Winter brought cold cash to BGE

April 21, 1994|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

Also yesterday, the headline on a story about Baltimore Gas and Electric Co. incorrectly stated the percentage increase in the company's revenue. Net income increased 24.8 percent during the company's first quarter. Revenue increased 9.4 percent for the period.

+ The Sun regrets the errors.

Pushed to its limits by the punishing winter storms, the Baltimore Gas and Electric Co. got its payoff with a 24.8 percent increase in first-quarter net income, to $82.1 million, the company announced yesterday.

"The increased revenues were caused by higher-than-normal sales during this unusually cold winter," said BGE Chairman Christian H. Poindexter at the company's annual meeting in downtown Baltimore.

FOR THE RECORD - CORRECTION

However, he said the higher revenues were partially offset by the cost of repairing damage caused by the storm.

The improvement in first-quarter results was primarily attributed

a 6 percent increase in electricity sales, with residential sales up 12 percent and business sales up 2 percent.

Gas sales were essentially flat, because an 8 percent spike in residential sales was offset by a 6 percent drop for businesses.

In other matters, Mr. Poindexter was barraged with questions at the annual meeting about the company's expansion into kitchen remodeling and other businesses and about the recently completed reduction in its work force.

He also announced an unprecedented agreement with Bethlehem Steel Corp. that will ensure that the steelmaker will remain BGE's largest customer for the coming decade.

Stockholders attending the meeting were greeted by about a dozen pickets outside the Sheraton Inner Harbor Hotel attacking the company for expanding into kitchen remodeling and other nonutility businesses and competing with small-business owners.

"Currently, you are trying to devastate the mom-and-pop companies of Maryland," said Larry LeDoyen, chairman of the Maryland Alliance for Fair Competition, a group that is challenging BGE's expansion plans before the Maryland Public Service Commission.

Mr. Poindexter defended the company's efforts, saying the new ventures employ independent contractors, who have received a total of $100 million annually from BGE in past years.

"As far as trying to put people out of business, that is far from the truth," he said.

Mr. Poindexter was also questioned about the use of contractors in other parts of the company.

A BGE worker who had her job eliminated and who is now in the company's job placement program complained that the utility seems to be using independent contractors to replace full-time workers.

"If you can train them [contractors], why can't you train us?" asked Patricia Joyce, a former data control clerk who worked for 22 years at BGE.

Mr. Poindexter said the company uses contractors for short-term needs that do not require permanent workers.

Much of the speech to about 600 stockholders concerned the increasingly competitive utility market, where traditional utilities are being challenged by rivals for the right to supply power to industrial electrical users.

"Many of our largest customers are being courted by other energy companies," Mr. Poindexter said.

But BGE has managed to secure its largest customer, Bethlehem Steel's Sparrows Point steel mill and shipyard, with a year confidential agreement, which was approved by the Maryland Public Service Commission yesterday.

Bethlehem buys $24 million worth of electricity, or 4 percent of the utility's output. Under the agreement, Bethlehem agrees to continue buying electricity from BGE rather than building additional generation facilities.

Without Bethlehem's purchases, rates for residential users would go up, Mr. Poindexter noted.

But Mr. Poindexter said he did not know how much other !B ratepayers will have to pay to subsidize the break given Bethlehem; he said the company would try to hold rates steady for the "foreseeable future."

However, some effect on the residential rate payers is "inevitable," according to PSC Chairman Frank O. Heintz. "How it washes out, you can't know until the next rate case," he said. Yet, he said, the agreement "appears to be the best deal at the right time."

Baltimore Gas and Electric Co. .. ..Ticker.. .. .. . Yesterday's

.. .. .. .. .. .. .. .. .. .. ... .. Symbol.. .. .. ..Cls. ..Chg.

.. .. .. .. .. .. .. .. .. .. .. .. .BGE .. .. .. .. 23 7/8 .. ..+ 5/8

Period ended

3/31/94 .. .. .. .. .... . 1st qtr. .. ... Year ago . .Chg.

Revenue .. .. .. .. .. .. .$748,275. .. .. $683,825 . +9.4%

Net Income .. .. .. .... ..$82,145. .. ... $65,796 . +24.8%

Primary EPS.. .. .. .... .. $0.49. .. .. .. $0.38 ... +28.9%

Figures in thousands (except per share data.)

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