-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EmGLJWXrMW1pC2FfoarJq4IUzumggvYLdcznhSVnddLrxUm8l5QqKJUqiYudrfBz lARcYItVVPNDhSjDKkxUNw== 0001004440-00-000003.txt : 20000320 0001004440-00-000003.hdr.sgml : 20000320 ACCESSION NUMBER: 0001004440-00-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000317 ITEM INFORMATION: FILED AS OF DATE: 20000317 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSTELLATION ENERGY GROUP INC CENTRAL INDEX KEY: 0001004440 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 521964611 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-25931 FILM NUMBER: 572215 BUSINESS ADDRESS: STREET 1: 250 W PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21201 BUSINESS PHONE: 4102345685 MAIL ADDRESS: STREET 1: 250 W PRATT STREET CITY: BALTIMORE STATE: MD ZIP: 21201 FORMER COMPANY: FORMER CONFORMED NAME: CONSTELLATION ENERGY CORP DATE OF NAME CHANGE: 19951220 FORMER COMPANY: FORMER CONFORMED NAME: RH ACQUISITION CORP DATE OF NAME CHANGE: 19951205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BALTIMORE GAS & ELECTRIC CO CENTRAL INDEX KEY: 0000009466 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 520280210 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-01910 FILM NUMBER: 572216 BUSINESS ADDRESS: STREET 1: 39 W LEXINGTON ST STREET 2: CHARLES CTR CITY: BALTIMORE STATE: MD ZIP: 21201 BUSINESS PHONE: 4102345511 8-K 1 CURRENT REPORT 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): March 17, 2000 Commission Exact name of registrant IRS Employer File Number as specified in its charter Identification No. ----------- ---------------------------- ------------------ 1-12869 CONSTELLATION ENERGY GROUP, INC. 52-1964611 1-1910 BALTIMORE GAS AND ELECTRIC COMPANY 52-0280210 Maryland ----------------------------------- (State or other jurisdiction of incorporation for each registrant) 250 W. Pratt Street, Baltimore, Maryland 21201 --------------------------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrants' telephone number, including area code: (410) 234-5000 Not Applicable --------------------------------------------------------------- (Former name or former address, if changed since last report) 1 ITEM 5. Other Events - --------------------- Attached to this Current Report on Form 8-K as Exhibit 99 are 1999 pro forma financial statements for Baltimore Gas and Electric Company (BGE), a subsidiary of Constellation Energy Group, Inc. (Constellation Energy). As a result of the deregulation of BGE's electric generation, we expect BGE to transfer, at book value, certain generation assets and liabilities to nonregulated subsidiaries of Constellation Energy no earlier than July 1, 2000 and upon receipt of all regulatory approvals. The pro forma financial statements and description of the pro forma adjustments presented in Exhibit 99 reflect these transfers and other financial impacts surrounding the deregulation of BGE's electric generation business. ITEM 7. Financial Statements and Exhibits - ------------------------------------------ (c) Exhibit No. 99 BGE 1999 Pro Forma Financial Statements - Generation Asset Transfer. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, each registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. CONSTELLATION ENERGY GROUP, INC. -------------------------------- (Registrant) BALTIMORE GAS AND ELECTRIC COMPANY ----------------------------------- (Registrant) Date: March 17, 2000 /s/ David A. Brune -------------- ------------------------------------ David A. Brune, Vice President on behalf of each Registrant and as Principal Financial Officer of each Registrant 2 EX-99 2 EXHIBIT 99 EXHIBIT 99 ---------- BGE 1999 PRO FORMA FINANCIAL STATEMENTS - GENERATION ---------------------------------------------------- ASSET TRANSFER -------------- BACKGROUND On April 8, 1999, Maryland enacted legislation authorizing customer choice and competition among electric suppliers. In addition, on November 10, 1999, the Maryland Public Service Commission (PSC) issued a Restructuring Order that resolved the major issues surrounding electric restructuring and the deregulation of electric generation. These matters are discussed further in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Notes to Consolidated Financial Statements" of Constellation Energy Group, Inc. (Constellation Energy) and Baltimore Gas and Electric Company, Inc. (BGE) in the Form 8-K filed on February 15, 2000. As a result of the deregulation of BGE's electric generation, no earlier than July 1, 2000, and upon receipt of all regulatory approvals, we expect that BGE will transfer, at book value, its nuclear generating assets and its nuclear decommissioning trust fund to Calvert Cliffs, Inc. (CCI), a subsidiary of Constellation Energy. In addition, we expect that BGE will transfer, at book value, its fossil generating assets and its partial ownership interest in two coal plants and a hydroelectric plant located in Pennsylvania to Constellation Generation, Inc. (CGI), also a subsidiary of Constellation Energy. In total, these generating assets represent about 6,240 megawatts of generation capacity with a total projected net book value at June 30, 2000 of approximately $2.4 billion. We expect BGE to transfer approximately $278 million of tax exempt debt to CCI and CGI related to the transferred assets and that BGE will receive approximately $1.1 billion in unsecured promissory notes. Repayments of the notes by CCI and CGI will be used exclusively to service certain long-term debt of BGE. It is also expected that BGE will transfer equity associated with the generating assets to these entities. The fossil fuel and nuclear fuel inventories, materials and supplies, and certain purchase power contracts of BGE will also be assumed by these entities. Under the Restructuring Order, BGE will provide standard offer service to customers at fixed rates over various time periods during the transition period for those customers that do not choose an alternate supplier once customer choice begins July 1, 2000. In addition, the electric fuel rate will be discontinued effective July 1, 2000. Constellation Power Source, Inc. (CPS), a subsidiary of Constellation Energy, will provide BGE with the energy and capacity required to meet its standard offer service obligations for the first three years of the transition period. Standard offer service will be competitively bid thereafter. CPS will obtain the energy and capacity to supply BGE's standard offer service obligations from CCI and CGI's generating plants and purchased power contracts, supplemented with energy purchased from the wholesale energy market as necessary. 3 The transfer of BGE's generating assets to CCI and CGI is subject to various conditions, including the receipt of satisfactory federal and state regulatory approvals. Nuclear Regulatory Commission approval of the transfer of the operating licenses of Calvert Cliffs Nuclear Power Plant Units 1 and 2 and of the decommissioning trusts will be necessary. We have filed for a ruling from the Internal Revenue Service that the transfer of the generation assets, including the nuclear decommissioning trusts, and the assignment of BGE tax exempt debt and issuance of unsecured promissory notes by CCI and CGI, can occur on a tax free basis. Approvals from the Federal Energy Regulatory Commission, the PSC, and the Pennsylvania Public Utility Commission will also be required in conjunction with these transactions. There can be no assurance as to the receipt of these or any other regulatory approvals or the actual timing of the asset transfer. DESCRIPTION OF PRO FORMA FINANCIAL INFORMATION The following consolidated financial statements for BGE are filed with this Exhibit: o Unaudited Condensed Pro Forma Balance Sheet At December 31, 1999, and o Unaudited Condensed Pro Forma Income Statement for the Year Ended December 31, 1999. The following major assumptions were made in preparing these pro forma financial statements: o The transfers described above were assumed to occur as of December 31, 1999 for the purposes of the condensed pro forma balance sheet. o The transfers described above were assumed to occur as of January 1, 1999 for the purposes of the condensed pro forma income statement. o The transfer of the generating assets and decommissioning trusts was assumed to occur at book value and on a non-taxable basis. o The provisions of the PSC's Restructuring Order are assumed to be effective as of January 1, 1999 for the purposes of developing BGE's revenues and electric purchased fuel and energy expenses included in the condensed pro forma income statement. o An effective tax rate of approximately 35% was utilized to develop the income tax effects of adjustments to the condensed pro forma income statement. These pro forma financial statements have been prepared for comparative purposes only and do not purport to be indicative of the results of operations or financial condition which would have actually resulted if the transfer of the generation assets or other related transactions been made on the dates or for the periods presented, or which may result in the future. Further, these pro forma financial statements have been prepared using information available at the date of this filing. As a result, certain amounts indicated herein are preliminary in nature and, therefore, will be subject to adjustment in the future. 4 DESCRIPTION OF PRO FORMA ADJUSTMENTS The Unaudited Condensed Pro Forma Income Statement and Balance Sheet filed with this Exhibit reflect the following adjustments: Income Statement Adjustments - ---------------------------- 1. The expected reduction of BGE's revenues to remove $112 million of interchange and other wholesale sales, which will no longer be a part of its business once electric deregulation occurs. 2. The adjustment of BGE's revenues to reflect the $54 million average, annual residential rate reduction provided for in the Restructuring Order. 3. The anticipated transfer to CCI of approximately $164 million of BGE's revenues that will fund nuclear decommissioning and stranded costs. 4. The reversal of BGE's actual electric fuel and purchased energy costs of approximately $487 million, and its replacement with the estimated $1,187 million cost of power BGE would have purchased from CPS to meet its 1999 system sales load at standard offer service rates provided for in the Restructuring Order. 5. The expected elimination of operation and maintenance expenses directly and indirectly relating to the generation function. 6. The anticipated elimination of approximately $165 million of depreciation, amortization, and nuclear decommissioning expense relating to the transferred assets. 7. The removal from 1999 results of the nonrecurring impact of $75 million of amortization expense relating to the $150 million reduction of electric generation plant that will occur prior to the actual generation asset transfer under the terms of the Restructuring Order. 8. The estimated reduction to taxes other than income taxes resulting from the transfer of the generation function. 9. The reduction to other income associated with the elimination from 1999 results of the equity portion of the allowance for funds used during construction relating to generation construction projects (approximately $4 million), equity in the earnings of Safe Harbor Water Power Corporation (approximately $5 million), and after-tax earnings on the nuclear decommissioning trusts (approximately $2 million). 10. The reflection in other income of approximately $63 million of interest income expected to be earned on the unsecured promissory notes described in this Exhibit. 11. The reduction of fixed charges to approximate interest expense expected to be avoided on the transferred tax-exempt debt. 12. The estimated income tax effects if the asset transfer had occurred and the Restructuring Order had been implemented on January 1, 1999, as described in this Exhibit. 13. The elimination of the amortization of deferred investment tax credits which are expected to be transferred along with the associated generation assets. 5 Balance Sheet Adjustments - ------------------------- 1. The expected transfer of fuel stocks including SO2 emission allowances, materials and supplies, and nuclear fuel inventories relating to the generation function. 2. The reflection of the current and non-current portions of, along with the approximate amount of accrued interest on, the unsecured promissory notes described in this Exhibit. 3. The expected transfer of nuclear decommissioning to CCI. 4. The expected transfer of BGE's investment in Safe Harbor Water Power Corporation to CGI. 5. The expected transfer of generating assets as described in this Exhibit including utility plant in service, accumulated depreciation reserves, construction work in progress, plant held for future use, and unamortized investment tax credits. 6. The elimination of the remaining $75 million unamortized balance of the regulatory asset relating to the $150 million reduction of electric generation plant that will be fully amortized prior to the actual generation asset transfer under the terms of the Restructuring Order. 7. The expected reduction to current liabilities from eliminating approximately $4 million of accrued interest relating to the transferred tax-exempt debt described in this Exhibit. 8. The anticipated transfer of the $26 million current (included in other current liabilities) and the $21 million non-current (included in other deferred credits and other liabilities) portions of liabilities accrued in connection with certain purchased power contracts that will become the responsibility of the nonregulated generation business. 9. The reflection of the approximate impact on accumulated deferred income taxes of the transfer of the generation assets and nuclear decommissioning, and the reflection of the Restructuring Order as described in this Exhibit. 10. The expected transfer of the tax-exempt debt as described in this Exhibit. 11. The anticipated net reduction in BGE's common shareholder's equity relating to the other balance sheet adjustments described above. 6 FORWARD LOOKING STATEMENTS We make statements in this Exhibit that are considered forward looking statements within the meaning of the Securities Exchange Act of 1934. Sometimes these statements will contain words such as "believes," "expects," "intends," "plans," and other similar words. These statements are not guarantees of BGE's future performance and are subject to risks, uncertainties, and other important factors that could cause its actual performance or achievements to be materially different from those projected. These risks, uncertainties, and factors include, but are not limited to: o general economic, business, and regulatory conditions, o energy supply and demand, o competition, o federal and state regulations, o availability, terms, and use of capital, o environmental issues, o weather, o implications of the Restructuring Order issued by the Maryland PSC, o loss of revenues due to customers choosing alternate suppliers, o inability to recover all costs associated with providing electric retail customers service during the electric rate freeze period, and o implications from the transfer of BGE's generation assets to nonregulated subsidiaries of Constellation Energy. Given these uncertainties, you should not place undue reliance on these forward looking statements. Please see BGE's periodic reports filed with the SEC for more information on these factors. These forward looking statements represent our estimates and assumptions only as of the date of this report. 7 Baltimore Gas and Electric Company Unaudited Condensed Pro Forma Statement of Income Twelve Months Ended December 31, 1999
As Reported Adjustments Pro Forma ------------- ------------------- ------------- (In Millions) Revenues Electric $ 2,259.5 $ (330.0) (1,2,3) $ 1,929.5 Gas 485.3 - 485.3 Diversified businesses 283.5 - 283.5 ------------- ------------- ------------- Total Revenues 3,028.3 (330.0) 2,698.3 ------------- ------------- ------------- Operating Expenses Electric fuel and purchased energy 486.8 700.0 (4) 1,186.8 Gas purchased for resale 233.7 - 233.7 Operations and maintenance 728.8 (390.0) (5) 338.8 Diversified businesses - selling, general, and administrative 222.1 - 222.1 Depreciation and amortization 427.9 (240.0) (6,7) 187.9 Taxes other than income taxes 224.7 (85.0) (8) 139.7 ------------- ------------- ------------- Total operating expenses 2,324.0 (15.0) 2,309.0 ------------- ------------- ------------- Income from Operations 704.3 (315.0) 389.3 Other Income (Expense) 8.4 52.0 (9,10) 60.4 ------------- ------------- ------------- Income Before Fixed Charges and Income Taxes 712.7 (263.0) 449.7 Fixed Charges 205.9 (13.0) (11) 192.9 ------------- ------------- ------------- Income Before Income Taxes 506.8 (250.0) 256.8 ------------- ------------- ------------- Income Taxes Income taxes 186.9 (94.0) (12) 92.9 Investment tax credit adjustments (8.5) 6.0 (13) (2.5) ------------- ------------- ------------- Total income taxes 178.4 (88.0) 90.4 ------------- ------------- ------------- Income Before Extraordinary Loss $ 328.4 $ (162.0) $ 166.4 ============= ============= =============
- ---------- Numerical references are to the "Description of Pro Forma Adjustments - Income Statement Adjustments" on page 5. 8 Baltimore Gas and Electric Company and Subsidiaries Unaudited Condensed Pro Forma Balance Sheet December 31, 1999
As Reported Adjustments Pro Forma ------------- --------------- ------------ ASSETS (In Millions) Current Assets Fuel stocks $ 94.9 $ (60.0)(1) $ 34.9 Materials and supplies 139.1 (100.0)(1) 39.1 Current portion of notes receivable, affiliated companies - 279.0 (2) 279.0 Interest receivable, affiliated companies - 22.0 (2) 22.0 Other current assets 421.0 - 421.0 ------------- --------------- -------------- Total current assets 655.0 141.0 796.0 ------------- --------------- -------------- Investments And Other Assets Notes receivable, affiliated companies - 805.0 (2) 805.0 Nuclear decommissioning trust fund 217.9 (217.9)(3) - Safe Harbor Water Power Corporation 34.5 (34.5)(4) - Other investments and other assets 161.4 - 161.4 ------------- --------------- -------------- Total investments and other assets 413.8 552.6 966.4 ------------- --------------- -------------- Utility Plant Plant in service Electric 7,088.6 (3,950.0)(5) 3,138.6 Gas 962.0 - 962.0 Common 569.5 (82.0)(5) 487.5 ------------- --------------- -------------- Total plant in service 8,620.1 (4,032.0) 4,588.1 Accumulated depreciation (3,466.1) 1,555.0 (5) (1,911.1) ------------- --------------- -------------- Net plant in service 5,154.0 (2,477.0) 2,677.0 Construction work in progress 222.3 (145.0)(5) 77.3 Nuclear fuel (net of amortization) 133.8 (133.8)(1) - Plant held for future use 13.0 (3.2)(5) 9.8 ------------- --------------- -------------- Net utility plant 5,523.1 (2,759.0) 2,764.1 ------------- --------------- -------------- Deferred Charges 680.7 (75.0)(6) 605.7 ------------- --------------- -------------- Total Assets $ 7,272.6 $ (2,140.4) $ 5,132.2 ============= =============== ============== LIABILITIES AND CAPITALIZATION Current Liabilities Current portions of long-term debt and preference stock $ 523.9 $ - $ 523.9 Other current liabilities 554.6 (30.0)(7,8) 524.6 ------------- --------------- -------------- Total current liabilities 1,078.5 (30.0) 1,048.5 ------------- --------------- -------------- Deferred Credits And Other Liabilities Deferred income taxes 1,032.0 (622.0)(9) 410.0 Deferred investment tax credits 109.6 (82.0)(5) 27.6 Other deferred credits and other liabilities 301.1 (21.0)(8) 280.1 ------------- --------------- -------------- Total deferred credits and other liabilities 1,442.7 (725.0) 717.7 ------------- --------------- -------------- Long-Term Debt BGE first refunding mortgage bonds 1,321.7 - 1,321.7 BGE other long-term debt 1,135.8 (278.0)(10) 857.8 BGE obligated mandatorily redeemable trust preferred securities of subsidiary trust holding solely 7.16% deferrable interest subordinated debentures due June 30, 2038 250.0 - 250.0 Diversified businesses long-term debt 33.0 - 33.0 Unamortized discount and premium (10.6) - (10.6) Current portion of long-term debt (523.9) - (523.9) ------------- --------------- -------------- Total long-term debt 2,206.0 (278.0) 1,928.0 ------------- --------------- -------------- BGE Preference Stock Not Subject To Mandatory Redemption 190.0 - 190.0 ------------- --------------- -------------- Common Shareholder's Equity 2,355.4 (1,107.4)(11) 1,248.0 ------------- --------------- -------------- Total Capitalization 4,751.4 (1,385.4) 3,366.0 ------------- --------------- -------------- Total Liabilities And Capitalization $ 7,272.6 $ (2,140.4) $ 5,132.2 ============= =============== ==============
- ---------- Numerical references are to the "Description of Pro Forma Adjustments - Balance Sheet Adjustments" on page 6. 9 -----END PRIVACY-ENHANCED MESSAGE-----