Poindexter says BGE is ready for the growing competition Shareholders are told preparation includes merger

profit up 50%

April 24, 1996|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Baltimore Gas and Electric Co. held perhaps its last annual shareholders' meeting in its 180-year history yesterday, an event punctuated by themes of both internal and industry change.

"Positioning for the future is what our merger with Pepco is all about," BGE Chairman and Chief Executive Christian H. Poindexter said of the $8.4 billion utility's pending March 1997 corporate marriage, which will create the nation's ninth-largest power concern. "Competition is driving the changes in our industry. When regulated markets are open to competition, larger companies are better able to survive."

In addition to the merger with Potomac Electric Power Co., BGE is preparing for and reacting to deregulation and heightened competition by expanding the scope of its unregulated subsidiaries, its natural gas business and marketing efforts with large commercial and industrial customers, Mr. Poindexter said.

He said he believes federal and state energy policy changes encouraging competition will bring about wider customer choice, is occurring today in the telecommunications industry.

BGE also yesterday reported first-quarter earnings of $91.1 million, a 50 percent gain that the company and analysts attributed largely to frigid winter weather. BGE's revenues grew 20 percent to $861.3 million for the quarter.

BGE's total electricity sales in the quarter increased 9 percent, while natural gas sales jumped 10.5 percent.

"Utilities are somewhat beholden to the weather," said Greg Gordon, an Oppenheimer & Co. Inc. utility analyst in New York. "And this past winter was not only colder than 1995 but it was colder than normal."

Most BGE shareholders were chilly as well to a proposal by Amalgamated Bank of New York, which owns shares in the utility, that would have eliminated pension benefits for the utility's outside directors.

The bank argued that retirement pay for directors isn't in the best long-term interests of the company, and that it "has the pernicious effect of compromising their independence and impartiality," according to BGE's proxy statement.

"The concept of pensions for directors is opposed by a great many shareholders," said stockholder Albert F. Carr during a question-and-answer session. "It appears to be greedy on the part of those persons."

Mr. Carr's comment drew applause from some shareholders at the Sheraton Inner Harbor Hotel.

The proposal to eliminate pension benefits, which was opposed by management and the board, was defeated by a narrow margin of shareholder votes. Mr. Poindexter said in response that BGE and Pepco are studying all aspects of directors' compensation.

But the overall theme of the meeting was the BGE of tomorrow, which executives said will be well-suited to succeed in the changing utility environment.

"We intend to profit in a fully open energy market where all customers have choices," Mr. Poindexter told stockholders. "Our strategy is to become a total energy company."

Pub Date: 4/24/96

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