Hot summer made BGE profits sizzle Net up 29 percent in 'one of the better quarters we've had'

October 21, 1995|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

The Baltimore Gas and Electric Co. reported yesterday that its third-quarter net income rose 29 percent to $163.3 million, a gain the utility attributed to the extremely hot summer.

The $1.04-per-share earnings -- $1.11 a share excluding a special one-time charge -- also narrowly missed shattering an all-time record set seven years ago, when BGE generated earnings per share of $1.07.

BGE said the 7-cents-per-share charge stemmed from the decision to scrap further construction at its Perryman power plant in Harford County. The first of the two planned $100 million generating units became operational in June.

"It's one of the better quarters we've had," said Charles W. Shivery, a BGE vice president and the company's chief financial officer.

"On the electric side, the third quarter made up for the mild weather of the past two periods, but gas earnings were not quite what we thought they would be."

For the nine-month period ended Sept. 30, BGE generated net income of $285.1 million, or $1.73 a share, a 3.5 percent increase from the comparable reporting period a year ago. The only slight jump in the nine-month figures resulted from mild weather in the first half of 1995.

The weather fluctuation also influenced BGE's revenues.

In the third quarter, for instance, the utility's revenues increased 12.5 percent to $848.8 million vs. the same period in 1994, while revenues for the first nine months rose 1.6 percent, to $2.2 billion.

Mr. Shivery said the nine-month earnings also were positively affected by more than $20 million in savings from a continued cost-cutting program. In the third quarter, BGE shaved $3 million off its operating and maintenance expenses.

Continuing a recent trend, BGE's earnings also received a boost from its nonutility businesses. In the third quarter, Constellation Holdings Inc. contributed 8 cents per share -- double its performance in the 1994 quarter -- and 14 cents per share in the nine-month period. The nine-month figure represented a 133 percent increase.

Constellation, which comprises most of BGE's nonutility operations, generated $12.2 million in the third quarter and $20.4 million between Jan. 1 and Sept. 30. Mr. Shivery pointed to increased earnings from Constellation's 25 energy projects and its investment portfolio as reasons for the gains.

Earnings applicable to common stock rose to $153.1 million, a 31 percent gain from the three months closing Sept. 30, 1994. On a nine-month basis, however, common stock earnings rose just 4 percent, to $254.9 million.

But while the earnings are considered impressive relative to other East Coast power concerns, they fell short of some analysts' predictions. Several industry analysts believed the record heat of July and August would generate earnings as high as $1.15 per share. This summer, Baltimore experienced 35 days of 90 degrees Fahrenheit or above.

"I'm slightly disappointed, given the fact we had one of the hottest summers on record, but not overly concerned," said Alex Hart, a Ferris, Baker Watts Inc. utility industry analyst.

Wall Street sent BGE's stock to a recent record level on news of the earnings, closing at a 52-week high of $27 per share, a jump of 62.5 cents. The company's stock has been rising steadily for several months, the result of its announcement last month of a $2.9 billion merger with the Potomac Electric Power Co. and of Wall Street earnings estimates.

The company also announced a quarterly dividend of 39 cents per common share. The $57.5 million payout to shareholders will occur Jan. 2.

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