-----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, SEkR/DaNR6L7zaG1AwlRzSao7VsYK79M69ixhJ049PBZSuxrJ6IKyhmToKJ3bNa1 OtO1B0m5K1DE5jkHTRmgVQ== /in/edgar/work/20000707/0001004440-00-000018/0001004440-00-000018.txt : 20000920 0001004440-00-000018.hdr.sgml : 20000920 ACCESSION NUMBER: 0001004440-00-000018 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000630 ITEM INFORMATION: FILED AS OF DATE: 20000707 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSTELLATION ENERGY GROUP INC CENTRAL INDEX KEY: 0001004440 STANDARD INDUSTRIAL CLASSIFICATION: [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: 668929 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: [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: 668930 BUSINESS ADDRESS: STREET 1: 39 W LEXINGTON ST STREET 2: CHARLES CTR CITY: BALTIMORE STATE: MD ZIP: 21201 BUSINESS PHONE: 4102345511 8-K 1 0001.txt 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): June 30, 2000 Commission Exact name of registrant as IRS Employer File Number 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 2. Acquisition or Disposition of Assets - ------- ------------------------------------ As previously discussed in the 1999 Annual Report on Form 10-K (1999 10K), and the March 31, 2000 Quarterly Report on Form 10-Q (2000 10Q) of Constellation Energy Group, Inc. (Constellation Energy) and Baltimore Gas and Electric Company (BGE), BGE's electric generation was subject to deregulation pursuant to the Electric Customer Choice and Competition Act of 1999 (the "Act"). On June 30, 2000, BGE received the approval of the Nuclear Regulatory Commission (NRC) for the transfer of its nuclear generation assets. The NRC's approval was the last regulatory approval needed by BGE to transfer all of its generation assets including the electric generating facilities, fuel inventories, materials and supplies, and certain power purchase contracts to unregulated subsidiaries of Constellation Energy. In addition to the NRC's approval, BGE also received approval to transfer its generation assets from the Maryland Public Service Commission (Maryland PSC), the Federal Energy Regulatory Commission and the Pennsylvania Public Utility Commission, and obtained a private letter ruling from the Internal Revenue Service that the transfers would be tax free. Consequently, effective July 1, 2000, BGE transferred its nuclear generating assets and its nuclear decommissioning trust fund and reserve to Calvert Cliffs Nuclear Power Plant, Inc. (CCNPP), a subsidiary of Constellation Energy. BGE transferred its fossil generating assets and its partial ownership interest in two coal plants and a hydroelectric plant located in Pennsylvania to Constellation Power Source Generation, Inc. (CPSG), also a subsidiary of Constellation Energy. In total, these generating assets represent about 6,240 megawatts of generation capacity with a total estimated net book value at June 30, 2000 of approximately $2.4 billion. The exact amount of the transferred assets will be based on the actual net book value at June 30, 2000, which has not been determined at the date of this filing. As part of the transfer of the electric generating business to CCNPP and CPSG, BGE transferred tax-exempt debt of approximately $47 million to CCNPP and $231 million to CPSG related to the transferred assets. Additionally, CPSG issued approximately $366 million in unsecured promissory notes to BGE. Repayments of the notes by CPSG will be used exclusively to service the current maturities of certain BGE long-term debt. BGE also transferred 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 were also assumed by these entities. Attached as an exhibit is pro forma financial statements for BGE and a description of the pro forma adjustments that reflect these transfers and other financial impacts surrounding the deregulation of BGE's electric generation business. These pro forma financial statements and descriptions of the pro forma adjustments represent the latest available information as of the date of this report. 2 ITEM 5. Other Events - -------------------- On April 8, 1999 Maryland enacted the Act. Major elements of the Act are discussed in our June 30, 1999 Quarterly Report on Form 10-Q. On November 10, 1999, the Maryland PSC issued an order that resolved the major issues surrounding electric restructuring, accelerated the timetable for customer choice and addressed the major provisions of the Act (the "Restructuring Order"). The Restructuring Order also resolved the electric restructuring proceeding (transition costs, customer price protections, and unbundled rates for electric services) and a petition filed by the Office of People's Counsel to lower BGE's electric base rates. The major provisions of the Restructuring Order are discussed in our 2000 10Q. In early December 1999, the Mid-Atlantic Power Supply Association (MAPSA), Trigen-Baltimore Energy Corporation and Sweetheart Cup Company, Inc. filed appeals of the Restructuring Order, which were consolidated in the Baltimore City Circuit Court. MAPSA also filed a motion to delay implementation of the Restructuring Order, pending a decision on the merits of the appeals by the court. Both the Trigen and Sweetheart Cup appeals have been dismissed with prejudice. In April 2000, the Baltimore City Circuit Court dismissed MAPSA's appeal and denied its motion for a delay of the Restructuring Order. In June, 2000, MAPSA filed another motion with the Baltimore City Circuit Court to delay implementation of certain provisions of the Restructuring Order. The Circuit Court also denied that motion. MAPSA then filed a motion for injunctive relief with the Maryland Court of Special Appeals, which denied the motion on June 30, 2000. MAPSA then filed a petition for certiorari and motion for injunctive relief with the Maryland Court of Appeals, which granted the petition and ordered a delay of the Restructuring Order on June 30, 2000. The Maryland Court of Appeals has set a hearing on MAPSA's motion for July 20, 2000. BGE filed an emergency motion for reconsideration, which was supported by the Maryland PSC and Office of People's Counsel. However, the Court of Appeals deferred action on the motion until its July 20, 2000 hearing. The effect of the Court of Appeals stay of the Restructuring Order is to delay the implementation of customer choice in BGE's service territory. While we believe that MAPSA's case is without merit, no assurance can be given as to the timing, or outcome, of the case. At this time, we cannot predict the effect that the delay of implementation of customer choice or MAPSA's appeal on the merits of the Restructuring Order will have on Constellation Energy or BGE, but they could have a material adverse effect on Constellation Energy's and BGE's financial results. On July 6, 2000, MAPSA and Shell Energy LLC filed, in the Circuit Court for Baltimore City, a petition for review and an injunction of the Maryland PSC's order approving the transfer of BGE's generation assets issued on June 19, 2000. We believe that this petition and request for injunction are without merit. However, we cannot predict the timing, or outcome, of this case, which could have a material adverse effect on Constellation Energy's and BGE's financial results. 3 ITEM 7. Financial Statements and Exhibits - ------- --------------------------------- Exhibit No. 2(a) Agreement and Plan of Reorganization and Corporate Separation (Nuclear) Exhibit No. 2(b) Agreement and Plan of Reorganization and Corporate Separation (Fossil) Exhibit No. 99 BGE ProForma Financial Statements--Generation Asset Transfer 4 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: July 7, 2000 /s/ Christian H. Poindexter ------------- ----------------------------------- Christian H. Poindexter, President and Chief Executive Officer on behalf of Constellation Energy Group, Inc. Date: July 7, 2000 /s/ Frank O. Heintz ------------- ----------------------------------- Frank O. Henitz President and Chief Executive Officer on behalf of Baltimore Gas and Electric Company 5 EX-2 2 0002.txt EXHIBIT 2(A)REORGANIZATION/SEPARATION-NUCLEAR Exhibit No. 2(a) Agreement and Plan of Reorganization and Corporation Separation (NUCLEAR) AGREEMENT, made June 26, 2000, effective as of July 1, 2000, among Baltimore Gas and Electric Company ("Distributing"), a Maryland corporation, Calvert Cliffs Nuclear Power Plant, Inc ("Controlled 2"), a Maryland corporation, Constellation Energy Group, Inc., a Maryland corporation ("Parent"), and Constellation Nuclear LLC ("Nuclear LLC") a single member Maryland LLC that is a disregarded entity for federal income tax purposes (collectively, the "Parties"). Recitals -------- 1. Distributing owns all the assets of its nuclear generation business (including Units 1 and 2 at its Calvert Cliffs nuclear power plant and the independent spent fuel storage facility) and all of the stock of Controlled 2; and 2. As a result of the deregulation of Distributing's electric generation assets in accordance with Maryland's Electric Customer Choice and Competition Act of 1999 and Maryland Public Service Commission Order No. 75757 ("PSC Order"), it is the desire of Distributing to separate its nuclear generation business from its transmission and distribution business by transferring its nuclear generation business to Controlled 2 effective July 1, 2000 (the "Effective Date"); 3. Distributing also intends to separate its fossil generation assets from its transmission and distribution assets by transferring its fossil generation assets to another entity pursuant to a separate agreement; and 4. On the Effective Date, Distributing will distribute the stock of Controlled 2 to Parent and Parent will then contribute the stock of Controlled 2 to Nuclear LLC. NOW THEREFORE, in consideration of the mutual covenants and agreements herein set forth, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 1. Transfer of Assets; Assumption of Liabilities; Allocation of Debt -------------------------------------------------------------------- A. Transfer of Assets. On the Effective Date, Distributing will assign, transfer and deliver to Controlled 2 all of its right, title and interest in its nuclear generation assets. B. Assumption of Liabilities. On the Effective Date, Controlled 2 agrees to assume and become responsible for liabilities, contracts and obligations relating to Distributing's nuclear generation assets and business, whether accrued, contingent, or otherwise including the obligation to decommission the Calvert Cliffs nuclear power plant and independent spent fuel storage facility (collectively, the "Facilities") in accordance with all applicable laws and regulations. 1 C. Allocation and Assumption of Debt. On the Effective Date, Controlled 2 will assume the rights and obligations of Distributing with respect to the tax exempt debt set forth in Exhibit A hereto that was entered into by Distributing to finance certain pollution control equipment installed at the Calvert Cliffs nuclear power plant. 2. Nuclear Decommissioning Funds and Competitive Transition Charge ------------------------------------------------------------------ A. Decommissioning Funds. (1) Assignment. On the Effective Date, Distributing will assign, transfer and deliver to Controlled 2 all of its right, title and interest free and clear of any liens or other encumbrances in (a) the qualified and nonqualified decommissioning trust funds maintained by Distributing ("Master Trust") established to decommission the Facilities; and (b) the revenue to be collected from Distributing's electric customers for the decommissioning of the Facilities that is included in the electric service rates of Distributing as specified in the PSC Order. (2) Collection Agreement. Distributing and Controlled 2 have executed a Decommissioning Funds Collection Agent Agreement, substantially in the form attached hereto as Exhibit B, pursuant to which Distributing will collect decommissioning funds for decommissioning the Facilities from its electric customers and will remit such funds to Controlled 2 beginning on the Effective Date. B. Competitive Transition Charge. (1) Assignment. On the Effective Date, Distributing will assign, transfer and deliver to Controlled 2 all of its right, title and interest in 90% of the revenue collected from Distributing's electric customers through the imposition of the competitive transition charge ("CTC") representing the amount of stranded costs attributable to the Calvert Cliff's nuclear power plant. (2) Collection Agreement. Distributing and Controlled 2 have executed a Competitive Transition Charge Collection Agent Agreement, substantially in the form attached hereto as Exhibit C, effective concurrently with the transfer of nuclear assets and liabilities, pursuant to which Distributing will collect the CTC authorized by the PSC Order from its electric customers and remit 90% of it to Controlled 2 beginning on the Effective Date. The remittance of the CTC shall be adjusted by the SOS Offset as specified in Exhibit C. 2 3. Distribution of Controlled 2 Stock ------------------------------------- On the Effective Date, Distributing will distribute all its common stock in Controlled 2 to Parent, which shall constitute all its stock outstanding. 4. Contribution of Controlled 2 Stock ------------------------------------- Immediately after the distribution of Controlled 2 stock to Parent, Parent will contribute 100% of Controlled 2 stock to Nuclear LLC. 5. Intentionally left blank --------------------------- 6. Conditions to Effectiveness ------------------------------ The Parties acknowledge that each of the following conditions have been met: A. Governmental Approvals. The following approvals have been received: (1) Ruling by the Internal Revenue Service that the transactions described therein will constitute a tax-free corporate separation under ss.368 and ss.355 of the Internal Revenue Code of 1986, as amended and that neither Distributing, Controlled 2, nor Parent will recognize any gain or loss or otherwise take any income or deduction into account by reason of the transfer of the assets and liabilities set forth in Paragraph 1. (2) Approval of the Maryland Public Service Commission of Distributing's application for transfer of its generating assets to Controlled 2. (3) Approval of the Federal Energy Regulatory Commission (FERC) of the Joint Application under Section 203 of The Federal Power Act for the Disposition of Jurisdictional Facilities. (4) Approval of the FERC of the Application under Section 204 of The Federal Power Act for the Authorization for Controlled 2 to Issue Securities and Assume Liabilities. (5) Approval of the FERC of the Joint Application - Authorization for Controlled 2 to Make Sales of Capacity, Energy, and Ancillary Services at market-based rates pursuant to Controlled 2 FERC Rate Schedule. (6) Approval of the FERC of the Joint Application - Acceptance for filing of the Interconnection Agreement applicable to Controlled 2 and Distributing. 3 (7) Approval of the FERC of the Joint Application - Cancellation of the Codes of Conduct applicable to Constellation Power Source, Inc. (an affiliate of Parent) and Distributing. (8) Approval of the FERC of the Controlled 2 application for determination of exempt wholesale generator ("EWG") status within the meaning of Section 32(a)(1) of PUHCA. (9) Approval of the FERC of the Power Sales Agreements between Distributing and Constellation Power Source, Inc. ("CPS") and Controlled 2 and CPS. (10) Approval of the Nuclear Regulatory Commission of Distributing's application to transfer to Controlled 2 and to amend License Nos. DTR-53, DPR-69 and SNM-2505 for Calvert Cliffs unit 1, Calvert Cliffs unit 2, and Calvert Cliffs independent spent fuel storage facility, respectively. (11) Receipt of all governmental approvals required for closing under that certain Agreement and Plan of Reorganization and Corporate Separation of even date herewith among Distributing, Parent, Constellation Power Source Generation, Inc., Constellation Enterprises, Inc. and Constellation Holdings, Inc. B. Other Agreements and Delivery of Documents. (1) Controlled 2 and Distributing have agreed on the proper allocation or proration of additional assets, items and liabilities, and each Party has executed and delivered all documentation reasonably requested by either party necessary to consummate the transactions contemplated in this Agreement. C. Orders and Laws. There is not in effect any governmental order or law restraining, enjoining, or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement. 7. Miscellaneous ---------------- This Agreement shall be governed by the laws of the State of Maryland. Neither this Agreement nor any of the Parties' rights or obligations hereunder may be assigned, in whole or in part, by any Party whether by operation of law or otherwise without the prior written consent of all of the other Parties. 4 Constellation Energy Group, Inc. By: ____________________________ Baltimore Gas and Electric Company By: _____________________________ Constellation Nuclear, LLC By: _____________________________ Calvert Cliffs Nuclear Power Plant, Inc. By: ______________________________ 5 Exhibit List ------------ Exhibit A - Schedule of Distributing's Tax Exempt Debt to be assumed by Controlled 2 Exhibit B - Decommissioning Funds Collection Agent Agreement Exhibit C - Competitive Transition Charge Collection Agent Agreement and calculation of percent attributable to Calvert Cliffs Nuclear Power Plant We agree to furnish supplementally a copy of the omitted exhibits to the Commission upon request. 6 EX-2 3 0003.txt EXHIBIT 2(B)REORGANIZATION/SEPARATION-FOSSIL Exhibit No. 2 (b) Agreement and Plan of Reorganization and Corporation Separation (Fossil) AGREEMENT, made June 26, 2000, effective as of July 1, 2000, among Baltimore Gas and Electric Company ("Distributing"), a Maryland corporation, Constellation Power Source Generation, Inc. ("Controlled 1"), a Maryland corporation, Constellation Energy Group, Inc., a Maryland corporation ("Parent"), Constellation Enterprises, Inc. ("Enterprises"), a Maryland corporation and Constellation Holdings, Inc. ("Holdings"), a Maryland corporation (collectively, the "Parties"). Recitals -------- 1. Distributing owns all the assets of its fossil generation business (including jointly held assets comprising two mine mouth coal generating stations and one hydroelectric generating station in Pennsylvania) and all of the stock of Controlled 1; and 2. As a result of the deregulation of Distributing's electric generation assets in accordance with Maryland's Electric Customer Choice and Competition Act of 1999 and Maryland Public Service Commission Order No. 75757 ("PSC Order"), it is the desire of Distributing to separate its fossil generation business from its transmission and distribution business by transferring its fossil generation business (including the jointly held assets) to Controlled 1 on July 1, 2000 (the "Effective Date"); 3. Distributing also intends to separate its nuclear generation assets from its transmission and distribution assets by transferring its nuclear generation assets to another entity pursuant to a separate agreement; and 4. All on the Effective Date, Distributing will distribute the stock of Controlled 1 to Parent and Parent will then contribute the stock of Controlled 1 to Enterprises. Enterprises will then transfer the stock of Controlled 1 to Holdings. Holdings will then transfer the stock of Controlled 1 to Constellation Power Source Holdings, Inc. NOW THEREFORE, in consideration of the mutual covenants and agreements herein set forth, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows: 1. Transfer of Assets; Assumption of Liabilities; Allocation of Debt ----------------------------------------------------------------- A. Transfer of Assets. On the Effective Date, Distributing will assign, transfer and deliver to Controlled 1 all of its right, title and interest in its fossil generation assets (including its jointly held assets). 1 B. Assumption of Liabilities. On the Effective Date, Controlled 1 agrees to assume and become responsible for liabilities, contracts and obligations relating to Distributing's fossil generation assets and business, whether accrued, contingent, or otherwise. C. Allocation and Assumption of Debt. Effective with the transfer of fossil assets and liabilities, Controlled 1 will be indebted to Distributing as evidenced by promissory notes in the aggregate principal amount of $366,266,000, each note in such principal amount, and with such maturity date and interest rate as set forth on Exhibit A hereto, to Distributing. Such notes will be substantially in the form attached hereto as Exhibit B. In addition, Controlled 1 will assume the rights and obligations of Distributing with respect to the tax exempt debt set forth in Exhibit C hereto that was entered into by Distributing to finance certain pollution control and solid waste disposal equipment installed at Distibuting's fossil generation plants. 2. Distribution of Controlled 1 Stock ------------------------------------- On the Effective Date, Distributing will distribute all its common stock in Controlled 1 to Parent, which shall constitute all the stock outstanding of Controlled 1. 3. Contribution of Controlled 1 Stock ------------------------------------- Immediately after the distribution of Controlled 1 stock to Parent, Parent will contribute 100% of Controlled 1 stock to Enterprises. Immediately thereafter, Enterprises will contribute 100% of the Controlled 1 stock to Holdings. Immediately thereafter, Holdings will contribute 100% of the Controlled 1 stock to Constellation Power Source Holdings, Inc. 4. Intentionally left blank --------------------------- 5. Conditions to Closing ------------------------ The Parties acknowledge that each of the following conditions have been satisfied: A. Governmental Approvals. The following approvals have been received: (1) Ruling by the Internal Revenue Service that the transactions described therein will constitute a tax-free corporate separation under ss.368 and ss.355 of the Internal Revenue Code of 1986, as amended and that neither Distributing, Controlled 1, Parent, Enterprises nor Holdings will recognize any gain or loss or otherwise take any income or deduction into account by reason of the transfer of the assets and liabilities set forth in Paragraphs 1 and 2. (2) Approval of the Maryland Public Service Commission of Distributing's application for transfer of its generating assets to Controlled 1. 2 (3) Approval of the Federal Energy Regulatory Commission (FERC) of the Joint Application under Section 203 of The Federal Power Act for the Disposition of Jurisdictional Facilities. (4) Approval of the FERC of the Application under Section 204 of The Federal Power Act for the Authorization for Controlled 1 to Issue Securities and Assume Liabilities. (5) Approval of the FERC of the Joint Application - Authorization for Controlled 1 to Make Sales of Capacity, Energy, and Ancillary Services at market-based rates pursuant to Controlled 1 FERC Rate Schedule. (6) Approval of the FERC of the Joint Application - Acceptance for filing of the Interconnection Agreement applicable to Controlled 1 and Distributing. (7) Approval of the FERC of the Joint Application - Cancellation of the Codes of Conduct applicable to Constellation Power Source, Inc. (an affiliate of Parent) and Distributing. (8) Approval of the FERC of the Controlled 1 application for determination of exempt wholesale generator ("EWG") status within the meaning of Section 32(a)(1) of PUHCA. (9) Approval of the FERC of the Power Sales Agreements between Distributing and Constellation Power Source, Inc. ("CPS") and Controlled 1 and CPS. B. Other Agreements and Delivery of Documents. Controlled 1 and Distributing have agreed on the proper allocation or proration of additional assets, items and liabilities, and each Party has executed and delivered all documentation reasonably requested by either party necessary to consummate the transactions contemplated in this Agreement. C. Orders and Laws. There is not in effect any governmental order or law restraining, enjoining, or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement. 6. Miscellaneous ---------------- This Agreement shall be governed by the laws of the State of Maryland. Neither this Agreement nor any of the Parties' rights or obligations hereunder may be assigned, in whole or in part, by any Party whether by operation of law or otherwise without the prior written consent of all of the other Parties. 3 Constellation Energy Group, Inc. By: ____________________________ Baltimore Gas and Electric Company By: _____________________________ Constellation Enterprises, Inc. By: _____________________________ Constellation Holdings, Inc. By: ______________________________ Constellation Power Source Generation, Inc. By: ______________________________ 4 Exhibit List ------------ Exhibit A - Schedule of Promissory Notes to be issued by Controlled 1 to Distributing corresponding to certain debt of Distributing Exhibit B - Form of Promissory Note Exhibit C - Schedule of Distributing's Tax Exempt Debt to be assumed by Controlled 1 We agree to furnish supplementally a copy of the omitted exhibits to the Commission upon request. 5 EX-99 4 0004.txt EXHIBIT 99 EXHIBIT 99 BGE PRO FORMA FINANCIAL STATEMENTS - GENERATION ----------------------------------------------- ASSET TRANSFER -------------- BACKGROUND In our March 31, 2000 Quarterly Report on Form 10-Q, we presented pro forma financial statements for Baltimore Gas and Electric Company (BGE), a subsidiary of Constellation Energy Group, Inc. (Constellation Energy). Effective July 1, 2000, BGE transferred certain generation assets and liabilities to Calvert Cliffs Nuclear Power Plant, Inc. (CCNPP) and Constellation Power Source Generation, Inc. (CPSG), nonregulated subsidiaries of Constellation Energy. The pro forma financial statements and description of the pro forma adjustments reflect these transfers and other financial impacts surrounding the deregulation of BGE's electric generation business. The exact amount of these transfers will be based on the actual book value at June 30, 2000, which has not been determined at the date of this filing. Since our March 31, 2000 Quarterly Report on Form 10-Q, there has been one new development in the assumptions used in these pro forma financial statements. Accordingly, we are providing revised pro forma financial statements to reflect this known change in the assumptions. This change results from the reduction of the level of unsecured promissory notes that BGE received from CPSG from $426 million, as disclosed in our March 31, 2000 Quarterly Report on Form 10-Q, to approximately $366 million. 1 DESCRIPTION OF PRO FORMA FINANCIAL INFORMATION The following revised consolidated financial statements for BGE are filed with this Exhibit: o Unaudited Condensed Pro Forma Balance Sheet At March 31, 2000, and o Unaudited Condensed Pro Forma Income Statement for the Year Ended December 31, 1999 and for the Three Month Period Ended March 31, 2000. The following major assumptions were made in preparing these revised pro forma financial statements: o The transfers described above were assumed to occur as of March 31, 2000 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 for the year ended December 31, 1999. The transfers were assumed to occur as of January 1, 2000 for the purposes of the condensed pro forma income statement for the three-month period ended March 31, 2000. In viewing these statements, it should be recognized that weather conditions can have a great impact on our results for interim periods. This means that results for interim periods do not necessarily represent results to be expected for the year. 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 Maryland Public Service Commission's (Maryland PSC) Restructuring Order are assumed to be effective as of the beginning of each period presented for the purposes of developing BGE's revenues and electric purchased fuel and energy expenses included in the condensed pro forma income statements. 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 for the year ended December 31, 1999. An effective tax rate of approximately 39.55% was utilized for the three-month period ended March 31, 2000. The difference in the effective tax rate results from the comprehensive changes in the state and local tax laws that began January 1, 2000. We discuss these comprehensive tax law changes in Note 4 of our 1999 Annual Report on Form 10-K. 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 had 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, are subject to change in the future. 2 DESCRIPTION OF PRO FORMA ADJUSTMENTS The Unaudited Condensed Pro Forma Income Statements and Balance Sheet filed with this Exhibit reflect the following adjustments: Income Statements Adjustments 1. The expected reduction of BGE's revenues to remove $112 million of interchange and other wholesale sales for the year ended December 31, 1999 ($23 million for the three-month period ended March 31, 2000), 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 for the year ended December 31, 1999 ($13 million for the three-month period ended March 31, 2000). 3. The anticipated transfer to CCNPP of approximately $164 million of BGE's revenues that will fund nuclear decommissioning and stranded costs for the year ended December 31, 1999 ($40 million for the three-month period ended March 31, 2000). 4. The reversal of BGE's actual electric fuel and purchased energy costs of approximately $487 million for the year ended December 31, 1999 ($119 million for the three-month period ended March 31, 2000), and its replacement with the estimated $1,187 million cost of power BGE would have purchased from CPS to meet its system sales load for the year ended December 31, 1999 ($267 million for the three-month period ended March 31, 2000) 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 for the respective period. 6. The anticipated elimination of approximately $165 million of depreciation, amortization, and nuclear decommissioning expense relating to the transferred assets for the year ended December 31, 1999 ($42.5 million for the three-month period ended March 31, 2000). 7. The removal from results of the nonrecurring impact of $75 million of amortization expense relating to the $150 million reduction of electric generation plant under the terms of the Restructuring Order for the year ended December 31, 1999 ($37.5 million for the three-month period ended March 31, 2000). 8. The estimated reduction to taxes other than income taxes resulting from the transfer of the generation function for the respective period. 9. The reduction to other income associated with the elimination of the equity portion of the allowance for funds used during construction relating to generation construction projects, equity in the earnings of Safe Harbor Water Power Corporation, and after-tax earnings on the nuclear decommissioning trusts. 10. The reflection in other income of approximately $22 million of interest income expected to be earned on the unsecured promissory notes described in this Exhibit for the year ended December 31, 1999 ($6 million for the three-month period ended March 31, 2000). 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 using the effective income tax rates for the respective period. 13. The elimination of the amortization of deferred investment tax credits transferred along with the associated generation assets. 3 Balance Sheet Adjustments 1. The expected amount of the 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 unsecured promissory notes described in this Exhibit along with the approximate amount of related accrued interest. 3. The expected amount of the transfer of nuclear decommissioning to CCNPP. 4. The expected amount of the transfer of BGE's investment in Safe Harbor Water Power Corporation to CPSG. 5. The expected amount of the 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 $37.5 million unamortized balance of the regulatory asset relating to the $150 million reduction of electric generation plant that will be fully amortized as of June 30, 2000 under the terms of the Restructuring Order. 7. The 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 transfer of the approximately $20 million current (included in other current liabilities) and $9 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 transfer of the tax-exempt debt as described in this Exhibit. 11. The anticipated amount of the net reduction in BGE's common shareholder's equity relating to the other balance sheet adjustments described above. 4 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 including the outcome of the Mid-Atlantic Power Supply Association's appeals of the Order as discussed in Item 5. Other Events of this Report on Form 8-K, 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. 5
Baltimore Gas and Electric Company Unaudited Condensed Pro Forma Statement of Income Three Months Ended March 31, 2000 (Revised As Of July 7, 2000) As Reported Adjustments Pro Forma ------------ ------------- ------------- (In Millions) Revenues Electric $ 524.6 $ (76.0) (1,2,3) $ 448.6 Gas 195.1 - 195.1 Nonregulated 1.0 - 1.0 ------------ ------------- ------------- Total Revenues 720.7 (76.0) 644.7 ------------ ------------- ------------- Operating Expenses Electric fuel and purchased energy 119.4 148.0 (4) 267.4 Gas purchased for resale 103.0 - 103.0 Operations and maintenance 177.6 (95.0) (5) 82.6 Nonregulated - selling, general, and administrative 0.6 - 0.6 Depreciation and amortization 126.1 (80.0) (6,7) 46.1 Taxes other than income taxes 60.1 (21.0) (8) 39.1 ------------ ------------- ------------- Total operating expenses 586.8 (48.0) 538.8 ------------ ------------- ------------- Income from Operations 133.9 (28.0) 105.9 Other Income 3.3 3.0 (9,10) 6.3 ------------ ------------- ------------- Income Before Fixed Charges and Income Taxes 137.2 (25.0) 112.2 Fixed Charges 47.5 (3.0) (11) 44.5 ------------ ------------- ------------- Income Before Income Taxes 89.7 (22.0) 67.7 ------------ ------------- ------------- Income Taxes Income taxes 37.5 (9.0) (12) 28.5 Investment tax credit adjustments (2.0) 1.0 (13) (1.0) ------------ ------------- ------------- Total income taxes 35.5 (8.0) 27.5 ------------ ------------- ------------- Net Income $ 54.2 $ (14.0) $ 40.2 ============ ============= =============
6
Baltimore Gas and Electric Company Unaudited Condensed Pro Forma Statement of Income Twelve Months Ended December 31, 1999 (Revised As Of July 7, 2000) 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 Nonregulated 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 Nonregulated - 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 8.4 11.0 (9,10) 19.4 ------------ ------------- ------------- Income Before Fixed Charges and Income Taxes 712.7 (304.0) 408.7 Fixed Charges 205.9 (13.0) (11) 192.9 ------------ ------------- ------------- Income Before Income Taxes 506.8 (291.0) 215.8 ------------ ------------- ------------- Income Taxes Income taxes 186.9 (108.0) (12) 78.9 Investment tax credit adjustments (8.5) 6.0 (13) (2.5) ------------ ------------- ------------- Total income taxes 178.4 (102.0) 76.4 ------------ ------------- ------------- Income Before Extraordinary Loss $ 328.4 $ (189.0) $ 139.4 ============ ============= =============
7
Baltimore Gas and Electric Company and Subsidiaries Unaudited Condensed Pro Forma Balance Sheet March 31, 2000 (Revised As Of July 7, 2000) As Reported Adjustments Pro Forma ------------ ------------- ------------- ASSETS (In Millions) Current Assets Fuel stocks $ 69.6 $ (60.0)(1) $ 9.6 Materials and supplies 138.6 (100.0)(1) 38.6 Notes receivable, affiliated companies - 366.0 (2) 366.0 Interest receivable, affiliated companies - 4.0 (2) 4.0 Other current assets 355.9 - 355.9 ------------ ------------- ------------- Total current assets 564.1 210.0 774.1 ------------ ------------- ------------- Investments And Other Assets Nuclear decommissioning trust fund 222.7 (222.7)(3) - Safe Harbor Water Power Corporation 34.5 (34.5)(4) - Other investments and other assets 161.9 - 161.9 ------------ ------------- ------------- Total investments and other assets 419.1 (257.2) 161.9 ------------ ------------- ------------- Utility Plant Plant in service Electric 7,123.4 (3,980.0)(5) 3,143.4 Gas 970.2 - 970.2 Common 562.2 (45.0)(5) 517.2 ------------ ------------- ------------- Total plant in service 8,655.8 (4,025.0) 4,630.8 Accumulated depreciation (3,522.1) 1,870.0 (5) (1,652.1) ------------ ------------- ------------- Net plant in service 5,133.7 (2,155.0) 2,978.7 Construction work in progress 241.1 (145.0)(5) 96.1 Nuclear fuel (net of amortization) 123.4 (123.4)(1) - Plant held for future use 12.9 (3.2)(5) 9.7 ------------ ------------- ------------- Net utility plant 5,511.1 (2,426.6) 3,084.5 ------------ ------------- ------------- Deferred Charges 639.8 (37.5)(6) 602.3 ------------ ------------- ------------- Total Assets $ 7,134.1 $ (2,511.3) $ 4,622.8 ============ ============= ============= LIABILITIES AND CAPITALIZATION Current Liabilities Current portions of long-term debt $ 543.9 $ - $ 543.9 Other current liabilities 509.8 (24.0)(7,8) 485.8 ------------ ------------- ------------- Total current liabilities 1,053.7 (24.0) 1,029.7 ------------ ------------- ------------- Deferred Credits And Other Liabilities Deferred income taxes 1,010.4 (470.0)(9) 540.4 Deferred investment tax credits 107.5 (82.0)(5) 25.5 Other deferred credits and other liabilities 309.1 (9.0)(8) 300.1 ------------ ------------- ------------- Total deferred credits and other liabilities 1,427.0 (561.0) 866.0 ------------ ------------- ------------- Long-Term Debt First refunding mortgage bonds of BGE 1,321.7 - 1,321.7 Other long-term debt of BGE 1,068.9 (278.0)(10) 790.9 Company obligated mandatorily redeemable trust preferred securities of subsidiary trust holding solely 7.16% debentures of BGE 250.0 - 250.0 Long-term debt of nonregulated businesses 32.0 - 32.0 Unamortized discount and premium (10.1) - (10.1) Current portion of long-term debt (543.9) - (543.9) ------------ ------------- ------------- Total long-term debt 2,118.6 (278.0) 1,840.6 ------------ ------------- ------------- BGE Preference Stock Not Subject To Mandatory Redemption 190.0 - 190.0 ------------ ------------- ------------- Common Shareholder's Equity 2,344.8 (1,648.3)(11) 696.5 ------------ ------------- ------------- Total Capitalization 4,653.4 (1,926.3) 2,727.1 ------------ ------------- ------------- Total Liabilities And Capitalization $ 7,134.1 $ (2,511.3) $ 4,622.8 ============ ============= =============
8 -----END PRIVACY-ENHANCED MESSAGE-----