UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
October 30, 1997 (October 20, 1997)
BALTIMORE GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Maryland 1-1910 52-0280210
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(State of incorporation) (Commission (IRS Employer
File Number) Identification No.)
39 W. Lexington Street Baltimore, Maryland 21201
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(Address of principal executive offices) (Zip Code)
410-783-5920
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
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ITEM 5. Other Events
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As previously disclosed, in September 1995 we agreed with a neighboring
utility, Potomac Electric Power Company (Pepco), to merge together into a new
company, Constellation Energy Corporation, after all necessary regulatory
approvals were received. On April 16, 1997 we received two approvals which we
disclosed in a report on Form 8-K. We discuss these approvals further below. On
October 20, 1997, we received an order from the District of Columbia Public
Service Commission (D.C. PSC) approving the merger, but the order contains
unacceptable conditions as described below.
D.C. PSC Order Approving the Merger Contains Unacceptable Financial Terms
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BGE and Pepco had proposed a regulatory plan to the Maryland and District
of Columbia Public Service Commissions that was designed to share the merger
benefits equitably between the shareholders and customers. Although the D.C. PSC
approved the merger, its order imposed conditions that, in BGE's opinion, would
produce an unacceptable financial result.
The companies sponsored testimony in the D.C. PSC proceeding based on
studies conducted by the companies and Deloitte & Touche that the net cost
savings of the merger over 10 years were estimated to be $1.3 billion. The D.C.
PSC order increased the amount of the estimated savings to $1.8 billion. The
order also amortized the estimated costs to achieve the merger over 10 years.
Apportioning 19.1% of the higher savings to D.C. customers and allocating the
savings 75% to customers and 25% to shareholders, the D.C. PSC ordered that D.C.
customers' rates be reduced by $99 million over the first four years of the
merger. This rate reduction returns more savings to those customers than can be
realized for those customers over the four-year period. Therefore, the companies
will ask the D.C. PSC to reconsider its decision and allocate the appropriate
savings equally between customers and shareholders.
D.C. PSC Order Approving the Merger is Available at the Company
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The D.C. PSC order approving the merger can be obtained by calling us at
410-783-5920 or by writing to Baltimore Gas and Electric Company, Shareholder
Services, P.O. Box 1642, Baltimore, Maryland 21203-1642.
Status of Other Merger Approvals
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As previously disclosed, the merger was approved by the Federal Energy
Regulatory Commission and the Maryland Public Service Commission on April 16,
1997. However, the Maryland PSC imposed conditions on the approval that
eliminated any reasonable opportunity for shareholders of the new company to
share in the merger benefits. As a result, the companies have filed with the
Maryland PSC for reconsideration. Those proceedings are on hold while an appeal
of the Maryland PSC decision by the International Brotherhood of Electrical
Workers (IBEW) is before the Circuit Court of Baltimore County, Maryland. On
October 27, 1997, an opinion and order was issued by the Circuit Court affirming
the Maryland PSC merger order. The Court concluded that the IBEW failed to show
that the Maryland PSC order in any way violated Maryland law. The IBEW could
continue to delay reconsideration by the Maryland PSC of the conditions imposed
in the order by filing a notice of appeal to the Maryland Court of Special
Appeals within 30 days.
The Maryland PSC order approving the merger is available at the Maryland
PSC web site at http://www.psc.state.md.us/psc/. You may also get a copy of the
order by calling us at 410-783-5920 or by writing to Baltimore Gas and Electric
Company, Shareholder Services, P.O. Box 1642, Baltimore, Maryland 21203-1642.
Other Information
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The status of the necessary regulatory approvals is regularly disclosed in
filings made by BGE under the Securities Exchange Act of 1934 (1934 Act). BGE's
filings under the 1934 Act, including Reports on Forms 10-Q, 10-K, and 8-K, will
continue to include updated information about the necessary regulatory approvals
until the merger closes.
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ITEM 7. Financial Statements and Exhibits
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(c) Exhibit No. 2* Registration Statement on Form S-4 of
Constellation Energy Corporation, as
amended, which became effective
February 9, 1996, Registration No.
33-64799.
Exhibit No. 99 News Release of Baltimore Gas and
Electric Company and Potomac Electric
Power Company dated October 29, 1997.
*Incorporated by Reference.
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BALTIMORE GAS AND ELECTRIC COMPANY
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(Registrant)
Date October 30, 1997 /s/ D. A. Brune
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D. A. Brune, Vice President
on behalf of the Registrant and
as Principal Financial Officer
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EXHIBIT INDEX
Exhibit
Number
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2* Registration Statement on Form S-4 of
Constellation Energy Corporation, as amended,
which became effective February 9, 1996,
Registration No. 33-64799.
99 News Release of Baltimore Gas and Electric
Company and Potomac Electric Power Company
dated October 29, 1997.
*Incorporated by Reference.
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Exhibit 99
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[BGE and Pepco Letterhead]
NEWS RELEASE
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Oct. 29, 1997 Contact: Art Slusark (BGE) 410-234-7433
FOR IMMEDIATE RELEASE Susan Moyer (PEPCO) 202-872-2680
BGE/PEPCO PLEASED WITH COURT DECISION REJECTING UNION LAWSUIT
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A Baltimore County Circuit Court's decision rejecting a lawsuit brought by
the International Brotherhood of Electrical Workers was applauded by officials
from the Baltimore Gas and Electric Co. and Potomac Electric Power Co., who said
they will continue to seek a prompt resolution of their merger from the Maryland
Public Service Commission.
"We said all along the union's case was without merit and clearly a
delaying tactic," said BGE Chairman and Chief Executive Officer Christian H.
Poindexter and PEPCO Chief Executive Officer John M. Derrick. "This decision
moves us one step closer to our goal of merging our two companies and creating
Constellation Energy Corporation."
In his opinion and order, Judge James T. Smith wrote, "There was substantial
evidence in the record to support the PSC's conclusions and determination that
the merger as approved is in the public interest."
On April 16, the PSC approved the merger with financial conditions attached
under which the merger could not proceed. On May 2, BGE/PEPCO requested a
rehearing of the order to address those conditions. However, that process was
put on hold because the IBEW asked for judicial review of the original order,
appealing it to Baltimore County Circuit Court. This court decision affirmed the
PSC's original order. This should now allow the PSC to address the rehearing
request.
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