ML20237H919

Annual Rept 1984

ML20237H919
Person / Time
Site:	Calvert Cliffs
Issue date:	12/31/1984
From:	Mcgowan G, Trueschler B BALTIMORE GAS & ELECTRIC CO.
To:
Shared Package
ML20237H898	List: ML20237H895 ML20237H908 ML20237H912 ML20237H919 ML20237H923 ML20237H926
References
NUDOCS 8708170414
Download: ML20237H919 (52)

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Baltimore Gas and ElectricLCompany.

Annual Report 1984.

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f.,'1 Contents The Cover!

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- Chairman's Letter,

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. A. Maryland Still Lifei Our ' Company :and'Its ancestorsi President's Report

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J have shared in Maryland's history for more than 150(

Financial Review ',

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' years, Like the black-eyed Susan' and the blue crab,L Building al Stronger Economy 9'

. BG&E is a home grown lprodu'cti And like'our home j New Strategies for Growth 10 state itself, we have the ability.to at preciate: tradition "

i 12 while welcoming change.:

t Responding to t.he Customer:.

14 -

s Providing kadership in the Public Arena ResoMng Problems Through Technology 16 V

Developbg New Ideas of Management 17.

Characteristics of the Business-20 Financial Contents 21 Common Stock Data' 21 Officers

- 46 Stockholder Information 46 Board of Directors Inside Back Cover -

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Financial Highlights 19t+i 1983 1974 Earnings Per Share of Common Stock

$ 5.54 Gi.95

$286 Average Shares of Common,$tock Outstanding 39,062,000 38,136,000 25,821,000 Dividends Declared Per Share

$ 3.10

$2.92

$1.96 -

Revenues Electric

$ 1,208,14 5,000

$1,093,310,000

$ 470.862,000 Gas 553,329,000 545,295,000 132,926,000 Net income Applicableio Common Stock 5 116.335,000

$ 188,873,000

$ 73,890,000 Dividends-Common Stock 121,114,000 111,423,000 50,527,000 Earnings Reinvested in the Ilusiness 95,221,000 77,450,000 23,363,000 Electric Sales-thousands of kilowatthours 19,235,000 18,263,000 13,990,000 Gas Sales-dekatherms 101,471,000 87,713,000 98,141,000 investment in Utihty Phuit

$ 4,203,208,000

$3,993,202,000

$2,212,502,000__

Dividends Paid on the Common Stock Continuously Since 1910-Aimys Earned-Never Reduced f

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Every company has an identity of its own. This is

'A more than a public image-it is a sense of mission, an attitude that remains consistent whether one is dealing with successes, adversities or new challenges.

7 The identity of the llaltimore Gas and Electric Com--

pany is embodied in our commitment to sersice and our belief in flexibility through planning. It is charac-terized by our intention to manage our own destiny.

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J The future is leading us in new directions. To i.,,.

E insure the continued growth of our Company, we are

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y preparing for a future in which a significant portion 1

i of our revenues will probably come from businesses and investments outside the utility industry.- for 4

IlG&E, diversification is the logical result of the evo-iutionary changes occurring in the gas and electric

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utility industries.

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Ii As we reach out to grasp new opportunides, we will retain our essential identity. 0m gas business 1

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dates back to 1816, making us the oldest utility in America, and we intend to maintain our position as one of the best. It is our purpose to preserve the same combination of prudence and innovation that 7. -

has historically helped us prosper. The following pagro will discuss some of the methods we use pres-endy-and shall continue to use in the future-to

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focus these qualities on the challenges before us.

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As the sun sets over northern

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turns on its own liiuminction. Unit

1. 1 has been generchng base-load power sinca May 1984 while Un!t #215 moving to com-s'..'-..

.'O plotion This cool-fired facility E

was designed with protec-tion of its natural setting in mind Efficient, economical and -

environmentally sound. Brandon Shores epitomess our comm!!-

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The Chairman's Letter to Our Stockholders Your Company and its Central Maryland ser-vice territory continued to benefit during 1984

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from the economic policy changes initiated in

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g.I jX6 'O Washington four years ago. American business is y%d j. k. f responding favorably to the return of a sound lf3 A ;V1I j <%g a system of economic incentives. I believe we are . g. 2 y(@[kh hjg. 3-hk Dy entering a period of sustained economic growth, l n]O low unemployment and low inflation.

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_j J .:y 4 ( (.. During the economic renaissance of 1984, gig 4(. '5 your Company's earnings record showed con-

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j, J".G, tinued improvement from 1983's excellent 7 U/. ,f- "M results. Earnings per share reached a record 2 $5.54, a 12% increase over the previous year. Return on average equity, a measure of the .]J .p'. profit performance of each dollar of stockholder 'i 4 investment, was 15.6% for 1984. A number of .n.:; factors contributed to the increase in earnings: 11 'W. higher electric and gas revenues resulting from w. 7 1 an improved economy and favorable weather; ~ -e..- refinancing with less costly arrangements; and higher scnice rates granted by the Public Senice j ),. V.gd Commission to cover the requirements attendant upon the commercial operation of Brandon ~ Shores Unit No.1. The quarterly common stock dividend was increased from $.75 to $.80 per share, effective with dividends paid October 1,1984. The year end market price per share for BG&E's common stock increased 28% over 1983, and, during the latter part of the year, consis-tently exceeded book value for the first time in many I years. This reflects a reaction to declining interest rates and increases in earnings in 1984 as well as the Com-pany's solid financial position. Our overall financial health was further highlighted when Moody's Investors Service last year upgraded credit ratings on all our securities. A major success story for 1984 has been the commer-cial operation of Brandon Shores Unit No.1, our new 620 MW coal fired plant Many electric utilities today face difficult decisions as they near completion of costly, new generating facilities. Sharp increases in customers' bills normally accompany these power plants when they are placed in senice. Many of these utilities are also finding that their new units far exceed their systems' near term needs for capacity. Brandon Shores Unit No.1, however, has been fully utilized since it was placed in

I 1 service in May, More significantly, we brought it on line The Company is positioned to take advantage of the at less than a 2% net increase in our customers' electric business opportunities that lie ahead. Our expected cash bills. This is an achievement we believe is the culmina-flow and capital structure will be strong over the next l tion of a long period of prudent planning and effective five years, and our financing requirements are modest. } cost control exercised by your Company's management The completion of the second unit at Brandon Shores is j and its employees. our only active major construction project. Beyond We are taking the same approach to the completion of Brandon Shores, no additional generating capacity will be Unit No. 2 at Brandon Shores as we did to Unit No.1. required until the late 1990s. To insure that our future generating capacity is accu-A'ter evaluating our financing requirements in light of rately keyed to our load growth, we have deferred the our modest construction program, we decided to de- "Our goal, to preserve and enhance the competitive posture of our core utility business, has not diminished as we continue our efforts to identify new growth-oriented business opportunities." in service date for Unit No. 2 to 1992. Should demand qualify the Dividend Reinvestment Plan for the deferral for electricity grow more rapidly than current projections of federal income tax on reinvested dividends. This deci-indicate, we have the flexibility to accelerate the starting sion will benefit all shareholders in the long run and will date. not affect the plan's tax-deferral feature for dividend-l The electric and gas utility industries are in a transi-reinvested during or before 1984. i tional period. This has required that we act decisively to The return of a vigorous economy makes this an i l control our destiny. Our Board of Directors has exciting period for America. Government and business l strengthened our long term strategy of diversification by alike are eager to do more with less. The utility industry authorizing the creation of two new subsidiaries. To is sharing in this renewed spirit of resourcefulness by facilitate internal control and coordination. the business striving to develop new ways to improve quality and j activities of these subsidiaries were consolidated under productivity. As we do so, we at BG&E appreciate more one organizational structure, Diversified Ifoldings, Inc. than ever the loyalty and support of both our share-(Dill). Resource & Property Management, Inc., which holders and our employees. was formed in 1981, was consolidated under DH1 in December 1984. The contribution of these subsidiaries l l to earnings last year was equivalent to 3% of our total l l earnings per commen share, and we expect their contri-butions to increase substantially in future years. Our goal, to preserve and enhance the competitive posture of l our core utility business, has not diminished as we con-tinue our efforts to identify new growth oriented busi-Bernard C. Trueschler I ness opportunities. Chairman of the Board i February 15,1985 i l I

The President's Report on Operations 1 i I In 1984, we saw 12 years of hard work and tough of which BG&E is two thirds owner, will be completed decisions <ome to fruition when the first of our two early in 1986. Also, by upgrading the pollution-control 620 MW units at the Brandon Shores Power Plant equipment on Unit No. 3 at our 11. A. Wagner Power I became operational on May 15. The plant's history, from Plant, we will be able to increase generation from its .f l. Its original conception as an oil-burning plant to its oper-current 270 MW operating capacity to its rated capacity l l ation as a coal fired facility, symbolizes to me the best of 319 MW. The work should be completed by early 1987, o l attributes of our Company. We were determined to build - While the addition of Brandon Shores Unit No.1 l - a plant that would benefit our customers while allowing m our system raises the percentage of coal in our j us the flexibility to handle the myriad of regulatory generating mix to 40%, the greatest part of the electric-changes. As a result, Brandon Shores is exactly what we ity we generate for our customers' needs - approxi-planned it to be -an efficient supplier of economical niately 55% - continues to come from our Calvert Cliffs energy to a growing commumty. In its first year of Nuclear Plant. When Calvert Cliffs completes its first 4 operation, it is expected to produce fuel savings of decade of operation this year, cumulative fuel savings. approximately $55 million. from the plant will total over $3.6 billion. We cannot The improvement in the economy, both locally and overstate the importance of this facility, which is consis-nationally, is reflected in the 5.3% increase in our elec-tently cited as one of the nation's top nuclear plants, to "By doing our business in the best waypossible, we are helping to make Maryland a betterplacefor everyone to do business." tric sales in 1984. Factors contributing to the increase the current and future economic well-being of our com-include last year's colder-than-normal winter, the greater munity. Accordingly, we were disappointed last November electric consumption on the part of residential cus-when the Court of Special Appeals upheld the Public tomers, and the growth in our local economy. The time-Service Commission's decision to deny BG&E, in part, liness of the Brandon Shores Plant is underscored by the full recovery of replacement energy costs incurred by the fact that the first unit had been on line less than a Company in 1980 and 1981 as a result of two month when last spring's early heat and humidity pro-unplanned maintenance outages at the plant. We believe duced a new hourly peak of 4,230 MW on June 13. Calvert Cliffs' superior performance over the years demonstrates a kl of prudent management that has for the ten years 19851995 we are forecasting a m re than compensated for the cost of the brief out-manageable peak demand growth of 2.0% and a healthy ages. We have requested the Court of Appeals to review sales growth rate of 3.0%. Load management techniques that decision. and a modest construction program will enable us to accommodate this long-term projected growth. Our next Turning to natural gas, sales increased 15.7% in 1984, major operating unit, part of that construction program, a real turnaround from the 12.6% decline in 1983. As in will be the second 620 MW facility at Brandon Shores, the case of electric sales, the stronger local economy, the re-scheduled to become operational in May 1992 to cold winter and increased usage on the part of individu-match, more closely, generating capacity to load growth, als contributed to the improvement. But, the major fac-Another project, the 190 MW expansion of the Safe tor in the gas picture has been the impact of delivery liarbor Water Power Corporation's hydroelectric facility

l senice. The Delivery Senice Rider, which charges customers solely for the transportation of gas they purchase directly at the wellhead, has enabled BG&E to recapture sales lost to alter-nate fuels beginning in 1982. Approximately 25% of gas sales in 1984 were handled under [. the Delivery Service Rider, mostly for our large interruptible customers. i'( For the largest number of our customers - those not able to purchase their own gas -we x are actively seeking cheaper gas supply contracts. In June 1984, we signed an agreement with the e. Transcontinental Gas Pipe I,ine Corporation (Transco) providing for the transport of gas that we buy at the wellhead at competitive prices for "1. s our general-system supply. This agreement and l; ; the associated wellhcad purchases saved our gas - A ~ customers about $6 iaillion in 1984. By imple-menting a variety of programs to obtain and sell g., \\ a4 gas at lower cost, we intend to improve upon the 1"+ average annual rate of growth currently forecasted for gas sales over the next ten years. 3 In essence, we have revolutionized the way we conduct our gas business, a process which began as a way of responding to the specific needs of our Interconnection Department. Many other changes are customers. going on below the departmental level. All are natural At all levels of the Company, we are concerned with ccumnces in the Me of a growing, thMng bunness. helping customers use our services in the ways that are The pages that follow explore some of the other ways most effective for them. In 1983, I established a pro-BG&E is working as a utility and as a business to gram of quarterly meetings to allow me and other strengthen the economic vitality of our region. By doing members of our management to meet with the manage-our business in the best way possible, we are helping to ment of our major industrial and commercial customers. make Maryland a better place for everyone to do business. By talking informally about our respective plans and objectives, we have been able to develop innovative ways to work together. Within the Company, we are striving to optimize the / productivity not only of our plants and equipment, but also of our people. In the Distribution Division, the i addition of specially-designed, aeriallift equipment George V. McGowan allowed us to reduce the size of many outside line crews President from three to two people and to boost productivity at the same time. We realigned the functions of the Electric February 15,1985 System Planning and Power Pooling Economics Depart-l ments and redistributed their functions to other existing departments as well as to the newly created Electric 1

R j 1 I Financial Review i i Earnings Earnings per common share were $5.54 in 1984 as com-j l pared to $4.95 in 1983. This record level of earnings j was attributable to higher electric and gas revenues reflecting an improved economy, colder than normal M I weather during the winter heating season growth in I electric residential heating customers and higher 8 senice rates. ML Dividend Increased The quarterly dividend rate on the common stock was o increased to $.80 from $.75 per share effective with the e e"* m m m m 1, October 1,1984 payment. The new rate is equivalent to construction 6 an annuai rate of $u0 per share. magvg llll;_ l Rate Relief On May 29,1984, the Public Senice Commission of Maryland issued orders authorizing higher electric, gas, Current estimates indicate that the Company's 1985 and steam base rates projected to increase annual construction expenditures will be approximately $226 revenues by $76.2 million. The new rates, which were million, of which $26 million is AFC. An additional $100 effective with service rendered on or after June 1,1984, million will be spent for nuclear fuel, including $72 mil-are designed to increase electric revenues by $61.0 mil-tion which the Company plans to pay to the Department lion, gas revenues by $14.4 million and steam revenues of Energy for the disposal of spent nuclear fuel. by $800,000. The increase in electric rates provided for the full rate recognition of the Company's imestment Security Transactions and operating costs at Brandon Shores Power Plant Unit The following security transactions occurred during 1984: No.1, which began commercial operation on May 15, a $125,000,000 was outstanding on December 31 under 1984. Also, in June, a $44.8 million net decrease in elec-several bank revolving credit agreements entered into in tric fuel rate revenees became effective, resulting primar-1984, which provide for borrowings at various interest ily from anticipated fuel savings at Brandon Shores Unit rates. The weighted average interest rate for borrowings No.1. Overall, these changes were designed to increase under these agreements was 11.15% in 1984. total annual revenues by $31.4 million. E $22,000,000 of Adjustable Rate Pollution Control j Revenue Bonds,1984 Series, were sold in December by Construction Expenditures Anne Arundel County, Maryland. The 1984 Series Bonds, The Company's construction expenditures amounted to which are due on July 1, 2014, will bear interest at a $244 million in 1984, including $42 million in Allowance rate of 6% per annum through June 30,1985 and there-i for Funds Used During Construction (AFC). Electric facil-after at an adjustable rate determined annually. As of ities required expenditures of $223 million, while $21 December 31,1984, the net proceeds of the sale were million was spent on gas facilities. Expenditures for con-on deposit with the Trustee and will be loaned to the struction of the Brandon Shores Power Plant amounted Company as needed to finance certain pollution control to $22 million and $42 million was spent for the acquisi-facilities at the lierbert A. Wagner Power Plant Unit tion of nuclear fuel. Internal generation of cash for util-No.3 i ity purposes was sufficient to fund the 1984 expendi-a The remaining $2,000,000 available in connection tures for construction and nuclear fuel. with Port Facilities Revenue Notes issued in 1983 by Anne Arundel County, Maryland was withdrawn from the Trustee in 1984.

r ] i I to I l { E 8 inammlBP 1 I Average Rate Per Kilowatthour of Electricity NONeI$7 ems $EnU7[gNEwed 7 1 0 703,586 shares of new common stock were issued Dividend Reinvestment j pursuant to the Dividend Reinvestment and Stock Pur-and Stock Purchase Plan l chase Plan (see below). Common Stockholders of the Company are provided an O Short-term capital needs during 1984 were financed opportunity to acquire additional shares of common through the issuance of commercial paper at interest stock in a convenient and economical manner through rates ranging from 8.00% to 11.88% Short term debt is participation in the Dividend Reinvestment and Stock issued on an interim basis to obtain funds for the con-Purchase Phm. Participants in the Plan may reinvest cash struction program and other corporate purposes. dividends on all or a portion of their shares of common G $50,000,000 which had been borrowed in 1983 under stock and/or make optional cash payments not exceeding a bank term loan agreement was repaid. $6,000 per quarter. l 0 $13,649,000 of Series V 2%%, due December 21, Beginning with dividends paid January 2,1985, the I l 1984 First Refunding Mortgage Bonds were redeemed at Plan no longer qualifies under the Economic Recovery l maturity and $14,352,000 principal amount of bonds Tax Act of 1981 for the deferral of federal income tax l and debentures were retired for sinking funds. In addi-on reinvested dividends. The Plan was amended after tion, $20,992,000 of 16%% Series, due October 1,1991 reviewing the impact on the Company's capitai structure J bonds were purchased and retired and $350,000 of the of future financing plans and a reduced construction 16%% Series and $5,842,000 of 14%% Series, due July program. The Plan's tax-deferral feature for dividends 15,1992 bonds were purchased and are being held as reinvested during 1984 or earlier years is not affected Treasury bonds. by this change. Security Ratings in August 1984, Moody's Investors Service raised the credit ratings on five of the Company's securities. First l mortgage bonds, secured pollution control bonds and ' preferred stock were raised to AAl from AA2. Deben-tures and preference stock were raised to AA2 from AA3. The Company's modest construction program and the successful commercial operation of Brandon Shores were cited by Moody's as factors in this recognition of the l Company's strong financial standing.

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Building a Stronger Economy f,2a;$;*20pirtta J" one of the city's many outdoor Baltimore--1984: The city itself has become a symbol of effective urban square-dancing arenas during the National Square Dance management. Traditionally known for its shipbuilding and steel, modern Balti-Convention held in Baltimore more has a new image. Confronted with the decline of its heavy manufacturing yt ue r s or base, Baltimore s mumcipal and business leaders saw the foundation for new cai college dormitories and state economic growth in a redeveloped harbor area. Where decaying warehouses once park facili+ies, some staying as stood, Baltimore, together with its modern Convention Center, now attracts over far away as Annapolis. Both the 100 conventions annually, bringing upwards of 355,000 people and over $52 n a[byiYvSc e Er erI$ sed C million a year to Baltimore. Twenty-one million visitors tour Harborplace to handle Baltimore's largest annually. Instead of ships, construction in Baltimore now centers on hotels. Nine convention to date. facilities currently being completed will g g g m w p w g y~em p y y' n 7 + add almost 2,500 rooms to the city s current 2,900 room capacity by 19'87. QM;gt9d"fJ W .A o Dhi Q NW liigh tech industries are attracted to y y;c ' + l3 mgg <, 'L Central Maryland by its abundant supply / of skilled labor, excellent educational 'i and research facilities, and easily access- .p q' < ible rail, sea and air transportation. ') They are forming the core of a new industrial base in the raetropolitan area \\ L i, surrounding Baltimore. i We have played a leading role in the area's resurgence, both as a leader in economic development and as a supplier of energy. Over the past year, through the economic development activities of our Marketing and Energy Services Department, we have been instrumental in bringing four new businesses-and g several hundred new jobs-to our ser-vice territory. Our economic-develop-ment representatives are now actively seeking to recruit high tech industries to Central Maryland. Our reasonable elec-tric rates -long among the lowest availabic among major cities-are an important factor. Our forecasts indicate that we will be able to offer our rate payers this advantage over the long term. A major contributor to our favorable position is our Calvert Cliffs Nuclear Power Plant. For ten years, Calvert Cliffs has consistently been among the top nuclear plants in the nation. Although it cost $778 million to build, the plant has et ofIegant$y7enovIted 8 st thus far produced fuel savings of $5.6 billion. In 1984 Calvert Cliffs pro-rowhouses in downtown Balti-vided 57% of our customers' needs. The coal fired Brandon Shores Power Plant, more, rises Harbor Court, a major whose l' nit No. I began commercial operation in May 1984, was designed to C Q' Mdo enhance even further the Company s-and our customers'-competitive edge. c r s sh ps and a restaurant. A project of the Murdoch Development Com-pony, Harbor Court will enhance Baltimore's emerging preemi-nonce in the convention industry.

yqgpw g lld@ NN,${ f {I , M/ We have worked to give our natural gas customers an edge as well, fighting i aggressively before the federal Energy Regulatory Commission and utti ing new g avenues opened by continuing deregulation to redece prices. In order to create a D / competitive market, we signed contracts and spot buying agreements wh a , hgg%{gg 5 gg jy number of independent gas producers to buy gas directly at the wellhead. Our Q purchases amounted to 15.7 million dekatherms or 20% of the total amount of gas purchased by the Company in 1984. These arrangements give us alternate L s, iif i sources of supply and supplement purchases from our long time supplier, L Mg iq Columbia Gas Transmission Corporation. In May, we reached an agreement with 9@ ' nas the Transcontinental Gas Pipe Line Corporation (Transco) to provide for the @ NgM{kg$g transportation of up to 25 millian dekatherms per year of independent pro- ? 4 ducers' gas through Transco's pipeline into our distribution system. We now l yi p estimate that the ability to purchase and transport gas in a competitive market will save our gas customers between $7 million and $10 million a year. In addi-tion, our aggressive posture toward Columbia to control prices has proven effec- . [y;4 , $jkh w tive since the actual cost of gas has remained stable throughout 1984. . KyMN." r" ]() g, ys cy gg@h %y } {gM We are fully committed to strengthening the economy of Central Maryland. y g} This is our home, and from its strength comes our ouu. $$%FT New Strategies for Growth Whh$ wp W .. ~ Our community is changing and so is our industry. Utilities now operate in an economic and political environment very different from the one that fostered the development of the world's most efficient, economic and reliable energy system. Ours is no longer a stable and predictable industry. The uncertainty of the future has forced us to develop new business strategies to control our destiny. We see g?e@ f opportunities ahead, and we are approaching the process of diversification with the same qualities of planning, prudence and flexibility that we have traditionally J n 4;

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brought to our utility business. v since 1981, we have created several wholly-owned, non utility subsidiaries. The [$[fh b[ N@ first, Resource & Property Management, Inc. (RPM), offers integrated real-estate services to business and industrial clients, including project financing, 7R design and construction, as well as property and asset management. It recently jy E completed Brandon I, the first buikling in its Ilrandon Woods Energy Business gy[ y',,;'%g Park, and has acquired other properties adjacent to the Business Park. RPM is g y developing these properties to create a complete business and residential com-g g* munity in northern Anne Arundel Coumy. ,4 g In December, Baltimore Biogas, Inc., completed the first full year of produc- [D ' $$ tion at its biogas facility. The facility, located at Baltimore City's Back River j f y[. i ,q L Waste Water Treatment Plant, produces pipeline quality methane gas as a b Q J4 y by product of sewage sludge digestion. g ,o m Another of our subsidiaries, Baltimore Capital Resources, Inc., is presently M engaged in passive financial investments, primarily in preferred ar.d common 6 4' stocks, leveraged leases and mutual funds. Diversified IHings, Inc. (a sub-sidiary holding-company structure), allows us to conso our diversified t e businesses under one subsidiary. These companies repru... a measured begin-t ning to our diversification efforts. While we cannot predict the future, we expect ' wm the Company of 1994 to look quite different from the BG&E of 1984.

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' @h' n - <\\, 2< g (4 @@;3, " Brandon Woods Energy Busi-p gf ness Park in Anne Arundel ~ County. Cool-combustion osh s y44 ' ~ ' ' s M J hp qQ" g,W, M was utilized in all cement e d building products including 'C%' %M!y M@ ~' d,6 j# p e concrete block, mortor, plos-i 4 ! 9 ff{-- >g, p 1 ' @' O h ter, concrete and also in the %y s y? JMi M- ^ ,4 ,p-Wr, sub-base for driveways. RPM is 3 y $n.,~ $ 8% F, <, My preparing to develop indus-1 N p e &: trial and residential communi-O ~ ties within the BG&E service a h/ Oda al i.h d '.. orea.

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1. 1x.,, a t s, g,sco Responding to the Customer e - - macev CL 0 ng 5 nC N DCff Ci UE%G $ t'a n ng Ond Cr f.pu f'..c,s,[c.1cc,,,,e, ' 9 W hateser our f uture dire (tlon. nlecting ille lleeds of our Cttstonier5 rentains d,e o,e gnonn in o.a.i> s e<ononn< enuronnieni a uohn nio,t grouac niore than as. uni elettnut) Custonien are dem.uiding a (hone in their energy usage.

'ac N s o e a tne rnany 'lhe) are looking for speciah/cd senues at (oinpetitn e prites troni the shed. cwatu s. : our tatcey mat 't Ou e gua'an!OOd C>Oa' 11ll11Q III (illr late.ldlllstlllellts ll) lht' dt'\\ t ltlpillt'llt (d l.cu pftll!lKIN ue afe u"n" k "d';tod W e' B'[-S E S respollduig to their (on(crlis m m a r i ectrc.erc ce rica r-es that caten road ', lll lOhj we uere.lb{l' l(I tifIset \\lrtuall) llle ellttre rate lil[rea3e alltlltirl/cd b) j ! O b f' the Publu 5en ne Comnussion of \\lar> land by tinling the nKrease to start simul-taneousl) with a reduction in the fuel rate resulting from tlic unnersion of our ('harles P ('falle Piluer l'lant f roill oll til Olal ll) ilppl)llig sintilar strattg) til los i to the rate case associated with our neu llrandon Shores Power Pl. ult. ue ucle.lblc tti l111111 lllc liR reast' 11) olir ellso tiller 5 bill5 to lebs tllail M

As we strive to optimize the productivity of our plants and equipment, we are offering customers a variety of ways to control their energy costs by using elec-use m ay meters MI become an increasingly tricity at off pe:i times. In February 1984, we made Time-of Day Rates available common sight in business. to our largest industrial and commercial users. By the end of 1985, we expect and evenrually homes, as 80% of our industrial and commercial sales, which amount to over 50% of our [*a tomfe [m YR total electric sales, to be covered by these rates. Eventually, we intend to make a customers. As peop!e l earn Time of-Day schedule available to the small commercial and residential sectors about these new off-peak as well' rate schedules, they will be able to make energy deci-To help our customers utilize these rates more effectively, we are testing tech. (on$ fk d antage of nologies designed to maximize energy efficiency. For our larger users, we are er st p wer Time-of-Day Rates will make investigating the cost benefits of ice-storage cooling systems. These systems are a security lighting program designed to make ice at night during off-peak hours and use it as a coolant cost effective. Other custo-during daytime peak hours. We are using ice-storage systems for cooling in our

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water during the night when rates are lower and coasting ( For those industrial and commercial customers who rely heavily on the use of on the stored heat during the sensitive electronic equipment, our newly developed Premium Electric Senice QY BYggu -DyRa$s i offers an important option. To work properly, sophisticated computers often help both the Company and require conditioned power, that is, electricity from which all voltage irregularities the customer, have been filtered out. Some high-tech firms require I uninterruptible power which is not only conditioned, l'. but protected against outages. Premium Electric Ser-I vice is unique in offering both types of power from a single, reliable source. Ours is the first complete turn-key package offered by a utility company. Responding to our large industrial and commercial gas customers has meant developing innovative methods to lower their cost of natural gas. Our Deliv-ery Senice Rider allows customers who qualify for the Columbia Gas Corporation's gas transportation pro-6 gram to purchase lower cost gas directly at the well- ~~ head. About 50 of our largest industrial and commer-I cial customers are participating in this program. P' Many of our residential customers also have special needs. CARES-the Customer Assistance Referral and Evaluation Senice-helps mentally or physically-dis-abled customers receive proper assistance. Our energy telephone hotline-625 WARM-provides compre-hensive information from November to April on energy grants, loans and services available in the community and from the Company. Through Winter flutton-Up, BG&E works with com-munity organizations to educate and assist low-and fixed-income elderly and financially hardshipped per-sons with their energy problems. h

i ehI 4, .[t .,e l k- [ ,u l, l W \\~. LQY l [ (h yM t 4WIPxeti llG&l: provides workshops on the basics of energy conservation and training in on effort to increase foreign for volunteers on the installation of free weatherization materials. Ily using volun. investment in central Maryland. C Pr v teer labor to cut costs, we are able to free additional dollars for the purchase of cLP "Y ]o anvie n na materials, allowing the program to reach more homes. In 1984 ue achieved our tnp mutua:ly sponsored by the goal of weatherizing 2,500 homes at a cost of apprmimately $125.000. Our bill. Economic Development Council ( bu ss 9 } ing record.s indicate that customers living in the weatherized homes are saving P"v Ia and he o pa t nt approximately 101 in their heating costs. of Economic and community As a customer oriented utility, we have an advantage as we move into new, o a a sp kesm o more competitive arenas-we know that customer satisfaction holds the ultimate Marviand's bus: ness communtty. key to our financial success. Mr. McGowan had the oppor- ' unity to visit the Mihama Nuclear Plant of the Kansai Electric Company The Mihama Nuclear Plant is located on a Providing Leadersh.ip in the Publ.ic Arena penmsumuM;ng into the Sea of Japan. Vistle across the bndge from the mainland are the F.ffective business leadership often me;uls looking bevond the affairs of the plant s containment structures nd tr osmisson imes corporation to the broader social and political issues affecting our industry, our community and our country. As a company, we pioneered and support programs like the now-famous and widely imitated Haltimore fuel Fund and a more recent

program operated in conjunction with the Associated Catholic Charities to supply low cost oil to needy families. As individuals, BG&E's officers and managers devote a significant portion of their time to volunteer civic and busi-ness organizations. Chairman Bernard C. Trueschler was instruments. in creating the Maryland Business Roundtable, an organization designed to improve the state's business climate. Under the auspices of the Greater Baltimore Committee, Mr. Trueschler serves as chairman of the State Aid Task Force, a group charged with monitoring state support of eco-nomie development efforts in the ~c subdivisions. As a member of the Council on Rate Regulatmn . j/, of Maryland llospital Association, a p' board member of St. Joseph Ilospi- 'I 5t tal, Inc. and a member of the Gov-4 ernor's Task Force on llealth Care Cost Containment, Mr. Trueschler is actively involved in seeking ways to lower hospital costs without sacrificing Maryland's high stand- 'y' 6 ards of malical care. e N Like Mr. Trueschler, Company 'I President George V. McGowan j divides his time between corporate i w fn .c management and numerous civic ^ # responsibilities. As first vice chair-man of the U.S. National Commit-tee of the Work! Energy Confer-T ence, Mr. McGowan helps to formulate riational energy policy, and in his capacity as chairman of the Governor's Volunteer Council, he is striving to broaden the scope of volunteerism in Maryland. Ilis concern about the country's short-age of engineers, as well as math and science teachers, has led him to take an active role in strengthening the ties between Maryland's schools and In the Plant's Unit #3 control universities and the business community. room, Mr. McGowan talked with operating personnel about the following the lead of our Company's officers, a great many of BG&E's more than 9,000 employees are active volunteers in organizations ranging from Adopt- {Sj 0 ] e* h s ma e unit, a School and the Special Olympics to neighborhood and business associations. In 1,666 MW Plant is one of three nuclear facilities operated by 1984, BG&E's eroup and team volunteers contributed over 170,000 hours to the Kansai Electric Company. All make Baltimore a better place to live. We provided 600 walkers to the March of $nsasuphesYectricty to ' P r Dimes Walk-a Thon alone, producing over $47,000 in support for that organiza-approximately 10 million cus-tion. Ours uns the number one company team in Maryland. Through our Com. tomers in the central section of pany Volunteers Program, we encourage and assist the efforts of our employees $"3 [y$P (ra InNsa a. d and their families because at BG&E, we believe that good management is more than simply minding our own business.

1 1 4 1 -y y %p y m y Resolving Problems ~*# 4 yd 4 e ~ - Through Technology CM M pidf j p,E N!5 y do aw At BG&E, we believe prevention is the best kN-dk s approach to problem solving. As a scientifically-C- oriented company, we often look to technology to h. . Za$g(( .' gE o T-provide the innovative solutions we seek. A - i ?Q gy The operation of Brandon Shores exemplifies this approach. The plant was specifically designed to pro-g yp. ?e O .( ' i g hp-tect the surrounding natural environment. Special J y siding on the buildings reduces plant operating noise. Waste water is collected, treated and then used in -;' 4

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plant processes in place of municipal water. Cooling -4 s[C towers control any thermal effect on surrounding t g waterways and sophisticated equipment continuously . 'hp % monitors the air quality of plant stack emissions. We g believe the environmental savings are well worth 4 7 i the cost. t N l We use state-of the-art technology to achieve an q ? equally prudent operation at our Calvert Cliffs M-t Nuclear Power Plant. Realizing that effective training

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of plant personnel is a prime factor affecting plant ~ * ~ f performance, we have established both a large train-d l[ ing staff and extensive facilities at the plant site. In j[^[' ) May 1984, the Institute of Nuclear Power Operations y l awarded Calvert Cliffs " Accredited Status" for its 'E ' "' T ' C i Operator Training Programs. Calvert Cliffs, a two-unit plant, is only the fifth plant in the nation to have 'f ' ' ~ a~ j achieved this designation. These programs will become . / g,. - even.tronger by mid year 1985 when our control j#7-A h..** A l room simulator, which duplicates a major portion of the plant's actual control room, becomes operational. Both Calvert Cliffs and Brandon Shores are economically and environmentally This is a graphite furnace at-toenment for on atomic suited to Central Maryland. As we evaluate new energy technologies for the future, we look for similar applicability. Solar energy has attracted a great deal [e$ rlng th P Y ty of attention from researchers and industry, primarily because it is an infinitely metals in the water of the renewable resource. We are carefully monitoring developments in solar technolo-Chesopeake Bay surrounding gies and evaluating their possible application by measuring the quantity and qual-Ian onced a%Iyti-th a ity of the solar resource in Maryland. Since passive solar techniques appear to be cal tool helps to determine the most promising for our area, we have been working with home builders in the plant's effect upon the environment and to keep the metropolitan area to determine the potential savings of such measures to our P' customers. After focusing last year on an individual home, we are now applying tn a passive solar modifications to a townhouse in Baltimore County. Our research will ultimately provide a broad range of information that people will need to make sound energy decisions. Fuel cells may hold promise as well. Through the Electric Power Research Institute, we have participated with United Technologies in a test project in-volving a 4.8 megawatt fuel cell in New York, and we are operating a test L

program in conjunction with the Gas Research Institute on a 40 kilowatt cell installed in a llaltimore County restaurant. Th Baltimore County test is sched-uled for completion in late 1985 and will help us determine whether the device has economic application for our system. In the basic operations of our own Company, technology often provides the means to improve efficiency. Our Energy Control Center, which directs the flow of electricity over our entire transmission and distribution system, is fully computerized, allowing us to anticipate pM W .a problems almost before they occur. Our meter readers will soon carry portable yme microprocessors. The result will be more timely billing for our customers and lower manpower and overhead costs for gg --- the Company. b - While we cannot always use technol- [ d ',' ~ M ogy '> prevent problems, we can often

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use n to create solutions. Our aquacul. - = 7.." Power Plant uses mtrm discharge water - p]: M ture project at the Charles P. Crane from the plant to raise striped bass, or 4 t.==a.e G rockfish as they are called in Maryland. peake Bay's dwindling population of [J.Q, Q9 in addition to replenishing the Chesa-3 4 ,gg these fish, our environmental scientists eJ

j have succeeded in isolatmg a virus m striped bass that may be one of the fac-

%gm, j ' e, tors responsible for the decline of these .q. fish in the bay. -N

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At BGKE, the development and appli-ikyk N hz s. cation of technology is just one more l' ' ' .. >(

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dj g-facet of good management. > Qf Developing New ideas of Management Uke most businesses today, ine u=v ineustes becom. ing increasingly involved with sophisticated electronic BG&E devotes the same quality of effort to developing promising ideas of equipment. our technicians. management that it does to researching new technologies. During the construc, such as the one shown here tion of Brandon Shores, for example, we were as closely involved with manage-o are fu y train car to ment issues as with the physical plant itself. We-not outside consultants-use. maintain and repair made the critical decisions. The result was a reliable, economical plant, brought state-of-the-art electronic on line just in time to meet the heavy growth in new energy demands produced d*"I' S-by June's sustained heat and humidity. In its first seven months of operation, Unit No. I achieved a capacity factor of 65%, quite high for a new plant and above industry average for comparable mature facilities. Throughout the Company, the emphasis is on implementing new techniques to imprme productivity. By reorganizing the field forces in our Distribution Division and introducing sophisticated, aerial-lift equipment it.:o the fleet, we were able

to increase efficienc) while reducing the division's manpower costs by 10% in 1984. Since we began a Variable Work Ilours program in 1980, group productiv-ity and morale have significantly improved Our Quality Circles program, which BG&E pioneered in the electric utility industry, saved the Company.$1.2 million in 1984. Since these are not one-time savings, that figure becomes $12 million when projected 10 years into the future. The program, which utilizes small groups of employees to resolve prob- ] l lems, now includes 45 circles and is expanding rapidly as we introduce innova-j i tions to improve its effectiveness. Critical to the utility industry is a technique we developed to use the circles in units operating on rotating shifts. Safety is a key component of productivity. CAPS-the Comprehensive Accident Prevention System-is an incentive and reward program designd to improve our accident prevention performance. In its first year, CAPS produced a 39% l reduction in lost work day cases and a 5% drop in vehicular accidents, f}8 Beyond their impact on productivity, these safety programs signify our concern l for the well-being of the people who are BG&E. We see their job satisfaction and career development as critical to the achievement of the Company's business goals. Our iluman Resources Planning System helps our people reach their full l potential while ensuring the Company that their talents and skills remain consis-f tent with our strategic plans. Through the Career Information Program, we offer l counseling and guidance to employees who wish to enhance careers within the Company, enabling them to use our Educational Assistance program more effectively. l Our proposal to reorganize our corporate structure into a holding company is a logical extension of our fundamental drive to utilize all our resources-human, technical and financial-more productively. In March 1984, the Federal District Court upheld our comtention that the State of Maryland may not prohibit l such a reorganization. The case is now under appeal. At BG&E we know that a business can be only as strong as the people who manage and operate it. We are proud of what our people are achieving and even more excited by their potential for the future. ) l With the old of our new moferiol-handling, single-bucket truck, o single member of a two-person overhead electric crew con } hoist a transformer or perform many other line operoflons that once required a three-person crew. Custom-de-signed according to our specifications, the new vehl-cles will eventually replace most of the traditional non-material-handling, two-bucket l trucks in our fleet.

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1 Map of OurLService Territory ~ County hth I i M ::""" %,,s _ T;" . theft mnty 1 Characteristics of the Business i llaltimore Gas and Electric Company is an investor owned utility Corporation, a pniducer of hydroelectric power. In addition, the engaged primarily in the business of pniducing and selling electricity Company is a member of the Pennsylvania New Jersey-Maryland and purchasing and selling natural gas, The Company, which is the laterconnection which affords access to pooled capacity on favorable oldest gas utility and one of the oldest electric utilities in the United terms. Electric generation by fuel type for 1984 was 57% nuclear. States, serves an area which includes Italtimore City and all or part 40% coal, 5% oil,4% hydro, and (6)% net interchange. of nine Central Maryland counties. The area served with electricity The Company obtains substantially all of the natund gas it sells approximates 2,300 square miles with 2,343,000 residents while the through purchases from pipeline suppliers and natural gas pro-area served with gas includes 600 square miles with a population of ducers. To supplement this supply of natural gas, the Company 1,807,000, maintains facilities at t5ree plants in Central Maryland for the pro-To senice this area, the Company operates ten electric generating duction and storage of liquefied natural gas, substitute natural gas, plants in Central Maryland, including the Calvert Cliffs Nuclear and propane. Power Plant which has consistently ranked as one of the top in addition to its regulated utility business, the Company sells performing nuclear plants in the country. The Company also main-and services electric and gas appliances. Subsidiaries of the Com-tains shared ownership of generating facilities in Pennsylvania con-pany are engaged in diversified businesses including real estate, sisting of two mine mouth plants and Safe !! arbor Water Pcarr financial investments, and alternative energy sources.

l; Baltimore Gas and Electric Company Financial Contents l l Common Stock Data 21 Operating Statistics 22 l Selected Financial Data 23 l Management's Discussion and Analysis 24 Report of Management '28 3 Auditors' Report - 28 Statements of income 29 j Statements of Retained Earnings 29 1 Balance Sheets. -30 .] i Statements of Changes in Financial Position 32 i l Statements of Taxes 33 l Statements of Capitalization 34 .q Notes to financial Statements 36 ') Officers - 46 Stockholder Information 46 Board of Directors . Inside Back Cover l l l 8 l -] \\ i l l l i 1 1 1 1 Common Stock Data q STOCK TRADING Preferred Stock (first) and holders of Preference Stock (next) are The Company's Common Stock, which is traded under the ticker entitled to receive, when and as declared, from the surplus or net symbol BGE, is listed on the New York. Midwest, and Pacific stock profits, cumulative yearly dividends at the fixed preferential rate exchanges, and has unlisted trading privileges on the Boston, specified for each Series and no more, payable quarterly, and to Cincinnati, and Philadelphia exchanges, receive when due the applicable preference stock redemption pay; As of December 31,1984, these were 81,601 Common Stock-ments, before any dividend on the Common Stock shall be paid or holders of record. set apart. Dividends have been paid on the Common Stock continuously DIVIDEND POLICY since 1910. Future dividends depend upon future earnings, the The Common Stock is entitled to dividends when and as declared by financial condition of the Company, and other factors. Quarterly the Board of Directors. There are no limitations in any indenture dividends were declared on the Common Stock during 1984 and ' or other agreements on payment of dividends; however, holders of 1983 in the amounts set forth below COMMON STOCK DIVIDENDS AND PRICE RANGES 1984 1983 Dividend Price Dkidend Price Declared liigh I.ow Declared liigh low first Quarter................ $.75 $33 $30 $.71 $31% $28% Second Quarter................... .75 33 30% .7! 31% 28 % Third Quarter.. .80 36% 31 % .75 30% 27% Fot:rth Quarter...................... .80 40% 35% .75 34 % 29% To tal........................... $3.10 $2.92

\\;;! l l Baltimore Gas and Electric Company 1

Operating Statistics; 19M 1983 1982 1981

-1980 ELECTRIC OPERATING STATISTICS U""*' ^""'""'" I" **"dd Revenues Residential.......................... $ 491,069 l$ 452,772 413.139 366.903 $ 342,796 - Co mmercial............................ 261,815 242,790-230,628 211,889 198,936 1 Indu st rial............................. 446,394 390,751 386,237 350,553 '311,182-O th e r............................. 8,867 6,997 5,602 ~ 4,815 4,350 To tal............................... $ 1.208.145 $ 1,093.310 $ 1,035,606-934.160 . $. 857,264 -l l Sales-MWil ) l Residen tial........................... 6,897,025 6,644,403 6,101,831 '6,006,255 o,005,110 l Commercial........................... 3,263,555 - .3,166,055 ~ 3,012,927 3,005,048 . 3,063,119 -j Indust rial............................ 9,074.069 8,452,975 - 8,177,421 8,573,161 8,159,691.. -I To tal............................ 19.234,649 -18,263,433 17.292,179 17.584,464 17.227,920 Customers Residential........................... 811,771-793,899 780,119 770,281 760,203 Co mmercial.,........................ 80,089 78,921 77,144 76,171 75,144 ] I ndu st rial............................ 2.317 1,760 1,876 1,801 1.642 Total......,...................... 894.177 874.580 859,139 848,253 .836,989 Average use per Residential Customer-hvil 8,591 8,440 7,872 7,848 . 7,956 . Peak Load (one-hour)-MW............... 4,230 4,079 3,924 3.871 3,969 Capability at Summer Peak-MW............. 5,498 5,019 - 5,015 5,004 4,967-GAS OPERATING STATISTICS Revenues 291,958 $ 262,993 '234,000 .195,784- $ 165.006 Residential........................ Commercial...................... 49,081 44,121 39,561 31,946 24,522 Industrial......................... 205,035 233.010 262,636-235,594 162,167 Other............................ 7.255 5,171 3,241 4,625 3,041 Total........................... 5 553,329 $ 545.295 $ -539,438 467,949 $ 354.736 Sales-DTil Residential.......................... 39,906,189 37,258,732 39,853,493 40,726,812 39.143,296 - Co mmercial......................... 6,837,512 6,258,274 ' 6,667,439 6,471,679 5,587,591 Indu s t rial........................ 54,727,002 44,195,654 53,8 % 102 : 60,253,182 52,063,654 101,470,703 87,712.660 100,376,034 107,451.673 96,794.541 Total.......... Customers Residential........................ 480,613 479,147 478,213 477,654 476,318 Commercial............... 29,831 29,846 29,928 29,972-29,625 5,052 4,977 4,865 4,763 4.508 Industrial.......................... Total........ 515,496 513,970 513,006 512,389 510A51 Average use per Residential Customer-DTil.... 83.2 77.8 . 83.4 85.4 ' 82.5 Peak Day Sendout-DTil... 607,200 648,300 690,800 585,300 543,700 827,000 827,000 827,000. 827.000 808,600 Peak Day Capability-IYl'il..... i Prior years' ps volunws have been restated from wet to dry dekatherms to conform with the 19M presentauon. i .) 1 1

I l l Baltimore Gas and Electric Company Selected Financial Data i i SDIMAltY Or OPERATIONS 19M .1983' 1982 1981 1980 ! Operating Revenues "^'"d E*P' "" "h*'" ^*""" ) l Elect ric.............. $1,208.145 $1,093,310 $1,035,606 $ 934,160 $ 857.264 Gas......... 553.329 545.295 539,438 467.949 354,736 'Ibtal operating revenues.... 1.761,474 1,638,605 ' 1,575,044 1,402.109 1,212,000 Operating Expenses Purchased thel and energy......... 630,269 654.386 676,723' 585.098 469.561 l Operations........................... 325,668 - 292,25l ' 279,570 244,861 214,047 Maintenance, 11',911 97,90J 88,819 86,332 74,810 Depreciatica................. 11.1,643. 97,090 92,73d 87,818 82,629 Income taxes Current... 106.545 28,137 44,742 55,021 40,080 l Deferred................. 29,328 66,773 22,616 8,572 23,279 investment tax credit adjust.acnts.. 12,816 21.554 28,122 22,488 13,812 l Other taxes................... 116.526 108,309 103.018 86.880 ' 87,696 Total operating expenses....... 1.450,706 1,366,402 1,336,340 1,177,070 1,005,914 Operating income............... 310,768 272.203 238,7M 225,039 206,086 Income from Steam Operations, Net.. 933 1,264 1,390 213 Other income l Allowance for other funds used during construction................ 23,364 32,413 24,282 12.162 12,053 11 Equity in no iruome of unconsolidated l subsidiarks. 6.338 1.740 1,117 756 717 Net other ince:ne and deductions. 77 (1,132) 1.107 2,128 2,134 Total other incc,me................ 29.779 33,051 26,506 15,046 14,904 i income liefore Interest Charges....... 340,547 306,187 '266,474 241,475 221,203 Net interest Charges Interest charges............. 115,441 115,688 111,028 106,162 93,828 Allowance for borrowed funds used during i const rucdon...................... (18.809) (25.954) (10,359) (14,346) (12,024) l Nat interest charges......... 96,632 39,734 91,669 91,815 81,804 Net income..... 243,915 216,453 174,805 149,659 139,399 Preferred and Preference Stock Dividends.. 27.580 27,580 27,869 26,416 22,099 Earning Applicab'e to Common Stock............ 216,335 188,873 146,936 123,243 I17,300 Common Stock Dividends. 128,114 111 A23 101.507 88,499 80.754 Earniny Reinvested in the Business.. $ 95.221 $ 77,450 $ 45.429 $ 34,744 $. 36,546 Average Shares of Common Stock Outstanding (7bomamh).... 39,062 38,136 36,090 33,353 32,258 Earninp Per Share of Common Stock......... $ 5.54 $4.95 $4.07 $3.70 $3.64 Dividends Declared Per Share of Common Stock.... $3.10 $2.92 $2.80 $2.65 $2.50 Ratio of Earning to fixed Charges.. 4.35 3.84 3.41 3.21 3.25 Ratio of Earninp to fixed Charges and Preferred and Preference Stock Dividends Combined...... 3.16 2 82 2A7 2.31 2A0 FIMNCIAL STATISTICS AT STAR END Total Assets.. $4.010,796 $3,309,785 . $3,566,839 $3.310,477 $3,106,319 Capitalization. i Common stockholders' equity.......... $ 1,434,141 $1,316,053 $1.204,008 $1,070,064 $1,010,941 l Prefstred stock...... 59.185 59,185 59,185 59,185 59,183 j Preference stock not subject to mandatory redem pt mn........................ 175,000 175,000 175,000 180.923 182.621 Redeemable prefcence stock 90,000 100,000 100,000 100,000 50,000 i Long-term debt.... 1.386.506 1,314,"14 1.272.843 1.232.246 1.247,854 j Total capitalization..................... 53.144.832 $2,991,952 $2.811.036 $2.642.418 $2,550.601 2 Ilook Value Per Share of Cammon Stock......... $36As $34.09 $32.24 $31.63 - $30.93 Common Stockholders 81,601 1.1372 87,026 88,373 89,579 Employees........................... 9,134 s 9,158 9,118 8,915 8,672

i Baltimore Gas and Electric Company ' Management's Discussion and Analysis. of Financia Condition'andLResultsJof Operations l (All No:: refArences hereunder are references to the Notes to Finandal Statements.) RESULTS OF OPERATIONS sales. The increase in 1983 electric sales was caused by an im. proving economy and the warmer than normal summer weather.

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Future electric sales volumes will continue to be affected by the EARNINGS . overall economic situation and level of business act,1vity in the j Earning per share of common stock increased to $5.54 in 1984 from $4.95 in 1983 and $4.07 in 1982. Company earnings are ' Company's service territory, as well as by weather conditions, l uffected by wrather conditions, the general state of the economy in ' additional heating installations, and customer conservation efforts. the Company's senice territory, and the timing and adequacy of rate relief. Each of these factors had a genersSy fworable impact GAS OPERATING REVENUES AND SALES (DTil) on earning in both 1984 and 1983. ' ! Gas operating revenues increased by 1.5% in 1984 and 1.1% in The earning increases were attributaNe to higher electric sales 1983. These increases were attributable to the following factors: volumes of 5.3% in 1984 and 5.6% in 1983 and a 15.7% increase in. ' ncrease (nec,,,3,). i 24 gas volumes in 1984. The introduction of a delivery service rider to rrom erior year - the gas tariff in July 1983 has enabled the Company to recapture 3934 3933 much of the industrial market which had previously converted from .un Milhons of puuars) - gas to alteinate fuels. Additionally, regulatory action by the Public Sales........................ $12.8 ' $(18.4) Senice Commission of Maryland produced base rate increases of Base Rate Adjustments......... 21.0' 13.2 $99.2 million in February 1982, $74.5 million in July 1983, and Gas &st Adjustments.......... (25.8) I 1.1 $76.2 million in June 1984. The June 1984 increase primarily pro- . Net Increases............ $ 8.0 $ 5.9 vided for the rate recognition of the operating expenses and capital carr)ing costs of the Brandon Shores Power Plant Unit No I which was placed in commercial operation on May 15,1984. Earning were Changes in operating revenues attributable to sales volumes and reduced by a net 6( per share in 1984 and by 4( per share in 1983 gas cost adjustments are affected by a delivery senice rider to the - f as the resuh of certain generally nonrecurring adjustments described gas tariff introduced in July 1983. Under this rider, customers, prin-in Notes 9 and 10. cipally industrial gas users with altunate fuel capability, are able to contract directly v.ith gas producers to purchase gas for their use. ELE (,TRIC OPERATING REVENUES AND SALES (MWil) free of long term contract provisions. The Company then transports ' i Electric operating revenues increased by 10.5% in 1984 and 5.6% in such gas through its senice territory to the customers and receives l I 1983. These increases were attributable to the following factors: a delivery senice fee equivalent to the margin on gas it sells to Inceaw (Decrease) other customers. From Prior Year Ga5 sales increased by 15.7% in 1984 and decreased by 12.6% in 1984 1983 1983. The changes by class of customer from the prior year were as - (in Milhons of Dollars) follows: Sales... $ 36.2 $44.9 1984 1983 Base Rate Adjustments......... 66.1 37.5 Residential.................. 7.1% (6.5)% Fuei Rate Adjustments......... 12.8 (24.4) Commercial.................. 9.3 (6.1) Maryland Electric Environmental Industrial.................. 23.8 (17.9) Surcharge....... (0.3) (0.3) Sales to residential and commercial customers increased in 1984 Net increases............ $114.8 $57.7 as a result of the colder winter weather after decreasing in 1983. due to warmer winter weather. Sales to industrial customers also Electric sales increased by 5.3% in 1984 and 5.6% in 1983. The increased in 1984 principally as a r-sult of greater sales under the - j increases by class of customer over the prior year were as follows: delivery service rider as well as the effects of the improving econ-1984 1983 omy. The 1983 decrease in sales to industrial customers was a Residential......... 3.M, 8.9% result of the adverse impact of higher gas prices and conversions to. i Commercia!................ 3.1 5.1 alternate fuel sources. Industrisi........ 7.3 3.4 The increase in electric sales in 1984 was attributable primarily to an improving economy. Also impacting sales were colder than normal wrather during the winter heating season and growth in the number of rendential heating customers. The cooler than normal l wrather during the 1984 summer season had an adverse impact on l n 1 1

Baltimore Gas and Electric Company zo ,I IL E h a q , Prior to 1984, the Company purchased all of its gas requirements u_ _ I IL. j from a single supplier, the Columbia Gas Transmission Corporation.

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. gg During 1984, as a result of its continuing efforts to reduce cuss 4 tomers' natural gas prices, the Company secured contracts directly 8' E ' tation of gas through a,econd pipeline, the Transcontinental Gas ~ gg_ E

== with several gas producers and suppliers, arranged for the transpor- ' 4' W-l Pipe Line Corporation, and also negotiated savings with Columbia. = E These measures, together with the impact of the delivery senice 2_ rider, have enabled the Company to recapture much of the indus-i trial market which had converted to alternate fuels. im w.s,9761977197819791980.t9st 1983.19831984 l - Future gas sales will be affected by the price and availability of l gas and alternate fuels, weather conditions, conservation efforts by. 0/[j',1cl* O 25 ] ) l customers, and general economic conditions. The Con pany does not m,#,g q expect the January 1,1985 deregulation of "new" gas under the l Natural Gas Po&y Act of 1978 to have a significant impact on gas l prices, llowever, if gas prices were to rise in relation to alternate j fuels, conversions from gas by industrial customers would be antici-1 no l pated. 'Ihe delivery service rider should enable gas to compete l favorably with oil as a primary fuel source and moderate conver-E sions from gas. Im OPERATING EXPENSES ? g g Q Purchased fuel and energy expenses decreased 3;7% in 1984 and 3. S 3.3% in 1983. These decreases were the net result of several factors 7L. ; j l including the price of fuels, the level of electric and gas output, the ? 3,o electric generation mix, rnd the operation of the Company's electric gg gg ggg g fuel rate and pmthased gas adjustme't clauses. Purchased fuel and Bg gg 3pM energy expense for 1984 included the write-off of $5.7 million of 4o __ m m B BmEEdE ~ l previously deferred fuel costs as described in Note 10. '] l Fuel prices were generally lower in 1984 after having been level 4 f in 1983 2o l l E'ectric output increased in 1983 and 1984, but gas output '] w declined in both years. The decline in gas output in 1984 occurred l despite increased sales because sales under the delivery senice rider g.,, g,, g,, do not invohe the purchase and output of gas by the Company and do not impact purchased fuel and energy expense. Voles 1 Gas - " id e d Nuclear generation is the Company's most economical source of W""" * " " )- " C"""W l energy and accordingly has a significwt impact on electric purchased fuel and energy costs. Refueling ope:ations presently occur every . eighteen months at each of the Company's two nuclear generating units and resuis in significant increases in fuel costs dunng the associated outages. P>oth nuclear units underwent refueling outages - in 1982 while only one unit was refueled in both 1983 and 1984. l The resultant greater nuclear generation in 1983 contributed to = lower fuel costs in 1983 as compared to 1982. In addition, a more economical generation mix has resulted from tne conversion of the 85 " E Charles R Crane Power Plant from oil to coal in 1983 and from the commercial operation of Unit No.1 of the coal fired Brandon 82 * -ME g, Shores Power Plant in 1984. $1,000 0 197419751976197719781979 MO 1981198J l98319H Total Utility Plant 1 (Mimons of DoHors)

Baltimore Gas and Electric Company The deferral of net under-recovered fuel costs resuhing from the IJQtIDITY AND CAPITAL RES0l'RCES operation of the Company's fuel clauses contributed to the lower ] purchased fuel and energy expense in 1983. The collection of a por-OVERVIEW j tion of those previously deferred costs partially offset the decrease The Company's capital requirements are attributable principally to ( Its construction program and to its expenditures for nuclear fuel. in purchased fuel and energy expense in 1984. 0ther capital requirements involve funds for the maturity or retire-Operations and maintenance expenses increased in both 1984 and 1983. liigher payroll costs contributed to the increases in both ment of outstanding debt and the redemplic,n of redeemable prefer- - years. The 1984 increases also reflected the expenses associated ence stock. with the commercial operation of Brandon Shores bnit No.1, ' The resources available to meet these capital requirements consist I inacased uncollectible account write offs, and greater maintenance . of internally generated funds and funds from external financing. The expenditures at the' Company's nuclear and fossil power plants. The Company anticipates that for the foreseeable future its capital 1983 increase was moderated by lower mainter;mce costs at Calvert requirements will be met primarily through the internal generation - 26' of funds, supplemented by a mixture of debt and preferred and Cliffs due to fewer refueling outages. Depreciation expense increased in both years as a result of higher. preference stock offerings. No common stock offerings are presently levels of depreciabic plant in service and changes in book deprecia- . anticipated. The mixture of fcture debt and preferred and prefer-tion rates (see Note 1). Most of the 1984 increase was attributable ence stock financing will be dictated by the company's target capital to Brandon Shores Unit No. I which commenced operations in May structure and coverage ratios, and by financial market conditions. - 198L Income tax expense increased in both 1984 and 1983 as a result CAPITAL REQUIREMENTS l of higher levels of pre-tax income. Other taxes increased irs both Actual capital requirements for 1982 through 1984, along with esti-years due to higher propery, capital stock, payroll, and Maryland mated amounts for 1985 through 1987, are set forth below: l gross receipts taxes. Ret remems and construcuon Nudear-Redempuons of Debt OTilER Expenditures oc . ruel and Preferen e stock Total The decrease in the Allowance for Funds Used During Construction on Minions of Donars) - (AFC) in 1984 resulted from Unit No. I of the Brandon Shores 12 2.... $279 $44 $ 42 $104 $469 Power Plant being niaced in commercial senice in May 1984. In its 1983.... 218 58 65 87 428 June 1984 rate order, the Public Senice Commission of Maryland 1984.... 202 42. 42 105 391 authorized higher service rates to provide for full rate recognition 1985.... 200 26 100 23 349 of the carging costs and operating expensef for Brandon Shore' 1986 200 29 65 143 437 Unit No.1. The increase h1 AFC in 1983 was primarily attributable 1987.... 185 33 55 58 ' 331' ta continued construction at Brandon Shores, and, as ordered by the Maryland Commission, to the accrual of AFC, effective The Company's construction program is subject to continuous July 1,1983, on other major electric projects scheduled for comple-review and modification. Actual construction and nuclear fuel expendi-tion after 1983 tures may vary from the estimates set forth above because of a The increase in Equity in Net Ir.come of Unconsolidated Subsidi-number of factors such as inflation,' economic conditions, regulation, aries in 1984 reflects the carnings of Baltimore Capital Resources, legislation, h>ad growth, environmental protection standards, and the 'j i Inc., the Company's financial subsidiary. cost and availability of capital. Ilowever, it is expected that the tw-The decrease in Net Other income and Dedualons in 1983 was struction program will require fewer capital resources in the future due to a loss resulting from the agreement to sell the steam as a result of a lower kvel of construction activity. The only major business project in the Company's construction program is Brandon Shores interest charges decreased in 1984 due to the replacement of cer-Unit No. 2. The scheduled completion of this Unit has been delayed tain long term debt with less costly financing arrarpments. The from May 1988 until May 1992 to more accurately align the Comt I increase in 1983 was due to sales of additional securities. pany's generating capacity with projected load growth. Ilowever, the - j Company has the flexibility to accelerate the completion of construc-tion should load grow more rapidly than presently projected. 1 Nuclear fuel expenditures include uranium purchases and process. ing charges and the payment of approximately $72 million to the.. Department of Energy in 1985 for the disposal of spent nuclear fuel which existed at April 7,1983 i f

Baltimore Gas and Electric Company in addition to the capital requirements for the construction pro-The $358 million of long-term debt incurred during the period gram and nuclear fuel, the Company estimates that during the 1982 through 1984, of which $74 million represented direct period 1985 through 1987 approximately $40 million will be refinancing, consisted of the following items: required for bond maturities, $38 million for sinking fund pay-(in.mmns of Datuo ments, $109 million for the retirement of other le g term debt, and F rst Refunding Mortgage Bonds $ 99 $37 million for the mandatory redemption of redeemable preference Bank Term loan.......... 50 swk. Port Facilities Loan......... 48 The Company also anticipates making capital contributions to Pollution Control loan................ 36 Diversified floidings, Inc. (Dill), a subsidiary which holds the stock Revolving Credit Agreement Loans.. 125 of three other companies engaged in diversified acthities. From 1981 through 1984, the Company invested a total of $71 million in g5g Dill and its subsidiaries. 27: ( In December 1984, the Company filed with the Securities and INTERNAL GENERATION OF CASil Exchange Commission a shelf registration for $100 million of addi-The internal generation of cash related to utility activities consists tional First Refunding Mortgage Bonds. The amount and timing of essentially of net income adjusted for non cash items, less dividends sales of these securities will depend primarily upon market condi-and capital contributions to the Company's subsidiaries. During the tions and the needs of the Company. j years 1982 through 1984, the Company's internal generation of The Company issues commercial paper notes to satisfy interim cash approximated 80% of expenditures for construction and nuclear financing requirements. To provide additional liquidity, the Company fuel. Assuming timely and adequate rate relief, the Company antici-maintains lines of credit and revohing credit agreements with pates that substantially all of the funds required for these purposes various banks. during 1985 through 1987 will be pro ided from internal sources. CAPITAL. STRUCITRE l EXTERNr.L FINANCING The Company maintains a capital structure that balances the need During the three years ending 1984, the Company issued $146 for sufficient common stock equity against the higher cost of equity l million of comuon stock and incur ed $358 million of long term as compared to debt finzacing. The Company's capital structure as debt. Of the long-term debt, $74 millicn was incurred for the direct of December 31 is presented below: refinancing of debt previously issued during the period, resulting in 1984 1983 1982 mi new long-term debt of $284 million. No preferred or preference Common Equity........... . 45.3% 43.5% 42.0$ stock was issued during this period. Preferred and Preference Stock not Approximately $50 million of he common stock issued was t Subject to Mandatory Redemption... 7.4 7.7 &2 attributable to an offering of two million shares in April 1982 and Redeemable Preference Stock 3.1 3.3 3.5 $87 million was issued through the Dividend Reinvestment and tong-Term Debt.............. 4 4.2 45.5 46.3 Stock Purchase Plan. The remainder was issued in connection with the Employee Stock Ounership Plan and the conversion of converti-Total * ' * * * * * * * * ' 100% 100% 100% ble preference stock. No new common stock is expected to be issued in the foreseeable future and the Company has no convertible issues INFIATION outstanding. Shares required for the Company's Employee Savings For information about the impact of inflation on the Company, see Plan, Employee Stock Ownership Plan, and Dividend Reinvestment Note 15. and Stock Purchase Plan are anticipated to be purchased through the open market. The Company's last issue of preferred or preference stock was in 1981, when $50 mdllon of redeemable preference stock was sold. Additional preferred or preference stock will te issued as future circumstances dictate.

a Baltimore Gas and Cectric Company Report of Management J j Management is responsible for tb information and representations Coopers & Lybrand, independent certified public exountants, are contained in the Company's financial statements. The financial engaged to examine the financial statements and express thcn j statements are prepared in accordance with generally accepted opmion thereon. Their examination is made in accordance with R accounting principles based upon currently available facts and generally accepted auditing standards which include a review of 1 circumstances and Management's best estimates and judgements of internal controls. 1 known conditions. The Audit Committee of the Board of Directors, which consist 3 of 1 ~ The Company maintains an accounting system and related system three outside Directors, meets perk >dically with Management, inter-of internal controls which are designed to provide reasonable assur-nal auditors, and Coopers & Lybrand to review the acth'ities of each q ance that the financial records are accurate and that the Company's in discharging their responsibilities. The internal audit staff and assets are protected. The Company's staff of internal auditors, which Coopers & Lybrand have free access to the Audit Committee,. reports directly to the Chairman of the Board, conducts perh>dic ' reviews to maintain the effectiveness of internal control procedures. l 28 l l Auditors'. Report To the Stockholders of l Baltimore Gas and Electric Company We have examined the balance sheets and statements of capitaliza. In our opinion, the financial statements referred to above present tion of Baltimore Gas and Electric Company at December 31,1984 fairly the financial position of Baltimore Gas and Electric Company and 1983 and the related statements of income, retained earnings, at December 31,1984 and 1983 and the results of its opera-changes in financial position, and taxes for the years ended tions and thanges hs its financial position for the years ended December 31,1984,1983, and 1982. Our examinations were made . December 31,1984,1983, and 1982 in conform.ty with generally in accordance with generally accepted auditing standards and, accepted accounting principles applied on a consistent basis. accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. &&fWff A Coopers & Lybrand 1 lialtimore, Maryland January 22,1985 z -)

s,- Baltimore' Gas and filectric Cdmpany Statements.of Income 1 War Ended December 31, 1984 1983 1982. OPElWFING RLTENUES On Thonunds. Except Per Share Mmur.ts) ' Electric.................................................. $ 1,2 0 8,1 4 5 . $1,093,310 $1,035,606 f Gas............................ 553.320 545.295 539,438 Total operating revenues... 1.761.474-1,638.605 1,575,044 OPERATING EXPENSES l Purchased fuel and energy.. 630.269 654.386 676,723 ( Ope ra ti o ns..................................................... 325,668 292,251 279,570 ) Ma in t ena nce.............................................. 115,911 . 97,902 88,819 : I l Deprechtlon. 113.643 97,090 92,730 Income ta es................. 148,689-116,464 95,480-Other taxes......... 116.526 108,309 103,018 Total operating expenses........................................ 1.450,706 1.366.402 1.336,340 1 OPERATING INCOME........... 310,768 '272,203 238,704 i i INCOME FROM STEAM OPERATIONS, NET................... 933 1,264 l OTIIER INCOME I Allowance for other funds used during construction.......................... 23,364 32,443 24,282 1 Equity in net income of unconsolidated subsidiaries.................. 6.338 1,740 1,117 ] Net other income and deductions...... 77 (1.132) 1,107 l Total other income.. 29.779 33.051 26,506 i INCOME ilEFORE INTEREST CilARGES 340,547 ' 306,187 266,474 NET INTEREST CIRRGES l Interest charges 115,441 115,688 111,028 A!!onnce for borrowed funds used during constructica................... (18.809) (25,954) (19,359) Net intetest charges. 96,632 89.734 91,669 NIT INCOME... 243.915 216,453 174,805 PREFERRED AND PREFERENCE STOCK DMDENDS 27.580 27,580 27,869 ESRNINGS APPLICABLE TO COMMON STOCK...................... $ 216. 3 3 5 $ 188.873 $ 146,936 i AVERAGE SilARFS OF COMMON STOCK OUTSTANDING... 39,062 38,136 .36,090 EARNINGS PER SILARE OF COMMON STOCK......... $ 5.54 $4.95 $4.07 Statements of Retained Earnings ) Year Ended December 31,

1984 1983 1982 On Thousands of Dollars)

IIAI.ANCE AT liEGINNING OF YEAR. $ 528,821 $451,473 $406,125 ADD: Net income.... 243.915 216.453 174.805 772.736 667,926 580.930 DEDUCT: Dividends declared Preferred stock... 2,899 2,899 2,899 .i Preference stock.......... 24,681 24,681 24,970 Common stock (at annual amounts per share of $2.80, $2.92, and $310 in 1982,1983, and 1984, respectively) 121.114 111,423 ' 10!.507 148,694 139,003 -129,376 Stock issuance expense... 102 81 IRIANCE AT END OF YEAR.. 5624,042 $528,821 $451,473 The auompanytng notes are an integral part of the financial statements.

f l Baltimore Gas and Electric Company ' t. I L Balance Sheets t i ,l ASSETS 1984 '1983._ .j - At December 31,i ] . in businds of Ibfl. irs) ( gggggj pgy ' Plant in service. (, Electric............................................................... $3,297,962_. $2,623,600 Gas.......................,............................................. 381,507 368,959 > i - 20,194' 20,436 S team............. Common............................................................

167,233 i47,727

) .3,866,896 3,160.712

]

. Total plant in service.......... (1.001,618) ~ (915j51,) Accumulated provision for depreciation....... ~ Net plan t i n senice........................................................ 2,865,278 2,244,761-Plan t held for fu t u re use..................................................... 10,117 - 19,090 Const ruction work in progress.................................................. 326.195 823,400 . Nuclear fuel (net of amortization of $350,298,000 and $292,926,000) 188.724 203,713 3.390.3_1,4- - 3.280,964 - Net utility plant....,............................................. _............. OTilER PROPERLY-AND IN\\TSD1ENTS Investments in subsidiaries. 88,703: 22,350 ' Other........ '10,713 11.009 Total other property and investments............................................... 99,416 33,359 ' CI'RRENT ASSETS Cash 3,694. 3,477 Special deposits and working funds 1,604 1,659 Accounts receivable Customers (net of allowance for uncollectibles of $7,162,000 and $5,838,000).............. 178.524 170,021 Other... 2,270 4,714 fuel stocks............. 77,997 52.004 Materials and supplies.. 83.866 76,152 Prepa y m e n t s............................................................. 68.276 58,490 Other................................................................. 6.851 5.09 Total current assets... 423.082 372,016 l DEFERRED CilARGES l Deferred fuel costs... 59,906 88,862 l Deferred nuclear fuel disposal costs.......................................... 10,451 13,535' Other.. 27,627 21,049 Total deferred charges...... 97,984 123,446 l TOTAL ASSETS........... $4,010.796 $3.809,785 l ( The amnnpanying notes are an integral part of the financial statements.

i

N.- Baltimore Gas and Electric Company Balance Sheets At December 31' L.APITA11ZAT10N AND LIABILITIES 39g4 3933 f CAPITAIJ7.AT10N Un Thousands of Dollars) Common stockholders' equity............. $1,434,141 $1,316,053 Preferre d s tock........................................................ 59,185-59,185 Preference stock not subject to mandatory redemption.... 175,000 175,000 I Redeemable preference stock.................................................. 90,000 100,000 j Long-term debt............,............ 1.386,506 1,344,714 Total capitalization........ 3.144.832 2,994,952 3 CURRENT LIABILITIES Short term borrowings.. 81,200 64,890 Current portion of long-term debt and redeemable preference stock......................... 23,258 32,652 l ' Accounts payable. '114,085 120,428 Taxes aurued.. i7,978 23,529 31. Interest accrued. -35,741 35,907 Dividends declared........................................................ 38.344 35.851 Vacation costs accrued................. 20,676 19,614. Provision for nuclear fuel disposal costs. 71,829 Other....................................................... 28.582 24,151 Total current liabilities...... 431,693 357.022 l DEFERRED CREDITS AND OTilER LIAlllLITIES Deferred investment tax credits. .192.691 182,911 Deferred income taxes 232,091 194,089 I Provision for nuclear fuel disposal costs 71,829 Other..... 9.489 8,982 Total deferred credits and other liabilities 434.271 457,811 COMMITMENTS AND CONTINGENCIES-see Note 12 TOTAL CAPITALIZATION AND LIABILITIES... $4,010.796 $3,809,785 The amunpannng notes are an integral part of the hnancial statement <

L . Baltimore Gas and Electric Company Statements. of: Changes ini Financialt PositionL Year Ended December 31, 1984-1983 1982-(in Thousands of Dollars) L SOL'RCES OF FUNDS Funds from operations $243,915 .$216,453 $174,805 l Net income........ o............................................ 7 Items not requiring (providing) funds 152,603: Depreciation and amortization...................................... 174,262 .'158,676' Investment tax credits.......................................... 10,217 18,339 30,363 Deferred income taxes.......................................... 38,172 73,107, 26.482 : < Allowance for other funds used during construction.................. (23.364). (32A43) - (24,282) ' Total funds from operations....................................... 443.202' 434,132- - 359,971 Funds from external sources 126,695 135,834 - '93.632 : Long-term debt............ Co m m on s t ock.................................................. 22,867 34,595 ' 88,515 1 (3,945) ' Preference stock (net of conversions)......... 16.310 (8.0i0) 52.05a 32 Short term debt-net............................................. Total funds from external sources.................................. 165,872 162,419 1

230.252 j.

Other-net........... (4,572) (997) 5 l TOTAL SOURCIS OF FUNDS.............,............................... $604,502 ' ' $595.554 - L $590,228 i-APPLICATIONS OF FUNDS $322,700 ' $244,072 $276,083. Construction expenditures. Allowance for other funds used during construction......................... . (23,364). '(32,443) (24,282) : Purchase of nuclear fuel materials................................. ~ 42,383-65,431 41,592 Common stock dividends............................................. 121,114 111,423 - 101,507 ? Preferred and preference stock dividends........... 27,580 27,580 27,869 105,185 87,170 102,500 Reacquisition of long-term debt. Redemption of preference stock...................................... 1,978 33,707 (7,102) (13,576) Materials. supplies and fuel stocks. Deferred fuel costs.............................................. (28,956) '. 30,497 17.230 ' Federal income taxes payable.................................... 6,918. 6.693 '13,656 6 16,582 Purchase of tax benefits...................................... investment in subsidiaries.... 60,015 6,177 2,718 Other-principally net change in other working capital items................. 15.M8 -24.039 (20.246) - $604.502 $595,554. . $590,228 TOTAL APPLICATIONS OF FUNDS.,.............................. The acnnnpanying notes are an interal part of the financial statements.

i

'i i i Baltimore Gas and Electric Company Statements of Taxes-i .i Year Ended December 31, l 1984. 1983 1982 'I On Thousands of tbilars) INCOME TAX EXPENSE .- i Charged to operating expenses l Current.. - $ 106,545 $ 28_,137 $ 44,742 . Deferred, consistin'g of the following tax effects of timing differences: Accelerated depreciation........................................ 31,167 ' 24,245 - 21,592' Deferred fuel costs... (13,058) 13.585 7,975 Nuclear fuel disposal costs..... (1,343) 29,797- . (6,699). Nuclear decommissioning costs....... (705) (259) .(259)~ a Percentage repair allowance.................................... 17,181.. .(437) -(440)- Connect ion fees '......................................... (4,830) l O th er........................... 916 (158) 447 Total deferred taxes.......................... 29,328 66.773 22,616 i lavestment tax credits ]', Current tax credits 1 a Eligible property.......... 20,661 26,856 30,388 Employee stock ownership plan................................. 2,599 3.220 4,269 Amortization of tax credits (10,444) (8,522) (6.535) Net investment tax credits... 12,816 21,554 28,122 Total charged to operating expenses.. 148,689 116.464 95,480 1 Charged to other income 1 Current.... (9,193) (5,760) (9,686) Deferred..................... 8,844 6,334 3,866 Investment tax credits, net Eligible property.. 6 6,510 Employee stock ownership plan...... 40 324 582.. Total charged to other income..... (309) 9M 1,272 I TOTAL INCOME TAX EXPENSE.... $ 148,380 $117,368 : $ 96,752 RECONCILIA110N OF T01Al INCOME TAX EXPENSE AND TAX COMPlTED AT STATirf0RY RATE Tax computed at.46% statutory federal income tax rate.... $180,456 $153,558 $124,916 Increases (decreases) in tax: Depreciation differences not normalized............................... 3,151 2,072 -396 Allowance for funds used during construction....... (19,399) (26,863) (20.075) Amortization of deferred tax credits............. (10,444) (8,544) (6,566) Net other items.. (5.384) (2.855) (1,919) Total income tax expense............................. $ 148,380 $117,368 $ 96.752 Effective federal income tax rate.. 37.8% 35.2% 35.6% OlllER THES Preperty. $ 28,294 $ 26,986 $ 25,323 Capital stock......................... 30.861 29,078 28,260 Maryland gross receipts.... 35.000 32,582 31,333 Maryland electric environmental surcharge............................. 2,714 3,056 3.386 Social security........ 21,886 '18,298 16,641 Miscellaneous.... 3.5e4 3.169 2,463 - 122,259 113,171 107,406-Amounts included above charged to accounts other than taxes. (5.733) (4.862) (4,388) TOTAL OTilER TAX EXPENSE..... $ 116.526 - $108,309 $103,018 The aanmpanying notes are an integral part of the financial statements.

Baltirnore Gas and Electric Company Statements of. Capitalization At December 31, 1984.. 1983 COMMON STOCKil0LDERS' EQl'lTY On Thousands of Dollars) Common stock - without par value - 45,000,000 shares authorized. 39,310,899 and 38,607,313 chares.. issued and outstanding at December 31,1984 and 1983, respectively. (At December 31,1984, 508.594 shares were reserved for the Employee Stock Oner:, hip Plan, and 2.803,433 shares for the ' $ 787,075 ( Dividend Reinvestment and Stock Purchase Plan.)................................... $ 809,942. Premium on preferred stock.................................................... 157 157 R etained earnings......................................................... ' 624,042 528.821 1.434,141 1,316.053 4 Total common stockholders' equity..................... PREFERRED STOCK Cumulative, $100 par value, 1,000,000 shares authorized 22,292 22,292 Series 11, 4 % %, 222,921 shares outstanding, callable at $110 per Aare. Series C, 4%, 68,928 shares outstanding, callable at $105 per share....................... 6,893 6,893 '4 Series D, 5.40%, 300,000 shares outstanding, callable at $101 per share.................... 30,000 '30.000 59,185 ~ 59,185' Total preferred stock.............. PREFERENCE STOCK NOT St:BJECT TO MANDKTORY REDEMPTION Cumulative, $100 par value, 5,000,000 shares authorized 8.7511970 Series,300,000 shares outstanding, callable at $104 per share prior to October 1,1986 l and at $ 101 per share thereafter.............................................. 30,000 30,000 7.88%. 1971 Series,500,000 shares outstanding, callable at $104 per share prior to October 1,1986 1 and at $ 101 per share thereafter........................................... 50,000 50,000 ' 7.75%,1972 Series,400,000 shares outstanding, callable at $103 per share prior to October 1,1987 - 40,000 40,000 and at $101 per share thereafter. 7.78%,1973 Series. 200,000 shares outstanding, callable at $103 per share prior to December 1, 1988 and at $ 101 per share thereafter.......................................... 20,000 20,000 9.35%,1974 Series. 350.000 shares outstanding, callable at $107 per share prior to Apri! I,1987 and at lesser amounts thereafter... 35,000 35.000 Total preference stock not subject to mandatory redemptien........................... 175,000 175,000 REDEEMAllLE PREFERENCE STOCK Cumulative. $100 par value. 1,000.000 shares authorized. 8.375%, 1979 Series, 500,000 shares outstanding.............................. 50,000 50,000 34,000 34,000 12%, 1981 Series A. 340,000 shares outstanding.. 12%. 1981 Series B, 160,000 shares outstanding 16,000 16,000' Lesa current portion of redeemable preference stock................. (10.000) -90,000 100,000 l Total redeemable preference stock. 1 The acmnipanying noto are an intepal part of the financial r,tatemems. l '4

Baltimore Gas and Electric Company - Statements of Capitalization At December 31,' 1984 1983 LONG-TERM DGT (in musands of Dollars) First refunding mortgage bonds Series V 2%%, due December 21,1984........................................ $ 19,123 Series X 2%%, due January 15,1986............ 24,317 24,317 Series Z 3%, due July 15,1989.................................................. 36,754 36,754 l 12%% Series, due September 15,1990... 60,703 ' 60,703 , 3%% Series, due December 1,1990. 29,682

29,6r, 16%% Series, due October 1,1991.......

35,524 63,491 l 4%% Series, due July 15,1992................................................ 25,000 25,000 14%% Series, due July 15,1992........................... ' 60,123 66,235 4% Series, due March 1, 1993.................................. 24,095 24,095 4%% Series, due July 15, 1994 29,989 ' 29,989 5%% Series, due April 15,1996. 26,680 26,680 6%% Series, due August 1,1997......... 24,967 24,967 5%% installment Se;ies, due August 15,1998. 65,000 66,000-7% Series, due December 15,1998...... 28,705 28,705 35 8%% Series, due September 15,1999'....... 22,198 ' 22,198 8%% Series, due September 15,2000....... 11,433 - ~ 11,433 7%% Series, due April l5, 2001. 60,000 60,000 7%% Series, due September 1. 2001............ 60,000 60,000 7%% Series, due January 1, 2002........ 50,000 '50,000 7 %% Series, duc July 1, 2002.......................................... 50,000 50,000 5%% installment Series, due July 15,2002. 12,500 12,500 7%% Series, due September 15,2002......... 50,000 50,000 84% Series, due February 1, 2004..... 74,986 74,986 6.80% Series, due September 15, 2004...... 20,000 20,000 9h% Series, due August 1, 2005. 15,638 15,638 8%% 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 Series, due September 15,2009... 55,000 %,000 Total first refunding mortgage bonds..... 1,165.854 1.220,056 Debentures 4h% sinking fund debentures, due June 15,1986................ 10,400 10,943 4%% sinking fund debentures, due August I,1990.. 18,557 18,997 Total debentures..... 28.957 29,940 Other long-term debt (unsecured) Port facilities loan, due June 1.1986..... 48,000 46,000 Pollution control loan, due September 1,1986. 36,000 36,000 Hank term loan.... 50,000 Loans under revolving credit agreements.... 125,000-Total other long-term dcbt.. 209,000 132,000 L'namortized discount and premium..... (4,047) (4,630) Less current portion of long-term debt... (13,258) (32,652). Total long-term debt..... 1.386,506 1.344,714 TOTAL CAPITALIZATION. $ 3,144.832 $2,994,952 The amnnpanying notes are an integral part of the finandal statements. l J 1 l 4 i 1 l

- 11altimore Gas and Electric Company. Notes to Financial Statements-i 1 l L NOTE 1. ' SIGNIFICANT ACCOUNTING POLICIES SYbTEM OF ACCOUNTS PENSION AND OTIIER POSTRE1:REMENT IlENEFITS %e Company's accounting records are maintained in accordance - The Company maintains a noncontributory, defined benefit pension - j with the Uniform System of Accounts prescribed by the Federal Energy plan covering its regular employees. The total pension cost for j i Regulatory Commission and adopted by the Public Service Commis- ' 1984,1983, and 1982 ns $14,295,000, $13,807,000, and - I sion of Maryland. $12,072,000, respectiwly, of which $11,515,000, $11,234,000, and 1 $9,823,000, respectively, ns charged to expense. The remainders ] REVENUES - were charged to construction. The Ccmpany's policy is to fund 1 Revenues are generally recognized at the time customers' meters are pension costs accrued based on the aggregate cost method. A com-j l read on a monthly cycle basis. parison of accumulated plan benefits and plan net assets is i. - presented below: At January 1,- FUEL AND PURClhSED GAS COSTS 19M. 1983 The Company recovers the cost of fuel used in generating electricity and the cost of gas sold through zero based electric fuel rate and Actuarial present value of. On Thousane of Mus) purchased gas adjustment clauses. To the extent revenues from cus-accumulated plan benefits 36 temers under the ciao,es exceed or are ies, than actu=> fuei co,ts. vested.............. . $ 200,969 - $i87,860 the Company records deferred fuel expenses which are accumulated Nonvested.. 31.924 34,258 [ and refunded to or recovered from customers in future periods. $ 232,893 ' $222.118 Ily statute, actual electric fuel costs are recoverable so long as the Company demonstrates that it has used the most economical Net assets available for benefits..... $ 320,989 $287.559 mix of all types of generation and purchase, made every reasonable effort to minimize fuel costs, and maintained the productive capacity of its generating plants at a reasonable levet ne fuel rate will not The assumed rate of return used in determining the actuarial'- change unless the calculated rate is more than 5% above o-below present value of accumulated plan benefits was 9% for both 1984 the rate then in effect. As implemented by the Maryland Commis-and 1983. Based on the latest available actuarial report, as of sion, the electric fuel rate formula is based upon the latest eighteen-lanuary 1,1984 there were no unfunded vested liabilities. month generation mix and the latest three inonth average fuel cost in addition to providing pension benefits, the Company provides for each generating unit. certain health care and life insurance benefits for active and retired The purchased gas adjustment rate is based generally upon the employees. The Company generally recognizes the cost of providing. latest twelve month volumes of gas and the current prices charged these benefits as they are paid. ne total cost for the 9,134 active by the Company's gas suppliers. Any deferred under or over-employees and the 2,463 retired employees was $22,672,000 for recoveries of purchased gas costs for the twelve months ended 1984. November 30 each year are charged or credited to customers over the ensuing calendar year. INCOME TAXES. The unrecovered (over recovered) costs deferred under the fuel The Company and its wholly owned subsidiaries file a' consolidated clauses were as follow federal income tax return income taxes are allocated to the indi-At December 31, vidud companies based upon their respective raxable incomes and ] 1984 1983 tax credits. Certain revenue and tpense items are recorded for financial (in Thousands of Dollars) f Electric. $63,715 $66,04] reporting purposes in a iear different from the year in which they G as....... (4,072) 21,988 are recognized for income tax purposes Deferred income taxes are Steam. 263 833 provided on certain timing differences, primarily those attributable Total.. $ 59,906 $88.862 to accelerated depreciation on post 1975 property additions, deferred fuel costs, spent nuclear fuel disposal costs, nuclear decommissioning costs, the percentage repair allonnce, and connec-tion fees. Deferred income taxes are not provided on certain other timing differences, primarily those pertaining to accelerated depreci-l ation on pre 1976 property additions. The cumulative net amount of such timing differences for which deferred income taxes have not been provided approximated $289 million and $294 million as of December 31,1984 and 1983, respectively,v.

Baltimore Gas and Electric Company i l l Investment tax credits, other than credits resulting from contrihu. ALLOWANCE FOR ITNDS USED Dl' RING CONSTRICTION I tions to the Employee Stock Ownership Plan, are deferred and allo. The allowance for funds used during construction (AFC) is an i cated to income ratabh over the lives of the subject property. Tax accounting procedure whereby the cost of borrowed and other funds credits related to the Employee Stock Ownership Plan do not affect used to finance construction projects is capitalized as part of utility net income as they are contributed to the Plan. plant on the balance sheet and is credited as a non cash item on The purchase of tax benefits resulted in decreases in current the income strtement. The cost of borrowed and other funds is taxes of $5,132,000. $5,701,000, and $10,712,000 and increases in segregated between net interest charges and other income, respec-deferred taxes of $5,127,000, $5,422,000, and $3,804,000 in 1984, tively. The Company recovers the capitalized AFC and a return 1983, and 1982, respecthery, ar.d an increase in investment tax thereon after the related utility plant is placed in service and credit adjustments of $6,908,000 in 1982. These effects on income included in depreciable assets and rate base. AFC is not taxable taxes are induded in Net Other Income and Deductions. income and the depreciation of capitalized AFC is not a tav deductible expense. [TittlY PIANT AND DEPRECIATION As prescribed by rate orders of the Maryland Commission, the Utility plant in senice is stated substantially at original cost, which AFC rates and the construction projects on which AFC was computed h) l includes material, labor, construction overhead costs, and where during the three-year period ended December 31,1984 were as applicable, an allowance for funds used during construction. Con-follows-struction work in progress, plant held for future use, and nuclear Construction fuel are hated at cost. Rate ' Projects Additions to utihty plant and replacements of units of property January 1982.. 8.13%, Brandon S are capitalized to utility plant accounts. The origtal cost of plant whut compounding Power Plant retired is removed from utility plant, and such cost, plus removal Effecthe cost, less salvage, is charged to the accumulated provision for February 1982, 9.13% Hrandon Shores depreciation. Maintenance and repairs of property and replacements compounded annually Power Plant of items of property determined to be less than a unit of property Effecuve are charged to maintenance expense. July 1983. 9.08 % All major Depreciation is generally computed using composite straight line compounded annually electric projects rates, applied to the average investment in classes of depreciable property. Prior to June 1984, the composite depreciation rate for INVESTMENTS IN Sl'BS! DIARIES nuclear electric properties included a provision for the decommis-Investments in subsidiaries are accounted for and reported under sioning of the properties at the end of their useful lives. Beginning the equity method. in June 19di, nuclear decommissioning costs are being recovered separately based upon an internal sinking fund method designed to MOW VAWATION accumulate a decommissioning resene of $333,407.000 by the year fuel stocks and materials and supplies are generally stated at 2009. The compo3ite depreciation rates by class of depreciable average cost properts for the years 1982 through 1984 were as follon DEFERRED NUCLEAR MAINTENANCE EXPENDITURES e ompany has inwrred a total of $10,653,003 in maintenance Pnorto urecuse Effective ~ expenditures for inspecting and repairing seismic pipe supports to Feb M.1%2 Feb li 1982 ' lune 1.194 Electric: meet Nuclear Regulatory Commission requirements at the Calvert Cliffs Nuclear Power Plant. Such costs are deferred and amortized l Nuclear 3 31%(a) 3.31Ma) 340% over the remaining life of the plant. The balances deferred as of Brandon Shores. 2.75%( b) a December 31,1984 and 1983 were $8,200,000 and $8,585,000, Other. 3.26% 3 26% 3.26% rvictively. These balances are included in Other Deferred Charges. Gas. 2.60% 2.7Tb 3.12% Common (c),,,, 3 00% 3.39% LO2?i' LONG TERM DEBT tai bclusive of I a decomntiening factor The discount, premium, or expense of issuance associated with long-(b) Rate erfenhe on Mav ti 19M (c) Escept for vehicles which are generally deprenated on a unge ba>K term debt is deferred and amortized over the lives of the respective g g gg tion of debt are amortized over the remaining original hves of the issues. Prior to July 1983, such gains and losses were reflectcd in income currently.

- Baltimore Gas and Electric Company i l NOTE 2., OTilER PROPERTY AND INVESTMF,NTS t. j Subshliary Companies - Diversified lloldings, Inc., a wholly-owned subsidiary formed in j investmems in subsidiary cumpnin were e follows-1983, holds all of the stock of three other subsidiaries, Baltimore - Capal hources, Inc, Mnwre Ngas, Inc, ad Resource & I' At December 31' Property Manaly ment, Inc The stock of Resource & Property - j 9g. jg33 . Management. Inc was transferred by the Company to Diversified (in Thousands of Dollars) I' Safe liarbor Water Power Holdings Inc in December 1984. Resource & Property Manage-I' Corporation.. $17,289 $14,782 ment, Inc is engaged primarily in land development, Baltimore. Diversified IIoldings, lac.......... 71,414 ' l.455 Capital Resources, Inc is engaged in financial investment activities. and Baltimore Biogas, Inc is engaged in obtaining gas from Resource & Property Management, Inc............... 6.073 non-traditional sources.. 'The capital stocks of Safe liarbor and Diversified lioldings are $88,M3 $21350 subject to a lien under the mortgage under which the Company's - ( Mortgage Bonds are issued. The investment in Safe liarbor Water Power Corporation, a pro-Purchased 7?n Bemfits ducer of hydroelectric pov.tr, represents two thirds of Safe liarbor's

The Company's invest.nent in purchased tax benefits amounted to total capital stock, induding one-half of the rating stock, and a two-

$8,557,000 and $8,981,000 at December 31,1984 and 1983,. thirds interest in the Subsidiary's retained eart.ings. respectively, ' NOTE 3. CILANGES IN COMMON STOC1; AND PREFERENCE STOCK NOT St3JECI',TO MANDATORY REDEMlY110N Cumulative Common Stock - Preference Stock Shares Amount.

Shares, Amount (Dnllar Amounts in Thousands).

Balance at December 31.19F w.............................. 33,835,505 $663.782 1,809,230 $180,923 Year 1982 Common Stock isued under: l Dhidend Reinvestment Plan................................... 1,175,854 29,098 Employee Stock Ownership Plan............................... 200,613 5,222 Commm Stock issue............ 2,000,000 50,360 Conversions of Convertible Preference Stock, 6%% Series, into Common Stock (decrease)...................... 137,629 3,916 (39,453) (3,945) - Redemption of Convertible Preference Stock, 6%% Series (decrease)................. (19,777) (1,978) Balance at December 31,1982.............. 37,349,601 752.378 1,750,000 175,000 Year 1983 Common Stock issued under Dividend Reinvestment Plan,............... 1.257,712 34,697 Balance at December 31,1983....... 38,607,313 787,075 1,750,000 175,000 1 Year 1984 Common Stock issued under Dividend Reinvestment Plan. 703,586 22,867 Balance at December 31,1984.............. 39,310,899 $809.942 1,750.000 . $175.000 t l i. l NOTE 4. REDEEMABl.E PREFERENCE STOCK The Company has three issues of Redeemable Cumulative Preference 1991, while series B will be redeemed in its entirety at par on Stock outstanding. The 8.375%,1979 Series consists of 500,000 July 1.1991. shares ($100 par value) which will be redeemed at par at the rate With regard to payment of dividends or assets available in the of 100,000 shares in each of the years 1985 through 1989. The event of liquidation, Preferred Stock ranks prior to Preference Stock; j 12%. 1981 Series A and B issues consist of 340,000 and 160,000 Redeemable Preference Stock and Preference Stock Not Subject to I shares ($100 par value), respectively. Series A will be redeemed at Mandatory Redemption rank equally; and all Preferred and Prefer-par at the rate of 68,000 shares in each of the years 1987 through ence Stock rank prior to Common Stock.

Baltimore Gas and Electric Company l NOTE 5. LONG-TERM DEHT Mortgage Lien Debenture Sinking Fund Payments Substantially all of the principal properties and franchises owned by The Company is also required to make annual sinking fund pay-die Company are subject to a !!en under the mortgage imder which ments (in cash and/or Sinking rurid Debeutures) to the Trustees the Company's first Refunding Mortgage Bonds are issued. under the Sinking Fund Debenture Indentures. The 4%% Debenture Nortgage Bond Sinking Eum! rayments sinking fund payment, to be made on or before June 14 of each On August i of each year, tne Company is required to pay to the year through 1985, requires an annual payment of $400,000 in Mortgage Trustee an annual sinising fund payment equal to 1% cash, in principal amount of 4h% Sinking Fund Debentures, or in a of the largest amount of Mortgage Ikmds outstanding under the c mbination thereof; and the 4%% Debenture sinking fund payment, mortgage during the preceding twelve months, Such funds are to be to be made on or before July 31 of each year through 1989m used, as provided in the mortgage, for the purchase by the Trustee requires an annual payment of $600,000 in cash, in principal of Mortgage Bonds of any series other than the Installment Series amount of 4%% Sinking fund Debentures, or in a combination Mortgage Bonds of 1998, 2002, and 2009, and the 6.80% Series thereof. In any year, at the Company s election, an additional sink. Mortgage Bonds of 200L Purchases may be made by the Trustee in ing fund payment of up to $600,000 (noncumulative) may be made the open market and/or through responses to invitations for sealed under the 4%% Sinking Fund Debenture Indenture, tender offers if purchases are possible at or below the applicable Olber long Term Debt redemption price, or directly through the redemption provisions to In 1984, the Company entered into Revohing Credit Agreements which the Mortgage Bonds are subject if purchases at a more favor-with banks which provide for borrowings of up to $125 million, of able price are not possible,. The Company may purchase outstanding which the entire $125 million is available through September 1987, Mortgage Bonds from time to time and may submit its sealed pro- $100 million through December 1988, and $50 million through May i posal for the sale of such Mortgage Bonds to the Trustee for the 1989. Under the terms of the agreements, the Company, at its l sinking fund. option, may obtain loans at various interest rates. The Company The Installment Series Mortgage Ikmds, due Augurt 15,1998 are pays commitment fees of %% to %% on the daily average of the, payable as to principal on the fifteenth day of August in the years unborrowed portion of the commitments. At December 31,1984, and the amounts as follows: the Company had borrowed the entire $125 million available under Principal Amount the Revolving Credit Agreements. Years Each Year In December 1984, Anne Arundel County, Mar)iand issued on nousands of tullars) $22 million of its Adjustable Rate Pollution Control Revenue Bonds 1986 $ 1,000 (Baltimore Gas and Electric Company Project) 1984 Series. The net 1987 through 1990 2,000 pmceeds. of tLe issue were deposited with a Trustee to be loaned to 1991 through 1995 3,000 the Company as needed to finance the Company's acquisition and 1996 and 1997 4,000 c nstruction of certain air pollution control facilities at the flerbert 1998 33,000 A Wagner Power Plant Unit No. 3. At December 31,1984, the total net proceeds of $21,732.000 were being held by the Trustee. The Installment Series Mortgage Bonds, due July 15,2002 are The weighted average interest rates for Other Long-Term Debt payable as to principal on the fifteenth day of July in the years and during 1984 and 1983 were as follows: l the amounts as follows: 1984 1983 Principal Amount Port Facilities Loan, due June 1.1986.... 5,90% 5.22% Years Each Year . Pollution Control Loan, due September 1,1986', 5.87 5.53 On Thousands of tbilars) Bank Term Loan. 10.44 9.86 "E 1993 $ 420 I994 430 Aggregate Matarities 1995 through 1997 605 The combined aggregate amounts of maturities and sinking fund 1998 and 1999 690 requirements for all long-term borrowings for each of the next five 2000 and 2001 865 years are as follows: 2002 O 25 Year Requirements The Installment Series Mortgage Bonds, due September 15,2009 On maands of poliars) are payable as to principal on the fifteenth day of September in the 1985 $ 13.258 years and the amounts as follows: 1986 133,000 principal Amount 1987 41,000 Years Each Year 1988 66,000 On Thousands of Do!!ars) 1989 104,000 2005 through 2008 $ 3,250 2009 42,000 i

Baltimore Gas and Electric Company NOTE 6. IIASES The Company contracts for certain facilities and equipment At December 31,1984, the approximate minimum future lease under lease agreements with various expiration dates and payments are as follows: Year payment Requirements renewal options. The Company has no material leases with inception dates sub-

(in nousands of Donar3).

sequent to 1982 which meet the capitalization criteria set forth in 1985 $7,572 Statement of Financial Accounting Standards (SFAS) No.13, 1986 6,663 " Accounting for Leases," that are required to be capitalized in 1987 5,307 accordance with SFAS No. 71, " Accounting for the Effects of Certain 1988' 4,266 'lypes of Regulation." If leases entered into prior to 1983 had been 1989 3,953 classified in accordance with SFAS No.13, the Company would have Thereafter 8,3M recorded assets and obligations of $7,553,000 at December.31, 1984 and $9,414,000 at December 31,1983. The capitalization of The aggregate lease expense in 1984,1983, and 1982 was leases would have no impact on the Company s net income. $11,600,000, $13,160,000, and $9,054,000, respectively. -1 4 i 40 l l NOTE 7. Sil0RTTERM BORROWINGS AND LINES OF CREDIT The Company maintains bank lines of credit to provide backup as to withdrawal. Borrowings under the lines are at the banks' financing capacity for commercial paper notes issued to satisfy prime or base interest rates or at a fixed percentage over the interim financing quirements and to permit short term borrowing London Interbank Offered Rate. Information concerning short term flexibility, in support of such lines, the Company pays commitment borrowings and lines of credit is set forth below: fees and maintains compensating balances which are not restricted 1 1984 1983 1982' (Dollar Amounts in Thousands) At December 31 Short term borrowings outstanding Commercial paper notes (maturing in 90 days or less).................. $ 81,200 $ 64.890 $ 72,900 - Weighted average interest rate.......... 9.15% 9.35% 8.79% Unused lines of credit......... $163,200 $163,175 $163,175 $ 1,725 $ 1,724 -$ 1,879 Compensating balances.. During the Year Ended December 31 $146.325 $125,400 $ 81.150 Maximum short term borrowings...... Average daily short term borrowings (a)..................,....... $ 78,205 $ 35,702 - $.19,931 Weighted average interest rate (b)............................... 10.53% 8.81% 10.74% (a) The sum of dollar dap of outstanding bottovbgs divided by actual dap in the perind L (b) Actual accrued interest dunng the perimi divided by average daily borromngs. j q l NOTE 8. SPENT Nt'C1. EAR ITEl. DISPOSAL COSTS In June 1983, the Compaiy contracted with the Department of' base rates. The remaining balances of $10.451,000 and $13,535.000 - Energy.(DOE) for the disposal of spent nuclear fuel pursuant to the are classified as deferred charges and are being amortized as re-provisions of the Nuclear Waste Policy Act of 1982. As a result, the covered through base rates through May 1988. Company is committed to ;ay to the DOE $71,829,000 for the The contract with the DOE also provides for the disposal of spent._ disposal oi spent nuclear fuel which existed at April 7,1983. The. nuclear fuel generated after April 7,1983 at a fee of one mill per Company plans to pay this o,iligation by June 30,1985. As of kilowatthour of nuclear generation. This fee, wifch is payable December 31,1984 and 1983, the Company had collected quarterly, was recovered througt Sase rates until May 1984, and $61,378,000 and $58,294,000 of that amount, respectively, through . subseyuent thereto through the dectric fuel rate.

Baltimore Gas and Electric Company .1 . NOTE 9. S'ITM1 OPEMTIONS l In December 1983, the Company entered into an agreement to sell anticipated sale, an after4ax loss of $1,509,000, or 4< per common substantially all of its steam prmluction and distribution system share,. was recorded in 1983, This loss was reduced by $623,000, or assets to Thermal Resources of flaltimore, Inc., a wholly owned 2( per common share, in 1984 for phase out period activity in subsidiary of Thermal Resources of Ohio, Inc. The sale is expected excess of the 1983 estimate. These amounts are reflected in Net to be completed in early 1985 after appropriate authorization by other Income and Deductions. the Public Senice Commission of Maryland. To reflect the NOTE 10. DISALLORED DEFERRED FUEL COSTS During 1984, the Maryland Court of Special Appeals issued an maintenance control procedures were, in all respects, reasonable and. opinion which reversed a lower court's decision and sustained a appropriate for preventing the outages (see Note 12). Although the 1982 ruling by the Public Service Commission of Maryland denying Company has requested that the Maryland Court of Appeals review recovery of approximately $5.7 million of replacement energy costs this decision, the Company charged $5.7 million of presiously incurred by the Company during two unplanned maintenance deferred fuel costs to Purchased Fuel and Energy Expense in 1984. outages at the Cahert Cliffs Nuclear Power Plant. The Maryland The after tax effect of this write-off was a reduction in earnings of Commission denied the recovery of the replacement energy costs 8< per common share. because it held that the Company failed to demonstrate that its 41, NOTE I1. JOINTLY OWNED ELECTRIC UTillTY PLANT The Company owns an undivided interest in the Keystone and The following data represent the Company's share in the jointly-Conemaugh mine-mouth electric generating plants located in western owned property as of December 31,1984: Pennsylvania, as well as in the transmission line which transports Transmission the plants' output to the joint owners' service territories. Financing Keystone Conemaugh Line l and accotmting for these properties are the same as for wholly-toonar Anmunts in nousands) l owned utility plant. The Company's share of the direct expenses of t ownership interest. 20 99% 10.56% 7,00% l the joint property is included in the corresponding operating Utility Plad in Service... $4466 $30,9u $t386 expenses in the income statements. Accumulated Provision for Depreciation.. $16,212 $10,188 $ 457 ) Construction Work in Progress., $13.466 $ 916 l NOTE 12. COMMITMENTS AND CONTINGENCIES ) Commitments and Cuarantees public of an owner of a nuclear power plant for property damage of The Company has made substantial commitments in connection with and bodily injury to third parties to $620 million for a single its construction program for 1985 and subsequent years, nuclear incident, as defined in the Act. 'lhe Company is protected The Company has agreed to guarantee 20.99% of bc: rowings of against this potential liability by a corabination of commercial insur-up to $33,212,000 by Keystone Coal Mining Corporation, the ance (currently $160 million through the nuclear insurance pools) major coal supplier for the Keystone Plant (see Note 1I). As of and Secondary financial Protection currently amounting to a maxi-December 31,1981, the total outstanding loans were $23,212.000, mum of $460 million. Under regulations issued pursuant to the Act, of which $4,872,000 was guaranteed by the Company. Additionally, the the $460 million of Secondary financial Protection for public liability Company has agreed to guarantee two thirds of up to $125 million resulting from a nuclear incident would be provided through an of indebtedness incurred by Safe liarbor Water Power Corporation after loss _ assessment of each nuclear-powered utility in the country (see Note 2) in connection with the expansion of its hydroelectric at a rate of up to $5 million per reactor, with a $10 million per generating facilities As of December 31,1984, the outstanding debt reactor limit in any one calendar year for multiple incidents. The totaled $54,400,000, of which $36,267,000 representy.he Company's Company's contingent liability in the event of a nuclear incident at twu-thirds share. any licensed nuclear power plant in the country owned by another company is an amount up to $10 million per nuclear incident Juckar Contingencies ($5 million for each reactor at Calvert Cliffs), with a maximum con. The two units at the Company's Cahert Cliffs Nuclear Power Plant tingent liability of $20 million per year in the event of more than are its principal generating facilities and produce the lowest coct one nuclear incident in a particular year. power available to the Company. An incident at this plant could The Company's insurance for physical damage to its nuclear have a substantial adverse effect upon the Company. The primary power plant is structured to provide a level of Primary insurance contingencies resulting from an incident at the Calvert Cliffs Plant and a level of Excess insurance. The Primary insurance, provided would involve the Company's liabihty to third parties for property through nuclear insurance pools, covers up to $500 million of damage and bodily injury, the physical damage to the plant, and the physical damage, including contamination, to the plant. The Excess cost of replacement power. Insurance currently provides coverage for an additional The Price Anderson Act ( Act) currently limits the liability to the $535 million (or a total of $1.035 billion) of physical damage to L

1 Baltimore Gas.and Electric Company: L l I ' he plant, induding contamination. Any damage to the plant in owned mutual insurance company through insurance company, t excess of $1.035 billion would be the financial responsibility of the - reserves and an after-loss assessment of each member. The con-Company. The Excess Insurance protection is provided through a tingent liability to the Company for these after loss assessments combination of nudear insurance pools and an industry-owned . currently is $15.4 million in any one policy year. - mutual insurace company. The major portion of any claim paid-The Company does not consider the amounts of insurance dis-through the Excess insurance coverage for damage to any nuclear cussed above to be adequate to cover the potential costs that could. power plant operated by a member of the industry owned mutual. result from a major incident or an extended outage at either of the ) insurance company would be funded through insurance company. ' Calvert Cliffs units; however, the insurance described above is the - i reserves and an after-loss assessment of each member. The con. only insurance currently available to cover such public liability,1 i tingent liability to the Company for such after-loss assessments cur- ' property damage, and replacement energy costs. The Company i rently is $9.7 million in any one policy year. would seek to have any unrecovered costs included in its service ' i In the event c.' an outage at Calvert Cliffs, the Company would rates, but the Company carmot assure that the Public Service Com-obtain replan; ment power from other sources. Due to the relatively mission of Maryland would allow such recovery. Iow cost of the power generated at the Company's nuclear plant, j replacement power would be more expensive. In the event that there is' an outage caused by physical damage to the nudcar plant Recocerab///ty of Electric fuel Costs ~ f which is insund as discussed above, other insurance provided By statute, actual electric fuel costs are recoverable so long as the l through an industry owned mutual insurance company would provide ' - Company demonstrates that, among other things, it has maintained j coverage for a portion of the replacement power costs if the outage the productive capacity of its generating plants at a reasonable level - lasts more than 26 weeks. Specifically, after the initial 26 weeks of - (see Note 1). The Maryland Commission has interpreted this as l an insured outage involving one of the two Calvert Cliffs units, this permitting a subjective evaluation of each unplanned outage at the ' 'j insurance would pay a maximum weekly indemnity of $2.8 million _ Company's generating plants to' determine whether or not the Com-for up to a 52 week period, followed by maximum weekly indemnity pany's maintenance control procedures were, in'all respects,. payments of $1.4 million for the next 52 weeks. For one insured reasonable and appropriate for preventing the outage. Based upon ' occurrence causing both Calvert Cliffs units to be shut down beyond thb evaluation, the Maryland Commission has in the past, and could 26 weeks, the weekly indemnity payments would then begin for each in the future, deny the Company recovery of increased costs f unit at a rate of 80% of the foregoing. This replacement power incurred for supplying replacement energy during individual outages insurance would fund a claim paid to any member of the industry-at Calvert Cliffs or other Company plants. I -l NOTE 13. SFGMENT INFORMATION 1984-1983-1982 On 'nen<!s d Doua@ El.ECTRIC $1,208,145 $1,093,310 $1,035,606 : Operating Revenues.. 408,965 358,172 299,853 Operating income before income Taxe.... 277,529 249,436 ' 214,021 Operating income............... i 101,026 85,043 81,859 Depreciation................ 222s970 255,114 303,266 Construction Expenditures......... Identifiable Assets at December 31............................... 3,195,295 3,060,011 2.833,382 GAS $ 553,329 $ 545,295 $ 539,438 Operating Revenues. 50,492 30,495 34,331 Operating income before income Tnes........... Ope ra ti ng i ncome..................................... 33,239 22,767 ' 24.683 12,617 11,147 - 10,871 Depreciation....................... l Construction Expenditures.......................................... 20,739 20,467 19,018 l identifiable Assets at December 31.. 342,430 332,059 - 324,928' TORL $1,761,474 $1.638.605 - $1,575,044 Operating Revenues............... 459,457 388,667 334,184 Operating income before income Taxes................. Opera ting incom e............................................. 310,768 272,203 238,704 933 1,264 income from Steam Operations, Net..... 113,643-97,090 92,730 Depreciation.......... 244,072 276,083 322,700 Construction Expenditures *. Identifiable Assets at December 31.......... 3,537,725-3,392,070 3.158,310 l Other Assets.... 473,071 417,715 408,529 l Total Assets 4,010,796 3,809,785 3,566.839

• Indudes steam expendnures

)

'1 , Baltimore Gas and Electric Company ] l l. NOTE 14. Ql!ARTERIY FIMNCIAL DAM (1:NAl'DITED) j l The following data are unaudited but, in the opinion of Manage-sales periods generally occurring during the summer and winter .nent, include all adjustments necessary for a fair statement of such months. Accordingly, comparisons among quarters of a year may not amounts. be indicative of overall trends and changes in operations. The business of the Company is seasonal in nature with the peak Operating Net income income Applicable Earmqs Per ( Operating Pius. Net To Common Share of l Quarter Ended Revenues AFC' Income Stock Common Stock l (In Thousands of Dollars. Except Per share Amounts) March 31,1984...... $ 522,657 $ 95,527 $ 67,991 $ 61,096 $ 1.57 June 30.1984 403,280 79,251 52,495 45,600. 1.17 September 30, 1984... 446,999 114,863 87,299 80,405 2.05 [ December 31,1984..... j88.538 63,300 36.130 29,234 0.74' 1 $ 1,761,474 $ 352,941 $ 243,915 $216,335 $ 5.54 i 43 March 31.1983... $ 458,150 $ 75,153 $ 47,946 $ 41,051 $1.V)9 June 30,1983... 374,736 68,424 39,670 32,775 0.86 ( September 30.1983..... 424.825 114.110 85,077 79,083 2.06 l December 31,1983 380,894 72,913 42.860 35.964 0.93 l $1,638.605 $330.600 $216.453 $188.873 $4.95

• The Allouunce for Funds l' sed During Construcunn (for Borrowed hmds and other Funds)is added to operating income in determining operaung income for ratemaking purines.

1 NOTE 15. Sl!PPl.EMENTARY INFORMATION ON Tile EFFECTS k i j OF CILtNGING PRICES (lNAl'DITED) The following supplementary current cost information is supplied Under the ratemaking prescribed by the Public Service Commis-for the purpose of praiding certain information about the effects nion of Maryland, the Company is generally limited to the recovery j of changing prices. It should be viewed as an estimate of the of historical cost of plant in service and nuclear fuel in revenues as j approximate effect of inflation, rather than as a precise measure, depreciation and amortization. During periods of inflation, such j Current cost information reflects changes in specific prices of amounts will be recovered in dollars having less purchasing power ( i plant from the date the plant was acquired to the present. The cur-than the historical dollars invested. Therefore, any excess of the

rent cost of utility plant represents the estimated cost of replacing current cost of plant over historical cost is not presently recoverable existing plant assets and was determined by indexing the suniving in rates, and is reflected as a reduction to net recoverable cost.

i plant by the llandy4hitman index of Public Utility Construction While the ratemaking process gives no recognition to the current { Costs. The current cost of nuclear futi mis determined by reference cost of ieplacing utility plant and nuclear fuel, based on past prac-j to current market prices. The current lear's provision for deprecia-tices, the Company believes it will be allowed to earn on the { l tion of utility plant and the effect of nuclear fuel amortization on increased cost of its net investment when replacement of facilities purchased fuel and engy expense were determined by applying the actually occurs. j Company's depreciation and amortization rates to the current cost To properly reflect the economics of rate regulation in the State-plant and nuclear fuel balances. Fuel inventories (other than nuclear ment of Income, the adjustment to net utility plant and nuclear fuel fuel), the cost of fuel used in generation, and gas purchased for should be combined with the gain from the decline in purchasing

resale generally represent recent acquisitions and were not restated power of net amounts owed During a period of inflation, holders I

from their historical cost in nominal dollars. The ratemaking process of monetary assets suffer a loss of general purchasing power while l limits the recovery of fuel and purchased gas costs to historical holders of monetary liabilities experience a gain. The gain from the j cost. For these reasons, fuel inventories (other than nuclear fuel) decline in purchasing power of net amounts owed is primarily ? l have been classified as monetary assets. attributable to the substantial amount of long-term debt outstanding l l As prescribed by the Financial Accounting Standards Board, which will be repaid with dollars that are worth less than the income taxes utre not adjusted dollars received when such securities were issued. I l -) l I l L __.

} i Ibitimore Gas and Electric' Company

i 1

4 STATDIENT OF INCOME ADJUSTED FOR CliANGING PRICES ] FOR TIIE YEAR ENDED DECEMBER 31,1984 Conventional Current Cost Elistorical Average Cost 1984 Dollars . (in husands of Dollars) - Operati ng Reven ues..................................................... $1,761.474 - $1,761,474 i Pu rchased Fuel and Energy............................................... 630,269' 640,604 ope rations and Maintenance............................................... 441,579 441,579. 113,643 270,368 Depreciation........................... Taxes........................................................... 265,215 -265,215 Total Operating Expenses....................................... 1,450.706 1.617,766 Opera ting i ncom e............................................... 310,768' 143,708-Other Income (including AFC)....................................... 29,779 = 29,779 i 340,547 173,487 Income Before Interest Charges............... 96.632 ' 96,632 - 44 Interest Charges (net of AFC)............... Net inceme (excluding adjustment to net recoverable cost)......................., $ : 243,915 76,855' increase in Specific Prices (Current Cost) of Utility Plant and Nuclear Fuel IIeld During the Year *.................................. $ 83,738 218,581-Adjustment to Net Recoverable Cost............. Effect of incease in General Price Level...................................... (279.077) Excess of increase in Specific Prices After Adjustment to Net Recoverable Cost Over lacrease in General Price Level......................... 23,242-Gain from Decline in Purchasing Power of Net Amounts Owed....................... 78,265 Net...... $ 101,507

• At December 31.19M. current cost of utility plant and nuclear fuel, net of accumulated depreciation and amortization, was $6,357,818.000, while historical cost or net cust recoverable through depreciation and amortization was $3,390,314,000.

l

l -l Baltimore Gas and Electric Company l l I I FIVE-YEAR COMPARISON OF SELFCTFD SI'PPLFMENTARY FINANCIAL. DATA ADJUSTED FOR CllANGING PRICES .l 1984 1983 1982 1981 1980 l (In Thousands of Dollars) . Operating Revenues - flis to rical................................. $1,761,474 $1,638.605 $1,575,014 $1,402,109 $1,212,000 in Average 1984 Ddlars... $1,761,474 $1,709,443 $1,695,992 $1,602,337 $1,528,750 i Current Cost Information (in average 1984 dollars) j Net Income 1 (excluding adjustment to net recoverable cost)........ $ 76,855 $ 47,346 $. 22,897 $ 18.218 $ 29,277 Income Per Common Share (after dividend requirements $ (.36) $.04-on preferred and preference stock)....... $ 1.26 $. 49 $ (.20) 4 ' Excess of increase in Specific Prices After Adjuttment to Net 1 Recoverable Cost Over increase in General Price Level.... $ 23,242 $ 51,614 $ 29,$50 $ (115,385) $ (241,920)

Net Assets at Year End at Net Recoverable Cost...........

$1,637,811 $1,590,077 $1,531,156 - $1,448.870 $1,509,211 ] Ceneral Information Gain from Decline in Purchasing Power of Net Amounts j Owed (in average 1984 dollars).................... $ 78,265 $ 67,242 $ 73,581 $ 144,450 - $ 206,464 J Cash Dividends Declared Per Common Share i 1(is torical.................................. $ 3.10 $ 2.92 $ 2.80 $ 2.65 . $ 2.50 l In Average 1984 Dollars............ $ 3.10 $ 3.05 $ 3.02 . $ 3.03 $ 3.15 Market Price Per Common Share at Year End f listorical......................... $ 40.63 $31.63 $28.75 $23.13 $19.75 in Average 1984 Dollars......................... $ 39.89 $32.44 $30.61 $25.58 $23.79 Average Consumer Price index 311.3* 298.4 289.1 272.4 246.8 ! Year End Consumer Price Index. 317.1* 303.5 292.4 281.5 258.4

• E5dHlated i

a l l l l l

Baltimore Gas and Electric Company l Officers Bernard C. Trueschler Jon M. Files Alfred 11. Inners 1 Chairman of the Board and Chief 11ce President, Management and Treasurer andAssistant Secretary Lrecutive Officer StaffServices .] Thomas F. Brady 1 . George V. McGowan John W. Gore, Jr.

Assistant Secretary and Assistant

-l President and Chief Operating 11ce President, Electric hearurer Officer Interconnection and Operations Charles W. Shivery j ' Norman J. Bowmaker. Arthur E. Lundvall, Jr. Assistant &easurer 11 - l' ice President, GeneralServices . l' ice President, Supply i Rayn.ond C. Bryant llenry 11. Miller l' ice hesident, Consumer 11ce President, Distribution Sereices Chris 11. Poindexter 46 t0"=a r c~~ <e "e"<c"'.t"si"~"x a"' t' ice President, Finance and. Construction Accounting, and Secretary 1 Stockholder Information ANNUAL MEETING EXECUTIVE OFFICES The annual meeting of stockholders will be held at 10.00 a m. on Gas and Electric Building April 19,1985, in the Constellation Ballroom of the flyatt Regency Charles Center Bahimore, 300 Ligiri Stiret, Baltimore, Maryland. P.O. Box 1475 Baltimore, Maryland 21203 1 F0ini 10-K Upon written request, the Company will furnish, without TRANSFER AGENTS charge, a copy of its Form 10-K annual report, including Chemical Bank, New York financial statements, after it is filed with the Securities and Maryland National Bank, Baltimore Exchange Commission in March 1985. Requests should be addressed to Alfred li. Inners, Treasurer, P.O. Box 1475, REGISTRARS Baltimore, Mar 3 and 21203, Common Stock: 1 Morgan Guaranty 'Itust Company of New York, New York IJnion Tr.tst Company of Maryland, Baltimore Preferred and Preference Stock: The Chase Manhattan Bank, N.A., New York Union Trust Company of Maryland, Baltimore 8 .] .q o

Board of Directors gy7mmq7 y. qqmyn . hh!h ,L N - h ' )[ h $ hM;S I gf c%. gy ' fyb u N n I ' f) } } } 1 L fl d / -.j p 24 + u M-

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M g-s,-('fg q ,m { }y$_ @' J[*fWV*,M"T7Y'""W Y'"LTWY@'M'?*QMRh.j. nTA Directors (left to right): .V n ' 'i- fiQ ? 3 7a y p* 3:ggy hg- '*A "t 'dE .] (upper left) Mr. Sanford, Mr. Disharoon, Mr. Wells, ]jf [- 5 ggg Mr. Trueschlu pNg (upper right) Mr. Geckle, Mr. Utermohle, Sister Feele), s y' n E Mr. McGownn, Mr. Miller (' ' ' y' j (left) Mr. Raddiffe, Mr. Sipple, Mr. Cole, F y .. q Mr. Snyder, Dr. Slaughter N e ' 4g Bernard C. Trueschler Jerome W. Gecide John P. Sippel C. Edward Utermohle, Jr. Chairman of the Board of the Chairman of the Board and Retired (former Vice Chairman of the Erecutive Company, Baltimore Chief Erecutive Officer, Cl> airman of the Board, 7be Committee of the Board of the George V. McGou2n HI r up, Inc, Cuhens NaHonalBank), Company, Bauimon Baltimore (Vehicle and Laurel, MD (Banking) President of the Company, 977y g gg;;g Baltimore Dr. John B. Slaughter Chairman of the Board, aul u C anwHw, University J McCormick & Company, Inc., J. Owen Cole Cisai an of e wuun Maryland at Couege Park, BalHmow (FoMocusing, Chairman of the Board, First MarylandBancorp, Baltimore CommiHM of Commnial CoHege Park, MD $n, etcJ (Bank Holding Company) Cudu Cmnpany, Balumow (EducaHon) (Financing, insurance, etc.) I,eslie B. Disharoon Henry F. Snyder,)r. Chairman of the Boardand George G. Raddiife Retired (Former General President, Monumental Chaiman of the Board and Managm Moduct une hn erd, e Balumom Ufe Hanning and Management, Corporation, Baltimore II"#"'#""E insurance Company, Baltimore AT&T Technologies, Inc.), Retired Director (Insurance) Morristoun, AJ George W. Velenovsky, who attained Sister Kathleen feeley, S.SX D Charles S. Sanford,Ir. IC##*""I###""# #i"#E*#"#l

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