILITY PLANT Plant in service z
l Electric.......
$3,441,027
$3.297,962 l
Ca s............
393.771 381.507 i
Stea m.............
20,194
)
f Common...
180.195 167.233 l
Total plant in service..........
4,014,993 3.866.896 Accumulated provision for depreciation........
-(l.095.237)
U.001.618)
Net plant in service.
2,919,756 2,865.278 Pla nt held for future use..........................
13,708 10.117 Construction work in progress 350.892.
326.195 l
Nuclear fuel (net of amortization of $402.482,000 and $350.298.000)........
I68.830 188.724 Net utility plant...
3,453,186 3.390.314 OTHER PROPERTY AND INVESTMENTS Investment in subsidiaries........
127,277 88.703 Other..
3,196 10.713 Total other property and investments......
130,473 99.416 CURRENT ASSETS Cash.
4.507 3,694 Special deposits and working funds.......
3,398 1.604 Accounts receivable Customers (net of allowance for uncollectibles of $7.848.000 and $7,162.000).
205.604 178.524 Other.
I,960 2.270 Fuel stocks.
67,084 77.997 Materials and supplies.
90.638 83.866 l
Prepayments......
63,454 68.276 Other.
13.339 6.851 Total current assets 449,984 423.082 DEFERRED CHARGES Deferred fuel costs........
107,587 59.906 Deferred nuclear fuel disposal costs.......
7,367 10.451 Other....
34,811 27.627 Total deferred charges.
149.765 97,984 TOTAL ASSETS.
$4,183.408 S4.010.796 The accompanying notes are an integral part of the financial statements 9
1 i
32
BALANCE SHEETS'
. Baltimore Gas and Electric Company 1
At December 31.-
1 1985 1984.
i Un Thousands)
CAPITALIZATION AND LIABILITIES
.J CAPITALIZATION
$1,434,141 -
Common stockholders' eq uity.............................................
$1,521,960 Prefe rred stock.............................
59.185
'59.185 Preference stock not subject to mandatory redemption......
175.000
.175.000,
i Redeemable preference stock..........................................
80.000
. 90,000 Long-term debt......
1.437,61I l.386,506 l
'I Total ca pitaliza tion...............................................
3.273,756 3,144,832 CllRRENT LIABILITIES Short-term borrowings..
86.975' 81.200 Current portion of long-term debt and redeemable preference stock..............
56,473-23,258 Accounts payabic...........
124.991 114.085 Taxes accrued......
18,443 17.978 Interest accrued..
36,351 35.741 Dividends declared......
40,100-38.344 Provision for nuclear fuel disposai costs......
71,829 Va ca tion costs a ccrued.................................................
21,804 20,676 Other.......
17,797
'28,582 Total current liabilities........
402,934 431,693 DEFERRED CREDITS Deferred investment tax credits........................
201,677 192.691 Deferred income taxes 295,037 232,091 Other.
10,004 9.489 Total deferred credits 506,718 434.271 l
COMMITMENTS AND CONTINGENCIES-see Note 12 l
l l
TOTAL CAPITALIZATION AND LIABILITIES.....
$4,I 83,408
$4,010,796 The accompanying notes are an integral part of the financial statements.
o l
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~
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STATEMENTS OF CHANGES ~1N FINANCIAL POSITION l
'Balumore Gas and Electric Compant.
)
s -
' Year Ended December 31.'
l
'1985.
1984' El983 fin Thousands)
SOURCES OF FUNDS'
[
Funds from operations Ne t i nco me...................................................
$247.300.
$243,915
.$216.453 Items not requding (providing) funds -
.,158.676 Depreciation and a amortization..................................
180,467 174.262
~ Investme n t tax cred its......................................
14,208.
10.217-
'18339 De ferred incom e taxes..,........................... o....
-72,621;
.38.172 173.107 L Allowance for other funds used during construction................
(14,597)
(23,364)
- f 32.443)
Equity in net income of unconsolidated subsidiaries...............
(13,917)'
16,338).
.(1.740)
Other'- net...........
12,347 '
l.298-743' Total funds from operations 498,429--
438.162
'433,135 Funds from external sources -
'26.695 -
cl 35.8'34
' ' Long-term debt.....
285,035 i
Com m on stoc k...............................................
. (419) 22.867 34.595 Short-term d ebt-net..............................
'5.775
'l6,310 -
(8.010)
Total funds from external souices............................
290,411 16'i872-1 62.419
}
TOTA L SOU RC ES O F FU N DS.............................. c.......
$788.840
$604.034
. S595,554-APPLICATIONS OF FUNDS Construction expenditures
$225,771
$244.072
' $276.083 Allowance for other funds used during construction..................
(14,597),
(23,364)
.(32.443)
~ Nuclear fuel expenditures............
32,291 42.383 65.431
' investment in subsidiaries.......
24,657 60,015-
'6.177:
Common stock dividends 131,692 121.114..
. ! ! !.423 -
Preferred and preference stock dividends......
27.370 27.580 -
27,580 Reacquisition of long-term debt...............................
202,460.
105,185' C7,170 Redemption of preference stock................
.10.000 Materials. supplies and fuel stocks... o.....
(4,141) 33.707
- 17,l02)
Deferred fuel coe..........
'47,681 (28.956).
30,417 j
s
[-
Federal income. wes pa yable '..................................
(671)-
~ 6,918 6,693
~
l One-timt fee for nuclear fuel disposal costs..,
71.829
-~
.L L
Other-principally net change in other working capital items............
34,498 15.380 24.045 j
TOTAL APPLICATIO NS O F FU N DS................
$788,840 -
$604.034
.$595,554
]
l
-l Certain prior year amounts have been reclassified to conform with the current year presentation.
The accompanying notes are an integral part of the financial statements.
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34 I
r
1 STATEMENTS OF TAXES Baltimore Gas and Electric Comnany l,
Year Ended December 31 1985 1984 1983 H
f (in Thousands) l INCOME TAX EXPENSE 4
Charged to operating expenses i
i Current.......
$ 70.597
$106.545
$ 28.137 Deferred. consisting of the following tax effects of timing differences j
Accelerated depreciation......
50.684 31,167 24,245 Deferred fuel costs...............
22,054 (13.058) 13,585 l
Nuclear fuel disposal costs............................
(1.41Y)
(1,343) 29.797 l
Nuclear decommissioning costs........
11,259)
(705 (259) l Percentage repair allowance.....
2,126
'l7,181 (437) l Connection fees '..
(1,246)
(4.830)
Other..............
(1,618) 916 (li8J Total deferred taxes.......
69,322 '
29.328 66.773 Investment tax credits l
Current tax credits I
Eligible property......
26,313 20,661 26.u5c l
Employee stock ownership plan...............
1,766 2.599 3.220 l
Amortization of tax credits.....
(11,426)
(10.444)
(8.522)
Net investrnent tax credits 16,653 12.816 21.554 Total charged to operating expenses.........
156.572 I48.689 116.464 Charged to other income Current.
(2.091) 19.193)
. (5.760)
Deferred 3,299 8.844 6.334 Investment tax credits net Eligible property....
(679) 6 Employee stock ownership plan..
I2 40 324 Total charged to other income 541 (309) 904 TOTAL INCOME TAX EXPENSE
$157,113 G l 48.380
$117.368 RECONCILIATION OF TOTAL INCOME TAX EXPENSE AND TAX COMPUTED AT STATUTORY RATE Tax computed at 46% statutory federal income tax rate.
$ 186,030
$180.456
$153,558 Increases (decreases) in tax Depreciation differences not normalized 4,673 3.151 2.072 Allowance for funds used during construction......
(12,120)
(19.399)-
(26.863)
Amortization of deferred tax credits.....
(11,996)-
(10.444)
(8.544)
Equity in net income of unconsolidated subsidiaries
~ (6.402)
(2.915)
(800)
Net other items.,.
(3.072) 12.469)
(2.055)
Total income tax expense...............
$157,113 S14$.380
$117.368 Effective federal income tax rate..
38.8%
37.8%
35.2%
OTHER TAXES Prope rty.................
$ 29,059
$ 28.294
$ 26.986 Ca pital stock............
35,589 30,861.
29.078 Maryland gross receipts.,
34,878 35,000 32.582 Maryland electric environmental surcharge.......................
2,623 2.714 3,058 Social security......
22.845 21.886 18.298 Miscellaneous..
3.491 3,504 3.169 128.485 122.259 l l 3.171 Amounts included above charged to accounts other than taxes (5.091)
(5.733)
(4,862)
TCTAL OTHER TAX EXPENSE....
$123,394 SI 16.526
$ 108.309 The accompanying notes are an Mtegral part of the financial statements, 35
L STATEMENTS OF CAPITALIZATION Baltimore Gas and Electric Company At December 31, i
1985 1984 f
On Thousands) i COMMON STOCKHOLDERS' EQUITY l
Common stock - without par value - 100,000,000 and 90.000.000 shares. respectively, authorized: 78,621.798 shares issued and outstanding at December 31,1985 and 1984.
(
(At December 31,1985.1.017.188 shares were reserved for the Employee "tock q
Ownership Plan, and 5.606,866 shares were reserved for the Dividend Reinvestment
, and Stock Purchase Plan.)...
S 809,523
$ 809.942 l
Premium on preferred stock..
'l57 157 j
Retained ea mings................
712,280 624.042 1
f Total common stockholders' equity.
1,521,960 1.434,141 PREFERRED STOCK 2
Cumulative. S100 par value, 1.000,000 shares authorized Series B, 4b%. 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
.j Series D, 5.40%, 300,000 shares outstanding, callable at $101 per share...........
30.000 30.000 f
Total preferred stock...
59,185 59,185
{
PREFERENCE STOCK NOT SUBJECT TO MANDATORY REDEMPTION Cumulative, S100 par value, 5,000.000 shares authorized 8.75%,1970 Series. 300,000 shares outstanding. ca!!able at $104 per share prior to October 1.1986 and at $101 per share thereafter.........
30,000 30.000 i
7.88%,1971 Series 500,000 shares outstanding. callable at $104 per share prior to l
October 1.1986 and at $101 per share thereafter......
50,000 50,000
.j l
7.75%,1972 Series. 400.000 shares outstanding. callable at $103 per share prior to j
l October I.1987 and at $101 per share thereafter..
40.000 40.000 l
7.78%.1973 Series,200.000 shares outstanding, callable at $103 per share prior to l
December I,1988 and at $101 per share thereafter.
20.000 20,000 l
9.35%.1974 Series. 350.000 shares outstanding. callable at $107 per share prior to April I,1987 and at lesser amounts thereafter.
35.000 35.000 l
Total preference stock not subject to mandatory redemption.
175,000 175,000 REDEEMABLE PREFERENCE STOCK Cumulative, $100 par value, l.000.000 shares authorized i
8.375%.1979 Series, 400,000 and 500,000 shares. respectively, outstanding.....
40,000 50.000 l
12 %. 1981 Series A, 340,000 shares outstanding..
34,000 34,000 12%.1981 Series B. 160.000 shares outstanding...........
ib,000 16.000 Less current portion of redeemable preference stock....
(10.000)
(10.000)
Total redeemable preference stock...
80,000 90.000 I
The accompanying notes are an integral part of the financial statements.
l
'36
l l
STATEMENTS OF CAPITALIZATION k
Baltimore Gas and Electric Company j
3 7.
7-l At December 31 1985 1984 l
l lin Thousands) r LONG-TERM DEBT First refunding mortgage bonds Series X 2%%. due January 15.1986
$ 24,302 S 24,317
~
i Series Z 3%. due July 15.1989....
36.754 36.754 l
12%% Series. due September 15.1990....
60,703 3%% Series, due December 1 -1990...........
29,682 29.682 l
16%% Series. due October 1.1991............
35,524 35.524 4%% Series, duc July 15.1992 25,000 25.000 14%% Series. due July 15.1992.............
54.543 60,123 4% Series. due March I.1993.....
24,095 24.095 29,989 29.989 4%% Series. due July 15.1994.
1 5%% Series, due April 15,1996 26,680 26.680 6%% Series, due August I,1997.....
24.967-24.967 5%% Installment Series, due August 15. I993 64,050 65.000 28,705 28.705 7% Series, due December 15.1998.
8%% Series. due September 15,1999....
22,198 22.198
'8%% Series. due September 15.2000...
11,433 11,433 l
7%% Series. due April 15,2001.
60,000 60.000 l
7%% Series, due September I,2001.
60.000 60,000 l
7%% Series, due January 1. 2002 50,000 50.000
.j 7%% Series, due July 1. 2002..........
50.000 50,000 5%% Installment Series. due luly 15.2002.......
12,500 12.500 7%% Series, due September 15.2002.
50,000 50.000 74,986 74,986 8%% Series, due February 1,2004.
6.80% Series, due September 15.2004.
20,000 20.000 9%% Series, due August 1. 2005.
15,638 15.638 8h% Series, due September 15,2006...
75,000 75.000 8%% Series. due September 15,2007.
75,000 75.000 9%% Series due July 1. 2008 62,560 62.560 6.90% Installment Scries. due september 15.2009......
55,000 55.000 Total first refunding mortgage bonds.
1,098,606 l. l65.854 Debentures 4%% sinking fund debentures, due lune 15.1986 10,400 10,400 4%% sinking fund debentures, due August 1.1990 17,345 18.557 Total debentures..
27,745 28.957 Other long-term debt (unsecuredi Port facilities loan, due June I,1986.
48 000 36.000 Pollution control loan, due September 1.1986..
Loans under revolving credit agreements 75,000 125.000 Floating rate notes, due July 1.1995..
100,000 Floating rate notes, due October 15. 1995 Series 11.
100.000 Pollution control loan, due July 1. 2011 36,000 Port facilities loan, due lune 1,2013..
48,000 Adjustable rate pollution control loan, due July 1, 20l4......
4,741 363,741 209,000 j
Total other long +erm debt...
Unamortized discot.nt and premium (6.008)
(4.047)
Less current portion of long-term debt..
(46.473)
(13.258)
Total long-term debt.
1,437.611' l.386.506 TOTAL CAPITALIZATION....
$3,273.756
$3.144.832 i
The accompanying notes are an integral part of the financial statements.
j i,
a i
37 i
-_D
NOTES TO FINANCIAL STATEMENTS Baltimore Gas and Electric Compamj e
r NOTEI. SIGNIFICANT ACCOUNTING POLICIES SYSTEM OF ACCOUNTS The Company's policy is to fund pension costs accrued based The Company's accounting records are maintained in accord-on the aggregate cost method. Based on the latest available ance with the Uniform System of Accounts prescribed by the actuarial report, as of January 1,1985 there were no unfunded Federal Energy Regulatory Commission and adopted by the vested liabilities. A comparison of accumulated plan benefits Public Service Commission of Maryland (Mar >!and Commissions and plan net assets is presented below:
At January 1 REVENUES 1985 1984 Revenues are generally recognized at the time customers' Actuarial present value of on Nusands meters are read on a monthly cycle basis.
accumulated plan benefits Vested.
$225.300 -
$200,969 FUEL AND PURCHASED GAS COSTS Nonvested 25,446 31,924' The Company may recover, subject to the approval of the Mary" land Commission, the cost of fuel used in generating electricity
$250.746
$232893 and the cost of gas sold through zero-based electric fuel rate Net assets available and purchased gas adjustment clauses (see Note 12t To the for benefits..
$330,306
$320,989 extent revenues from customers under the clauses exceed or are less than actual fuel costs, the Company records deferred fuel expenses which are accumulated and refunded to or in addition to providing pension benefits, the Company pro.
recovered froni customers in future periods.
vides certain health care and life insurance benefits for active i
As implemented by the Maryland Commission, the electric and retired employees. The Company generally recognizes the I
fueliate formula is based upc.n the latest eighteen-month cost of providing these benefits as they are paid. The cost of l
generation mix and the latest three-month average fuel cost for the benefits and the number of active and retired employees each generating unit. The fuel rate does not change unless the covered by these benefit plans were as follows:
i calculated rate is more than 5% above or below the rate then in jafAmounts in m sa si Cost.
$23,697.
$22,672 T e purchased gas adjustment rate is based generally upon the latest twelve-month volumes of gas and the current prices Active employees 9,008 9,134 char 6ed by the Company's gas suppliers. Any deferred under-Retired employees 2,618 2,463 or over-recoveries of purchased gas costs for the twelve mor ths ended November 30 each year are charged or credited to cus-I The Comp ny and its wholly owned subsidiaries file a consoli-h und r ov r lo ec credi costs deferred under dated federal income tax retum. Income taxes are allocated to the fuel clauses were as follows:
the individual companies based upon their respective taxable At December 31.
inc mes and tax credits.
1985 1984 Certain revenue and expense items are recorded for finaacial din Thousands) reporting purposes in a year different from the year in which they are recognized for income tax purposes. Deferred income Electric S 97,252
$63 ~ 15
- axes are provided on certain timing differences, primarily those Gas 10.335 K 21 attributable to accelerated depreciation on post-1975 property Steam 263 additions, deferred fuel costs, spent nuclear fuel disposal costs.
Total
$107,587
$99.906 nuclear decommissioning costs, the percentage repair allowance, and connection fees Deferred income taxes are not provided on certain other timing differences, primarily those pertaining to PENSION AND OTHER POSTRETIREMENT BENEFITS accelerated depreciation on pre-1976 property additions. The The Company maintains a noncontributory defined benefit cumulative net amount of such timing differences for which pension plan covering its regular employees. The total pension deferred income taxes have not been provided approximated tost for 1985,19M, and 1983 was $7,013.000 $14.295,000, and
$284 million and $289 million as of December 31,1985 and 1984,
$lt,807AX10. respectively of which $5,760,000. $11.515,000 and respectively.
$11,234.000, respectively. was charged to expense. The remain-Investment tax credits, other than credits resulting from con-ders were charged to construction. The decrease in total pen-tributions to the Employee Stock Ownership Plan, are deferred
insurance currently available to cover such public liability, mutual Insurance company. The major portion of any claim paid property damage, and replacement energy costs. The Company through the Excess insurance coverage for damage to any nuclear would seek to have any unrecovered costs included in its service power plant operated by a member of the industry-owned rates, but the Company cannot assure that the Public Service mutual insurance company would be funded through insurance Commission of Maryland IMaryland Commission) would allow company reserves and an after-loss assessment of each member.
such recovery.
The contingent liability to the Company for such after-loss assessments currently is $9.6 m'llion in any one policy year.
Recoverability of Electric Fuel Costs In the event of ar outage at Calvert Cliffs, the Company would By statute, actual electric fuel costs are recoverable so long as the obtain replacement power from other sources. Due to the rela' Maryland Commission finds that the Company demonstrates that, i
tively low cost of the power generated at the Company's nuclear amc og other things, it has maintained the productive capacity of l
plant, replacement power would be more exper:sive. In the event its generating plants at a reasonable level. The Maryland Com-that there is an outage caused by physical damage to the nuclear mission and Maryland's highest appellate Court have interpreted plant which is insured as discussed above, other insurance pro-this as permitting a subjective evaluation of each unplanned vided thrnugh an industry-owned mutual insurance company outage at the Company's generating plants to determine whether would provide coverage for a portion of the replacement power or not the Company had implemented all reasonable and cost costs if the outage lasts more than 26 weeks. Specifically, after effective maintenance and operating control procedures appro-the initial 26 weeks of an insured outage involving one of the two priate for preventing the outage. Based upon this evaluation, the i
Calvert Cliffs units, this insurance would pay a maximum weekly Maryland Commission has in the past, and could in the future, indemnity of $3.0 million for up to a 52 week period, followed by deny the Company recovery of increased costs incurred for maximum weekly indemnity payments of $1.5 million for up to the supplying replacement energy during individual outages at next 52 weeks. For ore msured occurrence causing both Calvert Calvert Cliffs or other Company plants.
Cliffs units to be shut down beyond 26 weeks, the weekly :ndem-nity payments would then begin for each unit at a rate of 80% of l
NOTE 13. SEGMENbNFORMATION l
l 1985 1984 1983 l
ELECTRIC Hn Nusando j
Operating Revenues.
$1.301,463
$ 1.208.145
$ 1,093.310 Operating Income before income Taxes.
432.540 408.965 358.172 Operating incom*.
291,849 277.529 249.436 Depreciation.
l i l,3M 101,026 85.943 Construction E. expenditures.
204,180 222.970 255.114 Identifiable Assets at December 31 3,264,559 3.195.295 3.060,011 GAS Operating Revenues
$ 453,309
$ 553.329
$ 545,295 Operating income before income Taxes.
48.274 50.492 30.495-Operating income.
32,393 33,239 22,767 Depreciation.
13,596 12.617 11.147 Construction Expenditures.
21,590 20,739 20,467 Identifiable Assets at December 31 343,556 342.430 332.059 TOTAL Operating Revenues..
$ l,754,772
$ 1.761,474
$ 1,638.605 Operating income before income Taxes,.
480,814 459.457 388,667 Operating income.
324.242 310.768 272.203 Depreciation 124,961 113,643 97,090 Construction Expenditures lincluding steam) 225,771 244.072 276.083 identifiable Assets at December 31.
3,608.115 3.537.725 3,392.070 Other Assets 575,293 473,071 417.715 Total Assets.
4,l83,408 4.010.796 3.809.785 44
4 j:
' Baltimore Gas and Electric Comparty L
NOTE 14. - OUARTERLY FINANCIAL DATA (UNAUDITED)
~
'Th'e following data are unaudited but,in the opinion of Manage-peak sales period's generally occurring during the summer and ment, include all adjustments necessary for a fair statement of.
winter months. Accordingly, comparisons among quarters of a such amounts.
~ year may not be indicative.of overall trends and changes in
. The business of the Company is seasonal in nature with the operations.
Operating Eamings income.
Applicable Earnings Per
,~
Operating Plus.
Net to Common Share of..
]
' Ouarter Ended Revenues AFC* -
Income Stock Common Stock ~
Hn Thousands. Exept Per Share Amountsi
.g lerch 31,1985..
$ 507,981 s 90,094 s 64,789 l $ 57,894 S.74 i
j u nt 30, 198 5........................
384,843 72,743 46,81I
~.39.916
.51 Septtmber 3 0, 198 5...............
462,147' 114,174 88,836.
81.941 1,04 Decamber31, 198 5.............
399,801 73,578' 46,864 40,179
.51
, $ 1,754.772
$350,589
$247.300
$219.930
$2.80 Marc h 31.1984.............
5 522,657
$ 95.527 S 67.991 S 61,096 S.79,
June 30.1984.........
403,280 79.251 52A95 45,600;
.58 l
September 30.1984....................
446,999 I I4,803 87,299 c 80,405 1.03'
.l December 31.1984.
388.538
'63.300 36.130
~ 29.234
.3 7 -
$1.761 A74 5352.941 5243.915
$216.335
$2.77
- The Allowance for Funds Used During Construction Ifor Borrowed Funds and Other Funds)1s added to Operating income in determining operating.
Income for ratemaking purposes.
NOTE 15. SUPPLEMENTARY INFORMATION ON THE EFFECTS OF CHANGING PRICES (UNAUDITED)
The following supplementary current cost information is supplied Under the ratemaking prescribed by the Public Service Com-for the purpose of providing certain information about the effects mission of Maryland, the Company is generally limited to the of changing prices. It should be viewed as an estimate of the recovery of historical cost of plant in service and nuclear fuel in approximate effect of inflation, rather than as a precise measure, revenues as depreciation and amortization. During periods of,
y l
Current cost information reflects changes in specific prices of.
Inflation, such amounts will be recovered in dollars having less I
plant from the date the plant was acquired to the present. The purchasing power than the historical dollars invested. Therefore, I
current cost of utility plant represents the estimated cost of any excess of the current cost of plant over hietorical cost is not replacing existing plant assets and was determined by indexing presently recoverable in rates, and is reflected as a reduction to -
~
the surviving plant by the. Handy-Whitman Index of Public Utility-net recoverable cost. While the ratemaking process gives no.
)
Construction Costs. The current cost of nuclear fuel was deter-
~
recognition to the current cost of replacing utility plant and.
j mined by reference to current market prices. The current year's nuclear fuel, based on past practices, the Company believes it 1
provision for depreciation of utility plant and the effect of nuclear will be allowed to eam on the increased cost of its net invest-fuel amortization on purchased fuel and energy expense were ment when replacement of facilities actually occurs..
determined by applying the Company's depreciation and amorti-To properly reflect the economics of rate regulation in the zation rates to the current cost plant and nuclear fuel balances.
Statement of Income. the adjustment to net utility plant and l
' Fuel inventories (other than nuclear fuell, the cost of fuel used in nuclear fuel should be combined with the gain from the decline l
generation, and gas purchased for resale generally represent in purchasing power of net amounts owed. During a period of recent acquisitions and were not restated from their historical inflation, holders of monetary assets suffer a loss of general pur-cost in nominal dollars. The ratemaking process limits the chasing power. The gain from the decline in purchasing power of..
i recovery of fuel and purchased gas costs to historical cost. For net amounts owed is primarily attributable to the substantial l<
these reasons, fuel inventories lother than nuclear fuell have amount of long-term debt outstanding which will be repaid with'
- been classified as monetary assets.
dollars that are worth less than the dollars received when such
~ As prescribed by the Financial Accounting Standards Board.
securities were issued.
Income taxes were not adjusted.
{
[
45
=
1 Baltimore Gas and Elafric Company i
STATEMENT OF INCOME ADIUSTED FOR CHANGING PRICES i
FOR THE YEAR ENDED DECEMBER 31,1985
-]
Historical.
. Current '
Cost Cost lin Thousandsl -
Operating Revenues......
$1.754.772 -
' $ 1.754.772 Purchased Fuel and Energy..
570.453 575.637 Operations and Maintenance.
455.150
,455.150' Depreciation.
124.961-277.929 Taxes......
- 279.966 279.966..
.l 4
Total Operating Expenses...
1.430.530 1.588.682 Operating income.
.324.242 166,090 Other income lincluding AFC),
29.739 29.739 income Before interest Charges.
353.981 195.829 -
Interest Charges inet of AFO 106.681
'!06.681'
$ 247.300
$ ' 89.148 Net income (excluding adjustment to net recoverable costi.....
increase in Specific Pnces (Current Costi of Utility Plant and Nuclear Fuel Held During the Year *....
$ ' 227.879 Adjustment to Net Recoverable Cost..
66.296.
1 Effect of increase in General Price Level.
.(264.621)
Escess of increase in Specific Prices After Adjustment to Net Recoverable Cost Over increase in General Price L.evel.,.
29.554 Cain from Decline in Purchasing Power of Net Amounts Owed.................
69.170 Net.
$ 98.724
- At December 31.1985. current cost of utility plant and nuclear fuel, net of accumulated depreciation and amortizationfwas $7.039.400.000, while historical cost or net cost recoverable through depreciation and amortization was $3.453.180.000.
FIVE YEAR COMPARISON OF SELECTED SUPPLEMENTARY j
FINANCIAL DATA ADIUSTED FOR CHANGING PRICES l
1985 1984 1983' 1982'-
1981 (Dohr Amounts in Tbusands. Except Per Share Amounts),
Operating Revenues Historical
$1.754,772
$ 1.761.474
$ 1,638.605 S I.575.044.
$ 1.402.109 in Average 1985 Dollars...
$1,754.772
$ 1.824.323
$ 1.769.298
$ 1.755.376
$ 1.658.442 l
Current Cost Information iin average 1985 dollars)
)
Net income (culuding adjustment to net recoverable j
cost).
$ 89,148
$ 79.597
$ 49.004
$ 23.699'
$.18.856 income (Lossi Per Common Share lafter dividend requis ments on prefemd and preference stock).
.79
$.65
$.25
$ (.10)
$ L19)
Excess of increase in Specific Prices After Adjustment to -
Net Recoverable Cost Over increase in General Price Level..
$ 29,554
$ 24.056
$ 53.42i
$. 30.585
$ (I19.425) g
(.
Net Assets at Year-End at Net Recoverable Cost..
$1,726.670
$1.0vi158
$ 1.645.753
$1.584,769, ' $1.499.601, l
General inf ormation I
Cain from Decline in Purchasing Power of Net f
Amounts Owed tin average 1985 dollars!
f 9.170 81.005.
$, 69.596
$. 76 ? S7
. $ ' 149,508.
i Cash Dividends Declared Per Common Share j
Historical......
$ l.675 -
' $ ' t.55
$ 1.46
$ l.40
'$ i.325.
in Average 1985 Dollars.....
$ l.675
$ l.61
$ l.58 Market Price Per Common Share at Year-End
$ l.56;
$ l.57
'j Historical
$25.00
. $20.32
~ $ I 5.82
$14.38
$11.57
{
in Average 1985 Dollars...
$24.58
$20.75
$16.79
$15.85
$13.24 -
Average Consumer Price Index 322.2*
311.l.
298.4 289.1 272.4 Year-End Consumer Price Index..............
327.7' 315.5 303.5 ~
292.4 '
' 281.5 l
4
- Estimated 1
-i 46 1
1
I i
i SHAREHOLDER INFORMATION -
Baltimore Gas and Eledric Company j
e s
y 1-COMMON STOCK DIVIDENDS 1985 1984
-)
Dividend Price Dividend Price
)
AND PRICE RANCES l
Declared High low Declared -
High Low First Quarte r......................
$.40
$20%
$19%
5.375 Sl6W SIS 1.
Second Quarter.....................
.425 23%
20%
.375 16W 15%
Third Quar *er............
.425 23%
20
.40 18 %
16 i
Fourth Quarter.....................
.425 25W 20%
.49 20%
17%
l Tota!.....................
m.675
$1.55 i
l l
l
!~
l DIVIDEND POLICY ANNUAL MEETING The Common Stock is entitled to dividends when and as The annual meeting cf stockholders will be held at declared by the Board of Directors. There are no limita-10:00 a.m. on April 18.1986. In the Hunt Valley Ballroom tions in any indenture or other agreements on payment of of Marriott's Hunt Valley Inn. 245 Shawaa Road (I-83 dividends; however, holders of Preferred Stock (first) and at Shawan Road). Hunt Valley. Maryland.
holders of Preference Stock (next) are entitled to receive, when and as declared. from the 1rnlus or net profits.
FORM 10-K l
cumulative yearly dividends at ti.t ixed preferential rate Upon written request. the Company will furnish, without specified for each Series and no more, payable quarterly, charge, a copy of its Form 10-K annual report, including and to receive when due the applicable preference stock financial statements, after it is flied with the Securities redemption payments, before any dividend on the Com-and Exchange Commission in March 1986. Requests mon Stock shall be paid or set apart.
should be addressed to Charles W. Shivery, Treasurer, Dividends have been paid on the Common Stock con-P.O. Box 1475, Baltimore, Maryland 2I203.
tinuously since 1910. Future dividends depend upon future a
earnings, the financial condition of the Company, and other AUDITORS factors. Quarterly dividends were declared on the Common Coopers & Lybrand Stock during 1985 and 1984 in the amounts set forth above.
Dividends and stock prices have been restated to reflect EXECUTIVE OFFICES the two-for-one stock split in August 1985.
Gas and Electric Building Charles Center STOCK TRADING P.O. Box I475 The Company's Common Stock, which is traded under the Baltimore, Maryland 21203 ticker symbol BCE. is listed on the New York. Midwest, and Pacific stock exchanges. and has unlisted trading privileges SHAREHOLDERS' INQUIRIES on the Boston, Cincinnati, and Philadelphia exchanges.
The following toll-free telephone numbers are available As of December 31.1985 there were 79.474 Common during our business hours,8:00 a.m. to 4:45 p.m.
Stockholders of record.
Baltimore Metropolitan Area 234-5703 TRANSFER AGENT AND REGISTRAR 234-6509 Maryland National Bank. Baltimore Within Maryland I-800-492-2861 Outside of Maryland I-800-225-2432 Written correspondence should be addressed to:
Baltimore Gas and Electric Company investor Services P.O. Box 1475
-)
Baltimore. Maryland 21203 47
t i
OFFICERS Baltimore Gas and Electric Company l'
Benard C. Trueschler Edward A. Crooke Henry H. Miller l '
Cheinnan of the Board Vice President, Finance Vice President, Distribution and Chief Executive Officer and Accounting, and Secretary loseph A. Tiernan
]
I George V. McGowan lon M. Files Vice President, Nudear President and Chief Operating Vice President, Managernent Energy O(ficcr and Staff Services i
Charles W. Shivery l
Norman J.. Bowmaker John W. Gore, Jr.
Treasurer and Assistant Secretary Vice President, General Services Vice President, Electric Interconnection and Operations Thomas F. Brady Raymond C. Bryant Assistant Secretary and Assistant Vice President, Consurner Arthur E. Lundvall, Jr.
Treasurer Services Vice President, Fossil Energy.
SUBSIDIARIES j
Constellation Holdings, Inc, ll01 St. Paul at Chase, Suite 302
(
Chris H. Poindexter, President Baltimore, Maryland 21202-2619 301-234-6784 Constellation Investments, Inc.
1101 St. Paul at Chase Suite 302 i
Henry A. jurand, President Baltimore, Maryland 21202-2619 301-234-5936 Constellation Properties, Inc.
7609 Energy Parkway l
G. Wendel Heineman, President PO. Box 19628.
l Baltimore, Maryland 21226-0628 301-255-2030 Constellation Biogas, Inc.
1101 St. Paul at Chase, Suite 302 i
). Thomas Wellener, President Baltimore, Maryland 21202 2619 301-234-5198 i
Constellation Holdings, the parent company of Constellation investments, Constellation Properties and Constellation Biogas, is a wholly owned subsidiary of Baltimore Gas and i
Electric Company.
CHANCES IN DIRECTORS AND OFFICERS I
At the annual meeting of stockholders held on formerly Vice President, Supply became Vice Presi-
)
April 19,1985. Willard Hackerman, President of The dent, Fossil Energy and Joseph A. Tiernan became Whitingerner Contracting Company was elected to Vice President, Nuclear Energy Earlier, effective membership on the Company's Board of Directors.
October 1,1985 Mr. Tiernan was elected Vice Presi-During the year, John P. Sippel and Henry F.
dent, Engineering and Construction to succeed Snyder, Jr. did not stand for reelection at the annual Chris H. Poindexter who became President, Constel-rneeting held on April 19,1985, and C. Edward lation Holdings, Inc.
l Utermohle, Jr. retired from the Board effective Effective January 1,1986, Charles W. Shivery was November 1,1985.
elected Treasurer to succeed Alfred H. Inners who s
l Effective January 1,1986, Arthur E. Lundvall, Jr.,
retired on that date.
l 48
_ _._ -- _w
H
' BOARD'OF DIRECTORS-
- Baltimore GL and Ele'ctric Company.
I Bernard C. Trueschler
' Jerome W. Ceckle George G. Radcliffe Chairman of the Board Chairman of the Board
. Chairman of the Board of the Company, Baltimore and Chief Executive Officer, and President,' The Baltimore '
PHH Group, Inc.,
Life insurance Company,
. George V. McGowan.
Baltimore (Vehicle Baltimore (Insurance).
President of the Company,.
and Personnel Services)
Baltimore Charles S. Sanford, Jr.
Willard Hackerman -
President, Bankers Trust.
I. Owen Cole President, The Whiting-Turner.
' New York Corporation, Chairman of the Board, First Contracting Compuny, New York (Bank Holding Maryland Bancorp, Baltimore
.Baltirnore (Construction Company)
(Bank Holding Company) and Construction Management)
' Dr. John B. Slaughter Leslie B. Disharoon Paul G. Miller Chancellor, University Chairman of the Board.
Chairman of the Board
.of Maryland at College ~
and President, Monumental and Chief Executive Officer, _
(Education)
Park, College Park, MD Corporation, Baltimore Large Systems Consultants, Inc.,
(insurance)
Baltimore (Computer Systems, Software and Consulting)~
Harry K. Wells Sister Kathleen Feeley, Chairman of the Board, S.S.N.D.
McCormick & Cconpany, Inc.,
President, College of Notre.
Baltimore (Food Processing, Dame of Maryland, Baltimore Spices, etc.)
i (Education) t 1
COMMITTEES OF THE BOARD emur Audit Committee Executive Committee Committee on Management -
Mr. Radclille, Chairman Mr. Disharoon Mr. Geckle, Chairman Mr. Cole Sister Vecley Mr. Cole Mr. Miller Mr. McGowan Mr. Disharaon Mr Trueschler Committee on Mr. Wells Committee on Nuclear Power Diversified Businesses Mr. Wells, Chairman Mr. Miller, Chairman Sister Feeley Mr. Ceckle Mr. Hackerman l
Mr. Sanford Mr. McGowan i
Dr. Slaughter i
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I GAS AND ELECTRIC l
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Baltimore, Maryland 2!203 1
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