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): February 26, 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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New Power Marketing Business
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We are entering the power marketing business. This new business involves
o the purchase and sale of electric power and electric power
derivatives; and
o related activities including power brokering, marketing, risk management
activities and derivative trading.
We will pursue this business through a new wholly owned subsidiary,
Constellation Power Source, Inc. Goldman Sachs Power, LLC, an affiliate of
Goldman Sachs & Co., the investment banking firm, will be exclusive advisor to
Constellation Power Source, Inc. for risk management and power marketing.
We have previously discussed our ongoing evaluation of the rapid changes in
the electric utility industry. We consider various strategies to keep us
competitive as the industry changes. We concluded that entering the new power
marketing component of the electric industry was critical to keeping BGE well
positioned as the industry changes. Specifically we believe this new business
will
o allow us to offer additional power products and services
through the BGE family of companies,
o provide us valuable contacts with potential new customers in
North America, and
o position us to expand revenues from our diversified
businesses.
Capital to be Contributed
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Our Board approved a $100 million capital investment in Constellation Power
Source. This capital will be contributed from our retained earnings from time to
time, as needed.
Reorganization of Existing Energy Marketing Companies
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We also are reorganizing our other energy marketing businesses. We have
formed a new wholly owned subsidiary under BGE that will serve as the holding
company for Constellation Power Source and our two other energy marketing
companies
o Constellation Energy Source, Inc. (formerly named BNG,Inc.),
a natural gas brokering company with wholesale and retail
customers, and
o BGE Energy Projects & Services, Inc., an energy services business including
district heating and cooling systems, private electric and gas distribution
systems, energy consulting, power quality, and campus energy systems.
This new holding company structure for our energy marketing companies will
remain in place under Constellation Energy Corporation after BGE and Potomac
Electric Power Company complete their pending merger into Constellation Energy
Corporation.
Changes in BGE Executive Officers
- ---------------------------------
We also are transferring a number of employees to Constellation Energy
Source, Inc., including one current executive officer. Charles W. Shivery was
elected to President and Chief Executive Officer of three companies
o Constellation Power Source,
o Constellation Energy Source, and
o our new holding company for our energy marketing businesses.
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Management of BGE Energy Projects & Services, Inc. also will report to Mr.
Shivery. Mr. Shivery served as BGE's Vice President - Finance & Accounting,
Chief Financial Officer and Corporate Secretary since 1993. Mr. Shivery will
continue to participate in BGE executive activities and is considered an
executive officer of BGE in his new role.
David A. Brune was elected to replace Mr. Shivery as Vice President -
Finance & Accounting, Chief Financial Officer and Corporate Secretary. Mr.
Brune, 56, has served as BGE's General Counsel since 1984.
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ITEM 7. Financial Statements and Exhibits
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(c) Exhibit No. 99 News Release of Baltimore Gas and
Electric Company dated February
25, 1997.
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 February 26, 1997 /s/ D. A Brune
D. A. Brune, Vice President
on behalf of the Registrant and
as Principal Financial Officer
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[Baltimore Gas and Electric Company Letterhead]
February 25, 1997
FOR IMMEDIATE RELEASE
Contacts:
Art Slusark, Baltimore Gas
and Electric
410) 234-7436
Maria R. Gonzalez, Ogilvy
Adams & Rinehart
(410) 234-7433
Press Office, Goldman,
Sachs & Co.
(212) 902-5400
BGE TO CREATE NEW POWER MARKETING SUBSIDIARY
IN STRATEGIC MOVE TO EXPAND ENERGY BUSINESSES
Charles Shivery Named CEO
Goldman Sachs Power Named Exclusive Advisor
BALTIMORE, MARYLAND, February 25, 1997 -- Baltimore Gas and Electric Company
(NYSE: BGE) announced today the formation of a power marketing subsidiary to be
headquartered in Baltimore, Maryland. In conjunction with this announcement, BGE
announced that Goldman Sachs, through its affiliate Goldman Sachs Power, has
agreed to be the exclusive advisor to the new entity for risk management and
power marketing.
The creation of the power marketing subsidiary is a strategic move to expand
BGE's diversified energy businesses and position it for the new, competitive
environment. BGE's Board of Directors approved a capital investment of $100
million for the new power marketing subsidiary.
(more)
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The new company, which has been named Constellation Power Source, Inc., will be
a wholly-owned subsidiary of BGE. Constellation Power Source will sell power
products to wholesale customers nationwide. It will provide energy to customers
to meet short-term or long-term demand, and offer a wide array of
customer-oriented products, including risk management for electricity and
related fuels.
Commenting on the announcement, Christian H. Poindexter, Chairman of the Board
and Chief Executive Officer of BGE, said, "This is a home run. We've made a
significant financial commitment to Constellation Power Source, created a strong
and well-respected management team, and tapped the finest risk management
expertise in the world."
Mr. Poindexter continued, "The formation of Constellation Power Source and the
exclusive advisory relationship with Goldman Sachs Power will enable us to
leverage our 180 years of experience in managing, distributing, marketing, and
selling energy products, and to benefit from the unparalleled risk management
expertise of Goldman Sachs."
Charles W. Shivery has been named Chief Executive Officer of the new company.
Previously, Mr. Shivery was Vice President, Finance & Accounting, Chief
Financial Officer, and Secretary of BGE. Mr. Shivery said, "BGE's new power
marketing company combines the strengths of the oldest utility company in the
U.S. with one of the premier international investment banks. This move will
enable BGE to compete on a national scale and to play to its strengths in a
competitive energy environment."
Constellation Power Source will be headquartered in Baltimore and will comprise
approximately 50 personnel, which includes a significant number of professionals
from Goldman Sachs Power who will provide services to the new company.
(more)
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"The decision to locate a leading-edge company like Constellation Power Source
in Baltimore is a reflection of our continuing efforts to strengthen Maryland's
business climate," said Maryland Governor Parris N. Glendening. "BGE has always
been a premier corporate citizen and we applaud its decision."
Founded in 1816, BGE is the nation's first gas utility and one of its earliest
electric utilities, with a tradition of superior, low-cost service and
reliability. With assets of more than $8 billion, BGE serves more than one
million business and residential electric customers and 550,000 gas customers in
the 2,300 square-mile area encompassing Baltimore City and all or part of 10
Central Maryland counties.
As announced on September 25, 1995, BGE and PEPCO plan to merge to create a new
regional energy company called Constellation Energy Corporation. The merger is
the largest combination of two electric utility companies and will create one of
the 10 largest electric utility companies in the U.S., serving a population of
4.5 million, with 1.8 million electric customers and over 550,000 gas customers.
Constellation Energy will have assets exceeding $15 billion and annual revenues
of approximately $5 billion. Upon completion of the merger, Constellation Power
Source will become a subsidiary of Constellation Energy, as will all other
subsidiaries of BGE and PEPCO.
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