BGE forms subsidiary for appliance operations

June 09, 1994|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

The Baltimore Gas and Electric Co. unveiled a new subsidiary yesterday created to combine the utility's 11 appliance and electronic stores and its furnace and air conditioning repair arm into a single entity.

The change in BGE's corporate structure, which is effective July 1, removes the company's service operations from its main utility business and combines it with the unregulated merchandise operation.

The new entity, called BGE Home Products & Services Inc., would be formally separate from the utility.

The subsidiary would have 550 employees, along with a separate accounting and financial structure and board of directors.

The move comes as the company is involved in a Maryland Public Service Commission case over whether its merchandise operation receives improper subsidies from the regulated utility business.

The structure and finances of the new subsidiary are expected to become the primary focus of that case.

"It satisfies what everybody wanted," said BGE spokesman Arthur J. Slusark.

But opponents immediately objected to the subsidiary using the BGE name. They argue that the unregulated home products business should pay for the name of the regulated utility.

BGE customers would be "shortchanged" if the new subsidiary continued to use the BGE name free of charge, said Gary R. Alexander, an attorney representing two business coalitions opposing the company in the case. "That name is worth a lot."

Paul S. Buckley, the acting People's Counsel, who represents ratepayers before state regulators, agreed that the subsidiary should pay for the name, since it lends the utility's reputation to the operation. "The [BGE] trucks zipping around are free advertising," he said.

But the company has staunchly objected paying for the name, saying its reputation has been built by its employees, not by its ratepayers.

"It's a ridiculous argument to think we should pay for the use of our own name," Mr. Slusark said.

The president of the new subsidiary will be Herbert D. Coss, who is BGE's vice president of marketing -- a position he will retain. E. Frank Bender, the company's manager of merchandise, will become the subsidiary's vice president of merchandise. Michael E. Griffin, manager of the gas and appliance service, will become the subsidiary's vice president of service.

There will be no change in the location of employees or the operation of the merchandise store or service business. The customer "shouldn't see any change at all," Mr. Slusark said.

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