UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 17, 1997
BALTIMORE GAS AND ELECTRIC COMPANY
(Exact name of registrant as specified in its charter)
Maryland 1-1910 52-0280210
(State of incorporation) (Commission (IRS Employer
File Number) Identification No.)
39 W. Lexington Street
Baltimore, Maryland 21201
(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 of the necessary
approvals related to the merger, but one of the approvals contains unacceptable
conditions.
Maryland PSC Order Approving the Merger Contains Unacceptable Financial Terms
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Although the Maryland Public Service Commission approved the merger, its
order imposed a number of conditions that, together, in BGE's opinion would
produce an unacceptable financial result. 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. The Maryland PSC order includes:
o a reduction in rates to Maryland customers by $56 million,
o a base rate freeze for three years once the merger takes effect, and
o the sharing of profits with customers if the return on equity exceeds 11.4%
The order also denies BGE and Pepco the opportunity to recover the full costs of
purchased power contracts previously approved by the Maryland PSC. Taken
together with the imposition of a series of earnings tests, the shareholder is
denied a reasonable opportunity to receive savings associated with the merger.
The Agreement and Plan of Merger signed by BGE , Pepco, and Constellation
Energy Corporation dated as of September 22, 1995 includes conditions to BGE's
and Pepco's respective obligations to close the merger. One condition is that no
order like the Maryland PSC order:
would have, or would be reasonably likely to have, a material adverse
effect on the business, operations, properties, assets, condition
(financial or otherwise), prospects or results of operations of
Constellation Energy Corporation.
BGE believes the Maryland PSC order would have a material adverse effect on
Constellation Energy Corporation. BGE and Pepco intend to ask the Maryland PSC
to reconsider the decision. Absent a change in the order's negative financial
implications to Constellation Energy Corporation and its shareholders, the
merger could not proceed.
Maryland PSC Order Approving the Merger is Available at the Maryland PSC
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Web Site
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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.
Federal Energy Regulatory Commission (FERC) Order Approving the Merger
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The FERC unanimously approved the merger without any conditions.
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ITEM 7. Financial Statements and Exhibits
(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 dated April 17, 1997.
*Incorporated by Reference.
SIGNATURE
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
(Registrant)
Date April 17, 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
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 dated April 17, 1997.
*Incorporated by Reference.
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Exhibit 99
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(Issued on BGE/PEPCO letterhead)
For Immediate Release Contact:
Art Slusark - 410-234-7436
April 17, 1997
Nancy Moses - 202-872-2680
BGE/ PEPCO to File Request for Reconsideration
of Maryland Public Service Commission's Merger Order
Baltimore Gas and Electric Company and Potomac Electric Power Company stated
today that while the Order of the Maryland Public Service Commission issued
yesterday recognized the benefits of the merger of the two companies, it
contained elements that must be revised for the merger to take place. The
companies will file a request for reconsideration of the Order so that these
problems can be remedied as soon as possible.
The two companies proposed a regulatory plan designed to share the merger
benefits equitably between the shareholders and customers. The Commission's
Order would put in place a plan that would eliminate any reasonable opportunity
for shareholders to share in the benefits. In addition to ordering a significant
rate decrease, the order also denies the two companies the opportunity to
recover the full costs for purchased power contracts previously approved by the
Commission. Taken together with the imposition of a series of earnings tests,
the shareholder is denied an opportunity to benefit from the merger.
"We hope to have the Public Service Commission revise its decision because the
Order would result in an unacceptable financial impact on the new company and
the merger could not proceed," stated Christian H. Poindexter and Edward F.
Mitchell, Chairmen of the Boards and CEOs of the companies.
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