ML20077L198

Forwards 1990 Annual Rept to Stockholders of Baltimore Gas & Electric, Quarterly Financial Statements as of 910630 & Projected Cash Flow for 12 Months Ended 910731 as Evidence of Guarantee of Deferred Premiums for Facilities

ML20077L198
Person / Time
Site:	Calvert Cliffs
Issue date:	07/31/1991
From:	Creel G BALTIMORE GAS & ELECTRIC CO.
To:	Office of Nuclear Reactor Regulation
References
NUDOCS 9108120123
Download: ML20077L198 (11)

Text

M t3 A LT IMORE GAS AND ELECTRIC

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CHARLES CEf4TER e P O. BOX 1475 o BALTlfdORE, lAARYLAf 4D 21203-1475 Gr o84cr C Cset tt v u r "" * '

July 31,1WI w o u. n i., o,

i J L il t t C 46' U. S. Nuclear llegulatory Commission Washington, DC 20555 NITENTION:

Director, Nuclear Reactor llegulation SUlUECT:

Calvert Cliffs Nuclear Power I'lant Unit Nos.1 & 2; Docket Nos. 50 317 & 50-318 Guarantee of lletrospective Prpmium Gentlemen:

In accordance with the requirements of 10 CFR 140.21, we are submitting oui guarantee of payment of deferred premiums fer our Calvert Cliffs Nuclear Power Plant reactors. Accordingly, we are enclosing herewith:

Exhibit I A copy of the IWO Annuallleport to Shareholders of Baltimore Gas and Electric Company containing certified financial statements.

Exhibit il -

A copy of quarterly financial statements as of June 30,1991.

Exhibit 111 -

A copy of Projected Cash Flow for the twehe months ended July 31, lW2.

Exhibit IV -

Narrative statement on curtailment / deferment of capital expendit'nes (if any) to ensure that retrospective premiums up to $10 million per reactor per year for each nuclear incident would be available for payment.

Shouki you have any further questions regarding this matter, we will be pleased to discuss them with you.

Very truly yours, f)

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Nuclear iteactor llegulation July 31,1WI Page 2 cc:

(Without Attachments)

Docurnent Control Desk D. A. Ilrune,lisquire J. II. Silberg, Ihquire

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• Intlades a prmwon for possibic fuel mst disallowante and the effren of the auounung (hange for unbdkd inenues.

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( 0, ( h n t. n i u Annivenaries are a time for reflection on the past - nostalgia for the good old days" n.akes us long for a time when hfe seemed simpler. liut this look into "IlGNEN attic" reminds us how sometimes difficult it w as to cook our food, dean our clothes and homes. and keep oursches warm. These arufasn represent attempts to make hfe easier than it had been "in the good ohl days." Gas and ekctrie applianto tools the drudgery out of daily houwho!d chores Manv of these items - gas space heaters. pas irons, refrigerators. and stoves - were sold in liGNEN

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merchandise stores m er the vean. The drawinp, meten, and equipment were found in sollee

,g tions throughout the Company. Some items are actually from our "attiE' but many were lent for pu icp t u as rman/

the photograph b.s eniployees and couomen. We hope you enior remmiwing in liGN1?> attic:

(4ttrr/) #4 FfOc[(d[af'rr a Coded key identibyknp tbe5C aMk AMs.:ppears inside our bJLk cover.

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,Q ne hundred and scirnty-fiar,) cars ago - In fbre the ruitroads, y befine carn the comjdetion ofthe National Road connecting the liast Coast to the Whst - artist, shou inan. entrepreneur and l,

visionary, Rembrandt Peale, started the Gas 1.ight Gnnpany ofBaltimore ta light ihe strect3 and homes ofthe ity It u.as ihefir<t gas utility in ihe i.

Neto Whrkl, and ur ase its direct descendant. Afier 1; syears, ourgas

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business is stilloffiring our customers innovative options to improir their

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l liars. Our electric side, although the danninant clement today, is s relative nnecomcr to our stor.y.

1.ongfluniliarity has iobbed enngy ofits ivonder in the cyes ofits consumers but not in ours. As ur plan cmporate strategicsfhr die decade vumw u V

l ahead, ur diram ofrechnological martrisfbr the century tofidhnv - and knuie thar one day, tve u ill build them.

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l ColwonxrE PROHl.E altirnore Gas and Electric Company is an investor-owned company that

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• its core utility business with diversi6ed non-utility operation 5 As the Grst gas utility and one of the Hrst elecuic utiliiies in the United States, we have a long tradition of superior service and reliability. Out utility suategy for the future focu es on maintaining both that tradition and our posi ion as one of the lowest-cost producers in the mid. Atlantic region. Our diversi6ed activities, under the direction of Constellation Holdings, are designed to provide meaningful carnings support to the Company while allowing us to take advantage of new business opportunities that use our expertise and experience. Constellation ilolding holds the stock of three companies that are involved in power generation projects. real estate development, senioriiving and health care, and investments and financial services.

BNG. Inc.. another wholly owned subsidiary of the Company. invests in natural gas reserves and obtains gas from nontraditional sources.

The Company and its wholly owned subsidiaries have over 9,ooo employees.

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the lownt-unt elnnitity prneratrd by dGM We aho maintam dured ou nerdiip of three genuating fauhtin m penny hania-i two onnemouth plann and.5 ate liarbor Waio Power Corpora-tion, a pmducer of h Jrodanic powci in addnion. we hdong 3

to the Penny kania New Jtney-Manland Interomneuion ihat a0ords m aucu to pookd capatity on fasorable irrnu.

Wet-.. urtually all our tuuomers' gas requirements ihrough

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three plann in Central Manland for the proJuoion and storage IHM operain io clearie generating plann in Central Maryland, of htluified nainul gas sulutnute natur d gas, and propane.

indudir.g the Cahen Chits Nudear Powo Plant. w hith produtn Other budncu indudes the sale of.n and dutric apphamn.

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centers to land auemblagn will prmide a bknd of on-seing,enui inu,mm u ai.m gaim on nunte sak<

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auociainbenically with the unidly growing mn.t.5 r

p# h h, segn ent of our population. Through joint unturn wc

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,,eniorliving and heah care nurket Tramed wioi a

" 'he operating companin in the Conudlanon group foem on nationally known provider of heahhsare servicn. we own Gre four nujor budnns lines. Through our ow nenhip podiion in nuning homes and two retiremeni tonununitin, a power gener.nion juojna and intohnnent in is connaos for Our positiom in invntmenn and Enancial servi (n let us operations and maintenance sermn. we are not only producing b!cnd turrent inuime with the long-term opital appraiation.

current income but are aho gaining valuable experience in the type proicca in our other husincu linn m produce the dedred w holnale power generation market toul sorponie rnuh. TEc bmadly dnerd6cd msonnent Our y real ntate proicas are heanly mncentrated wnhin portlobo prmidn 3 ear m-year u>re insome foi all the mid-Atlantic region. This growing and dis truGed porifoho Conurilation auivitin.

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i CilAlllMAN'S REl'OllT TO SIIMHO!DERS l

"*(he past year ploved to be as difUcult.is we ihotight it would be, and our b

Oll.lficial perforniance rcOccis that characterization. ()ur 1990 results were il10lle!)ced by factors tilat ate largely sllof t terni ill llature. f alllef than

[Utidamental changes ill ollt blisi!)ess. Poremost were the tiilaVailability of

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our Calvert Cliffs Nuclear Iower Plant for most of the year and the resuhing higher fliel and energy Costs IllCurred by (be Company. At the same time. %c signiOcantly increased our resources at Calvert Cliffs to assme its safe and effkient long-term l

operatioll. The downturn in !be econo!Hy depressed groWtil in our divef sibed busi-nesses atid, along with Warmer-dian norfHal temperatures during the heating seasoii, ba!!cd die groWtb in electric and ga% sales experienced duri!1g fecent years. hlost of these conditions were neither unanticipated nor unmanageable. We had expected that 1989 and 1990 would be dif0cuh years.

Consolidated earnings were 52.1o per share. a 3i%

decline from 1989. Util'ty operations contributed si.92, an s.89 decrease from the previous year, while diversibed i

business activi ies added s.i8. a 5.o6 decline. The lloard t

of Directors has maintained the coinmon stock dividends

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consecutive year of uninterrupted cash dividends on our i

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common shares.

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lti the 1990 Onancial results. we established a b4-535 million provision for a possible fuel cost disallowance Nff" k{ '

associated with the Calvert CliO's Nuclear Power Plant.

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This provision reduced 1990 net income by 5.28 per

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common share. The action was taken as a result of our concerns that the Public Service Commission of hlary-l a o u i. n..

land (PSC) may not allow recovery of the full amount of replacement energy cost

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related to the Calvert Cliffs outages. The latest indication was the view expressed in the PSC's December 1990 base-rate order that some of the Unit i work conducted during 198 -1990 was avoidable. While we disagree with the Commiuion's conclu-9 sion with respect to that work, we determined the prudent worse of action was to set up a reserve in the event a part of the replacement energv cost is subsequently 4

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Isit owe. /\\ so in 1990, we cilanged our reventle f ecopilition }H>licy to

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billed to cu ners as of the end of each month. This change, which

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confollas Wii Ille predo!nkflallt frafflk(c WhilHIl file utki.lly IlklustIy, increased earnings ap[noximately 5 9 per conunon share.

IJectric sales for 1990 decreased by is, re0ccting the effects of mild winter wcather and a reductioc. in usage by our largest industrial customer. The rate of growth in electric residential sales slackened, minosing a dedine in home building, which had increased dramatically during the latter half of the '80s. Although we are sucteufully expanding our gas market, total i990 gas sales for the year h

deained v., fiir similar reasons.

Constellation's growth, too, has been slower til.1fi we originally allticipated. $ilice ecollomiC conditions have inhibited the sale of several 0

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eartlings of its financial investments. Constella-h tion's linergy Gmup, however, has had a busy

.I, and productise year. Constellation will fiicus

. ' $l 8 more on the power generation business for the v'

A' long actm. It is, after all, our business. and C _ m m,s.,c i m _.,s _ g n., ;,~,

Certainly, our s}lof t term tenllts have been disappoiriting.13ut, itist as certainly, i ;

.lfter IN years il) !!!is business, we'!c not 11ere for ille silort rtin. Tlie siiodernizationi

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of Calvert Cliffs, the expansion of our gas business, and the installation of our g

new customer information computer systero represent investinent'in service and reliability that will produce resuhs in the decades ahead. You car read more about these projects later in this report.

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While 1991 - our I?$th annivt Tsary -

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will also be a demanding year, we do du U wC.! e (

expect improvcment in operations and E

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earnings. Calvert Cliffi again s'uld be

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our largest producer of electricay. Tc'll c (n a, n i-y(

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]L also be receiving additional revenue from sf the 577 million annual base-rate increase

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aw ti' audwrind in Deh h du Public i

Service Commission of Maryland, as well hp

,n as funn the s:24 niillion base-rate increase p(

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that will become effective in June. This o a v.. n tn 1,

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lauer increase pr vides rate recognition for our investment and operating expenses at

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the 640-megawatt lirandon Shores Un;t 2,

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i m ni m c n ruo.o s which will produce annual fuel savings of 2 s.)) y nmte than 55' million. In addition, the PSC authorized the Company to pply for 3

a sso million surcharge elTective October 1991 to recover contractual capacity m u m m.

purchases heginning at that time.

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We're pleased that the PSC recognized our future capacity A'.-

i needs and the prudence of the lirandon Shores plant. Ilut we e

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g to deny cost reccncry of certain nuclear operating and mainte-L nance expenses. These costs were required for safety improve-

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q ments and normal maintenance. We believe it is important to 1

i recebe proper rate recognition on these items and we've

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asked the PSC for a rehearing on these issues, j

l'd like to take some time now to tell you about Calvert A

Cliffs. Many ofyou, I know, have questions about the events

/ILL of the past two years. Unit 1 operated briefly in April and s

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fmally went back in normal senice in October i990. We expect

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- 1i enit 2 back on.iine ie,he rest year c, ef thi, yea,. This wiii 2

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complete Calvert Cliffs' nturn to normal production levels.

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(ofisidered ill eYelything we do. In hiay 19 9,(luting a nornial refochtig otita;r, 8

we diwovered evidente ofleakage from a component of Unn 2's reaaor cco' ant system - the pic:suri<cr. This systern is a key line of defense in nuaar safety. We had to find out if there was a similar problem on Unit 1, and so we shut it down the lhilowing day, Alas 6,19 9. We determined fairly quickly that there was no 9

iminediate evidence ofleakage on Unit i.

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. cri 1 line as soon as possible, but we had to understand why we had leaks on Unit 2 and not on Unit m

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when the designs were identical. Safety was the paramount issue. Consequently, we began an exhaustive analysis to answer that question.

We also decided to make efficient use of the downtime by doing additional inspections, as well as repair and modification work, jobs that could g.y y

1101 be dolle Wllile the Units Were operating. In the

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>o dedlt with then)-itt spite of the fact that the work extended the aheady lengthy m

s, outage into 1990. Again, safety was the main wnsideration.

Complicating the issue was the fact that we knew we had to shut down Unit i in

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1, the spring of1990 to conduct some required periodic surveillance tests and safety a

inspections. hiany inspection interrds are based on calendar time, not necessarily operating t me. We seriously considered combining the outages, but we decided i

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titere Was One important reason to get Ullit I back on line and opcTate it for as long

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as possible befbre the inspection outage. Ilaving been otT-line fbr so long with s,

malor Work a(WWplished, the unit needed a trial period of opera-tion to identify other problems that could only be detected in l

operation. That's why we decided to bring the unit on-line s

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briefly, As events unfohicd, we were only able to operate g

l it fm a few days in April bcrue the surveillance outage fu,J i

l began During the surveillance and testing outage, we aho Q/f-i I

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.i did unplanned work on systenn that had remained in service during the earlier shutdown. As before, when we discovered new problenn, we had to l

deal with them. Unit i retmned to service in October.

While this auivity was going on with Unit i, we were also repairing the pressuriier sleeves that had caused leakage in i

f Unit :. We had determined that the cause of the problem was a 3

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4 fabrication technique that had only been used in Unit 2. Once we understood the cause, wc designed the repair process.

Ahhough the job was 'engthy and complicated, the process went

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smoothly, and the repair was completed in July i990. Since then l

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,y have been performing maimenance and satety cmrectmns on m.

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the end of1990, we completed refuding on Unii 2, and it t

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should be generating full power in the near future, o

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That is why the plant has been out of serviw lbr so long. As

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- s the past two years as well as the ongoing maintenance program will keep Calvert Cliffs running safely and productively thr many years to come. Later in this report, I hope you'll read about the modernitation of the managernent systems at Cahert Clifts that has been a parallel effort to our work on the physical plant.

The American energy industry is moving in a number of exciting directions.

Competition in the bulk power market and the expansien of non-utility generators serve to increase the options for all of us. As we pursue those options in an effbri to supply the energy needs of our territory, we have to answer several basic questions facing our industry: How do we produce and market energy in an environmentally conscious world? What will the fuels of the future be? And who is going to build the 3

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c plants of the futura Our planning in the past and the wink we auomplidicJ ihis year put u, in ao cuellent position to deal with those iuucs.

Perhaps the most encouraging indicators of our future are the people who work for IMINE today. A fnent surrey indkated that the overwhchning majority of our people feel personally respomible for helping the Company operate safely and productively. That kind of conuniiment f

translates into (piality service for our customers, and servke is t{0,l s R the hedtock of ructen.

9' Tc baVe good reason to (f:lf-brate our INth anniversary alid g

U lot,k forw.ud to the inilestones ahead. This report snarks the f,

kI occasion by combining an illustrated tirne line that recalls key

. f i

.g j

events in our corporate and community historv with a discue sion of1990i strategic projects. As I look hoth to the past and I

i

~.

{

the future, I see a continuum of values: a beliefin tuanaging 1

prudently w hile preparing for change, a sonunitmtnt to serving our investors and our customers well, and a seme y..

s of caring about our employees and our community. Those d

values have supporte.1 our achievements for the better nart f

'f of two centuries, and they are the foundation for mar v M

m.

accomplishments to come.

/ to./f 4[?W

/

Gitnu;t V. McGowAN Churvun eft!r krd

.tnd Cl.ufEw tur Olli< cr Il luu'Aki 19s 1991 l

l l

O l

l FINANCIAL. REVIEW I AlWIM.%

ConsolidJted rarninp per share for 1990 u tre $2.10, a delhne of 1% frorn the 53.o5 caf ned ill 3

19 9. This dedine rnu!ted from lower earninp from both BGNis utility bminco and its 8

dhertibed businen activities. IIdrninp pel sbale are sumniali/ed beloul 1990 1989 Utihty operatioris.

si.92 52.81 NiVersified aClivities.........

.I b

.24 liltal.......

$1.10 S.L o $

The decline in the utilityi 1990 carninp was primarily I.uning mod tihidendi Dedued the result of higher operations and maintenance npemes, per Shne of Common 5tod, particularly at the Calven Clifh Nudear Power Plani, higher financing costs, and the effnts on sales ofless favor-suo able weather as wmpared to last year. Also contributing to n oo -

lower tuility earninp were inucawd wsts rnuhing from

- the purchase of additional generating capadty and from n,o lower saln of high voltage tranuniuion capability. Finally.

n, 7

ry(h the 1990 dedine reflects the recording of a provision liir

.no.

g._

"L 4

j O_ %

il

.._ h( i e _1

• _ j_ s the possible disallowance of certain replacement energy

,,,. 1 L

X_

. [

t d

1 cous. The deucase in utiuty enninp was paniaHy dsu no.

t]

by the effect of the change.m the Companyi xcounting q

1

_a o.

m i,rn mi i,si policy for unbiHed scretiues.

i,,o i,4 i,si i,n6.i,tr i,si e

Earning inom diversified activities reprnent pr;marily c nar i.,ning tenn.ui.aaica) the results of operatiom of Comtellation lloldinp Inc.

t;r.l3 twarna onhera and in subsidinin, The dedine in Constellationi i990 1.cning (comotidadi

1. 8'"I"P *d' d"" '" $"I'""s in Ihe real niare market and lower earning from hnana linvntments.

.m im uax nn uw nn uc nc nos.uo a

Imidend. Dedued During 1990, wnunon stock dividends were dedated at the quarterly rate of 52% cents per sharc, equivalent to um n4a re u n o es nm os a srs no?s suo an annual rate of st.io per share.

RuiMunio On December iy,1990, the Public Service Commission of hiaryland (hiaryland Comminion) issued an order authorizing Bahimore Gas and Elearic Company an b"rhei"ommon thuity immediate dectric baw rate increase of $77 million annually, equivalent to 4 7% of total electric revenues. In addition, the htaryland Conuniuion authorized a siza milhon base

[

rate increase to provide rate recognition for the Companyiinvestment and operating npenses at the 6 o Mr coal.6ted Brandon Shores Unit 2 upon that Unit's cornmercial-4 "T f operaion in hiay 199i. This sewnd inacase in base rates will be accompanied by a reduction

'o p i

- }( f g in the fud rate to reflect the currently otimated 552 million of expected annual fud cost 4

A Q saving rnuhing from the commadal opnaion of Brandon Shorn Unit 2. The hiaryland ol $

J ILi Commission also authorized the Company to apply for a surcharge to base rain for approxi.

c3%

• i,n * ' "*

mady sso million of purchased capacity costs beginning when the expenses are incurred Actual n % 6.as u w o W s e 10 t

com,m.n smit ua,L<i prite and floot Wlur

,n k

-w a

p"I j

jq nm in October 99i Itawd on the Cornpanyi finantial performance at that time, the

]

Mardand Comnuuion has agreed to authmire the surdurge ifit dricomnn that the f f 5 y yl!

Compant would otherwiw be unahlr to ahirve in authoriicd sourn.

nt,. J P

t / a y g a s v y

e y l'lu Wlsn lN l( dt Ib Mlhl t I t ~l l ( ( B l l }l'sll l().s Oi j j

g g gg in in 1990 financial rnal br Cornpany ntabliduJ a su million prmision, equisalent to j } (; @;]

j 2Rc per sbarr, for a possibis rud (mi doailowarue asmtiaird with in Cahct: Chffs Nudcar j g Pown Plam. This auioa wu iaken au roult of tomerm ihai ihr Manland Conunisaan n

~

o ~

nur not allow the Company to rnover all such (mn enulting from ouiagn ai the Cahni 4* d d qd l

~

Cidrs Nmirar Pown Pam. The 1.uc,, ind;< anon was ihe sinv nn,nsnt m ihe wrgand

,,sii.*,

,,,o Cornrniuioni Dnember 1990 Baw Rate Ordn that mme of the work u.ndoord ai t? nit i x

""4"' * ""*

during su v.1990 w.t avo;dable. While the Compant dharren with the hiarpand Comrnie

=

"*k sioni tondusiori with rnpnt to that work,it dndmined the prudent ununr of Ation was io sei up a enerve in the ntnt a pari of the replacement energnost is subwquendy diul-y,,tn p,a lowed. The Company hn filed a rnluoa for schearing of the hiarybnd Conuninion's baw on on on my a rate duision segaiding the Cahn ClitTs isson.

,wg m A n atwit s Cli W Gi 1)utirig 1990, DCNN dutiged ilt utility reventue rnogtlition policy to pnwide for t}ir at(rttal Marku m Douk Raue of tnCnue bit utility ACrvite rendered but unbilled as of the crid of eadi rnonth. Priot to i990 utility sevenon wne tungnited at the time cu tomrn' meten were icad on a monthly oMis. This change, widch w.u inade to proside a better snaiching of revenun and npcmn and to (onform with the predominant praoice within the utility indmtry, inueawd 990%

rarnings per unnmon share by 3H (enn.

Untity C<msnun,on I.sptndinun i

k 'lllili b b, A l kt t i hh 1 sl j xl)lli lil %

The utility'ri constructiot t :petidituin totaled s53s ruillion in 1990, including ss3 million um in ANOWante b)r I tinds Ustd DLiving ConstRNtion (AI C) Pintric eXpenditurn -

f*

l primarily for comtruction oflirandon Shores Unit 2 and imprmements to the transmhsion "j l.

l and dkiribution system - act ounted for $4 2 million of the 1990 total. Gas npenditurn 8

4*

T t S

totaled 59 million.

1 ( {

n, r..

lt is tunently numated that the utilityii991 construaion npenditurn will amount to

]

j

]

sw million,inauding su million in AFC, 7 4 y 1 j m ism noo

(

- F

.o r

During 1990, long-tcrm financings relating to utility operatiom u> misted of 5400 million in o.

. _i w

_m.

J debt,56s million of redermable prefneme stock and 587 million of uimmon stock. During the year, su million oflong icrm debt and 57 million of redeemahic preference stock werc

_.trtiled blandard N Poorh CorporJtion (hNP).ind bloodyh Irwntors herViCe dow ngraded my their ratings on BGNI?s debt, prefenni steck, and prefnence 5tml. SNP aho downgraded the Companyi commercial paper fmm A l+ to A-1.

conuniaion Corporate long-icrm botmwings by Constellation HolJinp Inc. increased by

"""""*"4""*

sss million during 1990.

AIC m so es su su so l old!

ou ou suk sw sm no

~, - _,

,m

._s

5 l

A.

l INV13TMI.NTS IN RI:UAHilm

~lin innt n5 nm

^

i 4

I A

f 4

? y!

q~";

A

~.

, i o o

/h ~ f 7 E Mi ^ l ji .A ^ [ N" f) jyi)O, WC kil\\ C\\lCd fledt i!y in (l1C fittillC: plJilililly Olli ClCilliC Supply [Of the A A t Illi Jnd JitCf *6)D% Lolitilluillg t})C nlOdtrfli/JtiOn DIOlli CdlVCit bikh NudCar PimCr Plant, expanding and tCinfOning Onf diuribution.md ON.it Nt n, la wmnt ^ Pt ill fil Mt lu l kAll A hli o "" 'I "N C N UIC U uni 8d' bn\\ inch 5.dnd MrCngtb-LN. bl si ! WlHI t,l m O! l hilfl" Al lib Ml%ll M IN Clling COllstCllallol[$ jtlyOlvCl1)Cnt j[1 pow er pepyrj{jpg, 'l'hp j,pgpljgg g[ g}gpgp ^ b \\l llW il< l. lh jl'N! ll* JLIIVitiCh dO nO! appedt in ly()O f ehlllth, ()dth 14 d lOnl'/tcrin busillCM, dnd (bC'.C A Pi \\1i ANlt Y.,Il![WI Cf UII$ dIC InICIIdCd (O Cnhul0 tlldI WC Cdn dCbVCf Ill (bC nCXI (Clltury (bC $dinC (.W)NN It WM I ni (ie A I f t.I n Ct %11'AW t il B M 'II. gcljahlC, qudlitV Schi(C that llds hCCM Ouf trademafk for M pm d' MW g \\RIRI. ( h lt 's ! 19, M W ilt I* Il4 ARD )6 ylut W W,N'. r (l[Nl)(g)1*,(, (;g}grll$ lid ()PlHN AN(_ l t,lVIN(, A 4 lif f N! % ('A t\\tMN) A 1 Li hpNEN g# N '1* f laN( if RI ANit r A g, b b d \\ !Iil ( A lll ' b 4. -,f .Y For mO4 Of thC past is 41'N i kM ~ f 'l( f i lidi r 16 0 sluiin 0 141 t iuoni. I l ? l .YCJr$. Ollr balVCrt (lifI'% . j,, A Nuclear PowCr Plant has ( l' been thC heart Of Our gCnCrdtlutihllpply,.ind. A it [ Coo A y), hi!!COlltintlCtO[lllthdt i, - W as.ame 4

o. m, -. a _

lb2b A f.* f, J 91 e ( n410.1%( 313(i!l, A ' N, JCJrh. We'VC l100n ll)VO]VCd 4,R;N1 k ( ti ll0 I m im a n,iN oi in an OvCthaul Of the management systenu and ~ l\\; 0 H NDI Nt l, i +3 s 'llli p nn C t 10 p Jnt sinR its ( i ikNI in i t iN1 t. I lill Start'llp ill thC midCOs This is a sital efli>rt. U A ( I l( All lH i \\l). Illi !)uring the ts-yCar period since the plant camC On-n m i enn k m Om" i'h IN IN AW 1 k.A e line, the regulatory f0Cus in the nudear industry s g cyp lyed [rogn an eggpl13sig on gesg}ts to an 0 1 0 'l lil M \\M l Wt t l l t.hi b Chip lldsigonOper;ttignjl pro (psses,{3(h @ pgy l 11CW plant WJ41C(jllired 10 Operate under 11 Kl t ilWilla A lelV M t, b t i n1MM, Pi ON I i dlC\\IIC4LIk!'CIneIlt\\W!ICnktWJ4birit ~ I IC ( i b l.it d t I ('( nf t AM. b placCd in service. ItOth wC and the i bllClCdr l(Uptlldtpf y Coln!11issiO11 (NitC) EI,, A ,I lli Av,l}RltAN ClVlt WAk .,, y;Q d 7m b P-1(dNs M 11R ltil ( ON!!!b 3 uaninamNIvu M M il it tin API (ll 12, A 37 A /, _ _ _ _. _. _ _ _ _ _ _ _ _. _... _,. _ _ _. _, _., _ _,.. -, _ _ _.. - _ -., _ ~. _, -. ,r.

g - = - g_, Agm __u__.ya g ggj y, ^ l i ^ INi$ l ^ l tts.civo w4kisns. s 1 18~i f 9 r _on uw I n.in onn m k (H h u f ah ud 4 ili s iti 153 11 4 Inl (J11 % Illi liti rCCogtli/Od (flat WC l lad to upgrade oul riiciliod, ol' h<mi s!w bar doing %olk at balVCf( Clkl[s to mCCt aluCnt C\\pCCta-UWm. tions. Our strategy for the nmdernization is desoibed in a doui-i Inrtit CallCd TalVCf t CliO~s pCf fort 11anCC Ifnpf'Wonitfit plan." %l1!(l1 We stihfilitted gg 9 io o,c xac in,089. wvvc u,mpu<a aboui urorih.u ptm. ana ihe xac m mm_ i. lolitil100s to filonitof our ploglC%. TC'vf also OnCoulaKCd all.ltmospllCle ob slli A ssll'Il Y Il \\l s Illi g intense self auessment at the plant - an auitude inore important than ever in A I H Al INCs%lil M I NI IAuP. todJy 5 fiUClral Cf1Viionn10!11. Illis i$ a lolig-(Clin Of[of t, and LIICly trniailu our g 888 '8' uppermou aintern. ^ ^ llo I P b ml N t e ((suPANu s A WI MI N.I D n) 10161 iln Ni W bl '.I k \\1l\\f. A g y . gg mm we cosnxani ans unsi v.,, / w.- A 1.a it i xic t u.iii niurm of many alcas in the { AND o n 1)Nul n.$lxu s country that will need h' a l{ticuac Is.ui ann n. ) llM ^ Powu4courast vn u: adth..nonal generating e o capacity in the neat g'l gggpryl os on u ixn 3 y. I ^ i898 future. Our Integrated Resource plan, a is.vCar '~ hh""""^'""" ^ ._ m

a. h

^(p. z i "* A Arna Mi Cotni no!Us y ~~ 51ratCgy (lClailing (l1C bCs! [N ack+E @$ $N.s' emk ilMI lin (iiM111 UIh 6, wea. mm LotubIllation of resolHCOs " ~ ' A M y1IRIsLlaa'lA hiLx10 ^ Au m 4 7 un n wi< m. to fl1CCt profCCled energy IUtllliterl)Clits, ploVidts a g comhination of demand side management cad conser- , oi >1 l unou n r, na rennt vation progrann, new plants and purchased power to I ( "" ' '" ' meet that necd. Luer this spring. lirandon Shores ^

• 1

(!

• D g..,

(S 'fe 6m j operation. We've implememed new demand 4ide ^ p m, + p,.emmo<h. <~i mag <. r.lai_mren<a w.m<,. yy' he=r swixacs. ana siana.ua iinic.or.use rms ror nc% s ^ residemial customers, in addition m an aggressive I i 1904 cornervation plan descr. bed later m th.n report. I.he 1 m Gia u nu nuon l u i deu.bility of our purchased-power annement with nn u osunanstsow pCnnsylvallia power N l.ight Company Will primH us to lU Dw oo m SunI L W,( m m o m os no e susau I N I Hil l ) I n s t h q f i t \\\\ ,-.---x-w.mm

A' i 19o6 A COMi'ANY SH W1 Ho! D1 hs 1 RAllii AN AC.kil MI N r lo A loMt A liitY !NilLR AII D A ( % ANI) f il ff klC M IWif f A ^ ( ORivkAlloN lo la KNOWN e THI Cosss M: 7 DAll D Ge 1 ll Citic sCliedit!c the addition of ea= p ^ f

• A r

4,4 1 li.H ! nh l'oWI R 4 our planned 00 mV )F A4g 6 4 1 ge-- i. (. tiMi%NY of ihl llW )RI. I D (ombined-Cycle littith J1 I 'I' wp -( ".1_7 * ^^^'.._ M ^ r ~~~1 1910 pettynlall af ound the m q r-y .,~ EN. ^ j v U Till l't'N ic Si nvict ^ effects of tliese deniind-A .N COMM!v. ton 01 ^ M Akyl AND is ( r.1 Ai1 D. , c I ohleCliVe of our L' ^ l Integrated Nesource p A Plan is simply ihiu to g ^ iM i develop the lowest Cost

• M o

/, ? = .q.}. L . g.o bu M..7 '. * '. '[d. $ A ,f teliah!c power supplV J ' ~,. M ^ ~' l }, d for ottr tetritory. or a 7 ^ 1916 ^ C(Bil'lilMi % 1lil I f!! Cl1 \\N All? AEl U1 1999 TH1 Niw iniNoi"" In the next decade, llGNE's fuel mix for electric ^ IWillIlNG lb a )Mi s 1 Hi A C( >Mf' AN) } ll M igI 3R rl IK; i generJtioll Will be approxir11.ltely.llN ntlC! car. 52"i-qg3l. and 2% hydro, With the renuinder 1 Combination U is Now KNuWN e iHi A G e AND I.i H'!Rh A or um TW s not o4 IlUllD!No. IN lHI 1 All A ,g, n n 19ses, lhi liw skii t RinN helps to insul:lte tis from volatility in the Supply Jud I ice of fuel, it gives m greater Oexibility in meeting ia Niw Ai iuNu in i" lor TH1 DIAlotilloN (4 the reqtiirements o the federal Clean Air Act ofi990. A!! bt'l ilVl int'II Dl%s IN q'e'ye bepugg evajuating eminion-corttrol options and lill 2 u kt lioWNio4 N Ak! 4. Now A CITY LAND- ' M WL, 't HI GNI. bt'llliiNu "b. b" E thelen, reducing stilftir dioxide arid nitrogen oxide emissions to the riew levels uill w b MVIDfoRin AtcHl. A ^!! Cit RAI QUAlin. A increMe the ice of electricity in the '90s and krond C(ml ja si nW 3 g Improving air qtlality is only one aspcCI of environmental i 1922 ,';L, proteClion Ericrgy conservatioii is ariother glob.il priority. ^ j* ] . HI L,ostPANY s[ U lls A b" ^ to. coo ni l'I t c1 Ric wnserve enetgv, protect the environment, and reduce our ^ u n ik. g A dependente on foreign oil by inucasing the energy 3 191*?-1918 l UNlrID S t AllA ins nvt D i ) IN wok! D WAR I. ^ ^ I.} ^ i A

g A A A h' A A A 1 4 a.y me 1 citic it th y I our ID ,.y 'f y. tilstoincts hotnes. l-l/ . r f;iyL : - ,,gi s,,y g g y, g.; g en *' t;y > ' h,f. Oll,nes, f.h tories, and HI ( ' NP W) Al t l'i 11 t o t [ 4 iju (f at.sportation. ()ut d t h u luis. W7,I thitist for 1991 (cnters 7 ~. f ott a tchate prograni to 39M Y prornote ilutallation of ^ O '*'I U " l ' U ADD' ell,Klent (olitlitets tal x ,j h A inni<onimn ns io ns j r uypj pg. ~ g M M H u n >N m m ^ g ~ ligluing. cooling and siosiNc. 4 o nu i-rum W4~ - P di.A ( UN1hv I ulvlu,it g,jj j y,, y me, with encigy-sasing ' i y.c l h wn i M iu,y t. 4> n o.Ininni,of nu s ^ - / .a *- sa m ' g, 13M H H hVIIIAkb"b htlildilig In.iterials. \\\\ c'ic g, WM19 l'ow L R Coul wy. also it)VCstigatillg illgl)-Clll(ic!)cy custofilet CI)ctgy .Gln ], \\ lit s ^ r- + managemetit systenn and appliathe upgrades in add. t-3, tion to focthing on a W!icty of dcVeloping gas applica- ^ A - t tiotts, partictil.itly in transpottalion and cliinate-tonttol A ^

• sntems.

1941-1945 4 libi Pilit t h)N ^ UNili ti $1 Ali s ins t u s i n ^ iN W( l !' W^v II' V.ii l ll \\W !!h IN e To maintain reliable sersice to our j ', 1950 ^ y ; <r3 A ttato.ners, wc'te expandilig and teillfotting both our bulk I? 'jm [gypwyniggqggs b power trathitiiniot) systern alid out distribution !)etwork. After ~ ^ M H W i 'N\\ l lNON Y; ^ l-ponel.itilitin M iw yeats of. legal and regulatoly delays, we are procceding with the ., y,, y,, y,, Lompletion of the 500 W loop, which willincicJsc out ability ^ N M t pat uw A to itilport power to our setsite territory and provide additiollal tratulnission ac(cu a 1990-19 H to alid frein Calvert Clifh, The two seginents of this proict t, inintly funded and ^ A UNill n hl Mi s ins oisils solbliutted Witl) neigllborklig Nototllat h}ntric YoWr ($olnpally, alc s(lleduled for a,, 9 q,3 g a i994 completion. ^ in response to customer growth in the northern pan of our territory, we are ') ' " " ^ I' "

• N 'i " "t upgrading our tranunission system from us Nv to no Kr. In 1990, we finished the A

I R( $U t t'ItitUNVIR1 first of several phases of this Notthern Ring proicci. In 1)ctember, we energized the 4 nowNiows B u uunni tirst leg of the no Es tranunission lines to and from our Perryman plant. This ^ umu no omou n oc A MV1 M lti M ( t 'klif N 1 b ^ l (IMP! l !! n. ^ 15 A

A A g, Ai ini ANNt u Mn nNG 4 >N APR!t. Is l, lill G iNu n li t h il n ('a b l.Ill I KH I.It,lil ANli ,gg g g, g hiu n n isu m oi (}IIEI 'O III IUdbICI SU hIdl UU U I}IC Idp d1[ gIU W Ug 1tdIfDIJ U UUUIy dIUd-l bC\\C Ih' nMt >RI h LI N AMl n 6 lhl Inhlki ('ob ann fnalor additions %ill stric the nort!)ctn and no!!beastern p.uh o[our tellitory %Cll ^ l'ii n ate coutm. into ille 2bt telittiry. 195(, We added five new sulutations and r e d'* Opark (apa(ity at be otlicts in IKiNI. \\M.Ns A L L INIRWI J. g _ C,.e gggg gg g) ppg joad towth on our % )l n sl \\ l N til 611 R 111(. 6 *;;L,, 4 g

• ?$

urin tinitusnons in . 3 ~~ "g *

• 'I It *RM 1 ol l'I NNu t s ANI A.

nliable local supply. This pattern will N1 s.ll R4 \\.MwvtANn ~ y -N m,_m yon. ,, min nc in,,,,. o a ni un s onno, f. s cum.m e en v h5 d IN il GR A11111 t i n i(K ,rg (, g !IIs I k !1b N b. .W@ lO,Nl. began as a pas Company, and jl yyam. f.o.u, e .m.: * .. r. f,p 1 } 4 j,, {as ks rt sulllkng a ploillinCnt Io C kll ollt 1 I busincu. Sescral factors make gas an ~ im attractne fuel for the.une 11 h domes-4 1 '!.144 1in t c1 v - t>i a-tically available, com ietitnelv prked +. mwnwi. ou s utu i .-.~. ',g-i h ali ;N lutliuoia b ' j ' f,' 4>w.d corupaled with oil arid aial, ann,, na , {,hC i s nNta iu n n oN An.csi j dean fud. q ui in M u on l uvu n or tain hi M d tu M Uc h p.h I fat i s \\NnPt). lH. has alwc.ys been a preferred fuel. And the Clean Air Act ' 9 f'4 of1990 provides a spur to desclop new technologies to lu;Ni's Niw C u\\xt hmb du WiWh On MmJ b disml l 'I N il k bt'ill'!% h n beat ng and procNing. liigl)-Officiency pas s i AP lili tin l\\NU ua lo1H uWh technologies play important roles in Conservc : vas os tun o r im 000. liahimore is a maior non-attaimnent area for ozone- , y g,,,9., U.E IN\\ t il \\ Ils IN lh ki n 1-insiN varN m operating on dean burning fuel before the end of the century. Our pilot programs with natural-gas. fueled vans and buses will help 19(C prepare th for that evcllithtlity. lu' Al ANNt M" tl s 11 ANs G I',as a,u conditioning is checu.\\ c in largtwale 9 , 37g _g lo pen n Muvi sNnN 1s 3 l n(%l Nk '('l l.O h iWl hl li j) pd(h(l((s, dl) WC {1[(1[ll(){C k( d{ll(){} (){ { { p t bl Nt R Al!Nt, P1AN I oN lls Ol\\ l R1 Clif t s slli. A!toi'l 60 Mtl1 s M it"Ill ol ^ 1(i 4

l .s .s a 4 1 4 i . !J ..e ,nm se 't t illdthtfkd! J!)d (OfllinCiliJl t (1%tOfnCl% l$Ut ddVJnLCh in (UtbnOkify g.j. Ind)' 400n IndkU gd4 (OOlillg kystCilh J aOI)Dillig dl t }loit C lInf ICti-llM I nh iRI. Al lill llMI, lill IWt*1%Il4klITI-dClllla!Cll\\tOmCfhJ%%CN.!50t!110 CXpdfid Oll! g h 11CJtilip findikCI dnd (O plCpale lOf ,,,,,m uq .I yCJi fOlltid kithillC%, MC afe Cxtrlldilig Olli gd5 fildil14 illto plow (b dlC.1% lt) dddl-mt,11 1WI s l Mi N I t il (IOll. WC df C 110W ll\\ilig lidtllid! p.It (Chi-Y.A 4 i)M Vll'il l t IN lill VI -Vil, dClltid! Ilbta!!JtiOlih tl1Jt JllOW IWO .;JiQ{ ). q,

n. p Q i pOlludi pel M]lliitt inCI) O[plCMU!C

, [ k( l' 19b9 inkiCad Of(IK lhlid! OllH]LiditCf l'ik%1 MIN iAN!i(>N 11H i 'n ^ " ""' " ' N "

• POlllld, Using dexible CO[pr tubing

.i ilhtCadOftbcllWJlClllnbCthumCp.ipC, j 1975 a t%O-ddy in4tJllatlOh DdW (dkC% iWO ,,, g'9 0 UNy g q Jm (m gg d-Cl ll i s N L 1 i I a l'i m i i< l)OLlrs Tliis COrisillefable Cost savings l'1 AN I I N il la si IWl( l -+ Ill3kCh flattildl pd$ d fl10fC apptJl ally ^ OptkOli IOf btlildCIL OUlillg 1990, II)r __ IEN/3 i )I % (si st16 h 1, 3 O ', ^"'""t*"""""^ kg;.* i examplC we installCd natutal gas in ss .h 'lll!Pli t el lill O h!P ANT N l10n10 dCVClOpl11Cllti alid added ikl M- . MY

g, y g s y,3 ggg,

!)C% f .{.500 nCW pdb}) Cat LllstOmCfL TC -f IIIIM i l\\ Ilil Ill' Il\\ll A ^ Alm klM! N1 ( tlAla-l lti C\\pCCl Olli 3ppfruiVC 111JIkCliDp 10 t ( l s it 1Mila la Miil'l 10hl1ll kil J AICJdy inCTCdAC i!) ClistO!!)CTL .Q g g J H AN Ho M!il HIN 'l 1 H hmi i' (l~% ](1\\ll 1; b! I i i; ! I \\ M' i Wi D id It A ( \\l Vi ki Ct lli s UNIl : NCliability i;.h illipOfldf1t kfl tkl0 ClblOmCI CIld O Mlf Sb 4! ( in ') fI bildN s til Nl FAllV !!!( - businns as it is in ibe supplU Cnd. WC've instal led a new Om m u n u row na As ^ ' " i i u-5 .s,,g.lf. m iOuin ua Cth!OlllCT !!1l,Of filatIOli byttCW -- OnC Ob tbC WO\\t D G v. i g g, App}li5thCJted COllipillCT SyStCf11% Ob kth lyfC kll I 10 PKH I li ft Lit t M ATilH H 'll 4 indtl5tfy --- (!)ill pkVC% ll\\ VIf tlld]i,V Ull kIII IC CA I If I\\ \\I A 1 UlIt)RI dtid ICspOnsiVCnCS% 10 Olli Cth(OtllCfN % })ilC lOWCit!)g

• \\

i l 4 ldk10!' dild Systtill flidilllCllallCC CO\\tb 1lli% knVC$tn1Clit g l976) 4 kil (}l13lity SCTViCC WI!! AllppOf t Olli gf0%lflg !)CCdh jy g j;p;gsjgpg]gg ^ IOTdCiddC% lhiInhiRflll} l't 'Ni s I t ) fil t P lin lNt t iMt ( ! s i t all In PM 'lll! Ili t (IM ll11 Allt'N Il il Nil Titi riu oP.Au "" " u m ""O m "" emCfging as a maiOf aomCsiiuOmpany in ibt rouynnation busions 4 4 Mi!.\\it f l'Ni h II H l d ( di- <st'l f li! <(H'Ni}O. g-a ---vnw.,-----.,-w--

• s l

t t t 9 A Ag{ na g4A4 ; 1 Rp[g @hM Ad[i Il?$I H AnnonttAct ortN3 ON 1 d /79 %, Q hg i M@ MNh gy Jety 2. A oniuoNi is I %d@hk p: C anTmou 's tsun ^ h hh d' h g 4 ; 4 r )g f y g g H wnos RI t u vi t onu NI. g Constellation Energy will increas- ^ ^ au. . ? ss yp %p :g;

v. -r 31g3 mgl> focus on power supply m. the g

ye 3 A m 4 4 4 '90s. Constellation holds positions yp(h; CossTkccTios or Int ^ rxtAssios os Tur sur 9 t in 24 power plants, with total i ty Huaion uvnnou cuac ^ ruois cr b, ciNs os capacity exceedin oo megawatts. M e a axo is cosa m o 2 These include biomass, solar, coat, @de 'ed ~ g UN APun rz. 985 .i hydru. and geothermal plants. In i ^ AI addition, Constellation, mainly gi { ' through partnerships, has P ql,Q' ^ A 2 contracted to operate 18 power , n. t plants,10 of which are owned by M A .%3

other companies.

Although several of Constellation ^ 4 ,my ,9, ~ ~ 1 i Investments' holdinp om -, meet earnings expecta > la mi,"m naast.ox snonts tions in 1990, several m m', u ceeded our plan. Overall, ~ .4 U srr i. A 64 4tw coni-t 4 HURNING l'LANT coMLs the subsidarv s dive-a investment pmgram provided N \\\\. oN-ilNL, VIRIUALLY LI!MI-innp riant liquid r.J the maicaity of Constellatio.3 ^ xxnsa rm couPasG A t%l of loiMlGN 011. k!oldings net inG me. 4 6 During 1990, Coustellation Real Estate made signifi- ' [' R 19 6 A 1 cant progress on exisung projects. It opened two high-u coxsw nos v s Hotoiscs is ron.uto os ',- rise < 'Tice buildings - Constellation Centre and One m.cany i. '[.Natioaal Busir css Park - and two other buildings at i: Uational Businen Park. Piney Orchard, a mixed-use ^ 8 19 9 - 4 - BGNE srnvcs ns ox: development in.inne Arundel County, opened last i A year as well. Although plans to sell selected real estate ^ un corrn crstourn A

suffered from a lack of market in i990, we're confident 1N M^v.

f that our diversified portfolio of quality projects holds .s

399, signific ne benefus for us s the Baltinere-Washington lx nit snusc, naasoox

^ huoRt? UNIT 2, A 6 odir l'eal estate pleture irnproVes in Colning years. ^ 4 [ Constellation Health Services con:inued co u.ntaxisc Ptavr. wat txTt+ snvu. f to expand selectively i" the senior-livir.g market. It added leases at its A i f rwo retirement centers aad puichaed an interest in an additional 5 nursing home. A i [ k-e t 18 A k

4 e< A e. A, .,~ A. FINANCIAL CONTENTS 4 4 .c^ 20 'salearikirkirr sale. or cu 9 UTuny i q 4 OPFRATING STATimCs - --lblimm afAkavion - Ah!!wm e![~ 4rIvrw -a-no A II et -- w- .e i SillC1tD ftNANCIAI DA1 A - - y **> no u "*s$ 7 j-- p 24 f m.. A !a t,. ,on -._ of. -T 22 m. w n. w =a q%y , < ~ . _L,y -Q 3 7 10 ~ .tg -, jy {i _; g 30 _. , 5r_ AND AN41 Dis ? k'f-84 U- ~W s6 - '1 [sli 4 d ~ f r 4 - -{ p 'h ~ 26 -) J 70 -[.h A-m4 g-n 1 n" h '3 - 1 60 - 4 -- - + - .:--. -m A lhPORT Or MANAGDtLNT ~ 1,. f ..r f .]_," (~,f 16 'Y 1 u, - y }.V-w a ,4 w A .,M. r;(

• q*

40-"** ^ p]"j* yY fi u fl - A+ 'A* IU PORT OF' }}- y 'W j- [ { INDIPENDLNT AUDITORS 6- [ h h ~ 27 4 jN" M"r7N" ? comOuDATm ~ 2%-v a a a# = ^ N suTairNis Or INcosa' -4986 1987 19 % a9 9 199o 39M6 3987 s988 #9h9 #99o 3 N Rentential M Residential 28 Liu Commenial f"'*'*** Commenia) A CON 501IDATED and Indeirial and Indmirial - A ilALANCE SlHETS = Residential Residential 30-66 %84aif N8 no 4 7a - 8 5 ' 9.2 9.( 94 - CON 50UDATED STl.TullNTS imercial and Induurial Commercial and Industrial A 8

• M9 M6 i OFCAm Fm n, 58

n4 ni i4 8 n3 n.: . Total - . Total - i 3g 2o 23r no us 146 ' 954 m3"'*5 2 7 N24 ~ A CONSOllDATLD t STATIMLNTS OF COMMON A StIAuritOLDr Rs' !.'.QUITY 4 b2 4s i CONsouDATm STATutLNTs -= Billing Degree Days - Billing Dept Days - Dectric Peak load (One Itour: 0F CAPITAuzA rioN Cooling- - Ileating ^ Mqvwin 3fb-loooe s,ooo ^ 6ooo CON 50HDATLD i. u.p-p r._y 4._M * [pn {.," tlme L .^.STATf MLNT5 OF TAxt.s __= s.e-q h j h II 3 1 1 - 3.1 .-~t M, sooo - 4,ooo. r-p-k7{p-? s O 3 ? l 1 NOTts To CONsouD ATip - 4co - A y - :k f._ d LM .5 (4" ' f II 7 7 f 1 l'INANCI AL STA;DilNTS po-i 3 ~. - -~ n ,kW3 y >y-. ]}- 3 1,ooo - f n.--,;y y -t' , }Q.h a t?;. ,f .i 5,000-n q a 1[3( (. ,1 _ ' _,F 41_ _'%,_ A.. g. 48 'm.S,. y l t 4 e + iono 4 1 A N}. T f 7 } y1 I SN - g - CORPORATL AND o .I b U U U i UTILITY Ot tict.as M n o o

1. 986 s9'l; 988 49 9 i+n 1986 19N' [948 19B9 3990 8

19 6 I?9? 1988 1989 1990_ s N .A.. CTS irual FN Actual M Summer Peak A..{j o A BOARD OF DIRIC'IORS . ' Normal no Wr Ase 4gw ""-- Normal noius AJerapi M Winice Peak - ~ ~ ~ * {_O 3 Auual Actual Summer Peak CONTTM LATION 9; SUMIDMM 9o+ 446 90 n+9 540 _ 47n4ht 4@l 4.M 4 oio - 44d 1.t*) M81 Mo4 14+- Norreal oo Year A.erager. Normal oo Year Avnage) Winter Peak N -Mar > um 806 EM nos 804 4.'04 4 '2' 4 38 4i?M 4.'o6 4.nr. 4w 46o55.:9 4ar A 32 ? suAnmotDtR INIORNIATION % m,3, 4e A A 19 a. L.-- :... .. ~.

f 1 UTitrn' OPEIMTING STxiIsTics Miimore Gas and & ric Company andsubadi.evier _ J 990__ JP9 198F 1987 _ 198 L 1Jectric Operating Statistio Revenues (in Thousands) Residential. $ 723,406 $ 648,884 $ 620.660 $ 594,283 S' 575,774_ Smail Commer iak 221,588 194 573 178.727 175,322 177,667 1 arge Commercial and Industrial. 735,110 666,042 626,300 615,723 626,022 uther. 4,050 9.795 8,8' 5, Ha07 8.788 'lotal..... _51,684,154 $ 1,519,294 $1 A34,562 $ 1,393,735 51,3_88.251_ Sales - M WH Residential, 9A 17,504 9.450.984 9,196A33 8.521,381 7,797.858 Small Commercial.... 2,579,929 2A60,592 2,292,764 ~ 2,139.164 2.007.040 1.arge Commercial and Industrial. J 2,622.64 5 12,879A86 12.491.50-11,914 A20 11 A30.725 Total.. 24,620,078 24.791.062 2.$.980,702 22,574,965 21.235.623 Customen Resid ntial,. 130,880 913,910 895,881 876,826 853,976 Small Commercial.. 92,102 90.647 87,049 83,247 80,384 1.arge Commerc.al and Industrial. 7,991 7,587 8.175 8,395 "'.9 54 'Iotal.... _ 1 030,973 1,012.144 991.105 96S d68 ___,,_94 2,34 3 Average use per Residential Customer - INH,. 10,209 10A38 10.362 9,837 9,255 Average Rate per INH - c. 6.82 6.09 5,95 6.14 6.50 Peak toad (one-hour)- MW 5A77 5.304 5.381 5,190 4.618 Capability at Summer Peak - MW 6,159 6.164 5,930 5,888 5,797 L Gas Operating Statistics Revenues (In Thousands) Residential, $ 224389 5 242,389 $ 225.035 $ 242,240 $ 258.975 Small Commercial.. 35,699 40,011 36,394 38,538 39.659 Large Commercial and Industrial Excluding Delivery Senice. 90,306 90,983 92.637 103,765 123,356 Oclivery Service.. 21,057 27,069 19.364 23A92 18A25 Other., !?b8 11,349 8,106 7A21 5.354 Total... $ 373A19 5 4!1.801 $ 381,536 $ 415A56 $ 445.769 Sales -. DTH Residential.. 36.032,159 39,805,853 40,140,800 38.142,183 38,629.757 Small CoramerciaL 6,349,301 6.888A39 6,791,8 6,335,306 5,960,010 1.arge Commercial and Industrial Euluding Delivery Service. 20,010,708 18,772,305 21,769A70 18.345,190 21.234.221 Delivery Service.. 40,23S ? 55 45.230,133 40.827,285 40.118,136 31,551 x99 Tota!.. 102 a 3 110,696.730 t 09.529.392 102.941,315 97,375.887 Customen Residential. 482,680 482,538 482,011 482,023 482.394 Small Commercial.. 31,981 31,881 31,582 31.108 30,820 Large Commercial and Industrial. 5,373 5.307 5.160 5.001 4,873 Total.. 520,034 519.726 518.753 518,132 518,087 Average use per Residential Cuuomer - DTH. 74.7 82.6 813 79.1 80.2 Average Rate per DTH (e:,;ludmg delivery service). $5,62 $5,70 $ 5.15 55.93 $6.29 Peak Day sendout - DTH.. 653,900 663,200 669.500 63r.000 624,700 Peak Day Capabilit - DTH.. 853,000 761,000 791000 731,000 748,000 10 e

a ^ I Sn Ecnm FINANCIAL. DATA Balumm Ga< and Unnk Comp ~y and5dadwm 1990 _. ._1989 19Hh l()H' Summary of Operations il bilu Amauno m I homeA I nrpt tw %m Aw,unw _ _19kn Revenors I lecuic. 51,684,154 $ 1,519.294 51,4 W,562 51,393,~35 S t.388.25 i Gao..... - 373,419 411,801 381,536 415 A 56 945,769 Diserufied activitiet. 101,690 71011 47,570 2" 555 20.0 % Totai res enneu....... 2,159,263 2,004.136 1.xpernes Other Than intereu and imome lhes ~ ~ 1,861668~ ~1.836,74o ~ 1,854.106 IJectric fuel and purchased energy, 523,086 370,131 311,510 2 % 543 327,317 Provision for possible disallowante of replacement energy wstu 35,000 Gas purchased for resale.. 200,762 223A62 19Fa31 2 H,702 271,383 Oper iionu $76,271 478,194 431828 38H,973 369,277 M ain t ena ni. e.. 163,457 149,014 132,746 124,837 120,052 Depreciation.. 170,586 156,446 147,076 134.838 128,002 'fiotes other than income tancu 156,722 150.204 14 1127 . _135,731 131,554 lbtal expenses other than interest and inwmc taxes., 1,H 2 5,8 H 4 1,527,551_ 1,366.718 1,314.624 1,343sS5 inwme I rom Operationu _ 333,3'9 4"6f 85 406,osu 5 2 2.12 2__ _ __ 506,521 Other Inwme Allowance for riluity funds used during comtruction., 27,086 18,s64 16.056 16,870 16,871 F.quity in carning of Safe Harbor Water l'ower Lorporation. 4,900 5.176 5.570 6.331 5,765 Net other inwme and deductions,. 4,6H9 ~,188 1,928 9 is (619, Total other income. 36,675 30.92H 2 (554 _. 24,146 22.01" income liefore Interest and Income Tam, 370,051 50",513 520,509 5%26h 528,538 Interest i xpense Interesi charges.. Allowante for borrowed funds used. ~. 200,922 164,369 136,071 129,871 126,324 during (onstruction.. _ (26,266) (14,77t)) _ (12.075) _ (14,069 (l_1582) Net imerest expeme,. _ _174,656 ._19 9,59].. _ 12 3,9'f 6_ _115,802_ .. l.12."4 2 inwme licfore inwme Taxes. 195,398 357,9/0 3 % 508 430 A66 a 15 '96 income Taxes. 19,952~~ ~ ~ ~81,629~ ~ ~ ~91096~ ~ ~ ~ ~ 130,\\68 191,177~~ Income liefore Cumulative i fTect of Change in '~ Accoun ing Method, 175,446 276,291 303 A l 2 300,098 274,619 Cumulative 1.tIct t of Change in the Method of Acmunting for Unbilled Revenues, Net oflaxes.. _ 37,754 Net inwme... _ 213,200 276.291 301412 300,098 2'4.619 Preferred and Preference Stock Dividends, _ 40,261_ 32,381 J,375 _26.406 26.876 Earninp Apphcable to Common Stock. 5 172,939

$ 241010

$ 274,037 5 273.692 s 247"43 Earninp Per Share of Common Stock liefore Cumulative ILi of Change in A_cwon:,og Method.- 51,64 53.05 $3.47 53A' $115 0: mutative l$cct of Change in the Meinod of Acwunung for Unbilled Revenueu...... A6 lbral Earninp Per Share of Common Stock. 5f10 % Ui;~ ' ~$Ei ~ ~ ~ s G7 7 \\ 15 Dividends Dedared Per Share of Common Suwk. 52,10 $2.075 $ 1.97 5 $ 1.875 51375 Ratio ofI atninp to 1 ixed Charges...... 1,96 3 12 184 4.22 4.19 Ratio of Earninp to i+ied Chors and Preferred and Preference Stock Dmdends Combined.. l.61 2.50 1 01 1 29 120 linancial Statistics at Year Fnd lotal Assen 56,710,3'5 $5.985.679 $ 5,126J62 $4.? 80,167~~~54,582.670 Capitaliation ~ ^ l ong-term debt.. 52,193,H44 $2,076,620 $ 1,769,066 $ 1.707 A0" $ 1.5%275 Preferred stm.L.. 59,I n5 59,185 59,185 59,185 59,18s Redeemable preference stock.. 365,000 322 h00 229,600 186A00 50S00 Preference stock not subject to mandatory redempdon. I10,000 110300 110.000 110,000 110,000 Common shareholderi equiry. 2,07 1 158 _2.001, I H8_ __ 1 885,295 1,';5,368 1,629,795 Total capitahution. 54,801,187 $i,569,793 $4,05i$i _ 5 1818.360 $3 A 45,255 llook %lue Per Share of Common Stosk. 524.U $24.91 523 $22 24 $20 '2 ] Number of Common Shareholders. 68,689 70,395 '1786 3,i,F ' (i.972 I l .I s

4 MANAGEMENT'S DISCUS $10N AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERNTIONS fuhimer Gas andHurric Company andSukidsann The financial condition and results of operations of Bahimore Statemenn (Notes), Selected Financial Data, and Utitty Gas and Electric Company (BG&E) and subsidiaries Operatin, Statistics sections of this Annual Repon. Factors (collectively, the Company) are set fonh in the Consohdated significantly affecting resuhs of operations, liquidity, and Financial statements, Notes to Consolidated Financial capital resources are discussed below. R1MTis of Ort unoss ! amings The Company's consolidated earnings per share for 1990 were of high voltage transmission capabilin. Finally, the 1990 $2.10, which represents a decline of $.95 from the 1989 level nf decrease reAccis a provision of $35 million or 28c per common $3.05. The earnings per share are summarized as follows: share, for the possible disallowance of certain replacement ""#TI'

• 'E""'

b## 1990 1989 GP.8 Notes i and i1). Utility business Earnings from utih.tv operations are affected by the regulation C.urren 7 ear operations. $1.46 $2.81 $ 3.2', of BC&E's rates by the Public $crvice Commission of Maryland Cumulatne effect of change in (Maryland Commission) and by the efTect on sales of economic the method of accounting for and weather conditions. b.rected increases in utilin operating unbilled revenues (see Note 1)... .46 - expenses in 1991 will be ofTset partially by addmonal ciectne Total utility business.. 1.92 2.81 3.23 ievenues resulting from t' e electric base rate increases authorized Diver.ined business activities.. .18 .24 .24-by the Maryland Commission in December 1990 as discussed 1btal. $2.10 Stos $147 under Utihty Revenues and Sales below, in addition, there are Utilitt eamings decreased during 1990 and 1989 primarily '" "'"'.7.# #'* "* '* * * '** #' I#" "E # Comrmssion, as discussed m Notes 1 and 1., which could as a result of higher operations and maintenance expenses.

• I'#* " * "'# Y'* " #* '"
• E particularly at the Calven ClitTs Nuclear Power Plant. higher I' **'

'#I'#*** the Onancing costs, and the effecn un sales ofless favorable weather operations of Constellanon Holdings. Inc. and its subsidianes. - as compared to the respective prior yean. In addm..on, the g;,,,g g decrease m 1990 reDecn increased costs resuhmg from the purch.ne of additional generating capacity and from lower sales QiwIM uun.mdsa!cs s The increases in electric revenues for 1990 and 1989 are primarily The changes in electric sales volumes were as follows: attributable io higher fuel rate revenues resulting from increased 1990 1989 fuel costs. The in.reases for both vears are summarized below. Residential.. (.4)% 2.8% 1990 1989 Small commercial.. 4.8 7.3 Un Wl'on" Large commercial and industrial.. (2.0) 3.1 Changes in sales volumes. 5 (3.6) $31.2 lbtal.. (.7) 3.4 ' Increased base rates. 32.9 .4 Increased fuel rates.. _U M 31 Sales to residential and small commercial customers re0cct Total increases in revenues.. $164.9 $84.7 growth in the number of customers H both years and increased per capita usage in 1989. In 1990, customer growth was more l than offset by the etTects of warmer winter weather The decrease in sales to latge commercial and industrial customers in 1990 rdlects lower steel production by Bethlehem Steel, which completed a planned maintenance outage during 1990. l-21 l l l

l, a . Bahimm Gas andHarrie Comjany and.%Inidiarin The increned lose rain for 1990 reflect the Maryland The changn in gn uln volumn were ai followv < ' minioni December 1989 raic orJer and a sunharge red during 1990 to recover certain purchned -'i999 j939 ~' ' y charges. Rnidential. (9.5)% b8)N I.latric revenues are npected to inuene in 1991 as a rnuh S*dU(""""C"Idk I 83 IA of several electric base rate inacases authorized by the Maryland I#FC """"kidI '"d i"d""'AdI

• b 9)

Commission in in Dnember 1990 rate order. In that order, the EdI - M U Maryland Comminion n thorized an immediate eleuric bac The deueasn in sales m enidential and small mmmercial ree increne of $77 million enually. In addition, the Maryland cmiomen in 1990 refica the effeus of warmer winier weather l Commiuion authorind a $124 mdlion bne raie merene to pmvide rate recogmtion for BGNI?s investment and operating n wmpared m 1989. The decrene in sales to large mmmercial and industrial cuuomen during 1990 tc0cco lower steel I expenm at Brandon Shorn Unit 2 upon that Uniti c omn,ercial pmduuion by Bethlehem Snel and decreased utihtation of operation in May 1991. The $124 million increase in bne rates is to be accompanied by a reduuion in -he fuel rate to reRect the delhery service by certain large cuuomert Duriag 1989, ules m large commercial and industrial msmmen increased currently ntimated $52 million of expected annual fuel cmt due m greater utiliiation of delhery servke. savings resulting from the commercial operation of that Unit-Th, changn in gn cou adiuumenn in each year reDect The Maryland Comminion aho authorized BGNE to apply for pnmarily thanges in the price of ga froin llGNEi pipeline a surcharge to bne rain beginning in October 1991 m prmide supplien_ in addition, the dectcne in 1990 ic0ects a seulemem for recmery of approximately 550 million of purchased capauty costs which will begin to be incurred at that time. Bned on of certain take-or-pay issun with BGNE's principal gas pipchne supphert BG&l" financial performance, the Maryland Comminion ha agreed to authorire the bue rate increne for Brandon Shore . and the surcharge ifit determines that BGRE would otherwhe be unable to achieve in authorized return. Gn sevenues changed compared to the respective prior years a a rnult of the following fauors: 1990 1989 l-Un M&ms) Changes in tdes solumes.. $(20.6) $ il Decreased bne rates. 0.8) Ud Changes in gn ont ad uuments.. 0 5.0) 26.8 i L Total changes in revenues. $(1R 41 5 TOM 4 t I nh eni6td DWneo As th ni<, Earnings from Connellation }loldingt Inc., and in subsidiaries the troubled banking and unancial servan induuriet offset (collectively, the Constellation Companin) dechned in 1990 somewhat by the performance in other pans of the selecuvely from 1980 and 1988 due to mftnen in the real estate market dnenified ponfblio. and hmer earnings fn>m 6nancial inveumenn. Earnings from the Constellation Companici power The Conste!!ation Companies' real ntaic developmem generation pmjeus increased in 1990 over 1989, redecting a bminns ha been affected by depressed real ntare and economic tontinuing unlitation of energy tax credas fmm conuruuion of l marken, rnuhing in reduced demand for the purchne or lease energy proiccts and mme operating income. Earning fmm a of available !and, office, and retail space. The inabihty to number of the power generation pmicas ue expected to remain complete anticipued sales of rcal estee projects hn rnuhed in low initial!y but then increne. As a result,it h anticipated that - increased carrying cc.srs and depcuiation, negatively impacting the total carninp of the energy projeca will begin to increase in carningt Earnings imm real cuao: auivitin are expeued to

99 4. Energy in credin remain available.ronugh 1991 for remain deprnsed a long n the real estate rnarket remains mft.

wnstruaion ef;;eorhermal and miar energy proicca. The performance of the Comielleion Companies' portfolio uf unancial invntmenn has been advently afTected in 1990 by l l 4

i n Mimre Gas and bric Cmpn and.%idwid yrmo Uectric fuel and purchaed energy expense wa as follows: opemions and nuintenance npenses are still npected to I ""'"" " "U

1. N " ' "* * "' "

1989 1988 ~1990'^un5my - ~ operat.on and as mher (msil power and dkuibution Actual cmts. 5630.9 5608.2 5322.0 expenditures increne. In addition, the 1990 inerca,e aho Net deiceral of cmts under electric reDects the expemes awociated with certain of the Constellation fuel rate clause (see Note 1). (107,8) (238.1) (10.5) Companies' real ntate partnerships which were previously -5523.1 0 7 55511 reported under the equiry method (see Note 4. Thtal expense... Dcpreciation expense increned in both years as a resuh of The increase in actual electric fuel and purchased energv higher levels of depreciable plant in service. Depreciat:on cusn in 1989 was due primarily to a less favorable generation expense for 1990 aho redects a $2.9 million annual increase in mix. The funher increue in actual cosu in 1990 wn due to the nuclear decommissioning accruah as authorized by the purchase of additional generating capacity to meet BG AE'S Marvland Comminion in its December 1989 rate order. In reuuirements under the Penmyhania-New Jeney-Maryland 199i. depreci.uion expeme will increme as a resuk of Brandon lmerconnection Agreement and to lower sales of high vohage Shores Unit 2 being placed in service and a 51.2 million annual transmission capabihty. The less favorable generation mix, increase in decommissioning accruals as authorized hv the capaciry purchun, and lower sales of transmission capability - Muviand Comminion in its December 1990 rate order. were auributable to extended maintenance and repair outagc$ faxes other than income taxes increned in 1990 and 1989 at the Calvert Chtfs Nuclear Power Plant. Calvert CliHi Unit 2 due m higher capit.d smck. propeny, public sen ice company went out of service on March 18. !989 and remained out of franchisc. and payroll taxes. service thioughout the remair der of 1989 and all of 1990. The.dlowance for funds med during construction (AFC) Calvert Clini Unit I went ou of service on May 6.1989, increased in 1990 and 1989 due to the continued con-rnction continued out af scrvice Gr d.e remdader of that year, and wa5 of Brandon Shores Unit 2 and otoer maim electric projects. The in operation for 80 days in 1910. Unit I bas returned to senice increne in AFC for 1990 aho reuccis the Maryland and Unit 2 h expected to return m service by tL end of the fast Commission's December 1989 rate order whi[h increased the quarter of 1991. In that nuclear generation represents the lowest AFC rate to 8.80% and reinstated in the AFC bae cenain cmt power generated by BGNE, outages at the Calven ClitT' expenditure related to Brandon Shores Unit 2. AFC h expected plam have a substantia' cfTect on fuel costs (see Note ! I) to decrease in 1991 due to the completion and commercial As dncussed in Note i1, during 1990 BC&E recordec a operation of Brandon Shores Unit 2 and the decrease in the pmvision of $35 million for the possible disallowance of cc tain AFC rate to 8.69% in accordance with the Maryland replacement energv costs associated with outages at the Cah rrt CommissioA December 1990 rate order. ClifIs plant-The increases in interest charges for both years pnmarily Purchaed gas expense was as follows: reflect increased levek of debt outstanding. The increased debi 1990 1989 1988 leveh are attributable to greater construction expenditures and un Mma,no increased deferred electric fuel costs. Actual costs.. 5181.1 $233,9 $220.6 income tax expeme decreased in both 1990 and 1989 as a Net recoverv (deferraD of costs result oflower pre-tax carnings. under purchased gas adjustment Preferred and preference stock dividen h increased in dause (see Note 1). 19.~ _{lo 4) _(22.2J 1990 and 1989 as a resuh of greater amounts of preference Tinal expense.. 5200.8 522M $198A stock outstanding. mpany dwup inaeaed opeming at on a em the The decrease in actual purchued gas costs for 1990 reDeca expenses and higher replacement costs for utdity plant assets. lower output due to warmer winter weather, while the in o: AMmugh the eRecu ofinuation can be mitigated through in 1989 reCects :ngher prices fmm pipeline suppliers. Operations and mamtenance expenses increasd in b. years me rebet, the regulawy pnxen unpmes a dmgag nme during which.mcreased costs may not be recovered. Thn due primarily to higher paymu and other cous a oe Calvert Clidi Nuclear Power Plant. The higher cosa at Calven Clifts regulawy lag b aunbmaMe in pan m rm re&Being twd on pan costs rather than projected cosa. It has been the Maryland are a resuh of significant expenditures i upgrade he plant Comminion's practice to permit recovery of the cmt of replacing equipment and pmcedures m the high st clards required at newer nudear facilities, Assuming 6e resumption oilormal plant auen, mgether with the opponunity to earn a fair return operations at Calven ClitTs, the Company anticipates that the thereon, beg:nning at the time of replacement. level of expenditures at the Plant will stabibie in 1991. However, 24

4 l Bahimm Gas and1L oh Company andkindwin 1 i LIQUllyIT m Qly! Al Rt mtu ! s The Company's capital requirements reflect the capital miensive 1988 through 1990 along with ncimaird anmunes for 1991 l riature of the utility budneu. Actual capital requiremems for through 1993 are shown velow 1988 1984 1990 1991 1992 p)9 3 On %l6w f Utility llminess Conuruction ex;wndnurn (ndudmg AfC) Lintric. 5212 5307 $362 5 379 5374 5 390 Gat 34 27 y) 47 52 42 Common. 44 80 81 74 9P 43 lbtal (onstruction capenthtures.. 5 10 ' 414 M I 7 Ei l 25" ~475' Al C. 28 33 53 33 16 25 Deferred nudear expenditures 10 28 23 27 13 Nudear fuel (uranium purthases and proteuirg charges). 47 17 21 3 37 55 lletirement oflong term dcht.and redemption of preference stock.. _ 21 _,5 3. _6R _ _89 _ j 3 310 Total utility businns.. 386 527 644 648 67H 878 i Diversified llminess Anivities l ketirement oflong-term debt. 131 89 8 m 97 84 l Equiry commitments, _103_._. 8 4_, __122._ _ _ J8_ _ _6Li'N 'lbral disersified busincu auisities. 234 _ _1_73_ 13p__402_ _ l60 162 ~lbral.. 1620 5700 s'74 51.Os0 $83s 51,040 BCACs con truction program is subject to continuom review Utility capital requireme: ts not met through the internal and mo<hficadon, and actual expenditurn may var > from the generation of cash are met through the iuuante of debt and cuimates above. The increase in estimated construction expen-equiry securities. During the three-year period ended ihturn as compared to prior estimates is attnhutable to the December 31,1990, ilGNEs iuuantn oflong-term debt, expamion and upgradmg ofitGACs transminion and diuri-preferred and preference stock, and common sim k were bution faciliiin and moddkatiom to existing generatin;; facihties. $632 million. $2l 5 million, and $132 million, ropectisdy. The most signifcant projects in the comtruction program are During the same three-year period, !!G A Es retiremems of the coaldired lirandon $len Unit 2 and two combined cyde unns long term debt and redemptions of preferred and preference at the Perryman site.1 xduding Al C, construction expenditures on stock were $114 million and 520 million, inpeciisdy. The Brandon hrn Unit 2 totaled $202 million over the 1988-1990 timing of future muances and redemptions and the mix of Jeht period, and such expcnditern are expected to arnoun: m 52s and equity securitin will depend upon market condniom and milhon m 1991. Expendnurn for Perryman are expected to total BG&Es needs. appmximatdy 5110 million, exdudint; AFC, mer the 1991-1993 Estimates of the Ccnuellation Companies' capital l peiiod. Other dectric tonuruction expenditures are primardy requirements are subject to continuous review and moddication. ) auributable m imprmements m BGNLi exiuing generating plams Thne estimaces may vary significamly due to the type and and to its transmmion and diunhution facilities. The ntimato number of projects sdected for development and ihe impact of above do not rdlect any expenditurn for compliance with the ket conditions on those pmicas. The Constellation Clean Air Act of 1990, and the Company does nor expect to incur ampanin' capital requirements have been met in the past significant expenditures for compliance through 199E through the internal generation of cash and through bonowings During 1990.1989, and 1988, the internal generation of from inuitutional lenders. As of December 31.1990, cash from utiliry operatiom pmvided 14% 8% and 74% Conudiation f loldings Inc. had utiliied fully its outuanding rnpectively, of the funds required for conuruction, nuclear fud. credit facilities. Approximately $364 muhon of the Comtdlation and deferred nu lear expendnures. The si nificant reduction fmm Companin'long.terrn debt, along eith the $64 milhon of 3 the M8 levd is due primarily to increased deferred electric fud short-term borrowmgs outuandmg at December 31.1990, will cons, greater construction expenditures and lower net income. mature 'aring 1991. The Conneilation Compmies intend to During the three9 ear period 1991 through 1993, approxim.acly refiname this indebtednns as it maturn and to continue to satisfy l 609o of the funds requ red for tonuruction, nudear fuel, and ongo;ng capital requirements through new and exiuing creda deferred nuclear expenditurn art expeued to be provided through facilnin and internally generated cash flow. utility operations. M

l REPORT OF MANAGEMENT

Baltimore Gas andktric company and%idiaries hianagement is respon',ible for the information and Coopers & Iyhrand, independent auditors, are engaged to i representations contained in the Company's Anancial audit the Gnancial statements and egress their opinion thereon.

statements. The Snancial statemenn are prepared in auordance Their audit is made in accordance with generally accepted - with generally accepted accounting principles based upon auditing standards which include a rniew ofinternal controh. _ current y ava ail ble facts and circumstances and hianagement's The Audit Committee of the Board of Directon, which l best estimates and judgnunn of known conditions. con ists ofIbut outside Directon, meen periodically with The Company maintains an accounting system and related hianagement. internal auditon, and Coopers N lybrand to system ofinternal controh which are designed to prmide review the a<tivities of each in d!wharging their responsibilitics. reasonable anurance that the financial records are accurate and The imernal audii staff and Coopers N 1 ybrand hase free acsess that the Company's assen are protected = The Company's stafTof m the Audit Comminee.

nternal auditors, which reports directly to the Chairman of the Board, conduca p-riodic reviews to maintain the effectiveness of internal control procedures.

REPORT OF INDEPENDENT AUDITORS 7b tiv 9,.rcholdm of Baltime r Gar and Eirctric Company We have a idited the accompanying consolidated balance sheets In our opinion, the financial statemenn referred to abmc and statements of capitaliurion of Baltimore Gas and Electric present fArly, in all material respeca, the consohdared Gnancial Company and Subsidiaries at December 31,1990 and 1989, position of Baltimme Gas and Electric Compny and and the related consolidated statemenn ofincome, cash flows. Subsidiaries at December 31, m and 1989, and the common shareholders' equity, and taxes for each of the three consolidated resula of thee operations and their cash Hows for years in the period ended December 31,1990. These 6nancial cach of the three yean in the period ended Decembei 3 L 1990 statements are the responsibility of the Company's Management. in conformity with gencially accepted accounung principles. 3 Our responsibility is to express an c. pinion on these financi,d As discussed in Note 1I to da consolidated financial statements based on our audin. statements, the Public Service Commicion of Maryland is We conducted our audits in accordance with generally currently reviewing the replacement energy costs resulting from accepted auditing standards. Those standards require that we the recem outages at the Company's nuclear power plant, and plan and perform the audit to obtain reasonable assurance about the Company has provided a reserve of $35 million for the whether the fmancial statemenn are free of material possible disallowance of replacement energy cosa, The misstatement. An audit includes examining, on a test basis, ultimate outcome of the fuel rate proceedings, however, cannot cvidence supporting the amoants and disclosures in the financial be determined but may result in a disallowance in excess of the tatements. An audit aho inc!ades assessing the accounting reserve provided. s princinles used and significant estimates made by Management, As discussed in Note I to the consolidated financial e Acil as evaluating the metall Anancial statemem presentation.

,tatements, the Company changed its method of accounting for

- We' believe that our audits provide a reasonable basis for our unbilled roenues in 1990. opinion. Q-A Coopers & Lybrand Baltimore, Maryland January 17,1991 26 I , wv

gl i. CONSOUIMTED STNMNENTS OF INCOME ~ ~ Bahimore Gau andHearic Company andSabidwesn Yeat I.mled December 31, 1990 1989 1988 un 'lin,uunds. I urn Per he Arnounn) 1 Revenues l l'let t ric.. 51,684,154 $ 1,519.294 $1 A34.56' i Gas. 373A19 411,801 381,536 Diversified activities.. 101,690 73,041 47,570 hal res enues., 2,159363 2,004,136_ __.H6._35[8 [ Espemes Other Than inscrest and Imome faus - 1;lectric fuel and purdiased energy., 523,086 370,131 311,510 l Pnnision fiir pouible disallowance of replacerncnt er.ergy costs (see Note 1 I).. 35,000 Cas purchased fi>r resalem 200,762 223A62 196,431 j Operatiom.. 576,271 476,194 133,828 l Maintenance. 163A57 149.014 132,746 Depreciation,,4 170,586 156,546 147,076 -l Taxes other than income taxes.. 156.722 150,204 143,127 'listal expenws otbcr ilnn interest and income taxes. 1,825,884 1,527,551 1.36bIi income from Operadoni...~.. 333.379 0 6,585 496,950 i i Other incorne Allowance liir equity funds used during construction. 27,086 18,564 16.056 Equity in earning of Safe Harbor Water Power Corporation 4,900 5,176 5,570 Net other income and deductions. 4,689 7,188 1,928 _ Total other income.. _ _.3_6.._67 5 ,- _ _3._:)_.9 2 8_._ _ _._2,.3_,5 5. _4 j income liefore Interest and Income Taxes.. _f4054 __ 501 513 520,504_ interent Expeme Interest charges, 200 922 164,369 136.0?! Allowance liir borrowed funds med during tomtru+ tion. -. _._ _ _...._ _'5) (14.776) (12,0 __2_6,266) ( Net interest expense. 174,656 199,593 123,996 income liefoie Imome Tr,xes., 195,398 357,920 396.508 Income Taws., 81,629 93.096 __19,9.._5 2 L income liefore Cumulati+e F5ut of Change in Accouming Methmt. 175A46 276.291 303 A 12 Cumslative IHett of Change in the Method of Accounting for Unhilled Itevenues, Net of Taws (See Note 1).. ___37_,7_54_. Ne. sc.c...,. 213,200 276 291 303A12 Preft,J and Preference Stock Dividends. 40.26 32,381 29,375 --.1 EarsingtApplicable to Common Simk.. $ 172,939 5 243,910 $ 274,037 Average Sh. m of Common SimL Outstanding... 82,366 79,997 79,052 Larning;s Per Share of Common Stock Defore cumulative effect of change in accounting method.. 51.64 $3.05 ~ $3 47 Cumulative efTect of change in the nicthod of accounting for unbilled revenues.. _ _A6 hat earnings per share of common stock. 52.10 5105 $3A7 See norn to wnadulnedfiwicial stawments. 27

4 CONSOLIDNFED BALANCE SHEETS hdrinwre Gan and lintri: Company and 5uhidurses At December 31, ( 1990__ .1989 (in 'I housandu

• s} l \\

~ Current Assets Cash and cash equivalents. 5 39.879 5 18.000 Accounts receivable (net of allowance for uncollettibles). 268,392 2S4,020 Accrued unbilled revenues.. 49,813 Luci stods... 78,535 45,499 Materiah and supplies.. I19,835 111,643 income t.nes refundable.. 44,720 73,144 Pr epaid tam other than income tars, 43,453 38,618 Cther piepayment.,. 30,759 34,247 Other.. . _._237 5,625 9, Total curreni assen.. 686,623 611,696 -Investmenu and Other Assets financial investments.. 322,532 326,341 L Real estate nrojects. 412,983 275.540 Ahernative energy systems.. 171,922 112,941 Safe Harbor Water Power Corporation... 34,241 40,421 Senior living facilities. 26,944 2',000 Nuclear decommissioning truu fund., 21,335 12,313 Other.. 54,517 38,120 Total investments and ochrt assets.. _ 1,044,474 _,832,685 Utility Plant Plant in service Electric, 4,230,881 4,034,444 Gas. 496,603 471,740 Co m mo n.. _ _410,538 308,492 I htal plant in service.. 5,138,022 4.814,676 Accumulated depreciatior.. (1,694,166) (1,;61,3291 I Net plant in senice, 3,443.856 3.253,347 Plant beld for future use.. 17,614 10,583 Comtructico work in pngress. 861,731 04,931 Nut. lear fur! (net of amor ization). 189,895 175,559 Net utility plant. _4,513,099 _4Aa_4.420 i Deferred Charges Deferred fuel sosn (net o provision for possible disallowance). 389,775 345.104 Deferred nuclear expend

• ures (net of amonintion)..

43,182 16,36' Other.. 35,222 35,40~ i Total deferred charges.. 468,179 396,878 Ti.tal Assets. 56,710.375 55.9s o?9 Le notes te conad redtinancals atementi Cerr.wiprior-year amau m have L en reaaied to conNrm u ici, rie currena yeari prnensatun I l 28

i CONSOI.lDATED BALANCE SIIEETS Italtirnorr Gas andIles rric Comj,.ory and kividiarrn At themhet 31, - 19_90 . _198,9. On huundo l.'l A NI i i 113,0,1 CAPii Al I/ 'il it W Current I.iabilities Slairt tenn horrowinp. ~ $ 227,700 $ 123,807 Cuornt ponions oflong t(tm dcht and picferen(c stod.. 452,912 72,965 Actounts payable.. 202,928 256.418 Cosmrner deposits.. -13,176 12,361 Accrued taxet, 23,982 22,501 Aa:tued interest.., 46,249 41,920 Dhidends declared, 54,331 50,983 Aarued sacation wea.. 27,050 25,482 Other. _ _I_4_262 _ __32d19 'lbtal current habilitin.. _.1,062.593 , 6.48.896 i Deferred Credits and Other !. labilities Deferred income taxes. 647,912 570,723 Deferred invntruent tax credits., 180,591 18i,991 0:ncr. ,_1 H,092 _ 21,276 Total deferred credits and other liabihtin.. a46J9,5 _ Z76,990 Capitalisation - 1.ong,ter;n debt. 2,193,844 2.076,620 ' Prcierred stock., 59.185 59,185 lledcemable pref erence '.tock. 365,000 322,800 Preference stod not subjut to nundatory redemption,. i10,000 110.004 Cornmon shareholders' equi y., 2,07115H 2#01,) H8 t l 'Ibca t apitalit.ation. _4,801,l r,7 ji,5ui,773 l C4Humitments, Guaranten, and Contingernics See Note iI l L 'Ibral 1.iabilities and Capitalisation. 56.710,375 $5,985.679 ~ hf 940fff 10 (CNWltkdifdfhHJEllidlledifNirNil l 29 i m.m.

.= s b e CONSOLIDATED STxrEMENTS OF CASII Flows Balumore Gas and Eltaric Cornpany and Subsidiarin Year Ended December 31, I990 1989 1988 O n 'I hmuridd Cash Flom from Operating Actisities Net income.. 5 213.200 5 276,291 5 303,. 12 AJjustment:, to reconcile to net cash provided by operating aaivities Cumulative effect of change in the metl.od of accounting for unbilled revenues.. (37,754) Depreciation and amortization.. 179,793 170,706 i99,533 Deferrcd mcome iases.. 56,995 136.388 42,299 Investment tax credit adjustmento (4,450) (1 A78) p.196) Deferred fuel costs.. ~.. (79,671) (248A72) (32,739) Provision for possible disallowance of replacement energy costs.. 35,000 Allowance for equity funds used during construction.. (27,086) (18,564) (16,056) Equity in earnings of a91liates and joint ventures (net).. 14,029 (6A49) (7,034)- Changes in current assets and current liabilities Accounts receivable,. 15,698 (51,030) (30.161) Accrued unbilled resenues.. 9,580 Materials, supplies, and fuel stocks.. (41,228) (5,075) 5 19 income taxes refundable.. 28,424 (73.144) Accounts payable. (53,844) 124.011 26A62 Accrued taxes, Other current assets and current liabilities.. 36 (1,824) (14.889) (12,837) 17,969 5,291 Other., (10,376) 1,095 ( 1,'60) Net cash provided by operating auivities.. 285,509 320A24 470,931 Cash Flows From Financing Activities Proceeds from issuance of Short. term borrowings Intt). 103,893 44,38/ 24,299 long-term debt.. 1,987,426 1,296,310 452,282 Prefererre reocl; 64,342 98.860 49,'21 C)mmon nock. 86,881 32A45 12.228 Reacquidtion oflong-term debt, (1,595.463) (1,020,029) (370 A 1 I ) Redemptmn of preference stock. (6,800) (6,800) (6,8001 Common stock dividends paid.._ (171,623) (163,534) (153,976) Preferred and preference stock dividends paid. (38A90) (31,151) (27,568) Other.. (34) (94) ( '.26S) Net cash pms ided by (used in) fmancing activities.. 430,132 250,389 (21 493) Cash Fluws From Inusting Activities Utility const uction expenditures. (535,316) (447,339) (318,018) Allowance for equity funds used during construction.. 27,086 18,564 - 16.050 Nuclear fuel expenditures.. (20,519) (17A31) (46.511) Deferred nuclear expenditures.. (27,755) (9,605) Nukar decommissioning trust limd., (8,108) (6,068) (4,761) t l Financial investments.. (9,907) (1,048) (14,396) L Real estate projects.. (49,745) (40,282) (80,'42) l Alternatise energv systems. (62A94) (65,702) (2,940) Senior living facilities.. (2,492) (4,390) (951) Other.. (5A12) (11,608) (5.612) i~ Net cash used in investing activities.. (694.662) (685,809) (457,3'5) l l - Net Increase (Decrease) in Cash and Cash Equiv,lents.. 20,979 (14,996) (7,8 S7) Cash and Cash Equivalents at Ileginning of Year.. _ _ 18 900 33296 _ _ 41,783 i Cash and Cash Equivalents at End oiYear.. 5 39.879 5 18.900 $ 34.896 Other Cash flow Information Cash paid during the year for: Interest (net of amounts capitalized).. $ 166,723 5 150,'78 5 124,278 income taxes. 5 (56,937) 14.390 $ 76,810 See noin to wniolidatedpnancialstatevnu Certain prior-year amounu kwe been ren.ned to wnfirm u ich the curuntyear1 presentarwn 30 1 m

l CONSOI.lDNTED S'IWrEMENTS OF COM AION SilAld:1-loinats' Ecurn' B,Jrsmurr Gas andIlarric Gwitany and %budoaries Yem ((nded.l?cce.mber 31,1990,.1989, and 19Nh Nct Unreabled l'n mium on Inu on Sintnmn Spgk Prefened Iterained .\\ tarketable Total $ hares Anmunt Sn.d 1 arn9 b ur nies Anmuni Iin "I h.,umi,w Italance at December 31.1987. 78,912 $H 17,513 $157 $ 944,526 5 (6.H2H) $ 1,755,36H Net income... 30M 12 303,412 Dividends dedared Preferred arid preference,ugk, (29,375) (29,375) Common stock ($1.975 per sbarc). (156,142) (156,142) Comnmn Hock inued under Dnidend Reinvestment and Stock Purduse Plan.. 386 12.228 l 2,228 Costs assotiated with inuance of redeemable preference sitKk.,, (279) (279) Chany.c in net unrealued low an marketable securinn. _y_ 33 llalang at December 31,198H, 79,298 829,462 157 1,002,421 (6,?95) 1.h 8 5,245 Net im ome.. 276,291 276,291 Dividends detlared Preferred and pref.rence siosk. ( 32,381) (32,3H 1) Commnn stock ($2.075 per share). ( 166,06) (166,067) Common um k inued under Dividend lleinvestment and Stod Purchase Plan. 860 26.465 20,465 Employee Suic. Genership Plan., 190 5,980 5.980 8 Cmts aurciatet with ismante of redeemable preference saxk. (1,140) (1,140) Change in net t nrealised loss on marketable secutirin. 6,795. 6.795 llalance at Decem5cr 31.1989., 80,348 N60.767 157 1,140.264 2,001, l H.4 Net income.. 213,200 213,200 Dividends declared Preferred and preferente uoslu (40 261) (40.261) Common stock ($210 per share),, ( 1 -'3,204) (173.20i) Common stotk issued under Public of tering... 2,000 57,062 57JHi2 Dnidend Reimestment and Stock I'urt h.nc l'lan. 936 27,474 27.04 Employce Savinp Plan. 75 2,345 2,345-Costs anosuitd wi A inuance of redermable preference stod. (65H) (65H) Chany,e in net unrolierd low on marketable securities. _,_._ jl 3,98 H ) _ ji3.988) llalance at December 31,1990.. 83,359 $946,990 $157 $ 1,139,999 Sf 13.938) $2,073,158 %e norn to wn.alui.itrJlin.in...d sr.urmentu )$ n

I CONSOUDATED STATEMENTS OF CAPFFAUZATION llatrimore Ga and Hurric Company andSJndarin At Daember 31. 1990 1989 iln huondo long. Term Debt first refunding mortgage bonds 3%% Series, due December 1,1990.. 5 $ 29,682 4%% Series, due July 15,1992. 24,751 25,000 4% Serie3 due March 1,1993. 24.070 24,095 4%% Series, due July 15, I994. _. 29,921 29.989 - 9%% Series, due October 15,1995... 200,000 5%% Series, due April 15,1996.. 26,585 26.680 Sh% Serin, due June 15.1997. 99,500 100,000 64% Serin, duc August 1,1997. 24,958 24,967 5%% installment Series, due August 15,1998. 55,155 56,770 7% S: ries, due December 15,1998... 28,646 28.684 84% Serin. due September 15,1999m 22,077 22,184 8.40% Serin, duc October 15,1999., f 00,000 100,000 8%% Series, due September 15,2000. I1,338 11,414 74% Serin, due April 15,2001.. 59,919 59.999 7%% Series, due September 1,200I, 59,985 60,000 7%% Series, due January 1,2002.. 49,999 49,999 7h% Series, due July 1, 2002......... -... 49,985 50,000 Sh% Installment Serin. due July 15,2002.. 12,500 12,500 7h% Series, due September 15,2002... 49,990 50,000 8%% Series, due Feb.uary 1,2004... 74,983 74,986 ' 6.80% Series, due Septeniber 15,2004. 20,000 20,000 8 %% Series, due September 15,2006.. 74,960 74,995 8%% Series, due Se tember 15,2007, 75,000 75,000 9%% Series, due ji 1, 2008.... 43,894 48,918 6.90% installment cries, due September 15,2009.. 55,000 55,000 9%% Series, due Match 1,2016. 98,000 08p00 To:al first refunding mortgage bonds,, 1,371,216 1,208.862 Other long. term debi Loan under unsecured credit facility. 25,000 Inant, under revolving credit agreements.. 175.000 50,MO Medium-term norn.... 47,000 4%% Sinking fund debentures, due August 1,1990. '5.545 9n% Notes, due May 1,1993., 100,000 100,000 Floating rate notes, due July 1,1995.. 100,000 100.000 Floating rate notes, due October 15,1995 Series 11.. 100.000 100.000 Pollution control loan, due July 1,2011. 36,000' 36,000 Port facilities loan, due June 1l 2013.._........, 48,000 48,000 Adjustable rate pollution control loan, due July 1,2014.. 20,000 20,000 Economic development loan, due December 1,2018... 35,000 32,100 Total other long-term debt. 686,000 sol,M5 Long-term debt of Constellation Companies Mortgage and construction loans and other collateralized notes 8.875% due June 30, 1991............. 21,250 21.250 10 50%, due August 24,1992 and October 1,1992. 53,300 Wriable ra es, due ihmugh 1995.. 98,278 70.434 10.31% due August I,1997 19,128 19,354 Industrial park facihties bonds.. 1,450 2,150 Loans under credit agreements.. 265,996 210.971 Unsecured notes 8 875%, due August 10,1991. 15,000 15,000 8.30% due April 12,1993.. 100,000 100.000 Total long. term debt of Constellation Companies.. 574,402 439,159 Unamortized discount aad premium. (7,662) (6,881) Current portion of'long. term debt.. (430,112) (66,165) Total long-term debt.. J,193J44 _,076,620 See now so comolidaudpnanti.d staument,. 31 s

4 4 ~ - CONSOI,lDATED STATEMENTS OF cal'ffAUZATION liahinwrr G,n andlin tok Con.pany and hulmdnaron At I)n :mber 31, 1990 1989 Orin.,m,,miJ Prefer ed Ste ' Cumulativt, $100 par valuc. 1,000,000 shares authorurd Series 11,4h% 222,921 shaf t s outstanding, ullabic at $110 per shate.. 5 22,292 5 22,292 Scrics C, 4 %,68,928 shares outstandmg, allable at $105 per share. 6,H93 6,843 Strics D. 5.40% 300,000 shares outuandmg. ullable at $101 pct shate, 30,000 30.Oqu 'lbtal perferred stosk.. _, 5 9, l H 5 5LIH5 Preferen(c Sunk Cornulative,5100 par salue, 6.000,000 shares authorierd Redeemable prefcten(c stot k 12% 198i Series A 68,000 and 130,000 shares, respe,inely. ounianding. 6,800 13,600 12 % 1981 Scrics li, 160,000 shares ountamhng. 16,000 16,000 7.50% 1986 Seric% 500.000 shares outuanding, ullable at 5107,50 per share ptior to October 1,1991 and at lcwer amounts thcreaftcr,. 50,000 50.000 6 75 % 1987 Series, 500.000 shares ourtandmg. ullable at $106.75 per share prior to April 1,1992 and at leurr announts thetcaiter., 50,000 50.000 6.95 % 1987 Seriet 500,000 shares outstanding-50,000 50,000 7.64% 1988 Senet 500,000 shares outstanding, ullable at 5107 64 per share prior to July 1,1993 and at Icnet amounts thescaher. 50,000 50,000 7.80 % 1989 Series, 500,000 shales outuanding. 50,000 50.000 8.25 % 1989 Scrics, 500,000 shares outstandmg. 50,000 50.000 H.625% 1990 Series 650,000 $ hares ountanding in 1990.. 65,000 Current portion of redermable preference stock, (22,800) _ J6,800) 'lbtal redecmable preference stock. _ 365,000, _322,H00 Preference stoth not subject to rnandatory redemption 7.88% 1971 Series, 500,000 shares outstanding, callable at $101 per diarc.. 50,000 50.000 " 7') % 1972 Series, 400,000 shares outstanding, callable at $101 per share. 40.000 40,000 7 78% 1973 Seriet 200.000 shares outstanding, callabic at $101 per share.. 20,000 70.000 ' intal prefertrar uock not subject to mandatory redempoon., _ i l_0,000 110.000 Common Shareholders' 1:quity Common stock - w nhout par value - 100,000,000 shares authorind, 83,359,464 and 80,348,185 shares hsued and outstandmg at December 31,1990 and 1989, respecovely. (At December 31,1990,402,362 sharn were reserved for the Employee Savings Plan and 3,251,990 shares were reserved for the Dnidend Ikinsestment and Stock Purchase Plan.). 946,990 860,767 Premium on preferred stock. 157 157 Retained earning.. 1,139,999 1,140,264 Net unrealued lon on marketable securities. (13,988) Total common shareholders' equity. 2,073,158 2,001,1 R8 Total Capitaliation.. 54,801,187 54,509,7W .su noin snenwhdaudfina saahr.uro rrnn 33

O l CONSOUDNTED STxrEMENTS or TAXES - Baltimorr Gas and Electric Company and5s.hsiduries Year Ended December 31, 1990 1989 1988 (Ibilar Amunn m Wuunda Inf ome Taxes Curient Regular tax.. 5 (6),130) Alternative minimum tn. _ 312 92,. 5 (78,617) $ 57,993 ji.jXu Total current ines.. (33,338) js3,'81)_ 57,993 Deferred Accelerated depreciation, 70.639 64.540 43,378 Deferred fuel costs.... 27,088 84,481 11,777 Provision for possible disallowance of replacement energy costs.. (11,900) Alternative minimum tax.,-..., (31,792) (25,336) Tax rate differential attributable to tax net operating loss.. 5,744 15.325 Energy tax credit carryfotv,ard ofTiet. (8,410) Unbilled revenues,. 12,952 (9,420) (11,957) Deferred nuclear expenditures.... 9,117 3.259 Customer information system development costs.. 6,885 7,790 3,105 Contributions in aid of construction.. (2,704) (2,785) (3,510) 1.everaged leases.. (943) 4.877 6.066 Other,. 513 (6.343) (6,560) Total deferred taxes.. 77,189 136.388 42.299 investment tax credit adjustments Current tax credits deferred.. 2,887 6.428 3.564 Amortization of deferred tu credits. j7,337) _ (7,906) (10.760_) Investment tax credit adjustrnena. (4,450) (1,478) (7,196) Total income taes.-._ income tues induded in cumulative effect of change in accounting method.._ _ 39,401 81,629 93.096 (19,449) Invome Taxes per Consolidated Statements ofIncome.. 5 19.952 5 81.629 $ 9toon ReoinJiiation ofincome Taxes Computed at Statutory fe&rej Rue to Total Income Taxes bcome before income taes (inc' -ling cumulative effect of accountin3, change).. 5252,601 $357,920 $396,50s Surutory federal income tu rate 34 % 349y _ 34 % ' !r>come tues computed at statutory federal rate.. 85,884 121,693 134.813 ' Jnedew (hcreases) in income taxes due to Depreciatmn differences not normalized. 4,301 4.610 4,990 A!!cnwe for funds used during construction.. (18.140) (11,336) (9,565) Arnortimion of deferred investment tax credits., (7,337) (7.906) (10,760) investment tax credin flowed through to income, (15,283) (10,219) (8,556) Dividends received deduction.. (4,352) (5.11I) (s,084) f.quity in eatnings of 5afe Harbor Water Power Corporation. (1,666) (1,760) (1,894) Lo s on disposition of assets. (1,892) (2,230) (4,329) Deferred tu rate differential... (3,062) (2,673) (3,385) Ot her.. 948 (3,439) (3.134) Tiital income ines, 5 39A01 $ 81.629 $ 93.005 EfTecthe federal income tu race.. 15.6 % 22.8 % 23.5 % Taxes Other Than income Taxes Capital stock.. $ 48,198 5 46,515 5 44,328 Property. 37,174 36,444 34,475 Public service company franchisc.. 42,812 38.293 36,040 Social security. 30,344 27,843 25.980 Other... 6,770 7.094 7,909 Total rues other than income taxes.. 165,298 156.189 148.732 Amounts included above charged to accounts other than taxes. m,576) (5.985) (5.605) Tues other than income tues per Consolidated Statements of Incarne.. 5156.722 s 150.20e 514 L127 See notes w anwlidatedfinancialnarem. ntt 34

e l ~ Nonts To CONSOLIDATEn FINANCIAL STNHW.NTS B.dumore Gas and11rari. Cmp.oq andMidumn 4 Noli 1 Sicsilimi An otx1Im. hu a :1s Nature of th Itunneu fad and Punhawd i ncrcs Cmis llahimore Gn and Elcaric Company (BGNL) and Subddiaries Subject to the appmval of the Niaryland Conunisdon, the smi (collectively, the Company) is pnmarily an electric and go of fuel med in generating electricity and the cost of gas mld nuy utility sening a territory whith wompanes Balismore City and be recovered through rem. based elcaric fuel rate and purchned al! or part of nine Ce. ural hiaryland countin. The Company is gas adjustment dames See Note 1it 'Ib the nient aoual fuel aho engaged in diversified buunen auivities a furrber described aan ddfer from rnenues under the damn. BGNE defen the in Nate 1 fuel cmts and accumulatn enem on the balance Aect to be rcwvered from or refunded to customers in fu:are periods. Prin< spin of consoliduion As implemented by the Alaryland Comnunion, the eleur;c The wnmlidated financial statements include the accounts of fuel rate fonnula is based upon the latnt twenty four. month bGNE and all subudiaries in which ilGNE owm direaly or generation mix and the latest three-memh ave age fuel mst for inducctly a majority of the wring stock intercompany balance, each generating unit, ElTeuive June 1,1990, the Ataryland i and tranuctions ha ce been climin,ued in consolidation. Comminion modified the electric fuel rate fonaula and ordered l Corporate joint ventures, partnerships, and afliliated companies BGNE to indode a rninimum levd of nudear generation in its in which a 50% or less voting interest is held are accounted for twenty-four. month generation mix. The fuel sate does not under the equity or cost methods. Under this poiiey, the change unless the calculated rate is more than 5% above or accounts of Constellation Holdings, Inc. and its subsidiaries bdow the tate then in effect. In addnion, the hiaryland (wllectivdy, the Conaellation Companies) and DNG, Inc. are Comminion has authorlied a surcharge to the decuic fud rate consohdated m the financial statemenn, and Safe liarbor Water to enable BGNE to recmer a pmtion ofits underretmered Power Corporation is reponed under the equiry method deferred electric fuel msts. BGNE has recovered $62.9 million from this surcharge through December 31,1990 and npects to Regulation of Utility Operatiom rewver an additional $15.3 million between January 1,1991 BGNE's utility operations are subject to regulation by the Public and the scheduled termination of the surcharge in Service Comminion of Ataryland (hiaryland Cmnminiont The October 1991. accounting for utility operat ons is in accordance with the The purchased gn adjustment is based on recent annual i Uniforn System of Acwnats prescribed by the Federal Energy volumes of gas and the related current potes charged by Regulatory Commiwinn and adopted by the Niaryland BGNE's gn suppliers. As authorized by the Ataryland Commission. The accounting policies and practices used in the Commission, any deferred underreuweries or metrecoveries of determination of service rates are aho generally used for financial purchased gn cmts for the twelve months ended Nmember 30 reponing purpu es in accordance with generally accepted each year are charged or credned to emiomen mer the emuing - acwunting principles for regulated industries. calendar year hee Note i1h The underrecovered wsts deferred under the fuel damn were l~tihr Rnenun a follows: Effectise January 1,1990. BC&l. ch.nged its revenue At December 31. recognition ptdicy to provide for the accru,d of revenuc f ar 1990 pw service rendered but unbilled as of the end of each mon h. Prior un h.e to 1990, revenues were recogniicd at the time custome s' meten Electric l were read on a monthly cycle bais. T he new policy was adopted Costs deferred. $128.632 $322,820 in order to provide a better matching of revenues and e. penses Prmision for pouible and to conform with ihe predominant practice within th utility thullowance of replacement industry. This change in pidicy resulted in an increase in. 990 energy cmts bec Note 11). 0 5,000) ..7 net income of $31,63'5,000, or 3He per common share. Tnis Net electric.. 391632 322.820 increne consisted of an increase of $37,754,000, or 464 p r Gas. . O,857) 22.2M common share, attributab!e to the cumular;ve dTect of the Tbtal. 5389.775 $ 14 s. im chan :e at January 1,1990, partially offset by a decrease of $6,0~9,000, or He per common share, in the December 31.1990 At December 31,1990 and 1989. the amount of cleuric accn al. If the current pohcv had been in dTect in prior years deferred fuel wsn induded in rate baw by the Ntaryland net is come would hae been 'ncrened by $6.046.000. or se ner Commimon for ratenuking purpmes wn $72,7%000 and comt mn share,in 1989 and by 5 i.445.000, or 6e per wmmon $ F0,205.000, rnpec ovd y. share in 1988. M

fuhimm Gn vutHurrk Cmpm andSulnidurin ^ 1Numu Ta for financial reporting purposes the Company records certain Upon adoption of Statement No. % the balance of restnues and expenses in yean difTerent imm the yean in whith accumubted deferred income tac 3 would incre.ne. Although they are recognind for income tax purposes. Deferred income thanges in utility-related accumulated deferred iocome taxes tnes are generally provided on timing differences except those arising from the initial application of Statement No. 96 pertaining to accelerated depreciation on pre-1976 pmperty generally would be Jeferred and recovered fmm or refunded to additions. The cumulative net amount of timing differences foi customers in futu;c years, changes awociated with nonregulated w hich deferred mcome taxes have not been prmided activities would How thrmch to income. As a result niits effect approximated $215 milhon and 5227 million as of on nonregulated activities, Statement No. 96 is present y l December 31,1990 and 1989, respectively. expected to resuh in an increase in net income of approximately The investment tax uedit (lTC) awociated with BGNiis 515 million for the year in w hich it is adopted. tegubts utihty operations is deferred and -mortized to income ratably over the lives of the subject property. ITC and other tax Im etuory Valuation - credin associated with nonregubted diversi6cd business Fuel smcks and materiah and supplies are generally stated at -' activities othcr than leveraged leases are Dow-d through to average cmt. income. As of December 31,1990. t' he Company had energy s tax credit carryforwards 9f $8,410,000 which expue in the Insestments 3 ear 2005. Marketable securities are stated at the lower of aggregate cost or BGNEi utility revenue n subject to the Maryland public market value, and other securitier are stated u cost. Where - service company franchise tax in lieu of a state income tax. The appropriate, cost re0ccis amortiution of premium and discount franchise tax is included in taxes other thaa mcome taxes in the computed on a straight-line basis. Gains and Imsc3 on the sale of Consolidated Statements ofIncome. investment secunties are recognized upon realisation on a The 1989 and 1990 current tax refunds consist of a regular specific identification basis. tax refund reduced by an alternative minimum tax (AMT). These regubr tax refunds represent principally the tax b neCr of Utility Plant and Depretiation net o; erating loues (NOLs) incurred in 1989 and 1990 dich UtHiry pbnt in service is stated at original cost, which includa are being carried back to recover taxes previous y paid in 1996 material, labor, conseuction overhead costs, and, where l and 1987 at federal tax rates of 46 percent and 40 percent, applicable, an allowance for furds used duritq; construction, respectively. The AMT liabilities cari be carried forward as tax Construction work in progress pknt held for ucure use, and e credits m' future years in which the regubt tax hability exceeds nuclear fuel are stated at cost. - the AMT liabilityt as of December 31,1990, this carryforward Additions to utibry plant and replacements of units of , totaled $57,414.000, in that the NOLs and AMTs are p< nerty are capitalized to utility plant accounts. The original attributable to timing ditTerences deferred taxes were cou ofphnt retired is removed fmm utility plant, and such cmt,- provided thereon. pNs removal cost, less salvage value, is charged to the l Statement of Fi: uncial Accounting Standards No. 96, accumulated provhion for depreciation. Maintenance and - which is still being resiewed by the Iinancial Accounting repairs of property and replacements ofitems of property Standards Board, presendy must be adopted by 1992. A3 deu cruined to be less than a unit of property are charged to presendyissued, this Statement would require a change in the maintenance expense. ~ accounting for deferred income taxes from the deferred tr.ethod Depreciation is gener'.lly computed using composite to the hability method. Under the liability method, the straight-line rates, appikd to the average investment in classes Company would be required to accrue deferred income taxes on of depreciable property. The composite depreciation rates by stJmtantially all temporary differences between the book and tax class of depreciable property are 2.80% for the Calvert Cliffs bases of assets and liabilit es, to adjust deferred income tax Nuclear Power Plant,2.75% for the Brandon Shores Power i balances upon enactment of changes in tax rates or laws, and to Plant,3.26% for other electric plant,3.12% for gas pbnt and di, continue net-of-tax reporting of the allowance for funds used 4.02% for common plant oth:r than vehicles. Vehicles are during construction. depreciated based on their estimated usefullives. 36 e i

m J _..A. a 4 _s_ e a.i . khimvr Gas andIkctnc Congam ami%boduw kh caf % k$I!IIN sk I!!$lI ()kkshfc.5(khu al l} $. fb kIk [f c dr s$ nk Of!!nl skIII!$ fk'hu i(% lfI l 3 44 !ik' dk.' l sj i( thmugh a UnLing fund methodology. In m Dnember 1990 tare bemy inocased in h ho% iompoundcJ ansiaalh. and the order, the Maryland Conuniuion gramrd BGh l addit;onal $s Nooo of enoruaion expenduurn on Brandon revenue to provide for an inacase in in nudcar Shorn Umi 2 bemg reinuaicd m the Al C base. I iTutise decomminioning aurualin ordct to aa umulate a rnene of Dctendict 111wo, a raic mdci of the Mar.dand Comnuunni $275 milhon in 1989 dollars by the end of Caher Chili senicc reduced the aficotax Al C < ate io K69% oimpounded annually. hfe. The utal dnornnuuioning rnene of $52.026,000 and 541,l35,000 at Dacmber 31,1990 and 1989, rnpcancly, n %iuiim! indaded in auumulatcd depred nion in the Conmlidated Nudcar fuel expendnurn are upualiicd and anmniicd as a llalam e sheen. mmponent of auual fud ima bawd on the coergy produced BGNI. h requircd by regulatiom of the Nudcar Regulatory met the hic of the fud ien for the future dhposal of spent fuel Commimon (NRC) to pnnide financial anurante that arc paal quarterly to the Deparnnent of1:ncrgy and are acourd decommnsianing funds in an amoum at leau equal to an NRC-bawd on the know.nFhoun of dcctricuy generaird. Nudcar fuel prncnbeu mirumum lod w di be auumulaird mer the expcmn arc subjni to rnou r3 ihmugh the dcoric fod rate. remaining service life of the Ca!ven Chfh plant, Auordingly, BGN1 has ntahlkhed a tax guahlied decomminioning inut to Ikiurcd Nudcar I sps o.! nom which a portion of decomminioning unts aurued base been Deferred nudcar expcoduures reprnent the net unamortued contribuicd. balame of tenain operanom and maintenance unn whh h,in accordance whh orden of the Manland Commiwion, have been \\lhntante foi f unds Uwd I $mb g Conuruuion dt:ferred. indaded in rau' baw, and are being amonued mer the The allowance for funds med during (onuruction ( Al C) is an remaining hic of the Calven ChfTs Nudcar Powc Plata. These anoonting procedme wl.creby the mu of funds incd to finance expenditurn mnuu of ann inwrred f un 1979 through 1982 utility mnuruainn projeen k capitahud as part of utility plant for impccting and rep,unng sciunic pi e suppons npendourn p on the balance sheet and h crnbred as a nonush ite n on the incurred during 1989 and 1990 awociated wah nonrnutring inmme si,acment, The cmt of borrowed and equity fumb h phasn of scnain nudear operanom proicco, and expenduurn wgregaint octween net mternt thargn and other inmme, inwned dunng 1990 for imntiganng Icaks in the prnsuruer respeuiveh; BGNE recmen the capitalized AFC and a return heater slenn. thereon after the related unbrv plam is placed in service and includcd in depreciable auen and rate baw Al C does not long Tenn Dchi iepresent taxable inmme, and the depred.: tion of upitalued The dismunt or premium and npenw of inuante awodaicd Al C h nor a raededuaible apenw. with long term dcht h deferred and amoniud over tht inn of During the period January through March 1988, an after tax the respective debt inues. (iaim and loues on the reatquninon AI'C rate of 8.55% mmpounded annually, was applicd to all of. debt are amortired mer tht remainir.g originalInn of the major dectrk pmieu.s. l.ffeane April 1988, an accounting iuuantn. change authorized by the Maryland Comminion rnuhed in $37,603,000 of Brandon $hores common facihties previoudy Cash I'iom Comidered pan oIbN! 2 for r0pulamry purpows, as Wd as Ier the purpo.c of reporung conh flows, highly hqmd $54,3h000 of mmeruction openditurn on Unit 2, being imestmenn purchasni wuh a maturity of threr months or Icw removed from the base to which the 8.55% Al C rare was are moudered to bc ush equnalents. applied. t:fleethe Decr* i 5,1989. a rate orJer of the i

l hdrimeur Gas andElurric Com),ary and Subsida.mn . = 11 2. 5[ 0 u ,1 N ; >,: s i li a Year 1.nded Decernber 31, 1990 1989 1988 un Wuundo llectric Revenues.. 51,684,154 51,519,294 S I A34,562 Income from operations.. 264,814 388,071 418,647 income from opera. ions net ofincome taxes. 233,863 30',300 326,882 Depreciation.. ^ 146,188 135,735 127,784 Cumulative effect of change in the method ot accounting for unbilled rnenues.. 30,173 Construction expenditures (including Al C), 482,529 406.410 276,278 Identifiable assets at December 31. 4,796,542 4.279,399 3,746,826 Cas Revenues. 5 373,419 5 411,801 5 381,536 Income from operations., 35,919 55,230 54,505 Incorne hom operations net ofincome taxes,. 30,634 42,343 4 0,.' l Depreciation.. 17,243 16,169 15,184 Cumulative effect of change in the nicthed of accounting for unbilled revenues.. 7,581 Comtruction expenditures (including AI:C)., 52,787 40,929 41.740 ldentifuble assets at December 31.. 447,292 433.248 394 013 Disersified Activities Revenues. 5 101,690 5 73,041 5 47,570 income from operations.. 32446 33.284 23.798 Income from operations net ofincome taxes.. 48,910 95,313 36,721 Depreciation.. 7,155 4,642 4,108 Identifiable awets at December 31. 1,041,365 836,530 622,860 Total Rn enues, 52,159,263 52.004.136 51,863,668 Income from operations.. 333,379 476,585 496,950 income from operatiom net ofincome taxes.. 313,427 394,956 403,M4 Depreciation.. 170,586 156,546 147,076 Cumulative effect ofchange in the method of accounting for unbuted revenues. 37,754 Construction expenditures Uncludmg AFC). 535,316 4 P,339 318.018 !deatifuble auets at Decemiier 31, 6,28 J,199 5,569,17' 4,763,099 Other auers at December 31. A ' 5,176 4 16,502 362,663 l-Total auets at December 31, 6,710,375 5,9 W679 5,126,362 l l l 38 -t

4 4 kl.l!!!**loff 0no 69Mf lltYUK' {0Ni}'dlly d!Jff NY!6PW1 - NOIi.h St~1611)I \\lW INI0161TIION Diversified businen asuvities cotoist of the operatiom of method. This invntment reprnenn two-thisds of hafe Hashor's Comtellation Hokhnp, Inc. and its suhddiarin and ling. Inc. total tapaal stod, including one half of the voting siod, and a Comtellation llohhnp, Inc., a w holly owned subsidiary, two thirth internt in the subddiaryi retained earnmp. holds all of the stod of three other subsidiaries, Conuellation The following is sonJcmed finantial mformation for Inyntments, inn, Comtellatinn 1.ncrgy, Inc,, and Comtellation Comtellation ilokhnp, Inc. and its suhddiatin and Safe llarhor lleal f. state Group, Inc. Thne tornpanies are engagcd in diversified Water Power Corporation. %milar information h not presentn! hmincu activitin includmg linancial investment: the development, for itNG, Inc. as ia financial position hharchokin's equiry of ownerdup, and operation of abernative energy systena: real ntate 56.2 milhan) and roults of operations (contribution of le per development; aml ownenhip of senior hving facihtics conunon shaic to the Company's earninp) are irnnut cd to the ling, Inc. h a wholly owned subsidiary which invnts in natural cornolidated financial staternenit The condemed !in.o <l gas rnenn and obtains gas from nonuaduional sources, information for the Constellanon Companin does not eiled the The imnimerit in Safe llarhor Water Power Corooration, a chmination ofinterwmpany balances and tramaction> % ch ere producer of hydroelectric power. is reported under the equiry chminaird in the Company's mmohdaicd financial staternentt 1990 1989...-.1988 Comtellation Holdinp. Inc. and Subsidiarin Income Statemenn llevet ucs.........., 5 106,175 5 77.787 5 51 A33 1.xpemes other than internt and inwme taxn.. 73,537 44.966 27.261 Ir.wmc from operationt 32,63H 32,821 24,172 Other inwme. 952 340 196 Interest expense, 37.345 28.709 18,917 inwme tax expeme (benefit).. ]l7,H59) J14.67N)_ J13,108{ Net inwme,. 5 14,104 5 19.130 $ 18.559 Contribution to tl.: Company's carninp per share of tonunon stod.. 5 .17 5 .24 5 24 llalance Sheets Current auets. 5 71.837 5 68,858 5 3H,942 N mcurrent aucts. 964,095 760,6H8 575.991 Total awetu 51.035.932 5829.546 $614.933 Current habiliGes,. 5 439,687 5 26.736 $ 25,599 Noncurrent liabilitin.. 343,602 551AH2 361,931 Shatchohleti cquity. ._ 252,643 251,328 22;A04 ~linal liabition and sharehohler's equity. 51,035,932 5829.546 5614.9 B Safe Harbor Water Power Corporation Inwme Statements lleven un......... 5 28,793 5 28.713 5 29.954 hptnus other than interni and inwmc taxes.. _ 13.161 _12.33E. _ 12.13H Inwmc from operationt 15,630 10,376 17,316 Other inwme.. 721 700 2il internt expeme, 4,702 4.700 4.727 Income raws.. 4,299 4.612 _ _ 4_,HH 1 Net income.. 5 7.lso 5 7.764 5 7.919 liGN E's eqmry in earninp.. 5 4,900 $ S.176 5 5,570 j Dnidends paid to liG&h by Safe Harbor. 5 11,084 5 5,142 5 3.960 llahnte Sheen Current anets. 5 10,803 5 15 A64 5 9,600 Noncurrent awen. 122.064 124,932 12',947 ~ lotal aucts., 5 132,847 5150,396 '~~ h T7,547 Current liabilities.. 5 3,79H 5 3.H01 5 3,788 Noncurrent liabihties.. 77,686 75.963 73,247 Shareholders' equity. 51,363 60,M2 60.512 Total li2bihtin and shareholden' cquity. 5 132.847 5140.396 5137.547 liG& E's investment.. 5 34,24l 5 40.421 5 40.341 l 39 6

Jiahinwrr Gau andnurne cumpr;r and kludww Mill 1, i IN \\v lil INVIM NU I s Li> liin! ! 414 ' I'ih ili t ~ls Iinancialinvestments consisted of the following inve.itments held in August 1989, a subsidiary of ConstcIlation iloidino inc. by the Constellation Companico acquired 100% of the aucts and habilitics of a real estate A Dec<,ber 31. partnership in which it haJ pictioudy held a 50% equity . 1990___ 1989 interest. The auets acquired totaled 566.934,000, indu ding o n 'l Louundo 562,354,000 of real estate property, and the liabihties iuumed Marketable securities totaled $50,306.000, induding 543,000,000 of long.ictm debt. At tost.. 5 82,051 5 79,355 The acquisition was remrJed using the purchase method of Net unrealind lost. J13,9881 accour:ing. At lower of aggregate wst In July 1990, a r,ubsidiary of Constellanon iloidinp. Inc. or market vslue., 68,063 79.355 obtained control of several real estate partnerships which h.2d Other securities.. 17,659 22,216 previoudy b en acmunted for under th( equity method. Iinancial limited partnerships. 123,711 121,556 Accordingly, the nnancial statements reflect assets totaling insurance companies., 72,603 62,~04 5155.635.000, including 5154,IH2,000 of real estate property, I everaged leases.. 40,496 40,510 and liabilities totahng 576,277,000, including 574,734,000 of Total, 5322,532 5326.341 !"" W * ' ' I '"P'"" Pi""' '""" '4 "I'Y mvestment. Ilcal estate proiccts consisted of the following imestments held by the Comtellation Companies: At Ibcember 31, 1990 1989 on 'I homando itental and operating properties (net of accumulated depreciation).. 5219,778 5125,391 l'roperties under des elopment (net of accumulated depreciation)., 190,677 76,295 Other real estate ventures.. 2,528 _7_3,854 Total. 5412,083 5275.540 40

g e Bahorwre Gu andHearu Cmpara ard.%Mharies 4 Noli. 5. Joisin Ow siti Etia na Uin iis Piasi llG AE owm an undisided interest in the Keystone and The fi,llowmg data represent itG&Us share of the jointly ouned Conemaugh mine-mouth electric generating plants losaicd in propenies at Daember 31,1990: i western Penmylvania, as well as in the trammission line wluth Transtmsion trarupolt5 the p anti output to die joint ow neri sersite Krystone. - _ _ _ _ - -O ulur Amc i l conernaugh Litic terntones. h...nancmg and accounu.ng for these propern.es are the same as for wholly ou ned utdity plant.14GNEi share of the dira t expenses and aswts and habilitin of the jomt property is Ownership internt. 20.99 % !M6% , 00% l mcluded in the corresponding uctions of the L,omolidated-Utility p! ant in service. 5 75.95' 5 41,256 5 1,486 Statements of Income and Consolidaicd lialance $heett Amtmulated deprec.. 23,387 Im979 6sl unon. Comtruction w ork m. progress.. 3,051 1.072 1 l 1 1 Noli 6. hilDRi-TiitM Boniawisu [ Information concerning commercial paper notes and lines of (ompemating balances which hase no withdrawal rntrictiont creda is set forth below. In support of the lines of acd t, the llorrowinp under the hnes are at the banks' prime rates, base Company pays commitment fees and, in some cases, maintain, interest rates, or at various money market rates. _ 1990 1989 1988 i I dbl lar Anmuao m lhouwnda BG&Cs Commercial Paper Notes llorrowings outstanding at December 31, 5163,700 $1l'.300 5 '2,0s0 i Weighted average interest rate of notes outstanding at December 31. 7.91 % 8.69 % 9.63% l Unused lines of credit supporting u.mmercial papet notes at December 31, 5225,000 5200.000 $ 150.200 Maximum borrowings during the year.. 5344,200 $212,350 $ 83.000 Average daily borrowings during the year (aL $218,642 $ 8-',02i $ 23,;1.i Weighted average interest rate for the year (bL 8.29 % 9.26 % s.0'% Constellation Companici Lines of Credit llorrowinp outstanding at December 31. 5 64,000 6.50' $ 'S5 Weighted average interest rate of borrowing outstanding at December 31. 8.89 % 10.65 % 10.6co l l Unuwd hna of credi, at December 31. $ 10.000 5 ',493 $ 1.625 l Maximum horrowinp during the year.. 5 64,000 $ 7,130 $ 12J59 Average daily horrowinp during the year (a).. 5 38,932 5 s.588 $ '90s Weighted average internt rate for the year (bL 8,93 % .1.12% 9.1 e0 l ta) The mm of dollar days of ounundmg borrowings divided by the number of days in the period ( th) Total interest a crued during the period divided by aserage daily borrowingt i i i 43 i

a a e Balmwei;as and Wrrw Om;m and %durm. k s 4* g t IMonJmg Mung., luods Substantially all of the principal propertin and franchhn owned ilGNE maintaim rnohing ucda agreements pmvidmg for by 14GN!;, as well as the capital stock of Connellation Holdings bor_ rowing of up to a total of $200 million. One of thne Inc., Safe ilarbor Tater Power Corporation, and ilNG, Inc., are agreements. which prosidn for barrowings of up to $50 million, subiect tn a lien under the nmrigage under w hich IIG&la 1 int npirn in Dn ember 1991, anJ the others, w Lich pmvide for Refunding Mangage lionds are iwued. borrowinp of up to a total of 5150 milhon, npire in 1991 On Augmt I of cath year. IlGNE h required to pay m the Under the terna of the agreements llGNL may, at in option, mortgage truuee an annual sinking fund payment equal to 1% of obian. loam at sariom internt ratn. A 6ommitment fee h paid the largnt amount of Mongage Itonds ountanding under the on the daily astrage of the unborrowed ponion of the mortgage during the prnedmg tCve months Such funds are to commitment At Dnember 31,1990, liG AL had bormwed be med,.a provided in the nwngage, for the purchase and 5175 million under the revolving medit agreemenn and had retirement by the tiuuee of Mongage liond of any serin mher available $25 milhon of unmed capacity under one of the t than the Imtallmem Serin of 1998,2002, and 2009, the agreemenn npiring in 1993. 9%% Serin of 1995, the 8A0% Serin of 1999, and the The mediutn term noin mature at various dain from 680% Series of 2001 Purth.on may be made by the truure January 1992 through January 1991 The weighted aserage in the open market and/or ihmugh respomo to invitatiom for internt raie for notes ountanding at Dnember 31,1990 h rw scaled propouh if purchasn are pmuhle at or below the Internt rain on the $100 million of Hoating Rate Noin due - applicable redemption price, m threctly thmugh the redemption 1995 are determined quanerly based on the 91 day Treamry ihil pmvisiom to which the Mongage Ibnds are subject if purchaso auction rate (nptnsed on a bond equivalent bads) plus 1.1% at a more favorable prite are not pmible. IlGNE may punhase The imeint rair h subica to a minimum and masimum of H% ountanding Morigape liands fmm time to time and rnay subrnit and 12% rnpecthcly, per annum. in scaled propmal for the sale of such Mongage lionda m the Internt rain on the $100 million of Hoating Rate Noin due iruuee for the sinking fund. 1995 Serin 11 are determined quanerly bawd on the 91-day The principal amounn of installmem Serin Mortgage Itonds Treasury liill aunion rate (exprosed on a bond equivalent ham) payable exh gar are as followc phn 1.125% The inteint rate is subjea to a mimmum and manmum of 7,9% and 11.9% rnreahely. per annum. Ilon4h Due liond, Due lionsh Duc Year 19 % 2no2 2no9 l.ong ~lcrm Debt of Lonucl!,dmn Compame, tin.t houah) Comtellation iloidings Inc. (Cill) mamtams comnuirnt aedit

1991,

$ 2,155 agreemenn that npiie at variom datn through Augmt 1"91 199' 3.000 and permit loam at various internt ratn. Comminnent icn are 1993.. 1000 5 420 pMd on the dMly avers;;r of the unbormwed portion of the j 4 1994.. 1000 430 commumentt CHI aho maintaim uncommitted creth 1995... 1000 605 agreements w hich are supported by hquidity facilitin hu 1996 and 1997., 1000 605 bormwmp under a i an ule program at vaiiom imernt ratet 1998.. 33,000 690 At Dnernber 31,1990, Clli had borrowed $266 million under 1999.... 690 ihne credit agreementw cnd there is no unused tapacity 2000 and 2001. 865 thneunder. 2002.. 6.725 The mortgage and construction loam.ind other tollateralised 2005 through 2008. $ 3.2s0 nmn require nmmhly principal and internt paymenn 2009.. 42.000 through maturity. The Induurial Park 1-auhtin lionds require principal h w I Wh no IW paymenu of $700,000 in 1991 and 5750.000 in 1992. Internt 1 The lo.tn under the umecured credit faubry matured on h payable semi-annually at a weighted astrage rate of 10.25% January 15,1991. Thh loan has bece clauified as long. term 'I he $100 mdlion of H.30"o umecured noin are subject to a becaus(, sub.cqucm to Duembn 31.1990, it was refinanced on mandatory Unking fund under which 30% of the pnncipal a long-term bam th:migh the $25 million of unused capacity amount will be redeemed at par in each of the yean 1991 and imder the revolving auht agreemenn dhcuwed below. 1992, with the remaining 40% being redeemed at par m 1991 42 4 s

N O qe g IMAGE EVAL.UATION / -a Y,o// '2N TEST TARGET (MT-3) 4h/ ' i-i t. g Nh' '% 8 y \\ 1.0 ' 2 c.-

n c

j,l !!!!!33 En 1.2 5 !l_1.4__ nn== !i! 1.6 l = 4 150mm 4 6" / 'b+ s +*},,,,,. Ky o

5 +[ /, 4

1. '"//[/

'Uw // IMAGE EVALUATION \\// \\ '[^ TEST TARGET (MT-3) s' ^ ' - 9[ \\pfjj 3 4- <r 1.0

m m

n22" u s_ j,l j ; e. m2 a te wa= i.25 ! i.4 g i.6 i s== 150mm 4 6" 3 44 e[y,y,/ig, 43 3,ly'//p O -;v ,p s,...

,I, Q- ,h v .n o v A_,, O ~:j,, v IMAGE EVALUATION s% \\\\qNg7 ~ V,4 TEST TARGET (MT-3) / ' ' '-:J g \\ k [ x\\\\$g"9[ g, g, -- 2n

25

.: 2 2 w =- l,l hNO ~ !iM l.25 1.4 g i.6 w= 4---- --- 15 0 m m 6" d hj / e# y %,a,7 yy

e;. I s s Mimm Gas and Fletric Company and Subudwin Mighitd Aurage Imerest Rain for uriable Itaic Debt Aggregate.\\lanuitin The weighted average interest rates foi v9tiab'r rate debt during The combined aggregate maturitin and sinking fund 1990 and 1989 were as follows: requirements for all of the Companis long-term horrowinp _1990_ 1989 for cash of the next fhe years are as follows: i1G&E Icans under r.nsecured credit facility. 8.81% year llequirements_ lnar s under revohing credit agreements.. 8.44 9.56 On h"mak Fk.ating rate notes. 9.04 9.67 1991. 5430.112 Floating rate notes Series !! 8.99 4.51 1992.. 168A25 Pollution control loan. 5.84 6.35 1993.. 390,876 Port facilities loan.. 5.91 6.32 1994.. 46A46 Adjustable rate pollution contn.1 loan. 6.15 5.91 1995.. 428.07% Economic development loan., 6.05 6.95 Constellation Companies Mortgage and construction loans and other collateraliicd notes. 9.89 11.13 1,oans under credit agreements. 8.56 9A8 Non S. Ripl anitti PRi t t ntset Slock The 68.000 shares of the 12 %,1981 Series A outstanding at The combmed aggregate reden siior, requirements for all Decernber 31,1990 are subject to mandatory redemption at par series of redeemable preferente stoct %r e,ch of the next the on July 1.1991. Pursuant to the redemption requirements, years are as follows: 63 000 shares were redetmed at par in each of the years 1987 Year through 1990. The 12%,198i Series 11 is subject to mandatory L.ep; u iremenn m c.my redemption in its entirety at par on Ju!y 1,1971. g9{3 g]gg 39g The 6.95%,1987 Series and the 7.80",,.1989 Series are gg subject to mandatory redemption in thdr entirety at par on 3993" gg October 1,1995 and July 1,1997, respectnely. 399 ggg The following series are subiect to an annual mandatory W95" Wo redemption of the number of shares sh .n below at par beginning in the year shown below. At LJ AE's option, an With regard to payment of dividends or assets available in the additional number of shares, not to exceed the same number as event ofliquidation, preferred stock ranks prior to preferense are mandatory. may be redeemed at par in any year, stock; all issues of preference stock, w hether subject to commenemg in the same year in which the mandatory mandatory redemption or not, rank equally; and all preferred redemption begins ik !L75%,1989 Series and the H.625%, and preference stock tanks prior to common simk. 1990 Series listed below are not redamable except through operation of a sinking und. f lleginning Series Shares T ear 7.50%,1956 Series. 15.000 1992 6.75 %.1987 Series. 15,000 1993 7.64 %, 1988 Series. 100,000 1994 c.25% 1989 Series. 100,000 1995 8.625%,1990 Series. I30.000 1996 43

m = e 4 ILo!wwr Gaund(1 avo, Compay nui3uksiwan N t l 1. 9. l't N SI, A \\NI) 01!!! k i h IkliIUl\\'lNI B1N111Is The Conf ny spon', ors sescral noncontributory defined bene 6 aserage tcmaining sen he period of acthe emplo3cet 'I he Companyi vhey is to fimd annually the wst of the penuen plans the largest of w hich (the Pemion Plan) wvers I 11GNE employees and certain employ ces of the Connellation Pension Plan as determined under the agpegate wo m<ihod. Companin. The other plans whk h are not material in amount, Plan auen at December 31,1990 wrniard pomanly of prmide supplemental benefits to celtain key emploven. Bene 6a nwknable securitiew poop annuity (onuxa. and under the plans are gc Teral!y based on age, ycan of senice, and E"Il'he following tah}O set forth die t ombined h,narKlal u 4"*'""C"""" c ampenunon inek of. he plam and the wmposnion of total net pcmion wst: t Prior service wu awosiatrd w nh reuoacthe plan amendments is amortued on a straic,ht.hne bask over the At December 31, 1990 19s9 h Anur.o u.1 houundo Asumulated benefit obhgaoon Ynred.... 53",818 5355,232 Nonvested. 11,283 11,'s8 Total $ 389,101 $ 46.900 Plan anets at fair value. 54'4,688 Sf 5,333 Projected benefit obligation.. f 472.90 0 (qm%40) 1 xcen of plan auen over pmjeued henc6t obligation. 1,784 28,'93 Unrecognited prior service mst. 10,597 11,404 Unrecogmzed net gam.. (18.860) (4',649) Unamortiied net auet fmm adoption of1 ASB Statement No. 87 (2A92) _ 2,~ 18 ) ( Atcrued pension cost.. 5 (8.971) $ (10. l'01 Auumptioat Dncount rate. 9.25"o 9.2 5"c. Avtr.!Re inC? caw m future compenution leve}s. 4j0 4Nt 0 bpelted long. term rate of return on aucts. 9.5'N "jN Year Ended December 31, 1990 1959 1958 un Trmuundu Components of net pemici wst 5en ne cost benec<s carre d during the penod.. $ 11,25" $ 10,893 5 9.S13 Imerest eat on projecad nenefit ohhpatiot-40,455 38,042 3%,508 Actual r, turn on plan assen..... (18,881) (64,593) (41.068) Net arr.oruzation and deferral (23,066) 2430' l.'a4 Tc.at net pemion emt., 9,765 8,849

,u r Amount capitalued as comtruction wst..

(l..U7) _ 1.2 3[), _ (S_02) ( Amount charged to expense.

8. 4 R H

$ Thi2 $ %.195 in addition to prociJmg penuon benentw certain heahh care muu be adopted by 1993. requires a change in the method of ,ad life msurance bene 6a are prmided for retired BG AE a,. counting for pouretirement benc6ts other than pen..ons from employees and certain reared empimees of the Constellation the prnent pay.aeyou.go method to an accrual method. Companies. The cost of these benefin is rencrally recognued as However, the Company s xpcus that the adoption of this the bene 6a are paid and rotaled 511,464,000 for 1990. The statement wi!! not have a sigmficant impact on net income cmt of providing these benefin for yean prior to 1990 is nm because any increased cmts for which service rates are not separable imm the con of providing similar benefin for actn e prmided would he deferred under the provnions of' statement employees, No 71 for regulated enterp<nct StJtement ofIInafRial Acwlit ting htandards No } 0b, w huh 44 s

o .o l - Mi enne i n.snd Elis tric Camujstory and 5,lutdn.uries Noll 10,1.1 m s J The Company, as losee, contracts for certain facilitin and Certain of the Constellation Companics, e lenor, hae equipment under lease agreements with various npiration datn entered into operating leaso for onke and retail space. and renewal options. Consiuent with the regulatory treatment, These lean npire mer periods ranging fmm I to 25 years. lease payments for operating and capitalleases for utihty with options to renew. The net book salue of property under operations are charged to expense in the Conwhdated op' rating leases we 5187,449.000 and $80,050.000 at Statements ofincome. I cae eywnse was as follows for the December 31,1990 and 1989, respecthcly. The future three years ended Ducmber 31: minimum rentals to be receised under operating lenes in _1920_ J29 1988 ceca at Dnember 31,1990 are as follows on Tb,wnd" Wr Operating leasn.. 513,240 515,031 $ 14.014 ~ g o., ggg Capital leases.. 330 365 839 1991. 5 8.101 Total lene cxpense, $ 13.570 $ 1 s.v)6 s 14.8s 3 1992.. 8,728 Capitalleses included in the Gnancial statements but not 1993.. 8.222 disclosed separately represent usets and obligations of 1994.. ',152 51,097,000 at December 31,1990 and $1,211.000 at 1995.. 6,040 December 31,1989. Thereafter.. 38.'? ! , The future minimum lease payments at December 31,1990 Total minirnum rentals. S'6.9'4 f or long-term nuncancelable leases are as follows: Operating Capital Yrar 1.cass t baset on Thouundo 1991. 5 4,918 5 324 1992.. 4,556 267 i993.. 4.271 94 1994.. 1,911 86 1995.. 1,908 86 Thereafter.. 3,394 566 Total mimmum lease payments. $20.9s 8 1,423 Interest portion. (472) Present value of net minimum lease payments. S 951 Noll 11. Cmi\\t! r sti N : s. Gt \\R WI H 5. ANI) CONTINMNCII$ 5 nm m 4' ma a s BGNE has made substantial commitments in connection with Year da lh"""n k

ts construction program for 1991 and subsequent years. In addition, BG&E has entered into two long-term contracts for the 1991.

28,896 purchase of electric generating capacity and energv. The contraas 1992-68,504 expire in 2001 and 2013. Total payments under these contracts 1993-69,282 1994-71.558 wcre 517,778,000, $12.922,000, and $8.840 000 during 1990, 1995.. ~2.994 1989, and 1988, respectivelv. At December 31,1990, the .T hereafter.. _ 831,r estimated future payments for capacity and energy that BG&E is obligated to buy under these contracts are a follows: 'Iotal payments. 51,142,411 45 e

. ~- e i> l Mrimm Gw and Rarm Cempm and %idunn. Certain of the Constdlation Companies have commincJ to erlectn e maimenante and operating control pincedurn contribute additional capital and to make additional loans to appropriate for pro enting the outage, EtTectise January I,1983 certain affiruen joint senture.s. and partnenhips in w hich they the Manland Commnsion authorized the estabbshmem of a ha$e an interest. As of December 31,1990, the total amount of t';enerating Umi Performance Program (GUPP) m measure, capital contributions committed to by the Comtd!ation annually utihty complianse with maintaining the producthe Companies i, $1# milhon' apuit3 of generating plants at reasonable loch bv estabbshing a system-wide generating performance target anJ indhidual mmm performance targen for each base load generating unit. In future BGNE. has agreed to guarantee two-thirds of certain fuel rate hean.ngs, actual generating performance after mdebtedness mcurred by Safe Harbor L.tet Power Corporan. on adjmtment for planned outagn wdl be compared to the system. bec N,ote.n T.he amount of such m. debtedness totah 550 wide target and, it met, should s.igmtv that BGNE he complied mdlion, of which 533.3 nnihon represenn BGNE s share of the wah the requirements of Marvland la'w. Failure to meet the guarantee. Aho, the Lansidlation L,ompanics ha e agreed t system. wide target will result in rniew of each uniti adjusted guarantec certain burrowmgs of various ahernatne energy and Actual generating performance tenus its performance tarEet in real estate projecto As of December 31.1990, the mtal determining comphance w. h the law and the basis for possibly n outstanding loans guaranteed by the Constdlanon L,ompames A on BM E Pmin m bl w briy E in in a were 596 milhon. The Company a<soses that the risk of still quesnon the prudence of BGNEi actiom or inactions with materiallow on the loans guaranteed is mimmat rw m an) given generating plant outage, w hich could roult N uslear Imuranct in the disallowance of replacement energy com by the Maryland An accident or an extended outage at either unit of the Calvert Comminion. Cliffs Nudear Power Plant could hne a substantial advene Since the two units at BGNEi Calvert ChtTs Nudcar Powet eficer on BG AL. The primary contingencies resulting fmm an Plant produce the lowest cmt power generated by BGNE, incident at the Calvert Cliffs plant would insolve the physical replacement energy cmts awociated wah outages at these unin l damage to the plant, the tecmerability of replacement power. can be significant. BGNE cannot estimate the amount of and BGNEiliability m third parties for property damage and replacement energy costs that could be challenged at duallowed boddy injury Ahhough BG&E maintains the various imurance in future fud rate pro <ecdings, but such amouna could be pohcies currently asailable to pmvide coverage for portions of material these ontingendes. BG&E does not consider the available in October 1988, BGNE tiled m first annual fuel raic c imurance to be adequate m cmer the costs that could resuh application for a change in in dectric fuel rate under ihr GUPP from a major accidem or an cuended outage at either of the program. The resuhant case before the Maryland Commnsmn Cahert Chffs units. cmcrs BGNEi operating performance in calendar year 198' In addition,in the nent of an incident at any nudcar power and BG&Ei fihng demonstrated that it met the syuem-wide plant in the country BGNE could be awessed for a portion of and indnidual nudear plant performance targen for 1987 in any third party daims, phpical amage to the plant, and the November ">89, testimony was filed on behalf of Maryland cost of replacement power anocured with the incident. Under Peoplei Coumel alleging that snen outagn at the Cahen Cliffs the prosinons of the Pace Andenon Act. BG&E wuld be plant in 1987 were due m management imprudence aad that assessed up to 5132 mihion per inciJent, payable at a rate of $20 the replacement energy cmn awodated with those outagn milhon per year. for third parrv daimt Under the nuclear should be disarewed by the Comminion. hal replacen ent insurance pook in which BG&E parncipatn. BG&E could be energy cosu associated with the 198' outagn were assewed up to a intal of $24 million in anv one puhey year for appmximatdy $33 milhon. physical damage, the cmt of replacemem power or radution in May 1989 BGNE filed ir3 fuel rate case in whkh 1988 injury daims by worken anociated with an mcidem at another performance will be exammed. BGNE met the system-wide and company's plant. nudear plant performance targen in 1988. People's Coumd alleges that BG&L imprudently managed several outages at ou rabih.n et Electra l. d Cmn Calwn Chffs and BG&E estimates that the meal replacement u >1 By statute, actual electnc tud cosa are recmerable so long as the encrp cmn associated wnh thne 1988 outages were Maryland Commission finds that BG&E demonurates that, approximardv 52 milhon. among other thingt it ha mamtained the producthe capacity of Nrim N89 and 1990. both umts at Cahen Cliffs had in generating plants at a reasonable Ind. The Maryland emnded' outages begmning in the Spring of 1989 when a leak Lommusion and Marvland s highest appellate court haye was distmued around the Unit 2 pressurizer heater,leeves interpreted this as permining a subjecthe evaluation of each during a refuehng ouuge. BGN1 shut down Una 1 e a unplanned outage at BG&Ls generatmE plann m determine precaunonary measure on Mav h 1959 to impcct for smular whether or not BG&E had implemented all reawnable and wst leaks and nor,e were found Howner, t: nit I we out of senac 46

1 1 w - I Balsamorr Gas soulWtric Company and%budsaries ior the remainder of 1989 and 285 days of 1990 to undergo The Commission noted in the order that in review and fmdinp maintenance and modification work to enhance the reliabdity on these issues pertam to the reasonablenen of IIGND iest-year of various safett systems, to repair equipment, and to perform operatiorn and mainteriani,e expens s for purposes of setting base required periodic suneillance tests. Unit 2, which is expected to rates and not to the responsibihty for replacement power costs return to service by the end of the 6rst quarter of 1991, canciated with the outages at Calven Chfft The Mar 3 and 1 remained out of senice throughout 1989 and 1990 to repair the Comminion stated that in decision in the bai,e raic car will hase pressuriier, perfoun mamtenance anJ modification work, and no resjuduata (bindmg) efTect in the fuel rate proceedmg complete the refuchng. The replacement energv cmt anociated namining the 1989-1990 outages. The work charactetired as with the 1989-1990 outages Dr both units at Calvert Cliffs is noidabic had a signiikant impact on the duration of the Unii 1 ntimated to be approximately 5415 million as of outage. Despite the Maryland Comminioni miement regarding December 31,1990, no injudwata effect, ilGN E recognii.n that the views exprnsed in a December 1990 order issued by the Maryland by the Maryland Comminion make the full recovery of all of the - Commission in a llGNE base rate proceeding, the Maryland replacement energy cmts aumiated with the Unit 1 outage Commission found that cenain operanons and mainienance doubtful Therefore, ilG&l: has rewrded a prousion of exp nses incurred at Calvert Clith during the test year should $35 milhon against the disallowante of such wsts which reduced not be recmered from ratepayert The Maryland Comminion 1990 carnings by 2M per wmmon share. Ilowever, ilG&E found that this work. which was performed during the cannot detennine w hether replacement energy wsts may be 1989-1990 Unit 1 outage and fell within the int year, wu disallowed in the present fact rate proceedinp in cuns of the avoidable and caused by llGNE actions which were deficient. prmision, but such amounn wuld be mecrial. Non 12. QUARH RIY f!NANCIM DATA (UNAUDITUO The fol% wing data are unaudited but, in the opinion of Manage-sales ieriods generally occurring during the summer and winter ment, indude all adjustments necessary for a fait presentation, mont u. Accordingly, wmparnom among quaners of a year may llG&B utility business is senonal in nature with the peak not be indicative of morall trends and changn in operationt Quarter Ended g ina,a Maub o f lunc to Septeml,rr in I nctember 31 IMemte H !!n 1houunds I acept Per shu Anmuntu I 1990 l Revenues.- 5545,436 5480.665 5616.338 5516,824 52,159,263 - Income from operationt 77,2'9 74.773 174,007 ",320 333,379 l Income before cumulatne etTect of change in accounting method.. 36,775 38,859 100,320 (5081 l'5,446 l Cumulatne effect of(hange in the method of acwunting l for unbilled re enues, 37,754 37,754 l Net income-74,529 38,859 100J20 (508) 213,200 l Earninp apphcable to common stock. 65,156 29,112 89,749 (l1,078) 172,939 l Earninp per share of common stock j llefore cuma!auve etiect of change in accouming method. 0J4 0.35 1.08 t.13) 1.64 Cumulatise effect of change in the method of umunting for unbilled revenun. DA7 0.46 Total earning per share of common stock - - 0.81 035 1.08 L13) 2.10 19S9

Revenueu,

$523,852 $434.703 $ s60.010 5485.s11 52,004.136 income from operations-115,63 81 AM 196,'38 82.646 476,585 l Net income.. ~0,5 27 43,952 I l ~,7 51 41.061 T6,291 I Earninp applicable to mmmon stock. 62.956 36.284 109.409 35,261 243,910 Earninp per share of common sax.k-o "9 0M Ir n 44 40; Q.-arterh amounnp r i971 bate hem rruatedin vrfar a eicany m. counnngpink wie u as made : i U r:I>cr iUW2 efterne laon,an 1 IVW ner Utdar Rexrnue, sntum c[!snr / > Re:ulv}ir thefnrtn quarter q! l 9%rkt riv pra mmijhv a pmnide dud l,su am e of repla. eme-e,u,y o u nca % I:> 1h sum ofthe quarterb rarnme per Ja>r amsww may not equalthe cora!yir tir a duc m hang m ik aware w,;i.er vpitam ouruandn ci ambout theyear 47 i

~. [ ColwOllATE AND UTiuTY Omcots lultimm Gas and Flurric comjuny and$s.hadwies Gt onGl V. hlCGowAN Chairman ofthe Boardand ChiefExecurit e Officer CllR1sT1AN H. Poispixrt n Vice Chairman ofthe Board FowARDA.CnooKL President - Utiloy Operations TnostAs E 1\\RAny 11ce Prnident. Accounting and Ewnomics h11atAn J. Cntsstn lice President. Comumer Servien HrutRT D. Coss, Jn. Vice Prnident. Electric Interconnection and Operations GLaRGL C. Cun \\ ice Prnadent, Nudear Enery Gt onGL D. ENatANo lice Praident. Distnbution joshi, fit.Ls \\' ice President. Afanagement Services G. Dawat SatwARTz,)n. Vice President, GeneralSe reica CnARLLs W. Sttinny Vice hesident, Corporate Finance, 7teasurer. andSurerary lastru A. TILRNAN Vice President, Corporate AjTairs ], Tnours WunsLn 1 ice President, Fossi! Energ ]L11 klY L.. DAV15 Assistant Secretarr Tnos1As E. ResztN, Jn. Assistant Treasurer n ( n m. : ,.n Eferisce April 1,1990: Herbert D. Coss Jr.. becarne Vice President of Electric Interconnection and Operations succeeding John W. Gore, Jr.. who retired with more than 41 years of service. G. Dowell Schwartz. Jr., was elected Vice President of General Services succeeding Herbert D. Cou, Jr. 48 i

g ^ - BOARD OF DilmcTolts Balnmm nu and &mc Ce nt.anpuJ huk.d>anr< I i l sto si< cous sio tw.i u n st nu r,m sttcon stt t emu Mt onnu ms sisn a i nin Gt ORGf V, h1LGowAN Civirman ofti>r Board.:rul GriefIkerutur Oficc ^ Cstunss tw 1i. Polsonx x n n Vu e Guirman qfdue Board ^ ll, l'enuONc 11An ownN Guirman ofthe Boardand Grief 15ccutur O!/icer Mercantde Baddures Cor;. oration chank!=!hng compargL dahimme * ). Owl N Cou Guirman qfthe lhecuanr Cornmittee, l First Maryland Bancorp (bank holding compey1, Baltimore ^ Eowrun A. Cnookt Porsident - Utilit, 0;cratiorn ^ List nI.11. DtstlAnooN li>rmer Guirman ofthe Boardand President. Monumental Cmper.:rion finsuranal Balumore Stsin n NAlIiu IN Yninn, S.S.N.D. Praidev. College ofMtre Dame ofMaryland irducatum1. Baltimore Ma. cu u r sta. u.m asus m M.m sta. nux um M. nmni va iamonu utwnn )t noMt W. Gt cuu. Chairmau ofih: Board (Ret. k PHH Corporation ( rhide. relocation. and facihties manayment sertices1. ILdrimore ^ Wsttrun ILAculinMAN President and ChiefL&rcutier Officer, Tie Whuing furner Contracung Company (conuruaion andconuruction managementh Rdtimore pat's G. hlluin Cluirman efthe Board. A Supercomputer knenn, Inc. (design, manuf1cturmg, andsalet o[>upercomputersL l.aurel, Md ^ Gn onct G. It Ancui e n li>rmer Ciuirman qfri>< Baardar.d ChiefL&ecutiir Ojiar, l'he Baltimore 1.ife fruurance Lompany nniurancel ILdnmore ^ Gi onci. L Ressin, Jn., Esq. Partner Piper 6 Marbury (laic firmL Baltimore ^ Ilt RNAnn C. Tnt :sciit.1 n Ch.nrman oftie l&ecutirc Committer ' flARRY N. WLu 8 Guirman ofthe Board (Raire.h McCormia & Company Inc (!bo i proassing. spices. etc.. Bahimore e u!: Bs i s Audit Committee Mr. Radditie, Clu/rman Nir. Baldwin; h1r. Cole; h1r. Russell Committee on Management h1r. GedJc, Chairman; hit. Cole; Mr. Dhharoon; Mr. Trueschler Executise Committee Mr. Trueschler. Ch.nrman; Mr. Crooke: Mr. Disharoon; Sister Fedey; Mr McGowan; Mr. Poindexter; Mr. Raddific Committee on Nudear Power Mr Tdh, C/wirman; Snter I:ecley; Mr. I f acLerman: Mr. Millcr; Mr. Poindexter 49 a

g -CONSTELLATION SUBSIDIARIES ILdurwr Gas and Urcaric Cwyarry and Suhudiarin l

MIK iks

= Gt onct V. McGowAN Ch.nrman ofthe Board. Comtellnion Holding, im BRuct h1. AstBLLR he>ident and Chief'thecuritr Officer. Constellation Iloiding. Inc. Tl RRY L. Oct i TRI L hrsident. Conste/Lrrion l~nergy. luc. W, E, (VLTt) 5mstoss,)n. hrsident, Constellition Rea!F< tate Group. Inc, )uttsW.]mcoa br>ider:t. Conariluion Health Sereises. Inc. i Sn nN D. K1 st 1:a hendent. Constell.nwn Imrstments. Inc. PrTru M. NInk hrsider:1. Tbc DIS Group. Inc. RoBLnr E. WINnitof hesident. Church Strat Station. Inc. < m o u a tos I b n e.us cou m i u n r.10 u bim Go u e Constellation Holdings provides direction to all or its This is the parent company of ses eral businesses - operating subsidiaries and furnishes them with legal, including Church Street Station in Orlando. Horida - financial, tan accounting, and penonnel services. that seek new business opportunities in several broad in addition, decisions on all new imestment or categories. The KMS Group performs real estate acquisition opportunities are controlled from development, consuuction, and operational activities, Constellation Holdings. and Constellation Health Services, through joint ventures, owns senior..living and retirement n, .> m ; >~ 1, communities, as well as nuning facilities for the elderh. This is the senior member of our Energy and C" * " " " " ' I " # C' " Environmental Group. Under the auspices of Constellation Energy, the company participates in a The largest single company at this time, Constellation invesonenn senes as the priniary pnwider of current number of alternative energy and cogeneration projects '"' " ' f""" i" I"Vr5 ""r"" I" i""' *CC""t ic' pmducing electricity for sale to other utilities. The Energv company is actively. involved with developing, investment partnerships, and fmancial-service arranging financing, building, and operating a number " "P3'"#'- of wholesale power projects throughout the country. Robert E. Tindham joined Church Street Station on December 19.1985, as Controller and was subsequently elected President of Church Street Station, Inc. on February 23.1990. 50

l -o ^ CONSTEUArlON SunsiniMuEs udwnm Gas and natric company and kinidaries !:,omo 01 Daa n ons y3+ a ~ neeprs:~ 5 IA dh $$ IA Ma Mccom Ma Amus Ma.auous M a. insn oons un. cu tu Gt onat V. McGowAN Chairman ofthe Board, Constelbtion Holdir:gi, Ine: Chairman ofthe Boardanc ChiefErecutiir Offker. Baltimore Gai and E!carie Cornpany ^ linvcn ht. AMa>txn President and ChiefErecutier Ofiar. Constellation Holdings. In.

11. YvutDNa Ert.ownN Chairman ofthe Boardand ChiefExecutiie Ofliar. Alercantdr Bank hares Corporation - t.tsur B. DtsniAnooN Former Chairman ofd,e Board and President. Alonument.d Corporation ^ JrnoMr W. Gi cutx Chairman ofti>e Board (Ret.). PHH Corporation Mk. H scKl aM ss Ma. km Ma. Mit t a a M k. Poistit xi t a Ma. 'l at i x nii n Will.ARD I1 ACKLRMAN President and CiriefErecutive Oficer, The u"hiang-7krner Contraaing Cemyany

• 1:nwARn W. KAv Former Co-Chairman and ChiefOperating Oficer. Ernst & Dung
• Pact G. Mtti.tn Chairm.1n ofthe Board. hpercomputer 5.htems. Inc, ^ CannnsTIAN I1. PonNorx1tn Vice Chairman ofthe Board. Baltimore Gas and Elearic Company ^ BtnNAnn C. Tactscnlns.n Ciairman ofthe Execiaiir Comminee Baltimme Gas and Elearic Comyany (innu t n i

.o 1,. Audit Committee Mr. Kay, Chairman; hir. llaldwin; Mr. Miller Committee on Management Mr. GedJe. Chairman: Mr. Disharoon; Mr. Trueschler 51 i

... - ~ 4 SnMmnowna INFORMNDON Kdmum Gu aa:dIkctric Cmpny andkimJuan t mtuo,Sns. lm a ,iPu n 9 99 __ _ _ _. 8 49 _ _ _ _ _ _ Dhidend . Pri e_ I N dend' Prke Dedared liigh low [kJared High lim lint Quiner. sss sub 529 4 s,sa su4 528'a econd Quaner.. .s:s 3o'. 2#. .m uh 29 s Third Quarter. .s u .v e uh m Wa uh lounh Quarter.. 52< 29 % uh .sn u, s. s 50, Took s 2.io ew The common uock is entided to diddends when and as I he annual meeting of shareholden will be hdd at 1o:00 a.m. dedared by the ibard of Directon. There are no hmitations in on April i9,i9m,in the llunt %lley Bdlmom of 51arrioni any inden:ure or other agreemenn on payment of dividende Hunt %11ey Inn. 2 o Shawan Road d.si at Sh.m an Road). however, holden of preferred uosk (firsti and holden of Ilum %1!cy. N!ardand. preference unck (neu t are entitled to retene, when and n dedared, imm the surplus or nei pmfin, cumuladve 3 carly i dnidends at the fised pncierential rate speci6ed for each series Upon written request, the Company will furnhh. without and no more, payabic quanerly, and m receive w hen due the charge, a copy of hs I orm to4 annual repon, induding applicab!c preference unck redemption paymems, before an> Gnandal statements, after it is Gled with the Suuritin and dividend on the common unsk shall be paid or set apart. Ishange Commhsion in Alarch iv9n Requeus should be Dhidends have been paid on the common stock continuoush-addressed to Charles W $hhcry, Vice Prnident, Secretary, since 19to. Future dhidends depend upm future carnings. the and Treasurer, PO. Itos q 5. llahimore, N1aryland n20py 5 Anancial condition of the Company, and other facmrs. - Quanerly dnidends were dedared on the common stock donny t, mo and t9 9 in the amounts set fonh anore. Coopen N lybrand 4 Record dates are norma!!y on the icth of Atarch, June. Gas and 1.lectric Buildmg september. and December Quanetly dividends are Charles Cemer cusmmarily mailed to each shareholder on or about the Bahimore,.\\lar3 2nd zum 1 at of Apdl. Julv. Ostober. and January. Alail: f!O. Box q, > W. E P: la n o !.n Bahimore, N!anland 2uc+q s i The Company s Dhidend Reimeument and Smek Purchase Plan pmddes an oppnunity for ho!Jen of the Company's su m not t :r wmmon uosk to acquire additional shares of such unck in a Shareholden de irmg assmance with lou or uolen stotk l wnvenient and emnomical manner. Parncipann in the Plan ceni6 cates or diddend checkt name changes address shango. r ay reinveu cash dnidends on ali or a ponian of their shares stock transfers or other nunen shomJ call the $harebokier of common umL and/or make optional cash paymenn. Servkes Represenuoves on our toll free telephone numbert The following mil-free telephone numbers are available during our businen hours 8:oo a.m. io aqs p m. l T he Companyi common stosk. w hh n n traJed under the Balomore Aletmpohun Area wo:o l tkker symbol DGE is hsted on the New York, Niidwest. and Within Alarvland

-soo.49 t-2sm Pacide smck e es, and he unlined trading prnilege' anude of Starvland

- on the Bmmn. t rt ;od Philaddphia enhanges. i400-22 s-4 u As of December 3n A. there were 68.689 Common Wnnen commumcanon should be addressed to: ShJrcholden of record, B.dtimore G.n and [leunc Company shartholder Senices po. Bm u.4: A12ryland National ibnk. Itdnmore Balomore. Atan!and zu w v4.o 52

ON OUR COVER U 44 _m,n 45 364 A5 ID c N _, C 5_. ? v r? t /As is [ 3 !N N jf~'?'- 48 [ 40A J}/-j f -+ i t-47 O 52 v %e y y[q s ~ " ' W / 8 30 39 )} g so Q .__y p'S 41 49 e /' T 2 s p,A]L,h ** 1 /{ gb[6 j'p! 5 (3 \\ ,o %N W 3 34 dJ il (I > ' L x( - b r'~ ~ j 3 ' 42 26 i 7.a _ 1 fq^ e g 20 s f C39 j k \\m\\! to \\ 33 h .? h jj k-3,) } i / 1 ! 84r N m x3, x8 i 3 jt M}, cm h,) [24 15 \\ L q y 1

VC%

C: \\ m / n n NJi j, 23 / -J Q> / (, N Y"r~.,L'n / J Li ) s n a t r ~ s, 3o 29 y i6 (j _~ m. _ __

• 8

,.gh ( A-N w, x _ 1 J

i. Oriole Gas Range arca run is. GL Electric fan

.. - !v;o

n. Diehl Ribbonaire Ian m a ser

2. Philco Radio circa n3m

19. I use Puller circa wm

36. IWantU Gas Imn cma wri

3. King KoolIlectric Fan circa ns zo. s2 Aluminum Cable i?. Enginecting illueprint cm.. ivm

4. Edison Light and Rect arca ivvo

d. Weiskinel Fire King Bulb (replica) arca i.ev 2i. Sunbeam Toaster arca un G n Ileater n r.a tav-

5. American Beauty

22. Victor Instantaneous

39. CGI 1.& PCo.

Elecuic Iron arca u n Water Heater cinaixvu Work 1.antern .ma nie

6. Noma Decorative

23. Fire Bucket arca n20 ao. Emeralits Dest Iamp arca um Lighting Outfit arca m'

q. West nghouse Watimeter arca isus 4i. liigh Voltage Sign a ca wAo

. Sunbeam Mismaster arca ur 20 Byan Gas Range and

42. K AL Diafting Pounte una seu

8. Engineering Blueprint arca moo Portable (hen unaiNi

c. Sdety Pique arca ur

9. Good. Lite Decoratise

26. American Beauty

44. Nipper Snings Bank or.a au 1.ighting Outfit ana ups llectric Iron arca un

c. V.estclos Alarm L.losk ana wts so. Dietr Construction

27. Gn Meter arca 19 5o 4

G,as I amp 6 ana anc Lantern arca um

28. Electric Generating Plant

47. RCA Radio cina up

n. Oriole Gas Space lleater arca au Power fattor Gauge ana neo 4 "' "#'" ' C#" 'I"E PI'"'

u. Wooden Gas Pipe

29. Wet Tnt Meter arca a u

30. Ilutnc Generating Plant

"".' " U "" " M " " and Vahe ~ cina i32r

13. Arch Water Gauge arc i ni!

4 " ' "."*"' ' "" " E '"' Amperes Gauge circa mo Kilovolts Gauge i4. Gas Meter arca u n y RCA lilevision ura m - arca aan 50 Ilectrit i.use ar a w;n i t. G.as Meter uvo

32. Line Crew liard flat arca Noo i6. Wooden Cross Arm and Glas &

l.oreka \\ acuum$"

n. Noma Bubble-lites arca as Porcelain insulators circa now s 2.

Lleaner on i mes

34. G1 Refrigerator ans nr

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e Exhibit 11 Quarterly Financial Summary June 1991 Inquiries concerning this summary should be directed to: Thomas F. Brady Baltimore Gas and Electric Company Vice President Gas and Electric Building Telephone 301-234 5502 Charles Center P.O. Box 1475 Baltimore, Maryland 21203 Charles W. Shivery Vice President, Treasurer, and Secretary Telephone 301-234-5511

Consolidated Statements of Income (uraucaec) Three Months Ended Six Months Ended Twelve Months Ended June 30 June 30, June 30, 1991 1990 1991 1990 1991 1990 (in Thousands. Encept Per Share Amountal Revenues E'ectnc.. 5469.931 $391,854 $ 897.591 5 772.695 $1.809.050 51.616.967 Gas.. 62.919 67.903 203.232 214.969 361.682 374J55 Divers.fied activit.es.. 25.381 20 908 49 246 38 437 112.499 79 899 ......... e, o ., 68 231 480 668 1.150.069 _._1_.026I6I Tf5ffbi T61Tifi 3 Total revenues.... Exoenses Otner Than Interest and income Taxes Electnc fuel and purchased energy...... 135.286 120,161 282.468 243.0$0 562.504 446.949 Provis.on for possible aisailowance of reolacement energy costs... 35.000 29432 32,664 108.182 120.533 188.411 201.366 Gas purenased for resale.. m. Coerations... 148,306 134.523 290,170 270.113 596.329 521.32S 42.434 41,723 83 694 78 S41 168 310 152.986 Maintenance.. Deprec:ation. 48.338 42.238 95.124 84.570 181.140 163.079 Taxes other than income taxes.. 36542 34 583 82S17 76 942 162597 154 477 Total expenses cther than interest and income taxes.. ~- 405 892 942.455 374 049 1.894.290 1.640 185 439 240 locome From Operations.. T18 571 ?D73 267 614 152 O!2 386 941 7 i 7 53 Other income Allowance for ecuity funos used cunng 4.118 6.511 12 075 12 530 26 531 22 467 J cons truccon.. Eouity :n eamings cf Safe Marcar Water Power Corporation,, 1.103 1.263 2 205 2 525 4,582 5.121 Net otner income and oecuctions. 637 2 336 157M 3 243 __966 6,.,'22 Total omer income.. 5 858 10 110 13 702 18 398 31 979 34 310 income Before liwest anc income Taxes. _121 349 8438J __221. 31 g 170 450 420 920 465146 Interest Exoense Interest enarges.. 53.612 47.587 108.853 94.298 215.477 179.565 Anowance for corrowed funcs usec cunng constructon.. 16.892) (6 511) (15 044) (12.630) (29 679) f 20 652) Net interest exoense... ~IB'*2D 41.07B 93 804 81668 185 3 55 158 91d Income Before Income Taxes.. ~ T8I5Y5 43 F67 1273d7 6Ti$U 234.122 306 E income Taxes Corrent. 2.526 (6 231) 823 121.413) (10 359) 166.007) Oeferrec. 17,347 11,3,4 68.316 35.282 50.029 104 554 investment tax crec.t aciustments.. 1936) fi98)- (1.935) C21) (5 683) 1 040 Totalincome taxes... l. -.. 18 937 4 948 272C4 13,148 34 657 69T6? ._o Income Before Comutative E'fect of Change in Accounting Metnoc.... 59,192 38.859 100.003 75,634 200.115 237.446 Cumuiauve E.'fect of Change in me Metnoa of Accounung for Unodlec Revenues. Net of Taxes. 37 754 37 754 59.192 38.859 100.303 113488 200,115 275 200 Net trcome Pre' erred anc Preference Stocx Divicends.. 11.028 9 746 21.599 19 120 42 740 16 262 Eamings Aconcame to Common Stocx. 5 48.164 3 29313 5 78304 5 94 268 3 15f3T5 5 238 958 r= n Average Shares of Common Stocx Outstanding.. 83 954 82.479 83.796 91.519 83.504 80 879 Eamings Per Share of Common Stock Utihty ocerat ons. 50 56 50.24 50 93 5011 31.97 S2.41 Cumulauve effect of enange in account:ng 0.47 0.46 memoc.... Provision for oossible cisallowance of repiacoment energy costs,. to29) Totai uuhty ooeratons.. 0.56 0:34 0.93 1.17 1.69 1 88 Divers:hed actvities.. 0 01 0 01 0 01 (001) 0.19 0 07 Total eamings per snare of common stocx.. 50 57 50 35 $0 94 $1.16 $188 52 95 Constellation Companies Revenues.. !;6 335 522.147 $51.843 540 789 $117 229 584 243 1,143 593 498 (1457) 15.359 5 657 Net income..-.... Total Assets-End of Penoc. 1.043 952 869 234 1.043 952 869 234 1.043 952 969 234 BG&E's investment-Eno of Penco. 261.090 245315 261.090 245 915 261.090 245 315 inrannar:an var ne consteaance Camoanres aces not renect consonaatwo entwatrons ?ar vre con.cany wances ana transxnans Cana n once cenoa amcunts m tras r rocer nave teen restatatt to rertect a cnange <n me memca cr x:auntn 'cr unculea annry revenues ancn was maae on Cctooer 1990 effechvo aan ant 1 1940 'Olas reOOneQ eamsngs for carencar gear ?990 are not affected CV Tus Crange u '>e eteers' 'nnt~anco contamou merern retIncts accornonments and estimates at some crems sucuect 'a hnar iciustr' ant Jr Te cwencar year-rnd Resutts for nienm

e!' cgs Nn cr> can Ce targety anttuunCMd CV nealt'or COniptions are not recessamy.rcyrt attve 21 results 10 q encecteQ 'cr an enbre year

= _.. 9 Consolidated Balance Sheets <unaudaea) June 30, 1991 1990 ASSETS (in thousanos) Current Assets Cash and cash equivalents... $ 65.121 8.165 .~.. Accounts receivable (net of allowance for uncollectbies).. 292.024 251J42 Accrued unodled revenues.. 72,027 61.487 193.503 178.120 Matenals, supplies, and fuel stocks.. income taxes refundabie, 5387 28.635 25.995 37.506 Prepayments and other.. Total curtent assets.. 654.457 ~~TsHQ investments and Other Assets Financtal investments. 257122 . 19.468 Real estate projects. - E N7 29t.132 191.697 144.58 Alternative energy systems.. Safe Harbor Water Power Corporation.. 34.247 .d406 Senior living facahties._.. 26.302 26.882 Nuc' ear cecommissioning trust fund., 26.454 17,134 66.067 9.584 Other.. Totalinvestments anc ether assets.... 1.048.296 907.064 Utsty Piant. 6.343.395 5 922 826 Accumulated ceprec:ation,.. (1.731.159) (1.629 469) 4.612 273 ~T2Ff57 Net ut&ty plant. Deferred Charges Deferrec fuel costs (net of provision for possible cisalic wance. 351 669 267197 De# erred nuc: ear expencitures (net of amortzationL 52.482 23.992 n1986 22 336 Other.. 436.137 424655 ~ Total ceterrec charges. Total Assets.. 56 251 126 5_6d91101 2 UASILITIES AND CAPITALIZATICN Current Lacilities Short-term borrowings..... S 270.900 $ 288.290 Current portions of tong. term cect and preference stock,..

• 73.692 7L209 142.990 151.46*

Accounts payacle.. Accrued taxes. 2.4 G 2.034 Accrued :nterest anc civicencs dec:ared.. 100 ~j38 94 414 Cther.. 49.960 55.076 Total current liacilit.es.. 990340 664 294 Defe rec Crecits and Ctner Uabilit:es Deterreo income taxes., 676.227 626.198 Deterrec investment tax crecas.. 178.691 184 292 43.193 33 368 Ctner.. Total deferrec credits anc other hacsties.,, 898.111 a43SM Long. Term Dect 1.369.061 1.207.562 Mortgage concs.. Ctner tong term cect.. 770.000 504.545 Long. term cect of Constellation Comeanies.. 529.676 416.504 Unamcrtzec ciscount anc cremium. (7.408) (6.489) (450 892) I65 409) Current portion of long term cect.. 2.209:437 2.0563T3 Total long. term cect... 5F83 59 (83 Preterrec Stock. Receemacie P eference Stock. 422.800 387.800 Current porton of receemacte preference stocx. (22.800) 46.800) Total receemacte preference stoca.. 400 066 381.000 Preference Stock Not Suciect to Mandatory Redemotion., 110 000 110 000 Commen Sharenoscers' Eculty Common stock.. 963.862 933.045 P emium en creterrec stocx.. 157 157 Retainec earnings.. 1.t 30 674 1.148J15 Net unreah2ec ioss on marketacte securities. (11 040) f 5 256) Tctat common snarencicers' eausty 2.003 653 'f M C681 Tota! Uaosties and Capitanzatior!. M751.126

56. t 9 t 7di m

4 Consolidated Statements of Cash Flows (unaucaeci Six Months Ended Twelve Months Ended June 30. - June 30, 1991 1990 1991 1990 (In Thousands) Cash Flows From Oceraung Actmbes Net income m $100.303 $113.388 $200,115 $275.200 Adjustments to reconcile to net cash provided by operaung actmties CumulatNe effect of enange in the method of (37,754) (37,754) accounting for uned:ed revenues.. Deoreciahon and amortizauon... 110.348 86.389 203,752 166.039 Deferrec income taxes. 28,316 35.282 50.029 134.554 investment tax credit adjustments. (1.935) (721) (5663) 1,040 38.106 (22.693) (18.872) (219,102) Deferrec tuel costs.. Provision for possible disadowance of repiacement 35 000 energ) costs... _.... Allowance for ecu y funcs useo cunng constructon.. (12.075) (12.630) (26,531) (22,467) a Ecuity in eamings of affdiates and joint ventures (net). 21.449 .9.113 26,365 6202 Cnances in current assets and current liacilitres Accounts receivaeie. (23.632) 32.27S (40.212) (16.061) Accrued unedled revenues.. (22.2131 12.094) (10 540) (2.094) Matenais, sucones. and fuel stoexs.. 4.867 (20.978) (15.383) (29.361) Income taxes refundaDie,. 38.933 45.254 22.848 (27.890) Accounts cayacie.. 160.0381 (104 958) (8.925) 41.809 Accruec taxes.. (21.522) (2tS57) (374) 644 Cther current assets anc current liacinties.. 53305 38.153 2115 22.551 Other. 11.370 13 448 (11.553) 1 823 Net casn provicea oy ocerating actmt.es.. 256 522 149 620 ~IOTiH 296 253 Casn Rows From Financing Actmties Proceeds from issuance of Short term corrowings (net). (6.800) 164.483 (67.390) 251.290 t.ong-term ceot.. 516.665 821.658 1.682.433 1,734.830 34.829 64.433 34737 113.807 Preference stoex. 17.043 72 844 31,080 86.138 Common stecx. Reaccuis: tion of long term cett.. (481.385) (842.668) (1.234,180) (1,547,535) (6.800) 16.800) Recemotion of creference stocx. Common stocx omcencs caid.. f 87.711 ) (84.507) (174 S27) (188.542) Preferrec and preference stocx civicenas paic. (21.141) (18.173) (41.458) (33.226) (11) q) r33 ) Cthe r -., (75) _ 171.259 230 298 329 929 Net casn proviced by (used in) financ:ng actvities.. 628 575) Casn Rows From invesung Acuvites Utdity construccon excencitures. (206.272) (241,721) (499 967) (514.039) Allowance for ecuity funcs used cunng construction.. 12.075 12.530 26 531 22.467 Nuc: ear fuet excenc:tures. t445) (993) (19.972) (7,434) Oeferrec ouc: ear excencitures.. (10.245) (7.994) (30.006) (17.599) Nue: ear cecommissionmg trust func.. (4.450) (4.465) (8.092) (6284) F;nanc:at investments.. 53.844 (21.909) 65.847 (41.596) Real estate cro!ects. (28.796) (22.396) f 56.136) (27.069) Altemauve energy systems.. (24182) i46.215) (41.061) (78.906) Senior kving facities.., i404) (1.294) t1.602) (5,071) Otner - r3.300 ) 2343 f11455) 1,311 ~ Net casn usec in investing actMties..._.. (212 5i5)

1. 331 614) 5575 313) (674 320)

Net increase (Decrease) in Casn and Casn Ecuwaients. 25.242 (10.735) 56.956 (48.158) Casn anc Casn E:uivalents at Beginning of Penoc... 39 879 18.900 8 165 56.323 Casn anc Casn Ecuivalents at Enc of Pened. Q5g21 5_ B.165 8 65 121 $ S.165 Cther Casn Pow informanon Casn ca:c cunng me cenoc for: !nterest Inet or amounts cacitaitzec).. 5 32.945 5 30311 5178.357 5158384 income taxes. 5 14 383 5 6.905 5 19.002 5 11.208 m A

Utility Operating Statistics Three Months Ended Six Months Ended Twelve Months Ended June 30. June 30, June 30, 1991-1990 1991 1990 1991 1990 ELECTRIC Revenues (in Thousancs) Resscential-houseneating. $ 73 695 $ 59 568 $172.219 $142.772 $ 313.585 $ 266.148 -other.., 131.594 102 733 235 246 194 446 474 694 419 926 -total... . ~f05.289 162.301 407.465 33"2T8 ~788.279 686 074 Small commercrak 61.454 54.397 115.710 103.113 233.285 209 698 Large commeretal and incustnal... 200,201 172,434 368.819 327.044 774.611 710.441 Other.. 2 987 2322 5 597 5.320 12,S75 10154 Total.. 52803i 559G3 IF9751lii iM2sM IT36 Hso itTfGo? Sales (Thousands of MWH) Resicentiai-nouseneating...... 85< <<8 2231 2 079 4.095 3.885 -other.. 1,419 1229 2.671 2 445 5568 5 467 -total.. 2276 2.006 4.902 4 523 9T63 97552 Small commercial 634 598 1191 1241 2=610 2.524 Large ccmmercial and industnal.. 3.177 2 942 -6.211 6 047 12 598 12 691 Total. 6.061 5 546 12.404 11 S11 2FsH 24 !M 1 GAS Revenues (in Thousanos) ResicentiaWnouseneaung. $ 30.360 $ 32.885 $104.969 $106 349 5 180.181 $ 183.243 -otn er.. 7.708 8 064 20 370 20.880 36 896 37,026 -icrai. 38.076 40.969 12$T55s 127.229 217.077-22026$ Sma,1 commercial 5,724 6 448 19 205 20 569 33 258 35 331 Large commercial and incustnal -Exc:ucing censery service. 12.779 13.190 45.379 53 313 9156 26 452 --Denvery service.. 4.274 5.096 8 E53 9 857 20 151 23 580 l 17 053 18.286 ~l33J2 63.170 99.307 110!63Y -7ctaL Cther.. 2 066 2 200 4756 4.001 12 040 9.123 Sales (Thousancs of DTH) ~ ~ 5 361 662 5 374 753 ~ Total.. 5 62.9t9 FTf3D3 ITOTT32 5214543 Res:centiaHnouseneating.. 4J03 5,125 17.980 17.931 29765 30.170 -other., 1.055 1.108 3 043 3.079 5274 52S3 -totai.. 5f58 6 233 21.323 21.010 -'"'35.339 3C4TJ Small commercial., 981 1.11 7 J,527 3.743 5.929 6.171 Large commercial anc incustnal -Exc:ucing cenvery service., 2.920 2.919 10 344 11.808 17,860 - 18.5 t 4 -Oeuvery servrce... 10 122 9 873 21 085 18 964 42~t4 41 102 - Tota t i 3 ?74 2 12.742 'JITS 30 772 60'T73 59 616 Total.. 19 781 20.142 55 979 55,526 101 541 101.240-l t l l Electric Generation Statistics Twelve Months Enced June 30 Hycro Purchased Nuclear Coal Oil & Gas Power Total Ger'9fation oy Fuel Type (*b) 1991. 15 9 43.S 67 5.8 27.3 100 0 1990. (0.1) 45.4 9.3 45 40.9 100.0 Thcusands of MWH 1991. 4242 11 685 1784 1.541 ".405 26 657 1990 (19) 11.976 2,436 1.189 10780 26.262 Average Cost of Fues (Cents cer M>lhen Stui I '991 51 07 157 42 314 56 156 75 1990. 96 04

• 5672 207 21 190 47

Supplemental Financial Statistics Twelve Months Ended June 30, 1991 1990 Consolidated Capitalization 47.9. 42.1 *; Long. term dect.. .4 40*4 5.7*. Short term borrowings... Preferred and preference stock... 10.6 % 11.0*. Common eavity 37.5'. 41 2*. Retum on Average Common Equity.... 7.5*6 11.9*. Ratio of Eamings (SEC Method)* 2.07 2.68 To fixed enarges.. To fixed charges and prefs, red and preference divicenas comeined.. 1.69 2.13 l i AFC as a . of Eamings Applicaole to Common Stock., 35 1 % 18 0 % Effectrve FederalIncome Tax Rate.. 14.5*. 2 4.4. Utility Constn.iction Excenditures inctuaing AFC. Nuciear Fuei, and Deferred Nuclear Excenditures (Thousancs of Collar $L $549.945 $539.072

• bciuces cumwanve eMect of change e the metnoc ci accouncng rcortwas revenues.

Common Stock Data Three Months Ended Twelve Months Ended June 30, June 30, 1991 1990 1991 1990 Common Stocx Divicencs -Dectared.. S.525 $.525 $2.10 '52.10 -P aid.. $.525 $.525 $2.10 $2,10 Market Value Per Snare -Hign.. 29% 30% 29% 34 % -Low.. 29% 27' '. 24% 27% -C;ose.. 29 % 29". 29% 29% shares Outstanaing-End of Pened (in Thousancs). 83.965 82.844 83.965 82.844 Bocs value per Share-End of Pened. 524 82 $25.07 $24.82 52807 412M9 9 a.

=-.. 1 ~ lixhibit til Page 1 of 2 INTERNAL CASil FLOW PROJECTION FOR CAINERT Cl,lFS NUCLEAR POWER PIANT Percentage Ownership in all Operating Calvert Cliffs Unit No,1 1(X).00% Nuclear Units Calvert Cliffs Unit No. 2 100.00 % hiaximum Total Contingent Liability (000) per Nuclear Incident $132,000 Payable at Per Year ((XX)) $20,(XX) Twelve hionths Twelve hionths Ended 6!3091 Ended 7/31/92 Non-Cash Expenses ($(XXI) Depreciation and Amortization $ 195,832 $ 255,6S4 Deferred Income Taxes and Investment Tax Credits 3 % 912 (10.675) Total $ 226,744 $ 245,(X)9 Percentage of Total to hiaximum Total Contingent Liability Payable Per Year 1,133.7 % 1,225.0 % Retained Earnines ($0(Kr) Net income After Taxct. $ 200,115 Less Allowance for Funds Used During Construct:on 55,210 Less Dividends Paid 216.285 Total - $ (71,380) p-Total Internal Cash Flow $ 155.364 Percentage of Total Internal Cash Flow to hiaximum Total Contingent Liability Payable Per Year 776.8 %

Exhibit til Page 2 of 2 IIAIJIMORE GAS AND El.ECI'RIC COMPANY UNDERIXING ASSUMPTIONS FOR PROJECTED CASil Ft.OW (1) Projected cash Dow does not include an estimate of actained earnings. Ilowever, internally generated funds without retained earnings are well in excess of the maximum possible retrospective premiums. (2) Depreciation accruals based on composite straight line rates of 3.26'Yc for electric property other than nuclear and Brandon Shores Power Plant,2.807c for nuclear property,2.75% for Brandon Shores,3.12re for gas, and 4.02% for common utility property, other than vehicles. Vehicles are depreciated based on their estimated useful lives. (3) Estimates of Federalincome taxes and other tax expense are based upon existing tax laws and any known changes thereto. (4) Accounting policies consistent with those in effect June 30,1991. l -,,-----e. --,.r. -,---,-,--e---n,w n s<--+--.- ne,- + m- ' ~ - '

..v. Ihhibit IV llALTIMOltE GAS AND ELECI'ItlC COMPANY CUltTAllatENT OF cal' ITAL ENI'liNillTUltES l Estimated construction expenditures including nuclear fuel, deferred nuclear expenditures, and Allowance for Funds Used During Construction for the twelve months ended July 31,1992 are $$83 million. To insure that retrospective premiums under the Price Anderson Act would be available during the aforementioned twelve month period without additional funds from external sources, t construction curtailments would affect all construction expenditures rather than impacting a specific project. l l l l i .,. _. -}}